Birla Estate battle takes new turn as Lodha loses forst round

Giving a new twist to the decades-old legal battle between the MP Birla Group and the Lodhas over controlling the Rs 5,000 crore-Birla Estate, a fresh row has erupted between the two with both the parties contesting each other's positions. The genesis of the row lies in the contested will of the late Priyamvada Devi Birla 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 Lodhas, a Kolkata-based business family.

In a 2:1 order on July 30, the Calcutta High Court- appointed three-member administrator's committee (APL panel) headed by retired justice Mohit Shah said it "does not support the decision of the boards of the four listed MP Birla Group companies to re-appoint Harsh Vardhan Lodha as non-executive chairman." Lodha flayed the panel report on Tuesday claiming the board decision should be above that of the panel which also should have decided unanimously and not by majority. In its report submitted to the Calcutta HC, the administrator pendente lite (APL) committee appointed in August 2012, also said it, "does not support payment of commission of net profit to the non-executive chairman of Birla Corporation and two other MP Birla Group firms which had been subsequently challenged by the Lodhas in the HC." The APL panel also has Birla nominee AC Chakrabortti, while MK Sharma represented Lodha. In the 2:1 order, Shah and Chakrabortti favoured the Birlas.

Following this, Lodha moved the HC first on August 2 and then twice on August 5 and 9 to cancel the AGMs of these four companies scheduled for Tuesday (August 13) in Kolkata but the HC gave the go-ahead for the AGM but said the results should not be published till the pendency of the case. The HC today adjourned the matter for final hearing on August 30.

After the AGMs, Lodha told reporters that "the APL panel is not superior to the boards of companies and is required to act unanimously and not by majority which we have pleaded before the court." Contesting Lodha's charges, the advocate on record for the Birlas, NG Khaitan, a partner at law firm Khaitan & Co, told PTI that both the HC and Supreme Court have upheld majority decisions of the APL panel in the past and that the panel report has just established conventions. He also pointed out that Lodha's own appointment to the boards of these companies have in the past been approved the APL panel by majority and not unanimously.

"Insistence on unanimity clearly indicates that Lodha does not want the panel to function and desire to create only a stalemate which is completely against the order of the HC which has been accepted by both parties," Khaitan said. At the AGM, shareholders owing allegiance to a certain faction raised questions on the observations of the APL panel.

The resolutions, including Lodha's reappointment as non-executive chairman, were put to vote at the AGM but the results will be declared after the HC verdict. The APL panel also favoured discontinuation of Lodha's remunerations which used to be 0.75 percent of the net income of the four listed companies--Vindhya Telelinks, Universal Cables, Birla Cable and Birla Corporation.

The panel also did not support his reappointment as a director on the boards of Vindhya Telelinks and Birla Cables. Though the administrator controls these companies with holdings ranging from 51 to 63 percent, this control remains only on paper and that it is Lodha who calls all the shots, sources said.

The tussle began after the July 13, 1982 mutual wills that dedicated all the assets to charity but another will dated April 18, 1999 propounded by RS Lodha, now being pursued by HV Lodha and other heirs of RS Lodha..