The euro 14 billion French dairy major, Groupe Danone, has formally initiated arbitration proceedings to end its partnership with the Mumbai-based Wadia group.

Danone filed the petition in the Bombay high court on Friday and made Kalabakan Investments, the holding company of the Wadias of Bombay Dyeing [Get Quote] a party to the case.

Kalabakan and Danone hold equal stake in Wadia BSN, which was supposed to make a foray into the food and dairy business by launching products from Groupe Danone's international portfolio in India. Wadia BSN has not launched any product despite the JV being in existence for over 11 years in India.

When contacted, a Wadia spokesperson refused to comment on the issue saying the matter is sub judice.

The Wadias and Group Danone have two joint venture companies, Wadia BSN and London-based Associated Biscuits International Holdings, which holds 51 per cent stake in India's largest biscuit firm Britannia [Get Quote].

Recently, Groupe Danone executives had indicated that their first priority was to set right the Wadia BSN partnership issues.

As per the Wadia BSN agreement signed in 1995, in case of a deadlock between the partners, Danone is obliged to buy all the shares of the Wadia group at a 'fair market value'. This agreement does not include Britannia's holding firm, ABIH, which has a separate agreement signed in 1992 and is subject to the British law.

The fair market value, as per the Wadia-BSN agreement, would be the aggregate of the price resulting from a valuation as at the date of the notice commencing the sale procedure made by a partner of an international auditing firm chosen by an agreement between Danone and the Wadias.

Sources say the Danone petition in the Bombay high court is to formally initiate the disengagement.