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Birlas seek administrator for MP group companies

December 16, 2004 11:08 IST

In yet another twist to the Birla-Lodha battle, the Birla family has filed an application for an administrator on all M P Birla group companies and the entire estate of Priyamvada Birla.

Sources said the application was filed by two sisters of M P Birla, Lakshmi Newar and Radha Mohta and the four caveators G P Birla, Yash Birla, K K Birla and Kashinath Tapuriah.

Birla vs Lodha: War over a will

The move assumes special significance since it involves all the companies of the M P Birla group including the flagship, Birla Corporation, of which Rajendra Singh Lodha was the co-chairman.

In the event of an administrator being appointed, Lodha would have to function under the supervision of the court-appointed administrator and all decisions would have to be ratified by the receiver.

Moreover, the M P Birla group comprises other listed companies such as Vindhya Telelinks, Universal Cables and Birla Ericsson Optical.

However, the estate would include the entire property over and above the companies in the group. According to the probate application filed by the Birla family, the valuation of the property was to the tune of Rs 2,404 crore (Rs 24.04 billion).

But, the valuation by the Birla family pertained only to Priyamvada Birla's shareholding in various companies. Taking the charitable trusts into consideration, the total value of the assets would be in the region of Rs 5,000 crore (Rs 50 billion).

This was not first attempt to freeze the rights of Lodha. Earlier, minority shareholders of Birla Corporation had moved the Company Law Board to for freezing of voting rights of promoter group companies under M P Birla, injunction on sale of assets of Birla Corporation and stay on re-appointment of Rajendra Singh Lodha as director of Birla Corporation. The matter was still pending with CLB.

In another proceeding before the court of Justice K J Sengupta, the hearing of the petition filed by Kashi Nath Tapuriah seeking discharge of the caveats filed by Lodha in both wills of M P Birla and Priyamvada Birla made on 1982 started.

S Sarkar counsel for Tapuriah argued that as Lodha was not an heir of M P Birla or his wife nor he is in any way connected with the Birla family he should not have any caveatable interest in the Birla family will. He was only an employee of a M P Birla company so his caveat should be discharged.

Sarkar also said that as Lodha does not accept the mutual will concept and he challenged reality of the mutual will of 1982 so how he can file caveat asking caveatable interest in the same will.

Meanwhile, Ram Jethmalani, the counsel for R P Pansari, the complainant in the criminal case against R S Lodha and three others, argued that the M P Birla Trust was not revocable as also the Priyamvada Birla Trust.

There was an implicit agreement not to revoke the trust and, hence, Priyamvada Birla could not revoke the trust unilaterally, upon the death of M P Birla, he said in the court of Justice D P Sengupta of Calcutta high court, which is hearing the criminal case against R S Lodha and others.

Jethmalani alleged that the transfer of the M P Birla group properties to R S Lodha was done in haste and smacked of intention to commit fraud.

Arguing the case for Pansari, seen as a Birla nominee, Jethmalani said assets and properties of the M P Birla group worth over Rs 5000 crore (Rs 50 billion) were earmarked for public charity from 1979 till April 15, 1999.

Thereafter, within three days, Lodha , the first accused in the case, transferred assets to his name, he alleged. This was criminal fraud, Jethmalani added.

He opposed the petition filed by S N Prosad, one of the accused in the case. Prasad has obtained a stay on the criminal proceeding from the high court.

Jethmalani further argued that on October 5, 2004, the chief judicial magistrate, Alipur, issued notice to the four accused, but the notices returned without service three times as the residence of R S Lodha was found locked.

Jethmalani said this was improper. He will continue his argument on December 16. Earlier in the day, counsel for Prosad, Pradip Ghosh, stated that if there was a probate proceeding pending in the court of law, then a criminal proceeding dealing with the same property should not be permitted to continue.

He also argued R S Lodha had not yet taken possession of the assets as he was yet to obtain probate on the will of Priyamvada Birla, so the allegation that R S Lodha committed fraud on the M P Birla estate was unacceptable at this stage.
BS Bureau in Mumbai
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