Significantly, this was the latest twist in the long battle over the will of Late Priyamvada Devi Birla being fought between the Birla family and the Lodhas.
A division bench of the Calcutta High Court has issued an order quashing a single bench’s order that had asked Birla Corporation, the MP Birla Group flagship, and two other companies of the group not to publish results of various resolutions put to vote at their annual general meetings held in August last year.
In respect of Birla Corporation, the resolutions included reappointment of directors, declaration of dividend to shareholders and approval for payment of profit-based remuneration/compensation to the non-executive directors.
As the three companies — Birla Corporation, Birla Cable and Vindhya Telelinks-— had not been able to publish results of voting on the resolutions taken up in the last annual general meetings, they appealed before the division bench of the high court.
Pronouncing the order on Monday, the division bench of Justices Sambuddha Chakraborty and Arindam Mukherjee vacated the single bench’s order on publishing the companies’ results. “The impugned order dated 2nd August, 2019, as clarified by the order dated 5th August, 2019, is, therefore, not sustainable in view of the fact that orders and/or directions were passed interfering with the holding of AGM by companies which are separate juristic entities without first deciding the issue of jurisdiction. Even if the deceased held shares in such companies, which are subject matter of the bequest under the Will in question, the jurisdiction to pass orders in respect thereof had to be decided first when specifically raised. The order dated 9th August, 2019, which is a subsequent order wherein the learned Single Judge has exercised probate jurisdiction when the issue of inherent lack of jurisdiction was kept pending for decision, is also not sustainable on the same ground,” the division bench said in its order.
Significantly, this was the latest twist in the long battle over the will of Late Priyamvada Devi Birla being fought between the Birla family and the Lodhas. Debanjan Mandal, partner of Fox & Mandal, the solicitor firm representing the Lodhas, said, “This is a vindication of our client’s stand that third-party companies are not party to the probate suit. It’s a victory for corporate democracy as the results of the polls taken at the AGMs clearly show what 99% of shareholders want.”
Responding to the division bench’s order, NG Khaitan, representing the Birlas, said, “The division bench, by its decision pronounced yesterday, has refused to go into merits of the matter and has held that it is for the Probate Court to decide the same. The Court also held that Probate Court under law can pass injunction orders against third parties in certain circumstances for protection of the Estate of the deceased. However, the division bench has held that in the facts of the case, the Probate Court should have first decided the issue of jurisdiction raised by Lodha before granting any interim relief and the order should have contained the reasons for granting such relief. Therefore, it has remanded the matter to the Single Judge for deciding the question of jurisdiction first and accordingly set aside the interim orders.”
“However, the court has directed the Probate Court to consider and decide all aspects of the matter after giving opportunity to these companies which has been one of the prayers of the Birlas. This is a landmark move which will now put the companies also before the Probate Court for the first time in this one and a half decade long litigation and accordingly, put a curtain on the hide and seek game being played by Lodha and the companies of the MP Birla Group at different fora,” Khaitan added.