SC dismisses petitions filed by Birlas

The Supreme Court, on Monday, dismissed three special leave petitions (SLPs) filed by the Birlas challenging the directive of the Division Bench of Calcutta High Court dislodging the interim protection granted by the Single Judge.

However, the apex court has clarified that the resolutions passed by the respective companies “shall abide by such final orders as may be passed by the learned Single Judge”.

The Division Bench comprising Justice Sambuddha Chakrabarti and Justice Arindam Mukherjee, had in its order on May 4, quashed restrictions imposed earlier by orders dated August 2 and August 9, 2019 on publication of results of various resolutions put to vote at the annual general meetings (AGMs) 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passed by the Single Bench, all the results of voting on the resolutions of the AGMs of these three companies could not be published. In respect of Birla Corporation Ltd, 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.

The Supreme Court in its order on Monday said, “Since the learned Single Judge is seized of the applications for interim relief, we only clarify that the resolutions which have been passed by the respective companies shall abide by such final orders as may be passed by the learned Single Judge. The learned Single Judge shall decide upon the issue of jurisdiction, together with the applications for interim relief and render a final determination thereof.”

According to Debanjan Mandal, partner at solicitor firm Fox & Mandal, and legal counsel to Lodha, the verdict marks a major victory in the sustained efforts of these companies to thwart repeated attempts to disrupt their functioning, typically made ahead of their annual general meetings.

“With Monday’s verdict, it has been settled right up to the apex court that no order can be passed by the probate court against third-party companies without deciding the issue of jurisdiction,” Mandal said.

A spokesperson for the Birlas said that while the SLP moved before the Supreme Court was not entertained, it has however, granted protection to the Birlas and directed that the results of the AGMs will be subject to the decision of the Single Judge.

“In essence, the SC directive categorically enables the Probate Court to re-look into the disputed issues of reappointment of HV Lodha to the boards of the MP Birla Group companies and the matters relating to his remuneration as director after hearing the companies concerned,” he said.

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