A day before the settlement of the six-year-old Bajaj family dispute, the Bombay High Court has asked Rahul Bajaj, the family patriarch and chairman of Bajaj Auto, to compensate the Pittie family, a minority shareholder in group investment firm Bachhraj & Company. The court has also asked Rahul Bajaj to deposit Bajaj Auto shares in lieu of money to be deposited within three weeks.
In a notice to the National Stock Exchange on December 22, Rahul Bajaj had said that he would acquire 29.20 per cent stake of Bajaj Hindusthan at the market price as on December 30 from family members and group investment firms.
These shares will be transferred to his brother Shishir Bajaj, who in turn will sell his stake in Bajaj Auto and a few other firms to the Rahul Bajaj faction on the same day.
Madhav N Pittie of the Pittie family, which holds 12.5 per cent stake in Bachhraj, moved the court for compensation for the loss that the group's investment firm would suffer for selling Bajaj Hindusthan's share at Tuesday's market price.
On Monday, Bajaj Hindusthan shares closed at Rs 63.75 on the Bombay Stock Exchange, about 84 per cent lower than its 52-week high of Rs 399.50 on January 9.
"In an ad-interim order, the court has secured the interest of the minority shareholder," said Anoj Menon, a solicitor from Crawford Bayley Company, a legal firm representing the Pittie family. "It has ordered Bajaj Auto shares to be deposited as security within three days," he said.
"The court has recognised the erosion in the stock price due to the global crisis and has ordered compensation for the loss to the extent they can establish it," said Madhav N Pittie.
The court has agreed to consider the stock price of March 1 to arrive at the notional loss for taking the security and later the money as deposit. In the final suit, the actual compensation will be decided by the court.
Since the stock exchange was closed on March 1, the stock price of Bajaj Hindusthan on March 3 could be considered by the court. The closing price was Rs 241.85 on that day compared to Rs 63 today. About 34.6 million shares of Bajaj Hindusthan will be sold by Bachhraj to Rahul Bajaj on Tuesday.