Vindhya Telelinks, Universal Cables and Birla Cable shareholders go against family’s wishes.
The Birla camp failed to nominate directors on the board of three MP Birla group companies -- Vindhya Telelinks, Universal Cables and Birla Cable -- as a majority of the shareholders voted against the resolutions in the annual general meetings held on Thursday.
According to the voting results available in the stock exchanges, 72 per cent of the valid votes were cast against the Birla camp resolution to appoint chartered accountant Dhanpat Ram Pal Agarwal as a director of Vindhya Telelinks.
The resolution to appoint another Birla camp nominee, Shyamal Kanti Chakrabarti, was also rejected by the shareholders. The Birla camp managed to get only 28 per cent of the votes in favour of their resolutions.
On Birla Cable board, Chairman Harsh Vardhan Lodha was reappointed with 83 per cent of the votes cast in favour while a majority of the shareholders rejected the Birla camp nominee -- Satish Pradhan to their board. The shareholders of Universal Cables also rejected the appointment of both Agarwal and Chakrabarti on their board.
The AGM of MP Birla group’s flagship, Birla Corporation, will be held on September 29. The Birlas are seeking to appoint one of their nominees on the board of Birla Corporation.
Punjab Produce and Trading, an investment company, filed nominations seeking appointment of two directors on the boards of all three cable companies. In two of them, Vindhya Telelinks and Universal Cables, they tried to remove justice (retired) Dilip Ganesh Karnik, who was seeking reappointment as director. In Birla Cable, the Birla camp had sought to remove Harsh Vardhan Lodha, currently the chairman of the MP Birla group.
In a statement, the MP Birla group said all these resolutions, which were aimed at interfering with the management of the professionally run companies, were defeated comprehensively. The boards of the MP Birla companies had deliberated over these nominations and strongly recommended shareholders to vote against them in view of potential conflict of interest if these persons were elected.
“It’s a landmark victory over years of mischievous acts, and one of the most memorable ones in 17 years of the proxy war being waged against the wishes of the late Priyamvada Birla,” said Debanjan Mandal, partner, Fox & Mandal.
“It gives us immense confidence to take on much more.”
Two of the three members of the APL Committee, or the court appointed panel of administrators overseeing the estate of Priyamvada Birla, have in the past couple years made repeated attempts to grab control of investment companies, trusts and societies of the MP Birla Group with the ultimate aim of influencing the operations of the listed companies. In 2020, they unlawfully altered the boards of several investment companies, one of them being Punjab Produce, the statement said.
This was legally challenged almost immediately, but the dispute over the legitimacy of Punjab Produce’s board has yet to come up for hearing at the Calcutta high court.
Simultaneously, two members of the APL Committee -- Justice (retired) Mohit S Shah and AC Chakrabortti -- demanded that Lodha step down as chairman of all MP Birla group entities, citing a contentious verdict passed by a single judge of the Calcutta high court in September last year.
A division bench of the Calcutta high court, comprising the chief justice, had later clarified in an interim order that Lodha was only barred from holding office on the strength of the shares of Priyamvada Birla’s estate, allowing him to continue as chairman of the MP Birla group. Even so, the two members of the APL Committee alleged contempt of court and wrote threatening letters seeking to pressure the operating companies to remove Lodha as chairman.
Lodha has, in the meantime, applied to court for removal of both these administrators, Shah and Chakraborti, from the APL Committee on grounds of bias and illegality of their actions. These petitions seeking their removal are yet to be heard.
Allegations of contempt of court against Lodha and directors of operating companies were quashed by a division bench of the Calcutta HC, and its decision upheld by the Supreme Court earlier this year. The apex court also instructed the Calcutta HC to dispose of all outstanding legal disputes arising out of the said verdict of the single judge within March 31, 2022.
“We remain fully confident that all tactics aimed at obstructing the professional management of the operating companies from acting independently will fail. Our client continues to have full confidence in the judiciary,” Mandal said.