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Business News/ Companies / People/  Singhania vs Singhania: what went wrong?
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Singhania vs Singhania: what went wrong?

Strife over inheritance of wealth comes back to haunt the Singhania family of Raymond

In February this year, Vijaypat Singhania said he would gift his 37% stake in Raymond, worth almost `1,041 crore, to his son Gautam. Photo: Getty ImagesPremium
In February this year, Vijaypat Singhania said he would gift his 37% stake in Raymond, worth almost `1,041 crore, to his son Gautam. Photo: Getty Images

Mumbai: Family disputes are peculiar. They are bitter, and, almost always, messy.

It is not surprising then that the Singhania vs Singhania case, playing out in the Bombay high court, follows the script to a T. Over the last four months, justice G.S. Patel has heard several stories—of a successful grandfather; of an estranged son who severed family ties to live an independent life in Singapore; of four aggrieved grandchildren who are staking a claim to their family property; of the fortunes of a famous Indian business family; and of the life of an uncle living in the lap of luxury.

Suit no. 201 of 2015 is up for hearing on Wednesday, 29 July, and it is likely that justice Patel will pronounce the verdict.

This story is to help you get up to speed on everything that’s transpired in the courts, the peculiar nature of this family disagreement and most importantly, what’s at stake for Vijaypat Singhania, 76, the chairman emeritus of Raymond Ltd. And then the flagship company Raymond itself.

First, a few facts.

In December 1998, the eldest son of Vijaypat Singhania, Madhupati Singhania, 56, severed ties with the family, left his ancestral home in Mumbai and moved to Singapore along with his wife Anuradha and four children, Ananya (29), Rasaalika (26), Tarini (20) and Raivathari (18).

Before he did this, Madhupati entered into a Family Agreement, under which he relinquished his rights, as well as those of his children, to the family property. Soon after his exit, in July 1999, Gautam Hari Singhania, 49, Vijaypat’s younger son, was elevated to the position of managing director of Raymond.

After that it was business as usual. For a good many years.

According to a Reuters story dated 9 November 2007, Madhupati was doing well in Singapore and part of the elite club, where he is shown relaxing “on his $435,000 yacht berthed at the city-state’s swanky One 15 Marina Club".

The story added: “Opportunity is what attracted Singhania to Singapore. He intends to buy a new 47-foot yacht for $1.3 million.

“You’ve got everything you want in Singapore. You want to buy a fast car, you want to buy a big boat, you want to buy an aeroplane, whatever you need, you can get in this country.

“Singhania, who runs a business consultancy firm, was originally from Mumbai but decided to move to Singapore and become a Singapore citizen, citing its first-world comforts," the story says.

Back in Mumbai, with Gautam at the helm, Raymond grew—almost five-fold in the last decade. From revenue of 991 crore in 2001-02 to 5,332.61 crore in 2014-15. In terms of profitability, Raymond returned a profit of 113 crore in 2014-15 compared with 80.5 crore in 2001-02.

Now, as it happens, on 9 February this year, Vijaypat announced that he would gift his 37.17% stake in Raymond, worth almost 1,041 crore, to his son Gautam. In a statement issued to the exchanges, a rationale was offered—that this would help in maintaining the continuity of management and align the ownership interest. So Vijaypat gifted 24,290 shares in JK Investors (Bombay) Ltd and 9,996 shares in Smart Investments Pvt. Ltd—which collectively hold a 37.17% stake in Raymond—to his son.

Around the same time, in February, Vijaypat’s grandchildren through his estranged son Madhupati filed a case against their grandfather.

In the suit, the four questioned the 1998 Family Agreement, which they claimed ignored their rights as minors. In the petition filed with the Bombay high court, the children claimed a right to the Raymond brand, ancestral properties, real estate and other movable and immovable assets of the group.

The children have stated that their parents had no right to enter into any agreement on their behalf and relinquish their claims. In the petition, filed by advocate Sharmila Deshmukh, they stated: “He (Vijaypat) also inherited everything by virtue of being a Singhania. The plaintiffs (children) have also inherited this legacy by birth and it could not have been taken away in the manner that it was chosen to."

To be sure, the children have also made their parents, Madhupati and Anuradha, respondents to their petition.

Needless to say, Vijaypat has summarily denied all such claims of his grandchildren.

An email sent to Raymond with a detailed questionnaire did not receive a response. When Mint reached out to Virag Tulzapurkar, the advocate representing Vijaypat, he said, “We don’t talk to the press. We are not supposed to." Despite repeated attempts, Deshmukh, the advocate representing the grandchildren, could not be reached.

A bit of karma?

A person close to the Singhania family who has been watching the affair play out says that there’s some bit of karma at play. At least for Vijaypat. And for that, spare a moment for a brief digression into some family history.

“Not many people remember but Vijaypat had a brother called Ajaypat," says this person, who asked not to be identified. “He was fond of the good things in life but he was part of the Raymond group. After his death, his family—which includes his wife Veena Devi and two children, Anant and Akshaypat—were deprived of everything. So, in a way, Vijaypat deserves what has come to him."

Another view, from a person who has known the family for more than two decades, is that it has a lot to do with wealth and not karma. “There is nothing called karma in this case," says this person, who too asked not to be identified. “Pure business calls over emotions and bad parenting have landed Singhanias in this latest trouble."

This family friend points out that the Hindu Undivided Family works like a Communist Party Platform, insisting on equality when it rarely works out that way. “The Singhanias were having fights in their families always, like any other family. The episode is also another glaring example of parents not preparing proper will for the next generation."

The Singhania family has had its fair share of disputes. Almost all of which dates back to 1987, after a major family settlement. Only in 2013 did the Bombay high court put an end to a 23-year-old dispute between the Singhania families—three branches in Kanpur, Kolkata and Mumbai over division and distribution of the properties belonging to a partnership firm called Juggilal Kamlapat Bankers (JK Bankers). (See graphic) While the revised partnership deed, signed in March 1987, provided terms for distribution of properties belonging to the firm, there were disputes between the three branches for which the family had approached the courts.

Now, let’s get back to case 201 of 2015.

The contention

At the heart of the matter is the 1998 Family Agreement between Vijaypat and Madhupati. In an affidavit filed with the court in April this year, Madhupati has stated that relations between him and his father were strained and that he left the country because of irreparable differences. There, two events played a major role. One, the way in which Vijaypat treated his wife (and Madhupati’s mother) Asha Devi Singhania and two, his father’s decision to elevate Gautam to the position of managing director of Raymond. In the court, Madhupati said that his mother was not treated with the love and respect due to her.

But the last straw was the change of guard at Raymond in favour of his younger brother. In his affidavit, Madhupati claims that his life was full of insults and humiliation, where his father would often pit him against his younger brother. Once his father expressed his intent to make Gautam the managing director, Madhupati says he took a call that he would not suffer humiliation by working under his brother and thus decided to separate from the family and lead an independent life in Singapore. The Family Agreement, thus, was signed, he says.

In the affidavit, Madhupati says: “That time I accepted his decision and decided to leave (for Singapore). But having no resources and stupendous task of migrating to another country, which involved many complicated issues, he forced me to sign the settlement. Having no options I signed the deed without considering its legality and its effect on my life and life of my children."

In his own affidavit, filed in the court, Vijaypat has stated that his grandchildren’s claims have no merit. That as part of the Family Agreement, Madhupati had been compensated and had relinquished his and his children’s rights over the family property.

It is another matter altogether that the timing of the case continues to remain a curious question. In the court, the subject has been debated extensively. Raivathari, Madhupati’s youngest son, turned major (18) just last year, and the children have claimed that they got to know about the Family Agreement just early this year. In the court, advocate Tulzapurkar has argued that the suit is time-barred because Madhupati’s two daughters turned major long back and thus cannot be made parties to the case.

It would be fair to say that in the last four months, all parties involved have had their fill in making insinuations.

Madhupati has alleged that for 17 years, living in Singapore, he tried desperately to keep his family afloat, while at the same time his father and brother were living in the lap of luxury. That while his children travelled in auto rickshaws, their cousins flew in private jets and lived in mansions. Vijaypat’s lawyers have argued that Madhupati and his wife are trying to get hold of relinquished rights on properties by inciting their children.

Janak Dwarkadas, the advocate who appeared on behalf of Raymond, has argued that the company has been dragged to the court only to sensationalize the issue.

The grandchildren allege that they have a right to the family property and that the Family Agreement has no legal standing because Vijaypat is not the founder of the family but son of the founder of the business empire. Hence, they have the natural inheritance rights despite relinquishing the rights under any circumstances.

Needless to say, family disputes are peculiar. Bitter. And almost always, messy.

Kavil Ramachandran, executive director, Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business, says there could be the combined effect of several factors for the Singhania dispute—lack of a respectable relationship in the family, feeling of injustice or lack of actual or perceived fairness in dealings and the absence of clear ownership divisions among family members.

“My hunch is that you will find elements of all the above in this case," he says.

“The best way to prevent such things from happening is to ensure that the head of the family behaves like a real steward who takes care of the interests of all members and is fair to all of them, whether he likes them or not."

If that doesn’t happen, matters usually land up in court. Like 201 of 2015 did.

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Published: 29 Jul 2015, 12:20 AM IST
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