Calcutta High Court affirms Harsh Vardhan Lodha's chairmanship in MP Birla Group

A little over three years ago, a single judge of the Calcutta High Court passed an order directing the removal of Harsh Vardhan Lodha as the chairman of the MP Birla Group based on a questionable concept of “extended Estate”.

In a 300-page verdict, a division bench of the Calcutta High Court on Thursday ruled that the lower court could interfere with the functioning of the companies, trusts and societies of the MP Birla Group.

Thursday’s verdict delivered by Chief Justice T.S. Sivagnanam and Justice Sabyasachi Bhattacharyya ruled that the question of whether Harsh Lodha could continue to act as the chairman of the MP Birla Group.

“There cannot be universal or dynamic injunction or direction affecting the future course of action of the companies from the Testamentary Court,” the two judges said in their judgment, referring to the disputed verdict of the single judge of Calcutta High Court passed on 18 September 2020.

The court could not do so “simply because the testatrix (Priyamvada Devi Birla) could not herself have taken such an action in law,” the bench added.

The estate of the late Priyamvada Devi Birla, former chairperson of the MP Birla Group who died on 3 July 2004, is currently under the custody of a three-member committee of administrators.

She had bequeathed her estate to her trusted advisor and confidante, Rajendra Singh Lodha, through a registered will dated 18 April 1999. After her death, R.S. Lodha became the chairman of the MP Birla Group.

Several members of the extended Birla family challenged the late Priyamvada Birla’s will, kicking off a protracted legal battle straddling various courts and judicial forums.

Harsh Lodha is the son of the late Rajendra Singh Lodha. The latter died on 3 October 2008.

Thursday’s verdict imposed several restrictions on the functioning of the committee of administrators, which in the past few years has taken several decisions by 2:1 majority and pressured companies, trusts and societies of the MP Birla Group to implement them.

Several malicious attempts have been made in the past few years to remove Harsh Lodha as director and trustee of MP Birla Group entities and to disrupt the functioning of the group.

In their verdict, the two judges clarified that the administrators cannot interfere with the internal affairs of companies, trusts and societies on directions of the single judge of the Calcutta High Court, referring again to the verdict of September 2020.

The remit of the administrators only extends to the shares owned by the late Priyamvada Birla, the division bench said on Thursday.

Referring to the administrators, the judges said, they “cannot jump steps to directly take (decisions) or pre-empt business decisions” of entities not under their direct control.

Referring to the late Priyamvada Birla, the verdict said, “her personal charisma and influence among different companies and their management even if existed during her lifetime, unfortunately went with her and cannot form a bundle of heritable right to be part of her Estate”.

The division bench also said that the administrators should bear in mind that they are not an “adjudicating authority”, and “merely the representative of the estate of the deceased testatrix”.

Expressing deepest satisfaction over the verdict, Debanjan Mandal, partner, Fox & Mandal, said: “In the past five years, relentless attacks were mounted on Harsh Lodha and certain other directors and trustees of the MP Birla Group on the basis of a convoluted interpretation of the late Priyamvada Birla’s Estate.

“Alongside, taking advantage of the legal battle, rogue executives of some trusts and societies have gone to extreme lengths to damage the interests, assets and properties of these societies. Thursday’s verdict reaffirms our client’s faith in the legal system that the perpetrators of these heinous crimes, who have personally benefitted from the properties of charitable trusts and societies, will be adequately punished.”

Pointing out that 19 years have passed since the legal battle over the late Priyamvada Birla’s will started at the Calcutta High Court, the division bench on Thursday directed that the trial in the probate petition—or the one to establish the will’s legal validity—should resume at the earliest.

Case background

In 2004, Priyamvada Birla passed away, leaving her estate to R.S. Lodha as per her registered will. Six factions of the extended Birla family contested the will, leading to a legal battle.

In March 2008, the Supreme Court dismissed challenges to the will, imposing fines on the litigants. A separate legal attack on R.S. Lodha as the will's executor ended in 2008. In 2012, a committee of administrators, including a retired judge, was formed to manage the estate.

Over the years, legal disputes ensued, involving decisions affecting MP Birla Group companies.

In September 2020, Harsh Lodha was restrained from holding any office, but a division bench in October 2020 limited administrators' control of estate shares.

Harsh Lodha continued as director, and petitions against him were dismissed.

The Calcutta High Court's historic verdict in December 2023 concluded the appeals filed by the Lodhas.