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Dhirubhai did not leave a will
BS Corporate Bureau in Mumbai |
November 19, 2004 10:14 IST
Last Updated: November 19, 2004 11:30 IST
Rumours that had been circulating for months were finally confirmed on Thursday when Reliance Industries chairman and managing director Mukesh Ambani told business channel CNBC TV18 that he had been having differences with his brother, Reliance Industries vice-chairman and managing director Anil Ambani, over "ownership issues".
These could spring from the late Reliance Industries chairman Dhirubhai Ambani not having left a will. Two independent informed sources told Business Standard that the Reliance group patriarch had died intestate on July 6, 2002.
|WHO LOOKS AFTER WHAT |
|Mukesh Ambani||Anil Ambani|
|Chairman, Reliance Industries||Rajya Sabha Member|
|Chairman, Reliance Infocomm ||CMD, Reliance Energy|
|Chairman, IPCL ||Vice-Chairman, IPCL|
|Director, Reliance Europe Ltd ||Director, Reliance Europe Ltd |
|Is steering Reliance's initiatives in oil and gas exploration and production. Also the group's research-led life sciences initiative. ||Is spearheading Reliance Energy's biggest initiative: setting up the world's largest gas-based power generating facility in Uttar Pradesh. |
"That he died intestate was because he thought the brothers would continue to be united," said one source.
At stake is the Ambani family's 46.67 per cent equity in Reliance Industries, now worth Rs 35,552 crore (Rs 355.52 billion). The family's shares are held through a series of investment firms and other companies. It is not clear who controls which company or how many of the shares.
Under the Hindu law of succession, the personal property of a man who dies without leaving a will has to be divided among his wife and children, but property registered under Hindu Undivided Family law has to be divided among the wife and sons.
Says Anil Galgoli, a lawyer at Karandikar, Bal & Associates, a Mumbai-based law firm: "If property is registered as an HUF, it is to be divided among the wife and sons. Unmarried daughters and widowed daughters, if any, can claim a stake. They can get a share, but not control."
Dhirubhai Ambani left behind two sons, Mukesh and Anil, and two daughters, Nina and Deepti, both married. Neither brother seems to have an issue on who will run Reliance Infocomm, the telecom company that Mukesh Ambani launched and runs and in which Reliance Industries has a 45 per cent stake, and on Reliance Energy, formerly BSES, whose chairman and managing director is Anil Ambani. Reliance Industries holds a 41.03 per cent stake in Reliance Energy.
Separate e-mails sent in the evening to Mukesh Ambani and Anil Ambani, seeking their comments, evoked no response. Both were said to be out of Mumbai.
At the close of trading, Reliance Industries had a market capitalisation of Rs 76,177.57 crore (Rs 761.78 billion). The company reported a gross turnover of Rs 74, 418 crore (Rs 744.18 billion) and a net profit of Rs 5,160.14 crore (Rs 51.60 billion) in March 2004. The total market capitalisation of the eight listed Reliance group companies is Rs 94,820 crore (Rs 948.20 billion).
Mukesh Ambani told the television channel: "Reliance is one of the strongest professionally managed companies, attracts huge talent and has moved beyond any one, two or three individuals, including myself.
"So while there are other issues which are ownership issues those are in the private domain. As far as Reliance is concerned, it is a very strong professional company."
He added, "(Reliance Industries) investors have no cause to worry, as the issues will have no bearing on the functioning of the Reliance group."
Citing the example of General Electric, Mukesh Ambani said, like GE had moved beyond Jack Welch, the chairman who took the company to great heights, Reliance had moved ahead of the individuals. "Reliance has moved on the path that Dhirubhai Ambani set for it, beyond Dhirubhai Ambani," he added.
The Reliance Industries scrip ended flat at Rs 545.55 on Thursday against Wednesday's close of Rs 543.85 on the Bombay Stock Exchange. The share clocked the highest combined turnover of Rs 546.52 crore (Rs 5.46 billion) on Thursday on the BSE and the National Stock Exchange.
Registration under HUF holds key, say lawyers
Control of Reliance Industries could hinge on whether the late Dhirubhai Ambani's investment companies and trusts, which control a 46.67 per cent stake in Reliance Industries, were registered under Hindu Undivided Family law. That's because Dhirubhai Ambani left no will.
It's not clear whether Dhirubhai Ambani registered his investment companies and trusts under HUF law.
A Kolkata-based lawyer, who is associated with the Birla-Lodha feud over the Priyamvada Birla will, said if Dhirubhai Ambani died without leaving a will and his property is not registered under HUF law, it has to be divided among all five members of his immediate family, namely, his wife, two sons and two daughters.
This won't be the case if the property is registered under HUF law. Married daughters and widowed daughters can't claim any property registered under HUF, he said. So his two daughters can't claim a share in the family's stake in Reliance Industries --- only his wife and sons can."Merely because a person (Hindu) dies intestate, it would not be correct to state the estate left behind by such a Hindu person would automatically become HUF property. The Hindu Succession Act will come into play and the division of the estate will be under the provision of the Succession Act," notes Kanu Doshi, partner at Kanu Doshi Associates, the legal firm. The property has to be registered under HUF law for the Hindu Succession Act not to come into play.