HC Orders Removal Of Harsh Vardhan Lodha From MP Birla Group Companies

The Calcutta High Court (HC) on Friday restrained Harsh Vardhan Lodha from holding any office in M P Birla group entities, marking a crucial victory for the Birlas in the 16-year-old battle over Priyamvada Birla’s will.

The order said, Harsh Vardhan Lodha is restrained from holding any office in any of the entities of M P Birla Group during pendency of the suit (testamentary). The court also directed implementation of the decision of the committee of administrators.

These directions mean that Harsh Vardhan Lodha immediately ceases to hold all positions in the M P Birla group, including as director in the firms and other positions in the trusts and societies of the M P Birla group, a statement from the Birlas read.

Lodha is the chairman of M P Birla group companies. The court has also restrained Lodha from interfering with any decision of the APL Committee (committee of administrators Pendente Lite of the estate of Priyamvada Birla), which is taken by majority, the Birla statement added.

However, the court has held that since the companies were not parties to the testamentary proceedings, directions cannot be passed against them but decisions of the APL Committee shall be implemented by Lodhas, who are plaintiffs in the testamentary proceedings.

Debanjan Mandal, partner, Fox & Mandal, advocate for Lodha, said, “The verdict by Justice Sahidullah Munshi over reappointment of Harsh Vardhan Lodha as director of Vindhya Telelinks, Birla Cable and Birla Corporation does not appear to be lawful. Our client’s confidence in the system remains completely unshaken and our client will challenge the judgment for immediate and long-term relief.”

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Lodhas will move the appeals court. “Lodha’s reappointment as director in the two said companies (Vindhya Telelinks and Birla Cable) was reviewed by two higher courts, including the Supreme Court, and the initial order restraining the companies from publishing the results of polls taken at their AGMs last year was set aside. The orders passed on Friday were not even asked for and will be challenged on this ground,” said the advocate for Lodha.

In addition, the jurisdiction of the probate court and the impermissibility of such orders affecting shareholders’ decision of reappointment of a director/chairman will be raised before the appeal court, the Lodha side said. The court passed directions against Lodha in terms of Section 247 of the Indian Succession Act.

In a separate statement, a spokesperson for Birla Corporation, said, the company will examine the judgement and take necessary steps including filing of appeal because the verdict seems to have ignored shareholders’ democracy and their right to elect by majority of their votes a person as a director of a company.

"Shareholders elected Harsh Varshan Lodha as a director of Birla Corporation with an overwhelming majority of 98 per cent. Mr Lodha being otherwise not disqualified from holding the office of director, there is no reason why the verdict of shareholders will not be respected," the spokesperson added.

The APL Committee — which had been appointed by the high court in 2012 to administer and manage the estate of Priyamvada Birla — has been in focus for the past one year for opposing Lodha’s reappointment in M P Birla group companies.

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In July 2019, it had directed removal of Lodha by a majority decision from the boards of Vindhya Telelinks and Birla Cables. It had also refused to support the resolution for the payment of profit-based remuneration to Lodha.

In the same vein, it refused to support resolutions for reappointment of Lodha and profit-based remuneration in Birla Corporation and Universal Cables this year.

The resolutions in all these firms, however, were passed by more than 97 per cent votes of shareholders.

For implementation of the APL Committee decisions Birlas had filed an application before the high court last year, that set off a fresh round of legal battle moving all the way up to the Supreme Court. The apex court said the decision taken by the companies would be subject to the final outcome of the high court decision.

The Birla statement on Friday said, “His stranglehold on the M P Birla group has been brought to an end by the Calcutta High Court.”