Lodha, MP Birla Group firms file pleas before Calcutta HC division bench against single-bench order

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September 22, 2020 8:53 AM

At least four applications were filed on Monday and more are to be filed before the hearing begins at the division bench later this week. In a setback for Lodhas, the Calcutta High Court last Friday restrained Lodha, the chairman of MP Birla Group, from holding any office in any of the entities of the group.

Harsh Vardhan Lodha, MP Birla Group entities, Calcutta High Court, Birla Corp, APL Committee In a setback for Lodhas, the Calcutta High Court last Friday restrained Lodha, the chairman of MP Birla Group, from holding any office in any of the entities of the group.

Harsh Vardhan Lodha and MP Birla Group entities on Monday filed multiple applications before a division bench of the Calcutta High Court, challenging a single bench order which restrained him 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.

At least four applications were filed on Monday and more are to be filed before the hearing begins at the division bench later this week. In a setback for Lodhas, the Calcutta High Court last Friday restrained Lodha, the chairman of MP Birla Group, from holding any office in any of the entities of the group. 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.

Cement maker Birla Corp, copper and fibre optic cables maker Birla Cable and telecommunication cables maker Vindhya Telelinks are major group firms.

According to lawyers familiar with the application filed by Lodha, one of the grounds of appeal is that Friday’s order was passed on some 30 promoter group entities, including listed companies, on exercise of voting right on shares held by them in group companies “without giving most any hearing at all” and it was a “violation of natural justice”. Also, the verdict allegedly sought to change composition of independent trust and societies run by trustees and managing committees by removing a member without giving any of them any hearing.

The genesis of the over 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, 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 the Birla Estate, in favour of Rajendra Singh Lodha. The legal tussle began after the July 1982 will gave away all assets to charities, but another dated 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.”

The Lodhas are also likely to argue that “the administrators’ committee has to follow the terms and conditions set for its appointment by a division bench in August 2012. Prayers have been made twice since for clarification whether it can decide by 2:1 majority. Such prayer was declined on either occasion. Yet a lower court through Friday’s verdict has sought to alter its terms of appointment. It is not permissible under Civil Procedure Code.”

The Lodhas may further argue that as the Friday’s verdict saw Priyamvada Devi Birla as a “single individual promoter”, it was “absurd”. “With that view the judge has ordered that all promoter group entities should submit to the joint administrators’ committee and exercise voting right as directed by the committee. This again is absurd because the same verdict acknowledges several times that this court doesn’t have jurisdiction over these entities.”

After the single bench’s order, Birlas, in a statement, said, “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.”

According to Birlas, Friday’s order paved 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,” they said.

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