Harsh Lodha removed from board of 5 firms of MP Birla Group, Lodha file appeals before Calcutta High Court

By: |
November 20, 2020 6:30 AM

While Harsh Vardhan Lodha has been removed from the boards of directors of five investment companies of the MP Birla Group, Lodha has filed appeals before a division bench of the Calcutta High Court challenging this action.

The interim order of the division bench made it clear that Lodha was barred from holding office in the MP Birla Group only on the strength of the shares of the Priyamvada Birla Estate, they stated.

While Harsh Vardhan Lodha has been removed from the boards of directors of five investment companies of the MP Birla Group, Lodha has filed appeals before a division bench of the Calcutta High Court challenging this action.

Lodha has been removed from the boards of East India Investment, Gwalior Webbing, Baroda Agents and Trading, The Punjab Produce & Trading, and Punjab Produce Holdings after a single bench of the high court on September 18, passing a major order, had restrained Lodha from holding any office in any of the entities of the MP Birla Group during the pendency of the suit involving the contested will of late Priyamvada Devi Birla, the widow of MP Birla.

Notably, the division bench of chief justice Thottathil B. Nair Radhakrishnan and justice Shampa Sarkar on October 1 did not grant any stay on the single bench’s order passed by justice Sahidullah Munshi of the high court.

“The Corporate Affairs Ministry on November 18 approved and accepted the cessation of directorship of Lodha as recorded by the board of directors of these companies headed by the judicial member of the court-appointed APL Committee,” according to a note from Birlas.

The decision to remove Lodha from the boards of the five investment companies was based on the decision of the single bench of the Calcutta High Court and “approved” by the division bench of the high court, the Birlas’ note said, adding the Ministry of Corporate Affairs’ website, which lists directors of companies, no longer shows Lodha’s name as a board member of these companies.

The genesis of over a 16-year-old legal row between the Birlas and the Lodhas over controlling the over Rs 5,000 crore-Birla Estate lies in the contested will of late Priyamvada Devi Birla, which was executed in July 1982 after the purported will allegedly transfer 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 Singh Lodha, now being pursued by his son Harsh Vardhan Lodha, and other heirs.

“Lodha has continuously misinterpreted court orders and flouted the APL Committee decisions to cling on to the boards of MP Birla Group companies wrongfully. We will move the court to restrain him from further action in contravention to the decisions of the court as well as the APL Committee,” said a spokesperson for the Birlas.

Terming the removal of Lodha from the boards of directors of five investment companies of the Group “illegal actions”, Lodhas said they have filed applications in the Calcutta High Court, challenging the actions taken by justice Mohit S. Shah (retired) as the chairman of these companies to remove Lodha as a director of these firms. Lodha has been a director in these companies since 2004.

“All the actions taken by Shah in the past one-and-a-half months were completely illegitimate exploitations of the verdict of Justice Munshi which is under challenge. These actions were taken in gross disregard of modifications made by chief justice T.B. Nair Radhakrishnan and justice Shampa Sarkar,” said Debanjan Mandal, partner, Fox & Mandal, representing Lodha.

Applications challenging the “illegitimate removal” of Lodha from the five investment companies are to be heard at the high court, starting November 20, for permanent and interim relief, the Lodha camp said.

“Shah, as the chairman of the investment companies, decided on his own that Lodha had ceased to be the director of these companies and did not send notices to him for board meetings held since 1 October. These board meetings were conducted without properly appointing a chairman and without compliance with various provisions of law. Further, in gross violation of the law, these companies were coerced by Shah into sending notices to the Ministry of Corporate Affairs removing Lodha as a director,” according to Lodhas.

The Lodha camp said Shah and A.C. Chakrabortti, as members of the APL Committee, formed the opinion that Lodha automatically ceased to be a director of these and other MP Birla Group entities by the verdict dated September 18 passed by justice Shahidullah Munshi even after it was “modified” by an interim order of the division bench of the Calcutta High Court dated October 1.

The interim order of the division bench made it clear that Lodha was barred from holding office in the MP Birla Group only on the strength of the shares of the Priyamvada Birla Estate, they stated. “In four of these investment companies, Lodha was not reappointed director on the strength of the Estate. In the fifth one, Gwalior Webbing, the Estate’s ownership is 50.43%. In its last AGM held in December last year, Lodha was reappointed director by show of hands with three directors in favour and one against. Though Shah had raised his hand against the reappointment of Lodha, he did not demand a poll and thus his reappointment was carried by a majority. In one of these holding companies, the Estate does not hold any share at all, and in another, its ownership is a mere 0.08%,” Lodha’s added.

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