Calcutta HC removes squatter Lodha from MP Birla Group
21 Sep 2020
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In a significant victory for the M P Birla Group, part of the extended Birla family, the Calcutta High Court today ordered removal of Harsh Vardhan Lodha from all company positions across the group, putting an end to a 16-year-long contest over the legal validity of Priyamvada Birla’s will.
Harsh Vardhan Lodha has fought for almost a decade to retain control of the MP Birla group of companies that include cement maker Birla Corp and the assets of jute mills owned by the group.
Lodha, who was in control of the MP Birla empire for 16 years, will now be removed from all positions in the group companies with immediate effect, according to the high court order.
Priyamvada Birla, widow of Birla Corporation promoter Madhav Prasad Birla (grand uncle of Kumar Mangalam Birla), had bequeathed her estate, believed to be worth around Rs5,000 crore then to well-known Kolkata-based chartered accountant, Rajendra Singh Lodha in July 2004.
The legal tussle began as a mutual will written on 13 July 1982 had given away all the assets to charities, while another will dated 18 April 1999 granted them to Rajendra Lodha, now being pursued by his son Harsh Lodha, and other heirs of the senior Lodha.
Lodha was the sole executor of the second will, and he showed up at Birla Park, the Birla family residential complex in Gurusaday Road, south Kolkata, to read the contents of the will, a few days after Priyamvada's death.
Madhav Prasad and Priyamvada had no children, so all of the extended Birla family expected charitable trusts to inherit the estate.
Harsh Vardhan Lodha, the second son of Rajendra Singh Lodha, has since taken control of the MP Birla Group’s assets, currently worth Rs25,000 crore from his father RS Lodha.
The probate court said that Lodha, chairman of the group's flagship firm Birla Corp, has been acting against the interest of Priyamvada Birla’s estate.
Lodha will be removed as chairman of the group’s flagship company Birla Corp. and as director on the boards of other MP Birla companies, including listed firms Vindhya Telelinks Ltd, Birla Cables Ltd and Universal Cables Ltd.
In May, a two-judge division bench of the Calcutta High Court had allowed Lodha’s reappointment as director by rotation in some of these group firms. Lodha was also specifically entitled to a profit-related commission in these firms, which was approved by a special resolution at the companies’ recently-held annual general meetings.
The Birla family had challenged this appointment in the Supreme Court soon after, but the SC turned down the petition and redirected that the case be heard in the high court.
The court in its order said all majority decisions taken by the court-appointed administrator pendente lite (the APL committee, or a committee of administrators appointed in 2012) will be binding on Lodha and that he will be obliged to implement them.
In separate orders in 2019 and 2020, the committee had directed Lodha’s removal from the boards of these companies and had refused to support the payment of any profit-linked remuneration to him, but these decisions were not implemented.
“These directions mean that Harsh Vardhan Lodha immediately ceases to hold all positions in the MP Birla Group, including as director in the companies and other positions in the trusts and societies of the MP Birla Group," a statement from the Birla family said.
“The court held that since the companies are not parties to the testamentary proceedings, directions cannot be passed against them but the decisions of the committee of administrators shall be implemented by Lodhas, who are plaintiffs in the testamentary proceedings… His stranglehold on the MP Birla group has been brought to an end by the Calcutta High Court."
