, Edited by Explained Desk | Mumbai |
Updated: June 25, 2020 6:26:21 pm
On June 23, a UK court ruled in favour of Srichand Hinduja (SP), Chairman of the Hinduja group with operations in several countries, and his daughter Vinoo on the issue of control of Hinduja Bank, headquartered in Switzerland, much against the wishes of his three younger brothers. The Hinduja group, once considered as a closely-knit business family, is facing a big challenge – division of assets. Three Hinduja brothers – Gopichand, Prakash and Ashok – contested the claim of Srichand and his daughter, saying “everything belongs to everyone and nothing belongs to anyone.”
What’s the tussle all about?
On July 2, 2014, the four brothers purportedly signed an agreement which says assets held by one brother belong to all and each brother will appoint the others as their executors. Srichand and his daughter Vinoo went to court stating that the letter should have no legal effect and cannot be used as a will or power of attorney. Srichand wanted the letter declared worthless. Justice Falk of the High Court of Justice, Business and Property Court of England and Wales said that the three other brothers Gopichand, Prakash and Ashok tried to use the letter to take control of Hinduja Bank which was in Srichand’s sole name. The court said that Srichand had insisted in 2015 that the letter “doesn’t reflect his wishes and that the family’s assets should be separated”. Srichand’s three younger brothers said Srichand was suffering from a form of dementia and that his health has been deteriorating for a number of years.
What was the UK court’s decision?
“Vinoo is appointed as Srichand’s litigation friend. Steps taken in the litigation prior to that appointment will have effect, as permitted under CPR 21.3(4),” Justice Falk said. CPR 21.3(4) provides that any step taken before a protected party has a litigation friend “has no effect unless the court orders otherwise”. The three younger brothers had used the July 2014 letter to take control of Hinduja Bank. This is not valid now.
What are the three Hinduja brothers saying about the fight?
They claim that this litigation will not have any impact on its global businesses, which will continue to function as they have been. It will be apparent from the judgment of the High Court in England that SP Hinduja’s health has been deteriorating for a number of years suffering from Lewy Body disease, which is a form of dementia, they say. “Vinoo, his younger daughter, acting as his Litigation Friend is bringing these proceedings on his behalf. It is very unfortunate that these proceedings are taking place as they go against our founder’s and family’s values and principles that have stood for many decades, especially, everything belongs to everyone and nothing belongs to anyone,” they said.
“We intend to defend the claim to uphold these dearly held family values,” they said in a statement, hinting that the legal fight is likely to continue in the future. Observers don’t rule out a division in the empire in the near future as the next generation from the family is already active in the group’s operations.
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What Srichand Hinduja wanted and the court said?
Srichand wants the July 2 letter signed by the four brothers to be revoked. “Srichand Hinduja seeks a declaration that neither document has legal effect, whether as a will, power of attorney, declaration of trust or other binding document, or alternatively that the documents are revocable and have been revoked,” the court judgement says. The defendants (the three brothers) do not dispute that Srichand lacks capacity, and indeed have relied on it as a basis for seeking to take control of Hinduja Bank, an asset in Srichand’s sole name, relying on the July letter. Clifford Chance (Srichand’s law firm) sent an email on May 2, 2015 stating that Srichand did not consider themselves legally or morally bound by the July letter. A further letter from the firm dated July 24, 2015 reiterated that Srichand was not bound by it, and he made the same point in a letter he sent dated July 16, 2015. “I am also satisfied that Vinoo can act fairly on behalf of Srichand and that she does not have an adverse interest,” Justice Falk said. “If Srichand’s claim has foundation, then it would certainly be the case that it is in SP‘s financial interests to challenge what is being portrayed as a use of the July letter to allow seizure of control of his assets and disruption of his financial affairs,” the court said.
Will Srichand’s assets pass on to his daughter?
The three brothers noted that if the claim succeeds then all assets in SP’s name would pass to Vinoo and her immediate family on SP’s death, including the entire shareholding in Hinduja Bank, according to the judgement. They maintain that a number of the complaints about the July letter relate to its impact on Vinoo personally rather than Srichand. The Defendants also contend that Vinoo has shown a disregard for Srichand’s best interests in bringing the claim, and it was not in his best interests for the proceedings to continue. Srichand has two daughters, Shanu and Vinoo. The certificate of suitability confirms that her father is no longer able to give instructions to lawyers and has asked her to do so, the court said.
What’s at stake in the Hinduja empire?
The Bloomberg Billionaires Index values the family fortune at $11.2 billion. Ths $ 50-billion Hinduja group, controlled from the UK, is active in old economy sectors such as banking & finance, transport, automobiles and energy as well as the new economy sectors like technology, media and renewables. It’s now an international conglomerate with a footprint across 38 countries and a 150,000-plus strong team. Ashok Leyland, flagship of the Hinduja group in India, is the 2nd largest manufacturer of commercial vehicles in India. Dheeraj Hinduja, son of Gopichand, is on the board of Ashok Leyland. IndusInd Bank, a leading private sector bank, is also controlled by the Hindujas. Gulf Oil controlled by the group has sales in 100 countries.
PD Hinduja, father of the four brothers, who is credited with establishing trade links between India and Persia set up the business in 1914. Two of his major philanthropic projects are Hinduja Hospital in Mumbai and Hinduja Foundation.
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The four Hinduja brothers
Srichand Hinduja, 84, is the head of Hinduja family and Chairman of Hinduja group and charitable foundations. After completing his education in 1952, he joined his father in the family business. Srichand along with his brothers Gopichand, Prakash and Ashok conceived and strategized the diversification and expansion of the Hinduja group.
Gopichand Hinduja, Co-Chairman of the group, was one of the architects of the transformation of the group from an Indo-Middle East trading operation into a multi-billion dollar transnational conglomerate. The group acquired Gulf Oil in 1984, closely followed by the acquisition of the then Ashok Leyland, in 1987, which was the first major NRI investment in India. He is also behind the group’s forays into power and infrastructure sectors, especially the group’s plan for building 10 GW of power generation capacity in India, says the group’s website.
Prakash Hinduja is the Chairman of Hinduja Group in Europe. Since 2008, he has been based in Monaco. After completing his university education, PP joined the family business in Tehran, Iran. He later moved to Geneva in Switzerland and took charge of the group’s European operations. Thereafter in 2008, he moved to Monaco.
Ashok Hinduja, based in Mumbai, is looking after the affairs in India. As Chairman, Hinduja group of companies (India), he has been driving the group’s growth and diversification since it re-entered India in the mid-eighties. He serves as the Chairman of IIHL (Mauritius), the parent promoting company of IndusInd Bank. He is the Chairman of Nxt Digital Ltd, the media and entertainment vertical of the group and Executive Chairman of Hinduja National Power Corporation, the company that runs a 1,040 MW thermal power plant.
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