Lalit Modi's son Ruchir escalates fight in Godfrey Phillips India

Writes to NSE, BSE again, questioning appointment of Bina Modi as firm's president and MD

In a new twist to the Godfrey Phillips dispute, Ruchir Modi, grandson of the late K K Modi, on Wednesday shot off letters to the National Stock Exchange and BSE, alleging once again that the appointment of Bina Modi, his grandmother, as president and managing director of the company was “effectuated in a fraudulent manner” and in violation of statutory provisions and principles of corporate governance.

In this, he was responding to a letter written by GPI to the stock exchanges on November 10. The letter was on the outcome of the board meeting held on Tuesday.

Ruchir Modi, son of Lalit Modi, is a non-independent director in the tobacco company.

In its letter to the stock exchanges, GPI said the allegation of illegality in the appointment of Bina Modi was “misconceived, motivated and baseless”. The allegation of corporate governance violations “is devoid of any basis or substance and is clearly motivated”, it added. It has also unequivocally reposed faith in Sanjay Gupta, the company secretary.  

Ruchir Modi has reiterated the board of directors of the company allegedly failed to disclose “material” events under rules of the Securities and Exchange Board of India (Sebi). He has pointed out that the leadership of Bina Modi there had been malpractices and violations of corporate governance, which amount to offences under the Companies Act.

He has sent a complaint to the Ministry of Corporate Affairs, asking for an investigation by the Serious Fraud Investigation Office.

He also questioned the role of Sanjay Gupta, saying that the latter had flouted the Companies Act and other regulations, and has complained to the Institute of Companies Secretaries of India.

According to sources, in Tuesday’s board meeting, a move to appoint an additional independent director was discussed. That would increase their number to five in the ten-member board. This, say sources, is expected to help independent directors have a greater say in the running of the business and enhance their ability to resolve contentious issues.  

Lalit Modi took on his mother, Bina Modi, and his brother Samir and sister Charu after the death of his father, alleging that her mother was not capable of running the business. He said under a trust deed, his father had stipulated that in the case of unanimity among the family members on continuance of the business, shares of key companies in the group, which included GPI, had to be sold. However, the other family members, led by Bina Modi, opposed the move.

Bina Modi and Samir Modi are executive directors.  Ruchir Modi has complained to Sebi that the trust deed through which the GPI shareholding was controlled by the family was not disclosed to the stock exchanges or the shareholders.

He has also said the agreement between the Modi family and Philip Morris Holdings, its joint venture partner, provided disproportionate voting rights to the family in managing the company, and appointing the managing director and other directors.

Philip Morris holds 25.1 per cent in GPI while the Modi family has over 47 per cent through companies and trusts.

The story so far

2019

Nov 2: K K Modi dies

Nov 14: Bina Modi appointed president and MD for 5 years  

Nov 30: Board of trustees of family meet, no unanimity on the future course of the group amongst family members

2020

Nov 3: Ruchir Modi, director in GPI and son of Lalit Modi, writes to department of corporate affairs seeking investigation in the affairs of tobacco company. Also sends letter to Sebi complaining on violation of SEBI rules.

Ruchir Modi

Nov 10: GPI holds board meeting for declaration of quarterly results. Also writes to NSE and BSE saying allegations over the appointment of Bina Modi as president and MD are without any basis. Rubbishes corporate governance violation allegations

Nov 11: Ruchir Modi responds to the letter by reiterating his position on GPI in a letter to BSE and NSE