Calcutta High Court refuses to stay order against HC Lodha in legal wrangle with Birla family

Mumbai: A division bench of the Calcutta High Court has declined to offer interim relief to Harsh Vardhan Lodha on an earlier probate court judgement that ordered his removal from all MP Birla group companies. Lodha and four manufacturing companies within the MP Birla group had appealed the probate court’s decision at the division bench. The court has asked for affidavits to be filed by October 21 and replies by November 17.

Last month, a probate court ruled that Lodha, Chairman of the group's flagship firm Birla Corporation, should be removed as chairman of Birla Corporation and as director on the boards of other MP Birla companies, including listed firms Vindhya Telelinks Ltd, Birla Cables Ltd and Universal Cables Ltd. The order was a significant victory for the extended Birla family, which is contesting the legal validity of Priyamvada Birla’s will. The two sides have been locked in a 16-year-old legal battle concerning the will in which Priyamvada Birla bequeathed her estate and control of the (now) ₹25,000 crore MP Birla empire to her chartered accountant RS Lodha and his second son Harsh Vardhan Lodha.

In Thursday’s order, a division bench of Chief Justice TB Radhakrishnan and Justice Shampa Sarkar said that “we are keeping open all issues for further consideration and are only proceeding to decide as to whether an ad interim order is to be issued. We are not dealing with the judicial precedents referred to by the learned advocates for the appellants, though it is not as if we are not bearing in mind the fundamental principles brought in through those precedents, referable to the realm of testamentary jurisdiction and company law.”

The court also clarified on the probate court’s order that the restriction placed on plaintiff no. 1 Harsh Vardhan Lodha is “to the extent of it being a restriction from holding any office in any of the 15 entities of the M P Birla Group during the pendency of the suit, on the strength of the shares referable to the estate of PDB (Priyamvada Devi Birla).”

While a spokesperson for the Birla family said today’s judgement was a “prodigious setback for Lodha”, an official statement from Debanjan Mandal, partner, Fox & Mandal, representing Lodha, said: “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.”

Lodha’s team believes Thursday’s interim order also allows him to continue in the trusts and societies of the MP Birla group, including Belle Vue Clinic, Bombay Hospital and South Point School. “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. He holds office in these entities not on account of any shareholding of the estate of Priyamvada Devi Birla but by appointment by the trustees/ managing committees.”