Bajaj, Firodia battle escalates

Rift over Bajaj Tempo set to reach DCA.

The differences between the Bajajs and the Firodias over the issue of changing the name of Bajaj Tempo is now likely to take a legal turn with Bajaj Auto planning to approach the Department of Company Affairs to resolve the issue.

Bajaj Tempo had earlier sought to change its name to Force Motors as its former collaborator DaimlerChrysler of Germany wanted the word Tempo dropped from the company's name. Tempo is a brand name owned by DaimlerChrysler, an automobile major.

The issue came out in the open with the Firodias seeking to remove 'Bajaj', too, from the company's name, which led to the Bajajs expressing dissent.

Bajaj Auto, along with family members and relatives of Rahul Bajaj, chairman, Bajaj Auto Ltd, owns a 24 per cent stake in commercial vehicle manufacturer Bajaj Tempo.

The difference has boiled down to whether a name change is possible with an ordinary resolution or whether it will need a special resolution.

While an ordinary resolution according to the Companies Act needs only 51 per cent of shareholders' approval (which the Firodias can manage without the consent of the Rahul Bajaj group), a special resolution will need the approval of 75 per cent of shareholders.

Bajaj Tempo has called for an extra-ordinary general meeting (EGM) to be convened on April 5, where it will seek to move an ordinary resolution to effect the name change.

Sources in Bajaj Auto said the issue would be taken to the regional director (Mumbai) of the department of company affairs before Bajaj Tempo could hold the EGM.

"Section 21 of the Companies Act 1956 clearly requires a special resolution and central government approval for a change in the name of a company," said Joy Jain, executive director, PricewaterhouseCoopers.

Legal opinion is, however, divided over the issue of when exactly a special resolution is required to effect a name change.

"When a name change is sought to be effected because the original name resembles the name of an existing company, then an ordinary resolution will suffice," said a legal expert on company affairs.

While the market was abuzz with news that the Bajajs and the Firodias were heading towards an amicable settlement, the Firodias in a release to the media earlier this week had said they would continue to hold their stake in Bajaj Auto and did not wish to buy any more of Bajaj Tempo shares from the market.

This statement, for the time being, has effectively ruled out the possibilities of the two groups reaching an out-of-court settlement.

Reacting to the statement, Rahul Bajaj said: "I hold Mr (Abhay)Firodia in very high regard. There is no fight between the two of us. He has been a shareholder of Bajaj Auto for a long time and if he wants to remain that way, I will be very happy to have a shareholder like him in the company."