A division bench of the Calcutta High Court on Thursday modified an order of a single judge in connection with the almost two- decade long legal battle between the Birla family and the Lodhas. Three years ago, the Court had restrained Harsh Vardhan Lodha from holding any position in the entities of the MP Birla Group.
“There cannot be universal or dynamic injunction or direction affecting the future course of action of the companies from the Testamentary Court,” the Division Bench of Chief Justice T.S. Sivagnanam and Justice Sabyasachi Bhattacharyya said in today’s order.
The bench also pointed out that a “testamentary court cannot decide issues of title conclusively; such power lies purely within the domain of civil courts. However, while deciding an application under Section 247 of the Indian Succession Act for appointment of administrator pendente lite, the testamentary court may decide the extent of the estate of the deceased testator/testatrix prima facie”.
Priyamvada Devi Birla died on July 3, 2004, leaving behind her will. At the centre of this dispute is the will claimed to be that of Priyamvada Devi Birla, bequeathing her entire ₹5,000-crore estate to her chartered accountant R.S. Lodha after her death in 2004. After R.S. Lodha died in 2008, his son Harsh Vardhan Lodha took charge of the fight against the Birlas and staked claim to the wealth owned by Birla Corp and became the chairman of several Group companies.
A three-member committee, Administrators Pendente Lite (APL) of the Estate of Priyamvada Birla (APL Committee), was appointed by the Calcutta High Court in 2012. On September 18, 2020, Justice Sahidullah Munshi of Calcutta High Court restrained Harsh Vardhan Lodha from holding any office in any of the entities of M.P. Birla group during the pendency of the suit. The order on Thursday modified the extent of the estate of Priyamvada Birla and laid down the powers of the APL Committee with the Harsh Lodha camp claiming that the ruling was “firmly” in their favour.
“The APL, for example, cannot jump steps to directly take or pre-empt business decisions in respect of the tertiary-tier companies without going through the process of first taking decisions in the first-tier companies and getting its decisions approved through the representation of the first-tier companies as shareholders in the lower tier companies,” the division bench said in its judgment on Thursday. The Court also said that the administrators should bear in mind that they are not an “adjudicating authority”, and “merely the representative of the estate of the deceased testatrix”.
A press statement by Fox & Mandal, counsel for Lodhas, said that the judgment conclusively answers the question whether or not Harsh Lodha could continue to act as the chairman of the MP Birla Group and unequivocally ruled that the lower court could not have interfered with the functioning of the companies, trusts and societies of the MP Birla Group.
“In the past five years, relentless attacks were mounted on Harsh Lodha (chairman of the MP Birla Group) and certain other directors and trustees of the MP Birla Group on the basis of a convoluted interpretation of the late Priyamvada Birla’s Estate. Alongside, taking advantage of the legal battle, rogue executives of some trusts and societies have gone to extreme lengths to damage the interests, assets and properties of these societies,” said Debanjan Mandal, Partner, Fox & Mandal, expressing ‘deepest satisfaction over the verdict’.
“Thursday’s verdict imposed several restrictions on the functioning of the committee of administrators, which in the past few years have taken several decisions by 2:1 majority and pressured companies, trusts and societies of the MP Birla Group to implement them,” Fox & Mandal said in its statement.
N.G. Khaitan, senior partner at Khaitan & Co, on behalf of the Birlas, said the division bench has modified the order of the single judge to a limited extent — partly in favour of the appellant and partly in favour of the respondent. “Most importantly, the order of the Single Judge restraining Harsh Vardhan Lodha (HVL) from holding any office in any of the entities in MP Birla Group has not been modified by the Appeal Court and the said restraint on HVL continues,” said Khaitan. “We will take further course of action after reviewing the order fully,” he added.
