Family ties cost Lodha his audit account

The courtroom battle over the will of Priyamvada Birla cost Rajendra Singh Lodha the audit accounts of South Asian Petrochem Ltd and Dunseri Tea & Industries Ltd of the C K Dhanuka group in view of the multiple and close relationships between the partners of Khaitan & Co, the Birla solicitor firm, and the Dhanukas who promoted the two companies.

Pradip Kumar Khaitan, chairman of South Asian Petrochem Ltd, is one of the executors of the unregistered 1982 mutual wills of Priyamvada and Madhav Prasad Birla.

The wills have been filed for probate in opposition to R S Lodha's probate application on Priyamvada Birla's 1999 will. A highly respected lawyer, P K Khaitan is also senior partner in Khaitan & Co which is acting on behalf of the Birlas against Lodha.

Khaitan and Lodha are fighting each other in Calcutta High Court with different Birla wills. The removal of Lodha as auditor is therefore no surprise, legal sources said.

In addition, P L Agarwala, one of the witnesses in the Priyamvada Birla will of 1999, is a director on the board of Dhunseri Tea & Industries Ltd.. Agarwala is one of the best-known legal brains in Khaitan & Co. The Khaitan-Dhanuka relationship goes beyond the boardroom. Hargrieve, the son of Pradip Khaitan, is married to the daughter of Chandra Kant Dhanuka.

When contacted, C K Dhanuka said the proposal for change of auditor did not come from the audit committees of the two companies but from a shareholder- himself. He said, technically, any shareholder holding more than five per cent shares in a company could propose a resolution.

The resolution would be placed for approval from shareholders at the company's forthcoming annual general meeting.