However, the decade-and-a-half of legal battle between the Birlas and the Lodhas over the will seems a long way from reaching a conclusion, reports Ishita Ayan Dutt.
Illustration: Dominic Xavier/Rediff.com.
The story has all the makings of a corporate thriller, involving one of the most well-known business families of the country and high courtroom drama.
It all began in 2004, when the former chairman of Birla Corporation, Priyamvada Birla, died. A will, dated 1999, emerged, bequeathing her Rs 5,000-crore assets to co-chairman and well-known chartered accountant Rajendra Singh Lodha.
What followed is a decade-and-a-half of legal battle between the Birlas and the Lodhas. It still seems a long way from reaching a conclusion.
In the past few months, the case has come to the limelight again. It is now in the last leg of its probate proceedings. The cross examination of Harsh Vardhan Lodha, who heads the group, is expected to start any day.
A three-member committee, Administrators Pendente Lite of the Estate of Priyamvada Birla (APL Committee), appointed by the Calcutta high court in 2012 to administer the estate of Priyamvada Birla is divided on the scope of interest of the estate, which is now consuming both sides. Submissions have been made before the committee by the two parties.
The APL Committee comprises three members -- Mohit Shah (appointed by the court), A C Chakrabortti (nominated by the Birla side), and M K Sharma (former vice-chairman of Hindustan Unilever, nominated by Lodhas).
The committee’s majority view, based on observations made by the high court and the Company Law Board, was that Priyamvada Birla had a controlling interest of over 62.9 per cent of the shares in Birla Corp, though Lodha contends that the control is over only 16.04 per cent.
The 62.9 per cent holding also includes a 14.35 per cent share in charitable societies.
Debanjan Mandal, partner in legal firm Fox & Mandal, however, said administrators were appointed to the estate of Priyamvada Birla and not over any company, trust or society, which are all independent entities.
Fox & Mandal is representing Lodha.
The APL Committee’s member M K Sharma has dissented with the majority view of the panel. His dissent note said investment companies in which the estate held direct or indirect equity interest more than 50 per cent of their total capital could be regarded as the “extended estate” for the purpose of administration.
However, Sharma said he was unable to concur with the view that the four public listed companies and a fifth, a joint venture (Hindustan Gums), can be regarded as “Estate of Priyamvada Birla” for the purposes of public administration such as to enable the APL Committee to assert or exercise any control on them beyond the shareholding of the estate or investment companies in these public-listed companies and the joint venture.
The M P Birla Group companies have a pyramid structure of control under which Priyamvada Birla directly controlled the apex investment firms and through a mechanism of chain and cross holding of shares the manufacturing and operating companies -- Universal Cables, Vindya Telelinks, Hindustan Gum & Chemicals, Birla Cable, and Birla Corporation -- were controlled.
The estate having a controlling interest in the manufacturing and operating companies would mean that the APL Committee, empowered to exercise rights flowing from the ownership of shares, can block resolutions or appoint directors in the manufacturing and operating companies.
It has, for instance, decided by majority not to support Harsh Lodha’s reappointment as a director of Vindhya Telelinks and Birla Cable. Though the voting on the two resolutions has already taken place, according to a court order, the results cannot be announced.