Granting relief to the Lodhas, a division bench of the Calcutta High Court, on Thursday, restricted the role of administrators in MP Birla Group companies, as the bench observed that a testamentary court cannot decide issues of title conclusively.

“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,” the division bench of Chief Justice TS Sivagnanam and Justice Sabyasachi Bhattacharya said while passing the judgment.

Notably, the estate of late Priyamvada Devi Birla, former chairperson of the MP Birla Group, is currently under the custody of a three-member committee of administrators. The three-member committee, the Administrators Pendente Lite (APL), was appointed by the Calcutta High Court in 2012. Priyamvada Devi Birla died on July 3, 2004, leaving behind her will.

“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,” said the division bench in its judgment.

Commenting on the judgment, Debanjan Mandal, Partner, Fox & Mandal, counsel for Lodhas, said: “In the past five years, relentless attacks were mounted on Harsh Lodha (Chairman of 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.”

“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,” said Fox & Mandal in its statement.

NG Khaitan, senior partner at Khaitan & Co, on behalf of 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.

Notably, a single judge bench of the Calcutta High Court had earlier passed an order directing removal of MP Birla Group Chairman HV Lodha from the positions he holds in the various companies, trusts and societies of the group.

“Further, the third member of the APL (Administrator Pendente Lite), who is a retired Judge of the High Court, has been permitted to exercise Veto power for effective administration of the estate in case of conflict of decision between the two members of the APL,” Khaitan said.

“We will take further course of action after reviewing the order fully,” he added.

The genesis of over 19-year-old legal row between the Birlas and the Lodhas over controlling the Birla Estate lies in the contested will of late Priyamvada Devi Birla, which was executed in July 1982 after the purported will allegedly transferred the shares of the MP Birla Group, collectively called as the Birla Estate, in favour of Rajendra Singh Lodha.

legal row

The legal tussle began after the July 1982 wills that gave away all the assets to charities, but another will of April 18, 1999, gave them to Rajendra Singh Lodha, now being pursued by his son Harsh Vardhan Lodha and other heirs.