Companies

Lodha challenges Administrator panel’s objection to his re-election as Director of two MP Birla group firms

Our Bureau Kolkata | Updated on August 13, 2019 Published on August 13, 2019

Harsh V Lodha, Chairman, Birla Corporation

Harsh Vardhan Lodha, Chairman, Birla Corporation Ltd, has approached the Calcutta High Court against the APL (Administrator pendente lite) Committee’s decision not to support his re-election to the board of two MP Birla Group companies.

Two of the three-member Administrators Committee have decided not to support his re-election as director in Birla Cable and Vindhya Telelinks Ltd. They have also decided to oppose a proposal for payment of performance-linked remuneration to non-executive directors/chairman of the four manufacturing companies in the Group.

The third member, Mahendra Kumar Sharma, has dissented with these decisions. The APL Committee, which was appointed to protect and preserve the estate of the late Priyamvada Devi Birla, comprises three members namely – Justice Mohit Shah, AC Chakrabortti, a chartered accountant, and Mahendra Kumar Sharma, former vice-chairman of Hindustan Unilever and ex-chairman of ICICI Bank.

‘Lack of communication’

AC Chakrabortti, who was present at Birla Corporation’s annual general meeting on Tuesday, said that there was a ‘lack of clear channel of communication’ between the management and the Administrators’ Committee, which manages the Estate. “We are objecting to the resolution due to adverse circumstances,” he said at the AGM. Chakrabortti said that the APL representing the estate of Priyamvada Birla holds 62.9 per cent shares. However, Lodha contends that the Administrators were appointed to the estate and not over any company, trust or society, which are all independent entities.

The APL Committee, sources said, exercises voting control over only 1,260 shares that were directly held by Priyamvada Birla. In his petition, Lodha said that the Administrators cannot decide on shares held by such independent legal bodies, and that these independent entities are to be guided by their own boards/committees. The decision not to support the resolution is also wrongful.

NG Khaitan, Senior Partner, Khaitan & Co, which is representing Arvind Newar, nephew of MP Birla, said the APL Committee is seeking to exercise the voting rights in respect of shares comprising controlling interest or promoter’s holding pursuant to the power granted by the Calcutta High Court. It has been upheld by the Supreme Court and therefore, “the aforesaid issue being raised again in public domain is merely a pretence and does not hold water”.

The Calcutta High Court has started to hear the dispute and in his interim order Justice Sahidullah Munshi directed that the results of voting on certain resolutions (and all in case of Birla Corporation) at the AGMs of the manufacturing companies should not be published until further orders.

Published on August 13, 2019
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