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Harsh Vardhan Lodha removed from the board of M P Birla investment firms

Birla side says corporate affairs ministry approved and accepted the cessation of his directorship on November 18

Harsh Vardhan Lodha
Illustration by Ajay Mohanty
Ishita Ayan Dutt Kolkata
4 min read Last Updated : Nov 19 2020 | 11:40 PM IST
Harsh Vardhan Lodha has been removed from the boards of five investment companies of the M P Birla group on the basis of a Calcutta High Court order restraining him from holding office.

The administrators panel (APL Committee) removed Lodha from the boards of East India Investment, Gwalior Webbing, Baroda Agents and Trading Co, The Punjab Produce & Trading Co and Punjab Produce Holdings. The investment firms are headed by judicial member of the APL Committee, Mohit Shah.

The Birla side said that the corporate affairs ministry approved and accepted the cessation of Lodha's directorship on November 18. 

The Lodhas have filed applications in the Calcutta High Court challenging the actions taken by Mohit Shah as the chairman of the five investment companies to remove Lodha as a director.

This is the first instance of Lodha’s removal from M P Birla group entities following the Calcutta High Court order on September 18, 2020. The Single Bench of Calcutta High Court had ordered that Lodha be restrained from holding office in any of the M P Birla group entities during the pendency of the suit involving the contested will of Priyamvada Birla. 

The order was challenged by Lodhas before the Division Bench which declined an ad interim stay on the Single Bench order and clarified that the restriction on Lodha was “on the strength of shares referable to the estate of Priyamvada Birla”.

The order was interpreted by the Birlas and Lodhas differently. On the basis of the Division Bench clarification, Lodha chaired the board meeting of Birla Corporation on November 5 and listed cable companies, Universal Cables and Vindhya Telelinks on November 9 and Birla Cable on November 10.

The Birla side said that chairing the meeting was “illegal and violative of the court orders”. They are expected to file contempt proceedings against Lodha, the companies and their directors.

A spokesperson for the Birla said, “Lodha has continuously misinterpreted court orders and flouted the APL Committee decisions to cling on to the boards of MP Birla Group companies wrongfully. We will move the court to restrain him from further action in contravention to the decisions of the court as well as the APL Committee.”

Debanjan Mandal, partner, Fox & Mandal, representing Lodha, however, said that the actions taken by Shah were in gross disregard of modifications made by Chief Justice T B Nair Radhakrishnan and Justice Shampa Sarkar (Division Bench).

The Lodha camp said that Shah, as the chairman of the investment companies, decided on his own that Lodha had ceased to be director of these companies and did not send notices to him for board meetings held since 1 October. 

“These board meetings were conducted without properly appointing a chairman and without compliance with various provisions of law. Further, in gross violation of law, these companies were coerced by Shah into sending notices to the Ministry of Corporate Affairs removing Lodha as a director," they said.

They also pointed out that in four of the investment companies, Lodha was not reappointed director on the strength of the estate. In the fifth, Gwalior Webbing, the estate's ownership is 50.43 per cent. In one of the holding companies, the estate does not hold any share at all, and in another its ownership is a mere 0.08 per cent, they added.

Applications challenging the removal of Lodha from the five investment companies will be heard at the Calcutta High Court, starting November 20, for permanent and interim relief, said Lodhas.

TIMELINE

September 18: Single Bench of Calcutta HC restrains Lodha from holding office in M P Birla group firms 
October 1: Division Bench declines ad interim stay and clarifies on order
November 5: Lodha chairs Birla Corporation board meeting
November 18: Corp affairs ministry approved and accepts cessation of Lodha's directorship

Topics :Ministry of Corporate AffairsCalcutta High Court