The Telegraph
Since 1st March, 1999
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Court spikes Lodha plea Elated Birlas demand resignation

Calcutta, Feb. 3: The Birlas have won another round in the protracted battle with Rajendra S. Lodha over late Priyamvada Birla’s purported will that bequeathed the Rs 5000-crore MP Birla empire to the latter.

In what could be seen as a major setback to Lodha, the Supreme Court today refused to quash the criminal proceedings initiated by an employee of the Birla group against him and three of his associates, paving the way for a criminal trial that could have a bearing on the fate of the MP Birla empire.

“The criminal proceedings cannot be quashed at this stage,” a division bench of Justice B. P. Singh and Justice S. H. Kapadia said, dismissing an appeal filed by S. N. Prasad and V. Gauri Shankar, co-accused in the criminal complaint.

The court said the matter needed to be fully inquired into and observed that evidence needed to be recorded in the case. The trial for the criminal case is now expected to begin in Alipore court.

Senior Birla counsel N.G. Khaitan celebrated the court’s decision by cutting a cake with R.P. Pansari, a Birla confidant, and demanded that Lodha should resign forthwith not only as an executor, but from all the companies of MP Birla group and all trusts and institutions on moral grounds.

“We will appeal to the court to expedite the criminal proceedings,” Khaitan said.

The Lodha camp, however, refused to see the Supreme Court’s decision as a setback and said it did not pass any observation on the merits of the case. The trial court will look into this aspect, they added.

“It is neither a setback for us nor a victory for the Birlas and hence the question of resignation does not arise,” said Debanjan Mondal, counsel for Lodha.

Even though none of the camps admitted that the criminal suit would have any impact on the probate petition case in Calcutta High Court, legal experts feel it would be difficult for Lodha to establish his claim over the MP Birla empire.

Late Madhav Prasad Birla and Priyamvada Birla created five mutual trusts in 1988 in which they vested their corporate assets. They also created three charities as the beneficiary of these five trusts.

But in 1999, three days before the disputed will was drawn up, these trusts were allegedly revoked. The five trusts held stakes in all the MP Birla group companies.

“Late Priyamvada Birla cannot will an asset to Lodha which was not hers to start with. So if it is proved that there was criminality involved in the revocation of these five trusts, then she could not bequeath the assets to Lodha. And that makes the 1999 will void,” the Birla camp said.

The criminal complaint was filed against Lodha and his three associates ' S.N. Prasad, V. Gauri Shankar and S.K. Daga ' for offences of criminal conspiracy, breach of trust and cheating.

A civil court cannot check the veracity of the documents produced before it, but a criminal court can do so. As a result, the documents produced by Lodha to buttress his claim can be challenged.

Khaitan claimed that Lodha has not been able to produce any viable document to prove that these trusts were revoked.

“They must be done by deeds or will. Nothing has been produced so far,” he claimed. However, sources said the appropriate authorities were informed within seven days of the revocation.

So far only a letter dated June 27, 2000 to the income tax department was produced by the Lodha counsel as a document to show that these five trusts were indeed revoked.

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