HC declines to stay order barring Harsh Lodha from holding office in MP Birla companies

A Division Bench of the Calcutta High Court on Thursday declined an ad interim stay on the Single Bench order of the same court directing the removal of Harsh Vardhan Lodha from all the positions within the MP Birla Group of companies during the pendency of the suit involving the contested will of the late Priyamvada Birla.

However, the Division Bench, of Chief Justice Thottathil B Radhakrishnan and Justice Shampa Sarkar, has clarified that there is a restriction on Harsh Lodha from holding any office in any of the entities of the MP Birla Group during the pendency of the suit (testamentary) “on the strength of shares referable to the estate of Priyamvada Birla”.

“We see that the impugned order refers to material facts; reflects reasons and demonstrates judicial consideration and determination of matters which fall within the domain of Section 247 of the Succession Act. We cannot treat it as a perverse decision or one which deflects the course of justice; or, that it is not in the best interest of the PDB’s estate. On the basis of various materials on record, to which we may not make any copious reference now, we notice that there are different orders inter partes which tend to indicate that this matter requires further consideration without any interlocutory order staying the operation of the impugned order. We are also of the view that the power of the APLC to control and administer the estate of PDB is repeatedly asserted through the different judicial orders of the Probate Court, the Division Bench of this court as well as the Supreme Court of India. We, therefore, do not find any reason to issue any order of stay as sought for at this stage,” the court order said.

The Birlas and the Lodhas, however, had different interpretations “on the strength of shares referable to the estate of Priyamvada Birla”.

According to NG Khaitan of Khaitan & Co, solicitors for Birlas, the estate of Priyamvada Devi Birla holds the controlling interest of the MP Birla Group.

“The Division Bench of the Calcutta High Court today accepted the pleas of Birlas and declined the prayer of Lodhas and companies for stay of the directions passed by the Single Judge. Therefore, all the directions passed by the Single Judge continue to operate. The Division Bench has clarified that Harsh Vardhan Lodha will not hold any office in any of the entities of MP Birla Group on the strength of shares referable to the Estate of Priyamvada Devi Birla which holds the controlling interest of the MP Birla Group,” he said.

Also read: Harsh Vardhan Lodha’s appeal against removal from MP Birla Group admitted for hearing at court

Khaitan also added that the Division Bench has widened the scope of the previous order of the Single Bench by clarifying that Lodha has to “abide by” the decisions of the APL Committee.

However, the Lodhas argued that the interim order has “significantly relaxed restrictions” imposed earlier by the Single Judge on Harsh Vardhan Lodha holding offices in the MP Birla Group.

According to the Lodhas, the modification of the earlier verdict of the Calcutta High Court passed on September 18, by the Division Bench on October 1 saying 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” has actually paved the way for Lodha to continue to hold office in MP Birla Group.

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

“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. 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,” Mandal said.

Thursday’s interim order also provides an important clarification in respect of the trusts and societies of the MP Birla Group.

“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,” the spokesperson for Lodhas said.

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