Birlas to challenge Harsh Lodha's reinstatement as director in MP Birla Group firms

The Birla family, which has been in a 16-year-old legal battle with the Lodhas to wrest control of the Rs 5,000-crore Birla Estate, has decided to challenge the reinstatement of Harsh Vardhan Lodha as a director in MP Birla Group companies in the Supreme Court.

The decision of the Birlas comes in spite of a favourable verdict from a two-judge division bench of the Calcutta High Court which on Monday had asked the probate court to hear the appellant MP Birla Group companies afresh, which was one of their key petitions.

A division bench of judges Sambuddha Chakrborty and Arindam Mukherjee had ordered the probate court to hear the appellant companies represented by Arvind Kumar Newar afresh even though they refused to go into the merits of the case as such and the jurisdiction issues, saying it is for the probate court to decide.

"We direct the probate court to consider and decide all the aspects of the matter after giving opportunity to these appellant companies," the division bench said in a 38-page order on Monday.

When contacted, a Birla family spokesman refused to comment saying the Birlas are studying the verdict in details, but two sources in the know of the family told PTI that "they will move the Supreme Court against reinstatement of Harsh V Lodha as a director on the board of these companies with remuneration."

Commenting on the division bench order, the spokesman, however, said the order has put an end to the hide and seek that the Lodhas have been playing all these 16 years.

"This is a landmark judgement as it puts the companies also before the probate court for the first time in this one-and-a-half-decade long litigation and accordingly draws the curtains on the hide and seek game being played by the Lodhas and the companies of the MP Birla Group at different fora," the Birla family spokesman told PTI from Kolkata on Wednesday.

However, in a setback for the Birlas, the HC allowed group companies Vindhya Telelinks and Birla Cable to reappoint Lodha as a director if the shareholders approve it, and also pay dividends to the shareholders of Birla Corporation and Vindhya Telelinks.

In another victory for the Lodhas, the court also set aside the August 9, 2019 ruling of a single HC judge who prevented these companies from publishing the voting results of the last AGMs.

However, the HC also held that the probate court can pass injunction orders against third parties in certain circumstances to protect the estate of the deceased.

Flaying the probate court for not deciding on the jurisdiction issue of the case, the division bench said the court "should have first decided the issue of jurisdiction raised by the Lodhas before granting any interim relief and that the order should have also contained the reasons for granting such relief and thus remanded the matter to the single judge to decide the question of jurisdiction first and accordingly set aside the interim orders."

The genesis of the 16-year-old legal row between the MP Birla Group companies represented by Newar and the Lodhas over controlling the over Rs 5,000 crore-Birla Estate lies in the contested will of late Priyamvada Devi Birla, the widow of MP Birla, which was executed in July 1982 after the purported will allegedly transferred the shares of the MP Birla Group, collectively called as the Birla Estate, in favour of the Rajendra Singh Lodha.

The legal tussle began after the July 13, 1982 mutual wills that gave away all the assets to charities but another will dated April 18, 1999 gave them to Rajendra Lodha, now being pursued by his son Harsh Lodha, and other heirs of the senior Lodha.

The legal battle got a new twist in July 2019 when in a 2:1 order on July 30, 2019 the Calcutta HC-appointed three-member administrator's committee (APL panel) headed by retired Bombay HC judge Mohit Shah opposed the board decision of the three listed MP Birla Group companies to re-appoint Harsh Lodha as non-executive chairman.

This forced the Lodhas to challenge the APL order in the High Court saying the board decision should have been above that of the panel which also should have decided unanimously and not by majority.

In its report submitted to the Calcutta HC, the administrator pendente lite (APL) panel, appointed in August 2012, also said it, "does not support payment of commission on net profit to the non-executive chairman of group companies”.

Following this, the Lodhas moved the HC first on August 2 and then twice on August 5 and 9 to cancel the AGMs of these companies scheduled for August 13 in Kolkata but the HC gave the go-ahead for the AGMs but asked to withhold the results till the pendency of the case -- which was ordered in favour of the Lodhas on Monday.