The Hindu Business Line : Birla-Lodha tussle: Both claim victory on HC verdict

Friday's dual verdict by the two courts of the Calcutta High Court — the trial court and the division Bench — on the Birla-Lodha tussle has left everyone a bit confused.

Both the sides claimed victory but no one is sure as to who will run the MP Birla Group companies during the next few weeks. Is it Mr R.S. Lodha, the current Chairman, or the group of four administrators, appointed by Mr Justice Kalyan Jyoti Sengupta of the trial court?

Mr Justice Sengupta in his verdict stated that there was a case for the appointment of a group of administrators to oversee the personal estate of the Late Priyamvada Birla. The group was asked to function after taking Mr Lodha's advice and then reconfirming it with the Birlas. In case of a difference, the matter would be referred to the Court.

His verdict mentioned that the administrators would "take charge of the shareholding of the deceased lady in all the companies wherever she had shares" and would function accordingly.

But what was the shareholding of Priyamvada Birla. The Birla clan claimed the verdict meant that all 38 MP Birla companies, which include nine manufacturing ventures, and her personal wealth and property would be under the administrators' management.

Mr Lodha's legal team differed. According to them, Mr Justice Sengupta order would give the administrators the power to manage the direct holding that Priyamvada Birla had in the investment companies.

The MP Birla Group has an interesting shareholding structure. Priyamvada Birla held majority stake into important investment companies by the name of East India Investment Co Pvt Ltd and Gwalior Webbing Co Pvt Ltd.

These two companies subsequently held stakes in 18 other investment companies which ultimately owned the shares of the major MP Birla Group companies such as Birla Corporation, Vindhya Telelinks, Birla Ericsson and Universal Cables. The shareholding pattern, in effect, is a maze.

Mr Lodha's lawyer felt that the powers of the administrators, as given by Mr Justice Sengupta, would end with the first tier of the investment companies and it would not percolate down.

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