Birla Corp shareholders to receive 2019 dividend

The shareholders of Birla Corporation will be able to receive the dividend announced by the company in 2019 withan order passed by the Division Bench of the Calcutta High Court paving the way for the declaration of results of voting on the resolutions taken up in the last annual general meeting.

The Division Bench, comprising Justice Sambuddha Chakrabarti and Justice Arindam Mukherjee, in its order on May 4, quashed restrictions imposed earlier by orders dated August 2 and August 9, 2019, on the publication of results of various resolutions put to vote at the annual general meetings of Birla Cable Ltd, Vindhya Telelinks Ltd, and Birla Corporation Ltd held in August last year.

In view of the said orders passed by the Single Bench, all results of voting on the resolutions of the Annual General Meetings of these three companies could not be published. In respect of Birla Corporation Limited, these resolutions included reappointment of director, payment of dividend to shareholders, and resolution for payment of profit-based remuneration/commission to the Non-Executive Chairman.

Birla Corporation, a flagship of the MP Birla Group, had declared a dividend of ₹7.50 (75 per cent) per share for 2018-2019. However, the company could not act upon the resolution for eight months and distribute dividend among its shareholders, which include several financial institutions, in view of the restraint order passed by the Single Bench earlier.

It is to be noted that the said three companies appealed before the Division Bench in November last year, contending that the orders are in violation of natural justice and fair play, contrary to the provisions of the Companies Act 2013, and has the effect of restraining discharge of statutory obligations to conduct various businesses at the AGM.

The Division Bench has observed that the order dated August 2, 2019, as clarified by the order dated August 5, 2019, is not sustainable in view of the fact that the orders were passed interfering with the holding of AGM by the companies, which are separate juristic entities without first deciding the issue of jurisdiction.

It further observed that the order dated August 9, 2019, where the single bench has exercised probate jurisdiction when the issue of inherent lack of jurisdiction was kept pending for decision, is also not sustainable on the same ground.

According to NG Khaitan, Senior Partner, Khaitan & Co, which is representing Arvind Newar, nephew of MP Birla, while the injunction order against the three MP Birla companies has been lifted by the Division Bench, however, it also once and for all answers the long-drawn debate raised by HV Lodha about the applicability of matters relating to the companies in the ongoing probate issue.

“By reverting the entire matter to the Single bench, the Division Bench has acknowledged that the third-party issue raised by Lodhas is now put to bed once for ever. This issue can no longer be a bone of contention in the probate matter,” he said.

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