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Uphill task for Lodha in fight to regain control of MP Birla group

Nevin John     September 27, 2020

The 16-year-old legal battle of Birlas and Lodhas for the control of assets and companies of late MP Birla turned complex as the managements of MP Birla group companies fight to bring back Harsh Vardhan Lodha as chairman, challenging the recent order of the single bench of Calcutta High Court. However, the Administrative Pendente Lite (APL) committee, which was appointed by the court to protect and preserve the estate of late Priyamvada Devi Birla -  the wife of late MP Birla, opposes Lodha's appointment in any MP Birla group companies.

A week back, Lodha and M P Birla group's cable companies, namely Universal Cables, Vindhya Telelinks and Birla Cable filed appeals before a division bench, challenging the single bench order that restrained Lodha from holding any office in any of the entities of the group during pendency of the Testamentary Suit over the assets of the M P Birla group.

"Lodha has already captured the managment, appointing his people at crucial positions. That is the reason why the companies fight for his reinstatement," said sources in Birla group.

Single bench's verdict seems to have ignored shareholders' democracy and their right to elect by majority of their votes a person as a director of a company, said Birla Corporation spokesperson. "Shareholders have elected Harsh Vardhan Lodha as a director of Birla Corporation with an overwhelming majority of 98 per cent. Lodha being otherwise not disqualified from holding the office of director, there is no reason why the verdict of shareholders will not be respected."

The appeals have been admitted for hearing in the division bench of the High Court of Chief Justice TBN Radhakrishnan and Justice Shampa Sarkar. The division bench's order will be critical for both the parties as it will give advantage to the winner while battling the same finally in the Supreme Court, said legal experts.

Birla Corporation, which is in cement and jute manufacturing, has Rs 4,800 crore market capitalisation.

The Court appointed APL Committee, which voted against Lodha, comprises three members - Justice Mohit Shah, AC Chakrabortti, a chartered accountant, and Mahendra Kumar Sharma, former vice-chairman of Hindustan Unilever and ex-chairman of ICICI Bank. Justice was appointed by the Court, while Chakrabortti is a nominee of Birlas and Sharma a nominee of Lodha.

Lodha claimed in his petition that the estate is a minority shareholder even after considering its indirect holding through investment companies, in all four manufacturing firms within the larger promoter group.

The appeal is likely to be heard by the division bench of the High Court from this week. The single bench also restrained the Lodhas from drawing any benefit personally from out of the assets of the estate of Priyamvada Devi. Justice Shahidullah Munshi restrained Lodhas from interfering with the decisions of the Court-appointed APL committee and any decision which might be taken by it in future by majority if the same directly or indirectly relates to the estate of the deceased.

The Court is also hearing a probate application by Lodha, whose late father R S Lodha claimed that Priyamvada Devi Birla bequeathed her estate, comprising the M P Birla Group, to him through a will. Birlas challenged the probate application. MP Birla was the grand uncle to Kumar Mangalam Birla of Aditya Birla group.

Priyamvada Birla had allegedly bequeathed her estate to Kolkata-based chartered accountant RS Lodha after her death in 2004. The drama began a few days after her death when Lodha went to the Birla family residential complex in Kolkata, to read the contents of the will, which is allegedly written in 1999. It was shocking for Birlas and they decided to fight the legal battle. MP Birla and Priyamvada had no children. So, Birlas expected charitable trusts to inherit the wealth. When Lodhas fight the do or die battle, it is a battle of pride for Birla.

Also read: Calcutta HC orders ouster of Harsh Vardhan Lodha from MP Birla group companies


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