The Calcutta High Court, in its final judgment, on Friday, directed the removal of Harsh Vardhan Lodha from all the positions within the M P Birla Group of Companies. The Court has also directed the implementation of the decisions of the Committee of Administrators.
“In a monumental direction, the Court has restrained Harsh Vardhan Lodha from holding any position in the MP Birla Group. The Court has also restrained him from drawing any benefit from the assets of the estate. The Court has specifically restrained him for interfering with any decision of the APL Committee, which is taken by majority. This paves way for smooth functioning of the Committee of Administrators,” a spokesperson for the Birlas said in a statement.
These directions mean that Harsh Lodha would immediately cease 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, the spokesperson said.
While the Court has observed that companies are third parties in these proceedings and hence, directions sought for against the companies cannot be granted; however, it has the power to pass directions against HV Lodha in terms of Section 247 of the Indian Succession Act. Accordingly, the Court has directed Lodhas, who are plaintiffs in the testamentary proceedings, to implement the directions of the APL Committee dated July 19, 2019 and July 30, 2019 and all the consequential directions.
The plaintiffs would also be restrained from interfering with the decisions of the APL Committee taken by the majority, said N G Khaitan, Senior Partner, Khaitan & Co, which is representing Arvind Newar, nephew of MP Birla.
To file an appeal
However, a spokesperson for Birla Corporation, said that the order is not likely to have any “material impact” on the company as it would be filing an appeal against the order.
“The company will examine the judgement and take necessary steps including the filing of appeal because the verdict seems to have ignored shareholders' democracy and their right to elect by the majority of their votes a person as a director of a company,” a spokesperson for Birla Corporation said.
It is to be noted that Harsh Lodha was elected the director of Birla Corporation with an overwhelming majority of 98 per cent at the recently concluded annual general meeting.
APL Committee decision
In July 2019, Birlas had filed an application before the Calcutta High Court for implementation of the decisions of the Committee of Administrators. The Committee of Administrators was appointed by the High Court in 2012 to administer and manage the Estate of Late Priyamvada Devi Birla.
The Committee, had in July 2019, directed removal of Harsh Lodha from the boards of Vindhya Telelinks Ltd and Birla Cables Ltd. The Committee had also refused to support the resolution for the payment of profit-based remuneration to him. The same decisions were repeated concerning Birla Corporation Limited and Universal Cables Limited in July 2020. The Committee took these decisions primarily on the basis that Harsh Lodha was in a position of conflict of interest and acting against the interests of the Estate and the companies.