Hikal: The Battle for Legacy

Introduction

The Kalyani Group, a prominent group in India’s Industrial Landscape, is currently finding itself embroiled in a dramatic family feud that has enthralled the world around. AT the epicenter of this feud is Bharat Forge’s chairman, Baba Kalyani, who has just recently lost the control of the board room which marked the end of his 31-year-old tenure as a board member.

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The Genesis of Discontent

In an old family settlement from the 1990s, it was said that the shares of Hikal had been bestowed on the Hiremath family. Post the death of Sugandha’s mother in 2023, Sugandha and her husband, Jaidev Hiremath, the founder, and executive chairman of Hikal filed a suit for the enforcement of the arrangement. They claim that Baba Kalyani had defaulted upon all these commitments and instead of doing that attempted to make his hold on the company. As the litigation churns through the courts, the second generation has entered the fray. Sugandha’s children Sameer and Pallavi Hiremath have filed their suit in Pune, praying for a partition of Kalyani family assets, which includes stakes in Bharat Forge among other companies under the Kalyani group. The Kalyani HUF claim also complicates an already complex array of factors in motion.

Legal Complexities of the Dispute

The fight between the Kalyani siblings over Hikal is a classic case of a family tussle at high stakes, tied with complexities of law. At the heart of this controversy is a 1994 agreement which Sugandha Hiremath says bound her brother Baba Kalyani to transfer his shares in Hikal to the family. Baba, however, disputes the existence of such a contract arguing that if indeed such had been the case, the earlier contract of 1993 would have superseded it. It reminds one of how issues in such informal private understandings among family members often face an uphill climb when thrust into the rigid framework of legal standards-too often turning such issues into long running court cases. In the case of Kale v. Dy. Director of Consolidation (1976) 3 SCC 119, the court observed that family arrangements were necessary to preserve peace in a family. In the aforesaid judgment, the court held that informal or unregistered agreements could be of legal force if they had been made for family amicably settling their disputes. This precedent would give strength to Sugandha’s argument of fulfilling the deal of 1994 since it projects the arrangement to preserve family unity, which should be honored, though informal. Sugandha’s children have also joined the battle, with a case filed against Kalyani Hindu Undivided Family in Pune for partition of properties they own jointly. The plea as coparceners raises the question of Hindu succession law that claims managerial rights over the family purse by Baba Kalyani.

It reminds one of Vineeta Sharma v. Rakesh Sharma, (2020) 9 SCC 1, wherein the Supreme Court held daughters as being coparceners equally in HUF properties and that such a right came into existence at birth itself. The claim for partition by Hiremath siblings thus challenges the traditionally governed control of a family member or members over their shared assets and could potentially reorder the Kalyani family business empire’s distribution. Coming from the Hiremath family notwithstanding, a move by Baba Kalyani to assert his dominance at Hikal had crept in an issue relating to the fiduciary duties and rights of shareholders. The Boardroom drama in which Kalyani lost his director’s position following voting by the shareholder underlines tension between personal interest and the greater responsibility to the company’s stakeholders. It is well reflected in Tata Consultancy Services Ltd. v. Cyrus Mistry (2021) 9 SCC 449 where the rights of minority stakeholders stand at the confluence of majority shareholders and their relationship. This delicate balance between exerting control and the norms of governance, as seen in the case of Tata – Mistry, is thus unearthed.

As observed in the Hikal – Kalyani case: Companies belonging to the Kalyani group lodged complaints with SEBI in April 2023 that Hikal’s compliance officer, along with its audit committee, was functioning in favor of Hiremath and was thwarting efforts the family from Kalyani made to increase their holding in the company. Such conflicts are important to SEBI because it aims to maintain fair play within the corporate realm and safeguard shareholder interests from the potential collusion between officers of such a firm and major stakeholders. Here, the respondent Kalyani side points to the tension in regulatory oversight and the internal boardroom dynamics, throwing light upon the difficulties that body regulators face in addressing disputes within family-run businesses. Probably, legal cases are going to have both a functionally procedural and transparent impact on Hikal. Litigation inherently introduces uncertainty to both the stock price and the investor sentiment, and therefore the mood of the employees. Short-term case: competition for control of board and ownership may trigger strategic paralysis as efforts of management become diverted to this battle rather than business growth. This is not something new for Indian family-owned enterprises either. Similar situations have been observed in other high-profile families, such as the Ambani’s and the Bajaj’s, where personal disputes spilled over into the boardroom. Such conflicts can hurt the company’s market valuation and undermine investor confidence if not resolved quickly. The Hikal case underscores critical lessons for family-run businesses, especially those with complex shareholding structures. This brings proper documentation of family planning to avoid confusion. If parties had signed proper agreements recorded and recognized by all parties, then such disputes could have been solved even decades ago when brought before courts. The kind of cases emphasize well-crafted succession plans. As family-owned businesses grow, there is an increasing demand for documenting paths of succession and roles to avoid further struggle overpowers by different branches of the family. The addition of the next generation, as with Sugandha’s children, illustrates the extent to which inter-generational conflict can aid or hinder the extended longevity of the business. Finally, the case helps drive home the importance of professional management in a family business. Management removed from the influences of family may care about the best interest of the company and provides a neutral playing field for such conflicts. This approach has been widely adopted by most successful family-owned firms in the world by balancing with modern corporate governance in family legacy.

Conclusion:

Indeed, this is a new battle for control over Hikal, which is a stark reminder of how family ties tend to get entangled with business interests-in the world of companies owned and operated by families, that is. And here is a story of how easily personal relationships turn into legal disputes when matters like succession and ownership are not clearly defined. When evaluated at stakes, the tit-for-tat between Baba and Sugandha Hiremath reveals how much is at stake if family agreements are left to guesswork. Beyond all the courtroom and boardroom drama, this is a dispute that really holds lessons for any family-owned business: the importance of putting everything in writing, however close the relationship. That this also turns out to be a reminder that planning is not merely a legacy left to live life with but ensuring that such a legacy does not get derailed by misunderstandings and rivalries. As the fate of Hikal hangs in the balance, the coming months would be critical in deciding whether the Kalyani family manages to go beyond their differences or the battle leaves scars on the company’s future. Whoever triumphs in courts, little doubt remains: this case will be the benchmark for all the families not willing to be led up that road. It is a story that, over years might just sum up how India’s family-run businesses handle succession, governance, and the fine juggling between loyalty to family and corporate interest.

Author: Aditya Trehan, 3^rd Year Law Student at Symbiosis Law School, Nagpur, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing

References:

1. Bloomberg
2. The Times of India
3. The Economic Times
4. Mint
5. Business Standard
6. Hikal’s website
7. SCC Online