CLB dismisses proxy petition of the Birlas against Lodha  

October 27, 2009

The Company Law Board (CLB) has dismissed the proxy petition of the Birlas represented by five shareholders of Rameshwar Jute Mills which challenged the appointment of Harsh Lodha in Birla Corporation Ltd. In the judgement, issued on 19 October 2009, CLB chairman S Balasubramanian said, “It is eminently apparent that the petitioners are more concerned about the interest of the Birlas than the affairs of the company.” He further said, “In the present case, the motive of the petition is to oust the Lodhas from the company and not for seeking any equitable relief.”  The petition was filed by five shareholders, set up by the Birlas, for drastic relief against Birla Corporation Ltd.

In his judgement, Mr Balasubramanian also added, “I find that the petition deserves to be dismissed on various grounds; that the petition is not maintainable in the spirit of Section 399; that the petition is a motivated one for an ulterior purpose of ousting Lodhas from the management and not for protecting the interest of the company; that there are no materials to come to the conclusion that there are acts of oppression and mismanagement in the affairs of the company warranting grant of any relief.” The CLB held that it will be a complete miscarriage of justice if such relief is granted and that in a petition which has not even disclosed a single act of oppression or mismanagement there is absolutely no justification.

The late Priyamvada Birla had bequeathed her entire estate to RS Lodha by a will dated 18 April 1999 which is a registered document. After her death on 4 July 2004, litigation started between members of Birla family and RS Lodha. The issue was conclusively decided in favour of RS Lodha in three successive litigations and the Supreme Court held that KK Birla, BK Birla and Yashovardhan Birla did not have any right to oppose the probate proceeding filed by RS Lodha.

After the Supreme Court’s decision, RS Lodha had been continuing to chair Birla Corporation. He expired on 3 October 2008. Harsh Lodha, his son, then became the chairman of Birla Corporation.
–Dhruv Rathi [email protected]