Property nature may decide deal

PRIYAMVADA BIRLA WILL

The different nature of properties left by Priyamvada Birla could serve as the guide for a settlement between the warring factions, sources close to the development said here yesterday.

"The M P Birla group assets constitute corporate entities like Birla Corporation, and the charitable trusts, and these are clearly two types of assets which are to be treated separately," the sources held.

Priyamvada's right to nominate a successor for the corporate entities would not be subject of any dispute, unless the authenticity of the will and its signatures were called into question. Priyamvada Birla had left behind a will that passed on all the assets of the group to group co-chairman R S Lodha.

However, even if Priyamvada's will were to state clearly that the right to manage and administer the trusts should pass to another person, the validity of her action could be questioned if the trusts did not empower her to make such a decision.

"It would then depend on the disputing parties to decide if they would accept her decision out of respect for the deceased, or choose to hammer out a separate formula for such assets disregarding her stated wishes simply because the stated wish was weak in point of law", said sources.

This legal position had emerged as the foundation for a settlement between R S Lodha, the designated successor, and the Birlas, who were claimants in this case. Lodha's unassailable right to the corporate entities would secure his title to them, while the trusts would pass to the control of the Birlas.

As a result, the control of the 25 per cent M P Birla group stake in Pilani Investments was likely to go to the Birlas.

An individual was free to leave properties under personal ownership to a nominated successor but, under normal circumstances, the right of a trustee to nominate a successor to manage a trust would be determined by the specific nature of the trust document and the powers bestowed upon the outgoing trustee.

In other words, Priyamvada was free to settle her private properties on whosoever she chose, but in the case of the trusts of the M P Birla group, her right to nominate a successor to manage affairs after her would be limited by the provisions of the specific trusts.

"Priyamvada could have nominated a successor only for assets which were in her power to give away. If this power did not extend to each and every one of the group's assets, they would have to be treated separately," sources clarified.