(Yicai Global) Jan. 2 -- A Beijing court has dismissed a defamation lawsuit that appliance retailer Gome had filed against its former chairman, the Mirror reported.

Gome Electrical Appliances Co. and Beijing Gome Electrical Appliances Co., which previously won CNY10 million (USD1.54 million) from Chen Xiao for breach of contract, sought CNY49 million in compensation and three public apologies from him. The No. 3 Intermediate People's Court of Beijing threw out the case on Dec. 20.

The suit claimed Chen made untrue and defamatory remarks in articles published by 21st Century Business Herald and the Business Magazine in 2011, after he had resigned, that hurt Gome's brand reputation, leading to economic losses. The media circulated the reports.

Gome Electrical Appliances Holding Ltd.'s [HKG:0493] shares plunged over two consecutive days once trading resumed, shaving more than HKD3 billion (USD380 million) off the Hong Kong-listed arm's market value. Day-to-day operations at 1,400 stores also took a hit, the firms said.

Chen began selling household appliance in 1985 and founded Yongle Electrical Appliance Co. in 1996, which Gome took over in 2006. He was chairman of Gome Electrical Appliances after founder Huang Guangyu was arrested in 2008 and battled the Huang family for control. Chen resigned as chairman in March 2011.

Neither the reasons nor alleged facts of Gome's charges warrant merit, Chen said, adding that the media cobbled together the articles based on public information and that they represented the reporters' opinion and not his own. As the media published without his permission, Chen said, he believes he bears no responsibility.

When Chen left Gome, he signed a deal not to publish or disclose materials that its directors, shareholders or executives had not made public, including group business strategies, and promised not to make negative remarks about the firm, it directors and executives. In return, Gome paid him CNY10 million after tax.

Beijing High People's Court made a final ruling on Dec. 30, 2016, that Chen had breached the contract as he had revealed information relating to Gome. The court ordered him to return the CNY10 million.