MP Birla firms: Calcutta High Court orders Lodha’s removal

In a setback for Lodhas, the Calcutta High Court on Friday restrained Harsh Vardhan Lodha from holding any office in any of the entities of the MP Birla Group during pendency of the suit involving the contested will of late Priyamvada Devi Birla, the widow of MP Birla.

Lodha is currently the chairman of MP Birla group companies, including cement maker Birla Corp, copper and fibre optic cables manufacturer Birla Cable and telecommunication cables maker Vindhya Telelinks.

Justice Sahidullah Munshi, in his order, said Lodha shall be restrained from drawing any benefit personally from out of the assets of the estate of the deceased (Priyamvada Devi Birla) during pendency of the Testamentary Suit.

The genesis of an over 16-year-old legal row between the Birlas and the Lodhas over controlling the over `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 Rajendra Singh Lodha.

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

Justice Munshi, in his order, said, “The plaintiffs shall implement the decision dated 19 July, 2019 and 30 July, 2019 of the APL Committee taken by majority as also all consequential decisions of the APL in furtherance of the said decisions and shall be restrained from drawing any benefit personally from out of the assets of the estate of the deceased during pendency of the Testamentary Suit”.

“The Calcutta High Court in its towering judgment has directed implementation of the decisions of the Committee of Administrators. In a monumental direction, the Court has restrained Harsh Vardhan Lodha from holding any position in the MP Birla Group. The Court has also restrained Harsh Vardhan Lodha from drawing any benefit from the assets of the estate. The Court has specifically restrained him for interfering with any decision of the APL Committee, which is taken by majority. This paves way for smooth functioning of the Committee of Administrators. These directions mean that Harsh Vardhan Lodha immediately ceases to hold all positions in the MP Birla Group including as director in the companies and other positions in the trusts and societies of the MP Birla Group,” Birlas said in a statement after Friday’s court order.

“The verdict passed by Justice Sahidullah Munshi of the Calcutta High Court on Friday over reappointment of Harsh Vardhan Lodha as a director of Vindhya Telelinks Ltd and Birla Cable Ltd in 2019 does not appear to be lawful. Our clients’ confidence in the system remains completely unshaken and our clients will challenge the judgement in the Appeal Court for immediate and long term relief,” said Debanjan Mandal, partner, Fox & Mandal, advocates for Lodha.

“It has all along been the case of the Lodhas that the probate court examining the validity of a will has no jurisdiction over any company in which the Late Priyamvada Birla held shares. Though the inherent lack of jurisdiction was observed in the verdict in respect of the companies, Lodha was injuncted from holding office of director in the boards of companies which the Court itself said was beyond its remit. Lodha was reappointed as Director in these companies in 2019 with overwhelming majority. Friday’s verdict pays no regard to the overwhelming majority of 99% with which he was reappointed as director in the two companies,” Mandal added.

A spokesperson for Birla Corporation, said, “Birla Corporation Limited will examine the Calcutta High Court judgment and take necessary steps, including filing of appeal, because the 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”.