An arbitral tribunal of three retired judges — Indu Malhotra, Deepak Mishra and Indermeet Kaur — has been formed by the Delhi High Court to ascertain whether Hero Electric can exclusively use the Hero brand insignia for its electric vehicles, and consequently settle the dispute between the two factions of the Munjal family.
“A petition was filed by Hero Electric to refer the disputes to arbitration which was strongly opposed by Hero MotoCorp. The Court, while rejecting all contentions of Hero MotoCorp, has referred all the disputes under the family arrangement to a three-member arbitral tribunal," the statement from Hero Electric reads. Last month, Vijay Munjal, who owns Hero Electric along with his son Naveen Munjal, sought intervention from the Delhi High Court, via an injunction, barring Vijay’s cousin, Pawan Munjal, the promoter of Hero MotoCorp, to sell electric vehicles with the Hero trademark.
According to the 2010 family settlement, which realigned the family businesses, Pawan Munjal was barred to sell electric two, three or four-wheelers made by his company with the Hero badge, and the global rights of Hero’s electric vehicles were given to Vijay Munjal, and his son Naveen. “Given the reference of all disputes between the parties, we will be making a prayer for interim injunction against Hero MotoCorp before the duly constituted tribunal. Needless to add that we will also take all possible steps to thwart any challenge to the order of reference of the disputes to arbitration,” the statement adds.
However, the threat of Hero MotoCorp branding their electric two-wheelers (E2W) under ‘Hero’ became palpable for Hero Electric when the former announced it was ready to launch its first ‘self-branded’ model in March 2022. Currently, Hero MotoCorp has a full-fledged R&D facility set-up in Jaipur and the Tech Center Germany (TGG) near Munich. The company has plans in place to produce the EV at the company’s manufacturing facility at Chittoor in Andhra Pradesh. The company has publicly stated that it envisages building an entire EV ecosystem — from products to technology, to sales, service, customer care, operations, and innovation.
Naveen contested that Hero MotoCorp’s intention to enter the electric two-wheeler segment goes against the family division of businesses — which was carried out under the oversight of Hero MotoCorp’s founding patriarch, Brijmohan Lall Munjal. He doled out independent areas of business to different factions of the family. The then-lucrative two-wheeler business had gone to Pawan, while Naveen and his family got the erstwhile-nascent electric two-wheeler business. At the time of the settlement, nobody imagined the extent of the disruption electric two-wheelers will bring in India’s lucrative two-wheeler market. Hero Electric was the segment leader when the EV revolution hit Indian roads — having sold about 46,260 electric two-wheelers in 2021.
Consequently, Naveen has taken a defensive stance over the dispute. “We have the exclusive ownership of the brand ‘Hero’ for non-polluting, green and electric or environmentally friendly vehicles for personal or commercial use. Over the past decade and a half, we have worked tirelessly to further build the legacy of the brand ‘Hero’ by journeying into electric and empowering India towards a greener future,” he told Fortune India earlier this year, adding that they will take all appropriate measures to protect rights on the brand and stop any violation of their rights in the segment. “We have always worked as per the family agreements, needless to say that we will abide by the family pact and the law of the land,” he added.
“The arbitration tribunal will have to read the provisions of the legal documentation harmoniously to arrive at a conclusion on the rights available to the Munjal family groups. Hero Electric may seek an injunction from the arbitral tribunal on the use of the brand by Hero Moto Corp till the time the arbitral tribunal makes a final decision,” tells Sameer Raina, the principal associate at Pioneer Legal.