Lodha counters APL committee's decision not to support his reappointment

The committee has also decided to oppose a proposal for payment of remuneration to non-executive directors and the chairman of the four manufacturing companies
Birla Corporation Chairman Harsh Vardhan Lodha on Tuesday countered a court-appointed committee’s decision to not support a resolution seeking his reappointment as director on the board of two group entities — Vindhya Telelinks and Birla Cable. “The board of a company is supreme as far as decisions regarding it are concerned,” he said. The Administrator Pendente Lite (APL) committee to administer the estate of Priyamvada Birla until there’s a final order in the decade-and-a-half-old dispute between the Birlas and the Rajendra Lodha family over control of the MP Birla Group. The dispute began in 1999 over the purported will of Priyamvada Birla, bequeathing her entire estate to Rajendra Singh Lodha, and is now in its last leg with probate proceedings that started eight months back.  

The committee has also decided to oppose a proposal for payment of performance-linked remuneration to Lodha with respect to four manufacturing companies — Birla Corporation, Universal Cables, Vindhya Telelinks, and Birla Cable. The high court had appointed the committee in 2012; it comprises three members, Justice Mohit Shah, A C Chakrabortti, and Mahendra Kumar Sharma, former vice-chairman, Hindustan Unilever. 

Sharma had dissented from the decisions of the other members and said the APL committee should support both resolutions proposed at the annual general meetings of the companies. The decision of the APL committee has been challenged in Calcutta High Court, said Lodha, when asked about it at a press conference after Birla Corporation’s AGM. Lodha’s main contention is that the administrators were appointed over the estate of Priyamvada Birla and not over any firm or trust or society, which are all independent legal entities. 

Harsh Vardhan Lodha
In the petition, Lodha mentioned that the administrators cannot decide on the shares held by such independent legal, bodies which will be guided by their own boards or committees. Lodha’s remuneration was one of the items placed before shareholders for approval at the Birla Corporation AGM on Tuesday. The APL representative, Chakrabortti, speaking as a shareholder, said there was no proper and defined channel of any communication between Birla Corporation’s management and the APL. Thus, it was not privy to decisions taken at the board. The APL representative attended and voted on behalf of the 1,260 shares that Priyamvada Birla directly held in Birla Corporation, said Lodha.

One of the contentions that has emerged is that the APL Committee is seeking to exercise voting rights in respect of shares not owned by the estate of Priyamvada Birla. 

N G Khaitan, Senior Partner, Khaitan & Co, however, said that the Division Bench of the Calcutta High Court which appointed the APL Committee held that the estate had controlling interest and controlling power over all the firms of the M P Birla group and in that context granted power to the panel to exercise voting rights thereof. Khaitan & Co is representing Arvind Newar, nephew of M P Birla.  In Vindhya Telelinks and Birla Cable, resolutions regarding Lodha’s reappointment as a director were placed before the shareholders. The court in its interim order had directed that results of voting on some resolutions should not be published until further orders, said Fox & Mandal Partner, Debanjan Mandal. Fox & Mandal is representing Lodha.

AGMs of the three cable companies of the M P Birla Group had already taken place and these companies have announced the results of voting on those resolutions on which there was no restriction.

The results show all resolutions in all three cable companies (that could be announced in keeping with court orders) have been carried with at least 98.78 per cent. Most of the resolutions, including the ones relating to Lodha’s remuneration in Vindhya Telelinks and Birla cable, have been carried by 99 per cent and 100 per cent majority. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel