MUMBAI: The new owners of English Premier League side Blackburn Rovers, Indian poultry firm Venky`s, are facing a claim for more than five million dollars for allegedly reneging on a proposed joint venture deal.
Mumbai-based businessman Saurin Shah told AFP he had issued a legal notice to the firm over a proposed tie-up for the Blackburn bid between Venky`s and his investment firm, Qubic Group.
The notice alleged that Venky`s, which completed the deal in November for 23 million pounds (30 million dollars), was liable for the equivalent of a 24 percent stake in the club, as agreed in early talks between Venky`s and Qubic.
Venky`s were also bound to pay Qubic`s costs and expenses for its "advice, reference and recommendations", the legal notice said.
Shah`s lawyers wrote to Venky`s parent company Venkateshwara Hatcheries Group on December 22, threatening legal action unless payment was made within seven days.
The correspondence claims that Venky`s successful bid for Blackburn was the result of work put in by Shah, who was therefore entitled to payment.
Shah, who had been looking to buy Rovers himself, told AFP that Venky`s had "backstabbed" him and completed the deal independently, with the "dishonest" motive of depriving Qubic.
"This is unethical and nothing less than a highway robbery," he said.
Venky`s chairwoman Anuradha Desai rejected the allegations outright, accusing Shah of "talking nothing but lies" and said the company was in the process of filing a defamation suit against Qubic.
"Venky`s has never cheated anyone in its history of 40 years," she added in an email.
The joint venture was rejected because Venky`s considered a variety of business models where the poultry firm invested all the capital but Qubic received a stake in the club -- sweat equity -- as unfair, she said.
Venky`s had asked Qubic to act on a commission basis to negotiate with the club, she said, but no reply was forthcoming, so it appointed its own agents to conduct talks and complete due diligence.
Qubic only responded to the offer to work on commission after Venky`s submitted their bid for the club. Shah`s firm had not done any ground work for them, nor had Venky`s borrowed Qubic`s ideas about business models, she said.
The dispute comes after Venky`s sacked Blackburn manager Sam Allardyce earlier this month following a defeat to his old club Bolton Wanderers that left the Ewood Park side 13th in the Premier League.
Allardyce himself said he was "very shocked and disappointed" and many fans were outraged, while Manchester United boss Alex Ferguson described the move as "stupid".
Steve Kean was promoted to caretaker manager for the rest of the season on December 22, having been the first-team coach.
Venky`s want to take the club to a top-seven finish but injury problems and a potential lack of funds in next month`s transfer window threaten that ambition.