Setback to Birlas146; appeal for group administrator

A calcutta high court bench today set aside a May 2006 trial court order appointing administrators over the MP Birla empire...

A calcutta high court bench today set aside a May 2006 trial court order appointing administrators over the MP Birla empire, being run by Rajendra Singh Lodha. Justices Pinaki Chandra Ghose and Tapan Kumar Dutt, while setting aside the order of Justice Kalyan Jyoti Sengupta, said they did not find any 8220;necessity8221; to appoint an administrator over the MP Birla group.

The order is seen as a major setback for the Birla clan, which has been battling Lodha ever since he claimed to have been bequeathed the issueless MP Birla8217;s companies and estate by his widow, Priyamvada Birla, after her death in June 2004. The MP Birla group was said to be worth Rs 5,000 crore at that time. The Birlas declined comment, but their lawyers said they could move the Supreme Court.

The bench also directed Lodha not to sell any part of the estate or spend any amount, including dividends accruing to the estate, except for its maintenance. Lodha has been directed to maintain separate accounts for the business earnings and dealings of the estate, in continuation of an earlier order.

Lodha had cited a will purportedly made by Priyamvada in 1999, and filed for probate. But the Birlas have challenged the will, contending that MP Birla and his wife had wished to leave everything to charity and that administrators ought to be appointed until the issue of the will is decided. The Birlas, in turn, have cited two mutual wills purportedly made by the couple in 1982.

Debanjan Mandal of Fox Mandal, solicitors for the Lodhas, said the Birlas had sought the appointment of administrators in December 2005, listing 36 companies as part of the MP Birla group. He said the Lodhas had told the court that the MP Birla group companies, especially flagship Birla Corp, have become 8220;better on each and every single index8221; since the death of Priyamvada Birla. 8220;With today8217;s judgement, it is the firm conviction of Shri Lodha that the MP Birla group will continue to grow and prosper in the years to come and Smt Priyamvada Birla8217;s wishes will be fulfiled.8221;

Mandal also said that the Supreme Court had concluded today its hearing in the matter of the appeals filed by the Birlas against a high court order dismissing the caveats filed by Basant Kumar Birla, Yashovardhan Birla, and KK Birla in the 1999 will of Priyamvada. The mother case 8212; the probate filed by Lodha in July 2004 8212; can proceed only once the caveats are cleared. Apart from this, there are another eight cases listed in the high court, most of them filed by the Birlas, apart from cases in lower courts here and in other states.

1982: MP, Priyamvada make wills according to Birlas

1999: Priyamvada makes will according to Lodha

Jun 2004: Priyamvada dies leaving group to Lodha

July 2004: Lodha files for probate with Calcutta HC

Dec 2005: Birlas seek appointment of administrators

May 2006: Trial court appoints group administrators

Oct 2007: Calcutta HC sets aside trial court order