High Court refuses to stay order barring Lodha from heading M P Birla firms

The Division Bench of the Calcutta High Court has declined an ad interim stay on the Single Bench order restraining Harsh Vardhan Lodha from holding any office in M P Birla group entities.

Eight applications were filed by the Lodhas, including those by M P Birla group companies Birla Corporation, Vindhya Telelinks, Universal Cables and Birla Cable. On Thursday, the Division Bench clarified that there was a restriction on Harsh Vardhan Lodha from holding any office in any of the entities of the M P Birla group during the pendency of the suit (testamentary) “on the strength of shares referable to the estate of Priyamvada Birla”.

The court said that the power of the APL Committee (Committee of Administrators Pendente Lite) to control and administer the estate of Priyamvada Birla was repeatedly asserted through the different judicial orders of the probate court, the Division Bench of the high copurt court as well as the Supreme Court. “We, therefore, do not find any reason to issue any order of stay as sought for at this stage,” it said.

 

The order led to Birlas and Lodhas splitting hairs on “strength of shares referable to the estate of Priyamvada Birla”. N G Khaitan of Khaitan & Co, solicitors for the Birla family, said, “Through various fora, it has been established that the estate (of Priyamvada Birla) has control over the M P Birla group entities.”

He pointed out that the Division Bench had also widened the scope by saying that Lodha has to “abide by” the decisions of the APL Committee.

However, the Lodhas said that the interim order passed on Thursday significantly relaxed restrictions imposed earlier by a single judge on Harsh Vardhan’s holding offices in the M P Birla group.

They said that the order modified the earlier verdict of a single judge by saying Lodha should not hold any office in the group only “on the strength of the shares referable to the estate of Priyamvada Birla”. This paved the way for Lodha to continue to hold office of M P Birla group, they said.

Lodha was reappointed as a director in all four listed companies in the last two years with at least 98 per cent votes cast in his favour, said Debanjan Mandal, partner, Fox & Mandal, representing Lodha.

“Our client wasn’t, in the first place, reappointed as a director in these companies on the strength of the estate of Priyamvada Devi Birla,” he said.  “So the order paves the way for his continuing to hold offices in these companies as he was doing uninterruptedly from before the death of Mrs Birla,” he added.

However, the Birlas point to a part of the order which said that the controlling interest is definitely referable to the shareholdings. In the case in hand, it, truly is part of the estate of Priyamvada Birla, the order said.

Lodha has been associated with the group in the capacity of a director for the past 24 years, since 1996.

In a statement, the Birlas said that the Division Bench of the Calcutta High Court, presided over by the chief justice today, declined to stay the ouster of Harsh Vardhan Lodha from all positions in all entities of the M P Birla group.

 

The Division Bench of the Calcutta High Court on Thursday accepted the pleas of Birlas and declined the prayer of Lodhas and companies for stay on the directions passed by the single judge. Therefore, all the directions passed by the learned single judge continue to operate, they said.

At the heart of the dispute is the extent of estate of Priyamvada Birla. According to the Lodhas, the four corners of the estate of Priyamvada Birla was conclusively established in the inventory of assets prepared unanimously by the three joint administrators way back in 2013.

In the inventory report, Priyamvada Birla’s shareholding in the four manufacturing companies is: 1260 shares in Birla Corporation, 42,003 shares in Universal Cables, 72,240 shares in Birla Cable and 500 shares in Vindhya Telelinks, Lodhas said.

Lodhas are pointing to the fact while the estate of Priyamvada Birla are these shares, the reappointment of Harsh Lodha in the companies has been passed by more than 97 per cent votes in favour.