Calcutta High Court
Calcutta High Court
Photo Credit: calcuttahighcourt.gov.in

A division bench of the Calcutta High Court on Thursday declined to stay the ouster of Harsh Vardhan Lodha from all positions in all the entities of the MP Birla Group.

The division bench of the high court presided over by the Chief Justice accepted the pleas of Birlas and declined the prayer of Lodhas and companies for stay on the directions passed by the single judge of the Calcutta High Court.

Therefore, all the directions passed by the single judge continue to operate. The division bench has clarified that Harsh Vardhan Lodha will not hold any office in any of the entities of MP Birla Group on the strength of shares referable to the estate of Priyamvada Devi Birla, which holds the controlling interest in the MP Birla Group.

"Having failed to obtain stay on the direction of the single judge, the writing on the wall is clear for Harsh Vardhan Lodha. His fully sponsored vacation in the MP Birla Group is now over and it is time for him to return to his chartered accountant practice," sources said.

The genesis of the present dispute between the Birlas and the Lodhas arises out of the mutual wills of Madhav Prasad Birla and Priyamvada Devi Birla.

In 2004, the Birlas had applied for probate of the said mutual wills of M.P. Birla and Priyamvada Devi Birla, whereunder, their enormous estate was given to charity.

"Out of nowhere, Lodhas claimed that there is another will by Priyamvada Devi Birla by which her estate was to be solely managed by R.S. Lodha," sources said.

In 2012, the Calcutta High Court had appointed an APL Committee to administer and manage the entire estate. This committee was to be headed by a retired judge of the Supreme Court or the high court.

"Using the pendency of judicial proceedings for appointment of this committee, Harsh Vardhan Lodha opportunistically latched on to be at the helm of the affairs of the MP Birla Group," sources said.

This position was to be reserved for the representative of the estate, which is the court appointed committee.

In July 2019, this committee, inter alia, decided to not support the reappointment of Harsh Vardhan Lodha as the Director in Vindhya Telelinks Limited and Birla Cable Limited. This direction was repeated by the committee in 2020 in relation to the reappointment of Harsh Vardhan Lodha as the Director in Birla Corporation Limited and Universal Cables Limited.

In July, 2019, the Birlas approached the high court complaining that Harsh Vardhan Lodha was not allowing the court appointed committee to function and was obstructing the implementation of its directions.

Birlas had claimed that although Harsh Vardhan Lodha owes his existence in the MP Birla Group to the estate, he was brazenly acting against the interests of the estate and the MP Birla Group.

As a counter blast, Harsh Vardhan Lodha later applied to the high court for setting aside of the directions passed by the court appointed committee.

The single judge of the Calcutta High Court on September 18, 2020, after a marathon hearing spanning nearly one year, allowed the applications filed by the Birlas and rejected the applications filed by Harsh Vardhan Lodha with a 160-page detailed judgment.

The court came to the conclusion that the controlling block of shares in the MP Birla Group belongs to the estate. The court, inter alia, restrained Harsh Vardhan Lodha from holding any office in any of the entities of the MP Birla Group.

"Therefore, Harsh Vardhan Lodha stood disqualified from holding any office by virtue of this judgment," sources said.

The court also restrained Lodhas from interfering with the directions of the court appointed committee and abide by its directions. The single judge arrived at an important finding that the court appointed committee is well within its powers to ask entities under the MP Birla Group to exercise their voting rights in the manner as considered beneficial by the court appointed committee.

This judgment by the single judge was challenged by the Lodhas before the division bench. The four manufacturing companies of the MP Birla Group also raised a challenge against the said judgment.

Crucially, in these appeals, Lodhas and the companies prayed for immediate stay on all the directions passed by the single judge. These appeals were vociferously opposed by the Birlas.

"Birlas took a stand that there is no infirmity in the judgment of the single judge and the directions passed by the court were completely warranted and justified," sources said.

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