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Published on: Nov. 30, 2020, 7:51 p.m.
In their battle against Lodhas, Birlas get upperhand
  • Lodha: kept at bay

By Sajal Bose. Deputy Editor, Business India

In a recent development in the long-drawn battle between the Birlas and the Lodhas, Harsh Vardhan Lodha has been removed from the boards of five investment companies of the M.P. Birla group. The boards from which Lodha has been removed by the APL Committee (Administrator Pendente Lite) were of East India Investment, Gwalior Webbing, Baroda Agents & Trading Co, The Punjab Produce & Trading Co and Punjab Produce Holdings. The committee did not allow Lodha to join the board meets of these investment firms, citing a HC order. The committee, which was appointed by the court to administer the affairs of the Birla Estate and was led by retired justice Mohit Shah, subsequently informed the Ministry of Corporate Affairs (MCA) also of the cessation. 

The APL panel's decision is based on the single-bench order of the Calcutta High Court passed on 18 September, preventing him from holding office. The Birlas camp also informed the court on 18 November that the corporate affairs ministry has approved and accepted the cessation of Lodha's directorship. 

The decision has come as a big blow to Lodha. His advocate immediately filed a petition in the Calcutta High Court, challenging the removal of Lodha from the directorship.  “Shah, as chairman of the investment companies, had taken the decision on his own and did not send relevant notices to Lodha regarding the board meetings,” claims Debanjan Mandal, partner, Fox & Mandal, who is representing Lodha. “Further, in gross violation of law, these companies were coerced by Shah into sending notices to the MCA, removing Lodha as director.” Though the petition was filed in the court of Justice Subrata Talukdar, the justice recused himself from the case, citing personal reasons. A division bench comprising the Chief Justice of Calcutta High Court has scheduled the hearing on January 6-7 next year.

The trouble began with the single bench order of Calcutta High Court on 18 September 2020, which restrained Lodha from holding office in any of the M.P. Birla Group entities during the pendency of the suit. The court also directed the implementation of the decision of (APL) Committee, which was formed in 2012. The order was challenged by Lodha before the Division Bench of the Calcutta High Court, which declined to issue an ad interim stay on single bench order. 

The Division Bench also clarified in its order on 1 October 2020 that the restriction on Lodha during the pendency of the suit has been imposed ‘on the strength of the shares referable to the estate of Priyamvada Birla’. Both sides had claimed victory then, interpreting the order differently. Lodha’s advocate had claimed that the interim order ‘significantly relaxed the restriction’, while the counsel for the Birlas stressed that ‘Lodha has been legally barred from holding any office’.

On the basis of the Division Bench clarification issued in October, Lodha chaired the board meeting of Birla Corporation and three cable companies of the group – Universal Cables, Vindhya Telelinks and Birla Cable – on 5, 9 and 10 November. N.G. Khaitan, senior partner, Khaitan & Co, and counsel for the Birlas, termed this as a complete violation of the court order. “Lodha has continuously misinterpreted court orders and flouted the APL panel's decisions to cling on to the boards of these firms wrongfully,” he charged, which prompted him to file a contempt of court petition against Lodha and his fellow directors on 17 November for flouting the court order.

Incidentally, the trial court is also hearing a probate application by Lodha, whose late father Rajendra Singh Lodha had claimed that Priyamvada Devi Birla had bequeathed her estate, comprising the M.P. Birla Group assets, to him through a will, which Birlas had challenged. Now, reacting on the Lodha’s removal by APL, Mandal charges: “All actions taken by Shah were in gross disregard of the modification made by the Division Bench in October 2020, headed by Chief Justice T.B. Nair Radhakrishnan and Justice Shampa Sarkar”. 

The bitter wrangle started in 2004 when late R.S. Lodha – father of Harsh Vardhan – took control of the reins of the M.P. Birla group because of a contentious will of late Priyamvada Devi Birla, wife of the late Madhava Prasad Birla. The group has been active in diverse business segments, such as cement, cable, jute and industrial chemicals, and has a net worth of Rs9,000 crore. The 16-year-old legal fight between the Birlas and the Lodhas over the control of this Birla fortune is expected to continue for an even longer period.

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