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Battle for Birla assets in crucial stage

Last updated on: April 19, 2005 20:41 IST

The legal battle for the Rs 5,000 crore (Rs 50 billion) worth assets of M P Birla group has entered a crucial stage with the main arguments for claimant Rajendra S Lodha's probate petition for Priyamvada Birla's purported will about to begin soon.

In this ideal David vs Goliath battle where the powerful Birla clan, one of the oldest and respected business families in the country, is pitted against rank outsider and once auditor of most of the Birla group's companies, Lodha.

Lodha, who had claimed that the entire property has been bequeathed to him by Priyamvada, has so far fought with equal elan but the most crucial time is ahead with the main suit for the assets to be taken up now.

However, the hearing of the probate application of Lodha for the assets of the M P Birla group, in which three members of the Birla family now remain contenders, could get delayed if the Birlas decide to challenge the dismissal of caveats by three others from the family.

"We are yet to get the certified copy of the order. After going through it, we will decide whether to appeal against the order," a source in the Birla group said.

"We already have three caveats in the case and can fight Lodha through those in the suit," he said.

Justice Kalyan Jyoti Sengupta, who is hearing the case, had admitted that G P Birla had a caveatable interest in the matter and as such can challenge Lodha over the latter's probate proceedings, while dismissing the caveats of three other Birlas -- K K Birla, B K Birla and Yash Birla.

Two sisters of M P Birla, Laxmi Devi Newar and Radha Devi Mohta would also fight the case against Lodha, as their caveats were not challenged by Lodha.

The Birlas, however, suffered a setback when the court refused to appoint an administrator in the M P Birla group companies in the interim while directing Lodha to maintain status quo in the M P Birla group.

A final order in this application of the Birlas seeking appointment of administrator in the M P Birla group companies is awaited as that will decide whether the group assets would remain in the control of Lodha or an independent administrator would take care of them till disposal of the main suit.

An order on the maintainability of the criminal case instituted by the Birlas against Lodha and three of his associates is also awaited, in which hearing has been completed before the Calcutta high court.

In the criminal case, lodged before a city court, the Birlas had alleged that Lodha, S N Prasad, Dr V Gaurishankar and S K Daga had committed a fraud on Priyamvada who, by a purported will in 1999, had bequeathed the entire assets of the M P Birla group to Lodha.

Lodha and his associates filed an application before the High Court seeking quashing of the criminal proceedings before the lower court. Hearing in this quashing application has been completed and the order is awaited.

In another significant victory for Lodha, the Company Law Board has declared him and two others elected as directors of the M P Birla group flagship company Birla Corporation Ltd.

While the Birla clan claims that auditor Lodha was trying to usurp the property meant for charitable purposes, Lodha said M P Birla's widow Priyamvada had entrusted the assets of the group in him as she trusted that he would be able to manage the assets more professionally and uphold the name of her husband.

The Birlas charges that Lodha had cheated Priyamvada into signing the will and accused him of breach of trust while the auditor alleges relation between Priyamvada and the rest of the Birla family had soured long back and that the will was a result of the bitter relations.

The Birla family came together to jointly fight the court case against Lodha and filed six caveats before the Calcutta high court challenging Lodha's probate petition.

The Birlas also sought probate of two 'mutual wills' by M P Birla and Priyamvada.

Justice Sengupta has, however, said the last testament of Priyamvada, which was purportedly signed in 1999, would be taken up for hearing first, and only after decision on that, would the question of 1982 wills arise.

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