FADA initiates legal action against UM Lohia

New Delhi: Automobile dealers' body FADA on Wednesday said it has initiated legal action against bike maker UM Lohia Two Wheelers on behalf of its members.

UM Lohia, a joint venture (JV) between the Lohia Group and US-based UM Motorcycles, stopped operations in India abruptly last October, leaving around 80 dealers in the lurch.

These dealers have invested around Rs 150 crore in establishing requisite infrastructure alone. The JV entity came into existence in 2015 and retail sales began in 2016.

The Federation of Automobile Dealers Association (FADA) said it has served legal notice to the US and Indian directors of the entity. "This is a fit case of forgery and fraud.

These dealers have lost their business, credibility and credentials for no fault of theirs. These people who invested in the company are now left with huge debts," member and ex-president of FADA Nikunj Sanghi told.

For some time now, it is becoming a trend for multinationals to come to the country, make tall claims about investment and then make a sudden exit, leaving investors in the lurch, he said, demanding fair compensation for the company's dealers who collectively sold around 10,000 units.

"How will the servicing happen, who will provide spare parts? Already, 2,500 jobs have been lost at the dealerships. The government needs to take a close look at the situation," he added.