Birla v/s Lodha: Company Law Board dismisses Birla's petition to remove Harsh Lodha
Moneylife Digital Team 18 February 2011

Both the Birlas and the Lodhas are fighting several cases at every possible legal forum since 2004, when RS Lodha sought a probate of the will after the demise of Priyamvada Birla

The ongoing battle between the Birla and Lodha families over the control of the MP Birla group has taken a new turn with the Company Law Board (CLB) dismissing all interim petitions, saying that the Birlas were following a one-point programme to remove Harsh Lodha as chairman and managing director (CMD) of Birla Corporation. Earlier, in October 2009 also, the CLB had dismissed a proxy petition of the Birlas challenging the appointment of Harsh Lodha in Birla Corporation. (Read 'Birla Bites')

In an interim order on 9 February 2011, Justice DR Deshmukh, chairman, CLB said, "With every such application being filed and the wide publicity being given and notices published by the petitioners (the Birla family) regarding any interim orders passed, it is becoming clearer as broad daylight that a one-point programme of removal of HV Lodha as chairman and managing director of the R-1 Company (Birla Corporation) is being followed by the petitioners."

"The floodgates of litigation opened by the petitioners over the years before every legal forum, and the exorbitant cost at which such litigation is being fought, prima facie creates an impression that it is not the interest of the R-1 Company which the petitioners seek to protect, but it is the continuance of HV Lodha as the chairman and director of R-1 that has become the eyesore of the petitioners. The petition thus prima facie appears to be a motivated one and the petitioners appear to be working for personal gains," the judge said.

In this case the petitioners were Birla Education Trust, headed by AV Birla group chairman, Kumar Mangalam Birla, and a few other Birla entities.
Despite their best efforts, the Birlas have not been able to stop the Lodhas from maintaining their control over Birla Corporation and other companies of the MP Birla group that the late RS Lodha inherited through the will of the late Priyamvada Birla.

In the previous order, as well as the recent order, the CLB has said that the petitioners are more concerned about their own interests rather than the affairs of the company, Birla Corporporation.

In the latest order, the CLB chairman, said, "In a Company (Birla Corporation), which is profit making, professionally managed by eminent persons and consistently declaring dividends to its shareholders (the last being 60%), no public interest would be served in granting the relief prayed in the CA759/2010 at the interim stage."

"Balance of convenience is this not in favour of the petitioners but lies in maintaining the status quo and it would be prima facie unjust to oust HV Lodha, R-2 from being the chairman and director of R-1 and to grant the injuction prayed for as an interim measure. Thus, at this stage the petitioners are not entitled to any interim relief prayed for in CA759," the interim order said.

The CLB also rejected the plea of the Birlas to restrain the Lodhas from shifting the company's corporate office to Shakespeare Saranai from Birla Building, RN Mukherjee Road in Kolkata. It said, "The petitioners Nos. 1 to 6 who constitute the Birla group are a miniscule minority in R-1 Company, holding only 1.08% shares and cannot be permitted to dictate at the hearing for interim relief as to where the corporate office of R-1 should be situated as it is the prerogative of the board of directors."

Earlier, on 31 July 2007, the board of directors of Birla Corporation decided to find a suitable place of about 20,000 sq ft for the company's corporate office and subsequently bought space at Shakespeare Saranai in November 2007.

The late Priyamvada Birla, wife of MP Birla, had bequeathed her entire estate to RS Lodha, once the auditor of the Birla group, by a will dated 18 April 1999 which is a registered document. After her death on 4 July 2004, litigation started between members of the Birla family and RS Lodha.

The issue was conclusively decided in favour of the Lodhas in three successive litigations. The Supreme Court held that KK Birla, BK Birla and Yashovardhan Birla did not have any right to oppose the probate proceeding filed by RS Lodha. After the Supreme Court's decision, RS Lodha had been continuing to chair Birla Corporation. He expired on 3 October 2008. Harsh Lodha, his son, then became the chairman of Birla Corporation.

Birla Corporation, the flagship of the MP Birla group, was initially founded as Birla Jute Manufacturing Company. It is now a multi-product corporation with divisions from cement and jute to vinoleum and the auto trim division.

chanakya maurya
1 decade ago
A registered will would have little value if birlas and firlas initiate long protracted and costly litigations. The court must fine birlas a minimum amount of 500 crores, i.e. ten percent of the 5k crore empire they tried in vain to remove Lodha from.
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