A file photo of R.S.Lodha

A file photo of R.S.Lodha

Court rules in favour of panel to oversee Priyamvada Birla’s estate

Court rules in favour of panel to oversee Priyamvada Birla’s estate

Kolkata: After an eight-year legal battle over the late Priyamvada Birla’s controversial will, a division bench of the Calcutta high court on Thursday passed an order allowing a panel of three administrators overseeing her estate to exercise all rights, including that of voting, in respect of the shares held by her directly in listed and unlisted firms.

The ruling is significant because it could tilt the balance in favour of one of the parties involved in the legal battle.

The fight itself stems from Birla’s controversial 1999 will, through which she gave away her estate to Rajendra Singh Lodha, her long-time friend. At the time of her death in July 2004, Lodha, a chartered accountant, was on the board of several companies of the M.P. Birla group, which is named after Birla’s husband, the late Madhav Prasad Birla.

A file photo of R.S.Lodha

The order, though, was stayed for four weeks by the same judges who passed them to give H.V. Lodha an opportunity to appeal it in the apex court.

H.V. Lodha’s lawyer Debanjan Mandal, who is a partner at law firm Fox and Mandal, said that Thursday’s verdict was being studied and a decision on whether to challenge it had not been taken as yet.

The Birla family sees Thursday’s order as a significant victory in their long legal campaign against the bequest. The administrators will take control of and represent Priyamvada Birla’s estate, said a statement issued by the family.

At stake is control of M.P. Birla group companies such as the flagship Birla Corp. Ltd, a cement maker, cable manufacturers Birla Ericsson Optical Ltd, Vindhya Telelinks Ltd and Universal Cables Ltd and Hindustan Gum and Chemicals Ltd, the world’s biggest producer of guar gum. The combined annual revenue of these firms is at least 5,000 crore.

Besides these, the M.P. Birla group owns several schools, hospitals and properties across India and a 25% stake in Pilani Investment and Industries Corp. Ltd—a key investment arm of the erstwhile undivided Birla family, which is now under the control of the BK Birla group.

The M.P. Birla group is controlled by a web of private holding companies and trusts; Priyamvada Birla had a majority stake in some of these investment arms. Thursday’s order gives the administrators control of her personal shareholding in the holding companies—her direct ownership in the listed firms was limited to a few thousand shares in each.

The panel of administrators appointed by the Calcutta high court includes two professionals—one each nominated by the two camps—and a retired judge of the Supreme Court, C.K. Thakkar.

The professionals on the panel are M.K. Sharma, former vice chairman of Hindustan Lever Ltd (now Hindustan Unilever Ltd), who was included at the suggestion of H.V. Lodha, and Amal Chandra Chakraborty, a chartered accountant and former partner of audit firm S.R. Batliboi and Co., who is a Birla nominee.

The names of the administrators were announced by the court in February, but their powers were not determined immediately.

However, the order may not immediately impair H.V. Lodha’s control over the group. Mandal said the administrators have been tasked with overseeing the estate of Priyamvada Birla for “protection and preservation" and not with the running of the M.P. Birla group.

Also, the order does not give the administrators authority over the trusts of the M.P. Birla group—they remain independent, controlled by their trustees.

Close