The Calcutta high court on Thursday dismissed a clutch of contempt petitions filed by the Birla family which effectively allowed Harsh Vardhan Lodha to remain on the boards of the listed companies of the MP Birla Group, including flagship Birla Corporation Ltd.
The Birlas had filed five cases against Lodha and four companies contending that the chairman of Birla Corporation had violated a judgment handed down by Justice Sahidhullah Munshi (now retired) by continuing on the boards of these companies and directing their affairs.
Justice Munshi had restrained Lodha from occupying any position in the MP Birla Group. On Thursday, a division bench comprising Chief Justice Thottathil B. Radhakrishnan and Justice Shampa Sarkar ruled that Lodha had not committed any act of contempt.
“For the purpose of this proceeding, it is sufficient to say that Harsh Vardhan Lodha’s participation in the board meetings cannot be termed as contumacious violation of the order of this court as the wilful disobedience has not been proved beyond reasonable doubt… The contempt application against HVL is dismissed,” the judgment read.
The bench also ruled that the directors on the board of the companies had not violated the order either because it was held that Lodha had not committed any contempt by attending the board meetings.
The latest round in this dispute signals the end of another chapter in the legal battle between the Birla and Lodha families over the control of the MP Birla empire which includes manufacturing companies, trusts and societies that run several educational and medical institutions in Calcutta and elsewhere.
Sources said the Birlas may consider an appeal before the Supreme Court.
The two sides have been sparring ever since Late Priyamvada Devi Birla bequeathed her estate to late Rajendra Singh Lodha, father of Harsh Vardhan, in 2004. Two years ago, a fresh battle erupted between the two sides after a committee of administrators was appointed to oversee the affairs of the estate.
Since then, two of the three administrators started taking decisions on the strength of a majority vote and many of these went against the interests of Lodha. The committee had instructed promoter group companies to vote against the appointment of Lodha in the manufacturing companies during their respective AGMs.
A Birla family member approached the high court seeking to enforce the decisions of the committee. On September 18 last year, Justice Munshi restrained Lodha from holding any position in the Group till the probate of Priyamvada Birla’s will was decided. The issue is still being heard before the high court.
On October 1, the division bench of CJ Radhakrishnan and Justice Sarkar modified the single bench order even though the bench did not stay it. The bench said Lodha would be restrained “on the strength of the shares referable to the estate of PDB (Priyamvada Devi Birla).”
The order was interpreted by the two sides differently. The Lodhas said it paved the way for Harsh Vardhan to continue on the boards of BCL and three other cable companies: Vindhya Telelinks, Birla Cable and Universal Cables.
The judgment noted: “We are not deciding in this contempt case whether the interpretation of the “estate of PDB” as given by the respondents or the one given by the petitioners is correct. That question has to be decided in the pending appeals.”
The Lodha camp contended that Harsh was not appointed on the strength of the shares referable to the estate of PDB.
The bench appeared to agree: “There is a possibility that HVL could continue to hold office on the strength of the votes of public shareholders in exclusion to the votes of the APL Committee and the Promoter and Promoter Groups and PACs.”
A raft of appeals and petitions had followed after the October 1 order was delivered. The bench decided to hear the batch of contempt petitions before it addressed any other issue including the main appeal against the September 18 order. There is little possibility that this bench will hear the main matter as CJ Radhakrishnan is due to retire by the end of this month.
