INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

BOTH BIRLAS AS WELL LODHAS DECLARE JUDGEMENT AS VICTORY

  The Birlas are triumphant, despite a last-minute division bench stay. “It's a landmark judgment” was the universal refrain at Birla Buildings on Friday afternoon, even as Mr S K Birla convened a hurriedly organised meeting of the media to express the official Birla side views.

“From the perspective of our family, in light of Friday's judgment we would like to say justice has come to the rescue of charity. And, I am speaking on behalf of the entire family,” Mr Birla told newspersons. “It is the first step towards justice, therefore, also the most important one so far,” Mr Birla said. “The Birla family had entered into this litigation only for reasons of charity. There is no personal element involved in all this. The charity ethos was uppermost in our minds. We would also like to see that the sentiment of our departed seniors is also properly respected,” he added. “Earlier, the Supreme Court judgment had said the various charges against Mr Lodha were sustainable. There is also a criminal case pending. This was a separate case asking for an administrator. The court has upheld our contention. It shows that the Birla family's contention is not without merit. It is a clear cut, decisive judgment,” Mr Birla added. “An appeal was promptly filed on the judgment ... they were ready with it. Thereafter, a short stay of two weeks was granted on it. Once that comes for hearing on June 13, things will proceed. The court returns after vacation on June 5,” Mr Birla concluded.

 “It is a landmark judgment in the judicial history of India,” N G Khaitan, the Birla legal counsel said. “The High Court judgment saying that a set of administrators is to appointed, does admit the fact that there is a serious challenge to the will. There are two angles to this: one, that there is prima facie a criminal offence by the Lodhas and second, that there is serious challenge to the validity of the 1999 will of Priyamvada Birla,” he said. “An administrator will be appointed and we will obtain probate,” Mr Khaitan said. “It is only a matter of time,” he added.

 IF the Birlas are jubilant, the Lodhas are ecstatic. The division bench stay on the appointment of administrators, was considered a major victory by Lodha counsel, Fox & Mandal. The renowned law firm felt that this could very well be the crucial turning point in the legal battle with the Birlas. “We would now have to wait for the final hearing on June 13. Mr Lodha will continue as chairman of these companies at least till disposal of the appeal,” said Mr Debanjan Mandal.

Asked what would be the next course of action would be like, Mr Mandal said: “All would depend on the hearing on June 13 and the judgment passed subsequently.” Later in the day, a press release from the Lodha side said: “As read out in court, Justice Kalyan Jyoti Sengupta declined to pass orders on the Birla prayers for appointment of an administrator or committee in respect of 38 companies of the M P Birla Group, to take over the management of affairs and control of the these companies.” “Justice Sengupta, however, passed an order for appointment of joint administrators only over the shareholdings of late Priyamvada Birla. The Justice had also ordered that the joint administrators would take steps concerning the estate in consultation with Mr Lodha,” the release mentioned.

 “The Birlas had also prayed for injunction restraining Mr. Lodha from exercising right of control over the companies. However, the judge, in his order, directed that the joint administrator should consult Mr Lodha on all decisions concerning the estate. This order has now been stayed in an appeal filed by Mr R S Lodha,” Mr Mandal said.

Mr Lodha will, however, not be able to take major policy decisions or alter decisions taken earlier without the leave of the court before the appeal is heard or disposed off. He will able to take decisions with regards to normal course of business. Status quo will be maintained till further orders.

The Lodha lawyers on the day were Anindya Mitra, Abhrajit Maitra, Pratap Chatterjee and Debanjan Mandal.

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