Settle Hero trademark row via arbitration: Delhi HC to Munjals

In a boost for Hero MotoCorp’s EV plans, the Delhi High Court hasn’t barred the company from using Hero brand name for its electric vehicles, but has instead asked the Munjal scions to settle the dispute through an arbitration.The arbitration panel includes three retired judges.

Vijay Munjal, who, along with his son Naveen Munjal, owns Hero Electric, the largest electric two-wheeler company, had moved the Delhi High Court in October against his cousin Pawan Munjal, promoter and chairman of Hero MotoCorp, seeking an injunction on Hero MotoCorp using the brand name for its upcoming electric two-wheeler products.

While the court hasn’t agreed to put any injunction, Hero Electric said that it would reiterate its prayer for an interim injunction against Hero MotoCorp before the arbitration tribunal.

“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. 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,” Hero Electric said.

Largest two wheeler maker Hero MotoCorp’s EV plans faced uncertainty as an injunction on the usage of Hero brand name would have forced it to use a different brand name for its EV product. But that would have entailed significant cost to build the brand including setting up separate dealerships which don't carry the Hero brand.

In August last year, Pawan Munjal showcased the first look of its upcoming electric scooter. It didn’t carry any branding.

The dispute stems from the family settlement agreement signed in 2010, by the four patriarchs of the Munjal family. In 2010, the Munjal family disentangled their cross-holdings in more than 20 group companies in a manner that each faction of the family received ownership of the businesses they managed. The businesses were divided among the family of Brij Mohan Lal Munjal, (father of Pawan Munjal) and his three brothers -— OP Munjal, Satyanand Munjal and the late Dayanand Munjal (father of Vijay Munjal).

According to this, while BM Munjal's four sons – Pawan Kant, Sunil Kant, Suman Kant and the late Raman Kant -- got control of Hero Honda (later Hero MotoCorp), Vijay Munjal group was vested with the rights to use the Hero brand for selling electric vehicles in the India and global markets.

Hero MotoCorp is planning to launch its first EV product in March which is likely to be an electric scooter. The company said that Hero’s existing strength from the traditional IC engine business like in distribution, sourcing, manufacturing or logistics will help to reduce investment in EV helping to cut cost of the product, helping it to gain an upper hand over well-funded new age start-ups like Ola Electric who are entering the EV business.

“While today cash burn is fancy, in future cash burn has to give way to cash earn and that’s where cost competitiveness will come into play. So players who can establish long term cost competitiveness will determine winning,” the company’s CFO Niranjan Gupta recently said.