Supreme Court admits appeals against ruling allowing Harsh Vardhan Lodha to continue as MP Birla Group Chairman

The Supreme Court on Friday admitted appeals against a Calcutta High Court verdict that effectively allowed Harsh Vardhan Lodha to continue as the Chairman of the MP Birla group of companies. (Arvind Kumar Newar v. Harsh Vardhan Lodha and ors).A Bench of Justices Abhay S Oka and Ujjal Bhuyan refused to grant any interim relief to the Birlas against the High Court ruling that restricted the 'administrators pendente lite' (APL) from interfering with the day-to-day operations of the group.The matter will likely be taken up next on April 15.."We make it clear that, at this stage, we are not granting any interim relief. If any direction/relief is required to be applied for, the probate proceedings are pending before the Testamentary Court. The parties can apply in accordance with law," reads the order .The Calcutta High Court had on December 14 delivered the judgment under challenge. This led to the instant appeal before the apex court, filed through Khaitan & Co and Aggarwal Law Associates. The Lodhas were represented by Senior Advocates Darius Khambata and Puneet Bali, instructed by a team from Fox & Mandal of Advocates Debanjan Mandal, Kunal Vajani, Kunal Mimani, Sanjiv Trivedi, Iram Hassan and Mahima Cholera.The Birlas were represented by Senior Advocates Kapil Sibal, Dr Abhishek Manu Singhvi and Mukul Rohatgi.Senior Advocates Shyam Divan and Sajan Poovayya, instructed by Advocate Ranjeeta Rohatgi, appeared for the MP Birla group companies..The High Court's decision had come on a clutch of appeals filed by Lodha and four companies of the Birla Group challenging the September 18, 2020 order of a single-judge who had restrained Lodha from holding the post of Chairman.The September 2020 order was passed after a few members of the 'extended' Birla family questioned the validity of the will of Priyamvada Devi Birla, wife of MP Birla..Priyamvada Devi Birla was the Chairperson of the group till her death on July 3, 2004. By virtue of a will prepared in April 1994, she had bequeathed her nearly ₹25,000 crore estate to her advisor and former chartered accountant, RS Lodha.Subsequently, RS Lodha held the Chairman's position. However, the 'extended' Birla family members challenged the same, and three administrators were appointed to oversee Priyamvada's estate.After RS Lodha's death in 2008, his second son Harsh Vardhan Lodha took over as Chairman, but he was restrained by the September 2020 Calcutta High Court order. He, however, continued as the Director of some of the companies..In December 2023, the High Court 'modified' the September 2020 judgment. It ruled that the APL cannot jump steps to directly take (decisions) or pre-empt business decisions in respect of the entities not under their direct control.The Division Bench had, however, clarified that as and when any major decision is required to be taken regarding transactions/transfers of the shares themselves, the APL mandatorily has to approach the testamentary court for necessary orders.While referring to the 'influence' of Priyamvada over the entire group of companies, it had said that her powers were restricted to her ownership of the particular shares in different companies.It had added that the APL must not confuse the expression ‘controlling interest’ with ‘personal influence’ of Priyamvada.Therefore, the 'controlling interest' (of the APL) would only mean the 'heritable incidental rights' such as voting rights, rights to participate in shareholders' meetings etc.As regards the contention of the APL passing 'drastic orders' compelling or pressuring the companies of the group to implement the same, the Court emphasised that the APL is not an adjudicating authority.The High Court had made it clear that the origin of the dispute is the will in question, which has been long pending and must be expeditiously decided..Justice BV Nagarathna of the Supreme Court had earlier recused from hearing the case..[Read Order]