Companies

Behind the long and arduous legal battle

Our Bureau Mumbai | Updated on September 18, 2020 Published on September 18, 2020

The 16-year-old battle between the Birla family and the Lodhas does not seem to be reaching any conclusion, with the latter planning to challenge the Calcutta High Court’s order. At the centre of this dispute is the will claimed to be that of Priyamvada Devi Birla, bequeathing her entire ₹5,000-crore estate to her chartered accountant RS Lodha after her death in 2004.

This ‘will’ was claimed by Lodha to be prepared in 1999 but was disclosed only after Priyamvada’s death. It assigned complete control of MP Birla group and its varied industries to Priyamvada’s ‘trusted friend’ Lodha. The extended Birla family, whose wealth is grounded in centuries of business history, was left flummoxed.

Various members of the Birla family — including Krishna Kumar, Basant Kumar, Kumar Mangalam and Yashovardhan Birla — decided to challenge the authenticity of the will. “More than the wealth and property involved in the dispute, Lodha was seen as an outsider by the Birla family. How could a non-Birla person inherit the estate?” asked a person who has been tracking the dispute for many years.

Three trusts

The Birla family said that MP Birla and Priyamvada Birla had a mutual will dated July 1983, according to which a major bulk of the estate would be transferred to three trusts — Hindustan Medical Institution, Eastern India Educational Institution and the MP Birla Foundation.

What followed was a long and arduous legal battle.

The Lodhas have produced official documents of Birla Corp, which show Priyamvada acknowledging the help of RS Lodha. “In one of the documents, dated September 15, 2001, Priyamvada mentions how RS Lodha has been helping all these years in many of the Group’s matters and how she keenly wanted him to succeed her. She also added how she had wanted Lodha to take over as chairman of the company,” said a source close to the Lodha camp.

After RS Lodha died in 2008 due to cardiac arrest, his son Harsh Lodha took charge of the fight against the Birlas. He staked claim to the wealth owned by Birla Corp and became the chairman of several Group companies. The Company Law Board also ratified Harsh Lodha as chairman of Birla Corp in 2009. The Birla family subsequently moved High Court seeking appointment of an administrator to manage the estate of Priyamvada. In 2012, a three-member committee, Administrators Pendente Lite of the Estate of Priyamvada Birla (APL Committee) was appointed by the Calcutta High Court in 2012.

Shift in battle scene

“But even after the formation of the APL, things became more complicated because both sides got to appoint one person as part of the committee. The battle scene simply shifted to this APL committee as the respective nominees would dissent to each other’s proposals. Then it boiled down to who could influence the Chairman of the APL,” said a source.

In 2019, the APL panel ruled against re-appointment of Lodha as director in Group companies, including Vindhya Telelinks Ltd and Birla Cables Ltd. This was challenged by the Lodhas while the Birlas moved the court seeking enforcement of the APL panel decision. The matter travelled all the way up till the Supreme Court which declined to intervene and asked the Calcutta High Court to hear the matter. Now, the Calcutta High Court in its judgement has directed the implementation of the decisions of the Committee of Administrators.

“After a long battle of 16 years, Harsh Vardhan Lodha has been restrained from holding any position in all the entities within MP Birla Group. He has been further restrained from gaining any pecuniary benefit from the Group. My clients have been fighting for charity as against greed,” said NK Khaitan, senior partner, Khaitan & Co, the legal advisor to the Birla family in the case.

“The verdict passed by Justice Sahidullah Munshi of the Calcutta High Court on Friday, 18th September, over reappointment of Harsh Vardhan Lodha as a director of Vindhya Telelinks Ltd and Birla Cable Ltd in 2019 does not appear to be lawful. The orders passed on Friday were not even asked for and will be challenged on this ground.” said Debanjan Mandal, Partner, Fox & Mandal, Advocates for Lodha

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Published on September 18, 2020
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