Calcutta, May 19: The absolute power of the Lodhas over the MP Birla group may come into question, following the court drama over the appointment of administrators to the estate of the late Priyamvada Birla.

R.S. Lodha is the chairman of most of the top MP Birla group companies such as Birla Corporation, Vindhya Telelinks, Birla Ericsson and Universal Cables.

There are nine manufacturing companies in the MP Birla group which are controlled by a maze of investment firms (see chart).

The late Priyamvada had majority shares in two key investment companies ? East India Investment Co Pvt Ltd and Gwalior Webbing Co Pvt Ltd. The administrators would oversee Priyamvada’s share in the two investment companies, her bank accounts, bonds, mutual funds and ornaments.

In her last I-T return, Priyamvada valued her personal assets at Rs 4 crore. She held 75 per cent of the shares in East India Investment and 50 per cent stake in Gwalior Webbing. East India Investment and Gwalior Webbing have stakes in a clutch of 18 investment companies which have shares in the nine manufacturing companies that are the cash cows of the group.

Justice Kalyan Jyoti Sengupta of Calcutta High Court passed the order to appoint the joint administrators of Priyamvada’s estate today.

The Lodhas argued that the administrators would have a limited influence on the MP Birla group since Priyamvada’s shareholding was limited to the first tier of investment companies ? East India Investment and Gwalior Webbing. In effect, the joint administrators would have a little say in the nine manufacturing companies, they said.

The Birla camp interpreted the ruling differently.

They said that since the investment companies in which Priyamvada held shares were the ultimate holding companies of nine manufacturing companies, the appointment of administrator would be in effect on all companies.

“The arbitrariness by which these firms are being run is gone,” S.K. Birla said.

The division bench of Calcutta High Court, too, today restrained the Lodhas from taking any major decisions till the next hearing on June 13.

Justice Sengupta in his order said the administrators would manage the estates in consultation with the Lodhas. If they agree with the Lodhas, they would seek the views of the Birlas. If there is a dispute, the matter would be referred to the court.

The order, it appears, paved the way for a direct confrontation between the Birlas and the Lodhas in the running of the companies.

Of the four administrators, two would be lawyers, one an accountant and the fourth a person having experience of running an industry. Their names would be declared later.

The term of the administrators will be for two years or till disposal of the probate on the will, whichever is earlier.