SC dismisses plea against Harsh Vardhan Lodha’s reinstatement as director in MP Birla Group firms

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May 12, 2020 2:10 AM

In a setback to the Birla family, the Supreme Court on Monday dismissed its appeal against reinstatement of Harsh Vardhan Lodha as director on the board of two MP Birla Group firms, Vindhya Telelinks and Birla Cable.

 SC also allowed profit-based remuneration/commission to Lodha.SC also allowed profit-based remuneration/commission to Lodha.

In a setback to the Birla family, the Supreme Court on Monday dismissed its appeal against reinstatement of Harsh Vardhan Lodha as director on the board of two MP Birla Group firms, Vindhya Telelinks and Birla Cable. It also allowed profit-based remuneration/commission to Lodha.

The Birla family has been in a 16-year-old legal battle with the Lodhas to wrest control of the Rs 5,000-crore Birla Estate. Upholding the Calcutta High Court’s last week’s order that allowed Lodha’s reinstatement with renumeration, a bench led by Justice DY Chandrachud asked the probate court to hear the MP Birla Group companies afresh and decide various issues including the jurisdiction issue raised by the Lodhas within a month. “Since the single judge is seized of the applications for interim relief, we only clarify that the resolutions which have been passed by the respective companies shall abide by such final orders as may be passed by the single judge. The SJ shall decide upon the issue of jurisdiction, together with the applications for interim relief and render a final determination thereof,” the SC order stated.

The division bench of the HC on May 4, without going into the merits of the case, had asked the probate court to hear the Birla Group represented by Arvind Kumar Newar afresh. It also allowed Vindhya Telelinks and Birla Cable to reappoint Lodha as a director if the shareholders approve it, and also pay dividends to their shareholders.
With the dismissal of the appeals on Monday, the SC also allowed these companies to publish the voting results of their last AGMs. The single judge had in August last year restrained the companies from publishing the voting results.

Challenging the HC order, the Birla group accused that “Lodha has wrongfully usurped such control and unlawfully assumed a position by which he is able to disobey and thwart the rights and directions of the APL Committee”, which has been set up to for protection and preservation of the estate of Late Priyamvada Devi Birla.

Alleging suppression by Lodhas, Newar stated that HC had passed the order on the premises that Late Priyamvada Devi Birla only had negligible share in the company, i.e. 1,260 shares and nothing else. This is in “complete suppression of the clear admissions” of Lodha in the earlier proceedings before the Company Law Board and the HC where Lodha had “has admitted that the Estate comprises of and controls 62.9% shareholding of Birla Corporation and not just 1260 shares which it now seeks to rest its appeal on. Hence, the appeal filed by Lodha before the HC suffered from the vice of suppression and deserved outright dismissal with exemplary costs”.

The genesis of the 16-year-old legal row between the MP Birla Group companies 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 as the Birla Estate, in favour of the Rajendra Singh Lodha.

The legal tussle began after the July 13, 1982 mutual 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.

The HC in December 2011 had appointed three-member administrator’s committee (APL panel) headed by retired Bombay HC judge Mohit Shah for protection and preservation of the estate of Late Priyamvada Devi Birla. It had held that the APL committee will be vested with all the powers of general administrators except that they cannot distribute the assets of the estate.

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