Big win for Lodha in proxy war with Birlas
Shareholders of MP Birla group firms — Birla Cable, Vindhya Telelinks and Universal Cables — have voted against the appointment of directors proposed by investment firm Punjab Produce and Trading at the annual general meeting of the companies on Thursday.
The nomination and remuneration committee as well as the board of directors earlier strongly recommended against the appointments.
Harsh Lodha, who was seeking reappointment as director on Birla Cable, received 83 per cent of the valid votes cast in his favour. Justice (retired) Dilip Ganesh Karnik was seeking reappointment as director in Vindhya Telelinks and Universal Cables also received votes in favour from shareholders, 77.54 per cent and 63.17 per cent, respectively.
The MP Birla Group in a statement said that all the resolutions, which were aimed at interfering with the management of professionally run companies, were defeated comprehensively.
“It is a landmark victory over years of mischievous acts, and one of the most memorable ones in 17 years of the proxy war waged against the wishes of the late Priyamvada Birla. It gives us immense confidence to take on much more,” said Debanjan Mandal, partner, Fox & Mandal.
According to the MP Birla group, two of the three members of the APL Committee, or the court-appointed panel of administrators overseeing the estate of Priyamvada Birla, in the past couple of years made repeated attempts to grab control of investment companies, trusts and societies of the group with the aim of influencing the operations of the listed companies.
In 2020, they unlawfully altered the boards of several investment companies, one of them being Punjab Produce. This was legally challenged, but the dispute over the legitimacy of Punjab Produce’s board has yet to come up for hearing at Calcutta high court.
Further, these two members of the APL Committee — Justice (retired) Mohit S. Shah and A.C. Chakrabortti — had demanded that Harsh Lodha should step down as chairman of all MP Birla Group entities, citing a contentious verdict passed by a single judge of Calcutta high court in September last year.
A division bench of Calcutta high court clarified in an interim order that Lodha was only barred from holding office on the strength of the shares of Priyamvada Birla’s estate, allowing him to continue as chairman of the MP Birla Group.
Harsh Lodha has, in the meantime, applied in court for the removal of both these administrators from the APL committee on grounds of bias and illegality of their actions.
Petitions seeking their removal are yet to be heard.
Allegations of contempt of court against Lodha and the directors of operating companies were quashed by a division bench of the Calcutta high court, and its decision was upheld by the Supreme Court earlier this year. The apex court also instructed the Calcutta high court to dispose of all outstanding legal disputes arising out of the said verdict of the single judge within 31 March 2022.
“We remain fully confident that all tactics aimed at obstructing the professional management of the operating companies from acting independently will fail. Our client continues to have full confidence in the judiciary,” said Mandal.