The Supreme Court on Friday refused to grant any interim relief to the Birlas, even as it admitted their appeal against a division bench verdict of the Calcutta High Court passed on 14 December 2023, which clearly defined, among other things, the powers of the Administrators over the estate of the late Priyamvada Devi Birla.
By declining to grant any interim relief, the apex court has cleared the deck for Harsh Vardhan Lodha, chairman of the MP Birla Group, to initiate legal proceedings to correct all wrongdoings that started with a section of administrators of Priyamvada Birla’s estate attempting to seize control of all entities of the Group on the strength of a controversial verdict of a single judge of the Calcutta High Court passed on 18 September 2020.
By not granting any interim relief to the Birlas, the Supreme Court finally sets the stage to start corrective action against mismanagement at several trusts, societies and privately-held companies of the MP Birla Group, where the administrators have unlawfully interfered with operations.
The controversial verdict of September 2020 had introduced a questionable concept of ‘extended Estate’, and expanded the role of the administrators. Even though the verdict was modified by the Division Bench, it was used as a handle to disrupt the operations of several trusts, societies and companies of the MP Birla Group, and led to proliferation of court cases.
While clearly defining the meaning and the extent of the Estate, the division bench clarified the role of the administrators. The two-judge bench of the Calcutta High Court had clearly said in their verdict that the administrators could not interfere with the operations of the trusts, societies and companies because they were not part of the Estate, and that the administrators’ voting rights were strictly restricted to the shares held directly by Priyamvada Birla.
However, on the strength of the controversial verdict of September 2020, the administrators, who have lately been taking decisions by 2:1 majority, have repeatedly attempted to influence the voting of promoter group entities in AGMs. In the wake of the Supreme Court not granting any relief to the Birlas against the division bench’s verdict, the administrators will no longer be able to interfere with the voting of different promoter group entities.
“The MP Birla Group will not have to deal with these distractions anymore,” said Debanjan Mandal, partner, Fox & Mandal—the law firm representing Harsh Lodha. “Also, the time has come to put an end to the mismanagement at trusts, societies and companies, where the administrators and a cohort of MP Birla Group employees had unlawfully tried to alter the management structure.”
