Birla vs Lodha dispute: Calcutta High Court paves way for Harsh Lodha to continue office in MP Birla Group

He has been associated with the group in the capacity of a director for the past 24 years, since 1996.

Modifying an earlier verdict of the Calcutta High Court passed on September 18, Chief Justice T.B. Nair Radhakrishnan, jointly with Justice Shampa Sarkar, ruled on October 1 that Lodha should not hold any office in the group only “on the strength of the shares referable to the estate of Priyamvada Devi Birla”.

The estate is under the custody of a court-appointed committee of three joint administrators, commonly referred to as APL (Administrators Pendente Lite) Committee.

Lodha was reappointed as a director in all four listed companies in the last two years with at least 98% votes cast in his favour, said Debanjan Mandal, partner, Fox & Mandal, representing Lodha in the court.

“Our client wasn’t, in the first place, reappointed as a director in these companies on the strength of the estate of Priyamvada Devi Birla,” he said, “so the order paves the way for his continuing to hold offices in these companies as he was doing uninterruptedly from before the death of Mrs Birla.”.

Thursday’s interim order also provides an important clarification in respect of the trusts and societies of the MP Birla group, including Belle Vue Clinic, Bombay Hospital and South Point School, among others.

There is no concept of shareholding in trust and societies, and therefore it becomes clear in view of Thursday’s division bench order that there is no question of Lodha being restrained from holding any office in the trusts and societies.

He holds office in these entities not on account of any shareholding of the estate of Priyamvada Devi Birla but by appointment by the trustees/ managing committees.

The four corners of the estate of Priyamvada Devi Birla was conclusively established in the inventory of assets prepared unanimously by the three joint administrators way back in 2013, and Mrs Priyamvada Birla’s shareholding in the four manufacturing companies is given below as found by the Administrator Pendente Lite (APL) Committee in their inventory report along with results of polling over reappointment of Lodha in the last two years.

Shares held by Priyamvada Devi Birla are currently under the custody of the APL Committee. The Committee has been exercising voting rights in respect of these shares—and these shares only—at the annual general meetings of these companies.

Division bench verdicts on extent of the estate: A division bench of the Calcutta High Court of Justice Dr Sambuddha Chakrabarti and Justice Arindam
Mukherjee had in May this year held in a verdict that “the estate of Priyamvada Devi Birla is the owner of the shares in the companies as mentioned in the
schedule of assets filed in the...unanimous report of the APL Committee to which there is no dispute”.

The report of the APL Committee list out only those shares which were owned by Mrs Birla during her lifetime.

In an earlier division bench verdict passed in October 2007, Justice Pinaki Chandra Ghose and Tapan Kumar Dutt had also said: “We have also considered the nature of the estate, mostly are the controlling block of shares held by Priyamvada Devi Birla at the time of her death which has also been disclosed in the affidavit of assets and there is no dispute in respect of such shares.”

In a further modification of the verdict passed on September 18, Thursday’s interim order said Lodha has to “abide by” instead of “implement” decisions of
APL Committee taken on July 19 and July 30 last year. The implications of this modification are being studied, said Mandal. 

Birla vs Lodha dispute:

When Priyamvada died in 2004, she gave the Rs 5000 crore estate to her close accountant, Rajendra Singh Lodha, who was a co-chairman.

Lodha eventually became chairman of Birla Corporation.

This estate included key holdings in the East India Investments Co and Gwalior Webbing, Birla Corporation, Vidhya Telelinks, and Universal cables, among others. However, the Birla family challenged the Lodha family in court in 2008 about the contents of the will, and Priyamvada’s previous two wills.

The case changed course with the sudden death of RS Lodha in October 2008.

In her will, Priyamvada declared that after RS Lodha, his son, Harsh Lodha would inherit the estates. Since the will was written in 1999 and was not officially granted "probate," the Lodha family currently holds the MP Birla group.