Soaring Markets Trigger Family Disputes

BUSINESS FAMILY DISPUTES re-emerge each time market valuations soar. The latest is Oberoi family’s battle over the hotel empire. The legal battle in the Delhi High Court stems from two conflicting wills of P.R.S. Oberoi, who passed away 10 months ago.

Oberoi’s daughter from second marriage, Anastasia Oberoi, has taken the matter to court, arguing that her step-siblings Vikramjit Oberoi and Natasha Oberoi and cousin Arjun Oberoi are attempting to prevent rightful execution of her father’s most recent will, dated October 25, 2021. Anastasia also submitted a codicil from August 27, 2022, that grants her rightful ownership of the assets and properties listed. Codicil is a formally executed document made after a will that adds to, subtracts from, or changes the will.

Anastasia’s claim has been disputed by Vikramjit, managing director and CEO of EIH Ltd. (flagship company of Oberoi Group), along with Arjun, chairman of EIH. They put forward an earlier will, dated March 20, 1992, in their defence. Vikramjit claimed that P.R.S. Oberoi did not have full ownership of shares in Oberoi Hotels, which were held in a trust for him and Arjun.

The Delhi High Court issued an interim order in favour of Anastasia Oberoi, preventing transfer of any shares in EIH Ltd., Oberoi Hotels and Oberoi Properties until the case is resolved. The battle is expected to escalate to the Supreme Court.

It is interesting to note that such legal battles intensify when valuations of group companies skyrocket. Shares of EIH Ltd. have jumped over 63% in last one year while Oberoi Realty has risen 71%. Total market capitalisation of the companies comes to ₹93,000 crore.

There is a battle of dual wills in Pune-based Kalyani family, too. Bharat Forge chairman Baba Kalyani and his younger brother Gaurishankar are locked in a legal feud over their late mother Sulochana Kalyani’s will. Baba filed a petition in the Pune civil court to probate their mother’s will, dated January 27, 2012, while Gaurishankar contested it, presenting another will dated December 17, 2022. There is already another legal battle between Baba, Gaurishankar and children of their sister, Sugandha Hiremath. Sugandha’s heirs filed a petition seeking one-ninth share of the Kalyani family’s Hindu Undivided Family assets. Baba and Gaurishankar opposed this, arguing they have no legal entitlement to these assets. Bharat Forge shares have risen 43% in last one year.

In another dispute, members of the Vadilal Gandhi family, Virendra Ramchandra Gandhi, Rajesh Ramchandra Gandhi and Devanshu Laxmanbhai Gandhi, are at loggerheads. The appellate tribunal, NCLAT, directed Vadilal Enterprises and Vadilal International to keep board structures unchanged until further notice. NCLT had previously declared a board resolution that retired Virendra Gandhi from boards of both companies as null and void. It also directed that the family businesses be divided among the three families. The shares of Vadilal Industries have risen 52% in last one year.

Also, the mother-son duo of the K.K. Modi Group is locked in a bitter feud over control of group companies, including Godfrey Phillips. A Delhi court in Saket has restrained the mother, Bina Modi, who is at the helm of the board at Godfrey Phillips and Modi Enterprises, from removing Sameer Modi, executive director of Godfrey Phillips, from the board.

While these play out, one family has settled its disputes. Members of the Murugappa family agreed to settle differences with the family branch of late M.V. Murugappan one year back. M.V. Murugappan’s daughter Valli Arunachalam wanted a board position in the holding company, else she wished to sell her family’s stake to other stakeholders in the family. The details of the settlement have not come out.

In India, family-owned businesses contribute more than 75% to national GDP, one of the highest percentages in the world, says a McKinsey report. This is likely to rise to 80-85% by 2047. McKinsey research reveals that from 2017 to 2022, family-owned businesses reported around 2.3% higher revenue growth than businesses that are not family-owned.