Explained: What's the Hinduja family dispute and how they plan to settle it

Hindujas

Indian Market
by 5paisa Research Team Last Updated: 2022-11-16T13:10:46+05:30

The feuding NRI Hinduja family could be nearing a settlement. Division of the assets of the $14-billion Hinduja Group between family members could happen by the end of November, six months after lawyers of Gopichand Hinduja, brother of family patriarch Srichand (SP), told a London judge that the family had agreed to set aside a 2014 agreement, a report in The Economic Times said. 

Citing people aware of the matter, ET said that there is an understanding that by November end, the family will come to a settlement to break up one of the biggest conglomerates in the world.

The November-end deadline is mentioned in the August 2022 judgement by Justice Hayden of the Court of Protection, and that the Hinduja family had agreed to “heads of terms” framework with the intention to end all litigation pertaining to the empire.

How big is the Hinduja group?

The group consists of 38 companies, of which half a dozen are listed, including flagship IndusInd Bank and Ashok Leyland.

What happens if there is no settlement?

Failing to arrive at a settlement could see the matter going back to the London court that has become the lead venue of a legal dispute. Multiple lawsuits have also been filed across the world, including in the Swiss canton of Lucerne.

What really is the dispute?

The nub of the issue is the legal validity of the 2014 agreement signed by the four Hinduja brothers — SP, GP, Ashok and Prakash — that “everything belongs to everyone, and nothing belongs to anyone.” Additionally, they also agreed then that each of the brother will be the executor of the other's will.

While GP, Ashok and Prakash Hinduja had argued that this pact laid the foundation for succession planning for the 108-year-old conglomerate, the stance was challenged by SP’s two daughters — Shanu and Veenu in 2019 and the matter became public in 2020.

What are the various allegations made by family members?

Shanu’s son runs the privately held SP Hinduja Banque Privée SA as its chief executive. The daughters have argued that they have been sidelined and “financially squeezed” by their uncles from the family wealth.

Okay, so who will get what?

According to the ET report, the Geneva-based bank is likely to remain with the SP Hinduja Group.

SP’s brothers allege a “power grab” by Shanu and Veenu, claiming that they used the patriarch’s failing health to go against his wishes. The daughters have disputed this in court.

In 2013, SP acquired Banca Commerciale Lugano and merged it with an existing Hinduja entity — Hinduja Bank (Switzerland). The entity was subsequently rebranded as SP Hinduja Banque Privée SA. SP then became founding chairman of the bank.

Shanu was originallu made SP's legal guardian but in February 2021, the lasting power of attorney was taken away from them after it was made public that SP's resources were used to fund the commerical dispute at the Chancery Court in London instead of his treatment for dementia. The daughter's disputed that arguing SP’s family were deprived of income from 2014 until it dried up entirely from 2018. GP Hinduja denied any financial squeeze.

What about the Hinduja group’s other assets?

Mauritius-based IndusInd International Holdings (IIH) is a charitable organisation whose emeritus chairman was SP Hinduja. IIH owns 12.58% of IndusInd Bank, whose market capitalisation is Rs 89,075.47 crore as on Tuesday — which makes the stake’s value Rs 11,205.69 crore. IIH also has investments in Hinduja Leyland Finance and IndusInd Media & Communications Ltd. Ashok Hinduja is the current chairman of IIH, according to its website.

Shanu and Veenu Hinduja also own shares of the listed Hinduja Global Solutions, a tech solutions company, as part of the promoter group.

What are the likely practical difficulties that will arise out of the settlement?

The promoter holdings are through trusts and offshore entities, making it difficult to segregate ownerships. Even the brothers’ domiciles complicate matters. SP and Gopichand live in London, Prakash resides in Monaco and Ashok in Mumbai.

It is not clear yet how the cross-holdings will be settled, the report said.

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