Calcutta High Court
Harsh Vardhan Lodha & Ors.\ vs Devendra Kumar Mantri & Anr on 23 September, 2016
Author: Nishita Mhatre
Bench: Nishita Mhatre
GA No. 2820 of 2016
With
APOT No. 551 of 2010
PLA No. 242 of 2004
In the goods of: Priyamvada Devi Birla (Decd.)
And
Harsh Vardhan Lodha & Ors.\
Versus
Devendra Kumar Mantri & Anr.
And
TA No. 42 of 2016
(Renumbered as GA No. 2952 of 2016)
With
APOT No. 551 of 2010
PLA No. 242 of 2004
In the goods of: Priyamvada Devi Birla (Decd.)
And
Harsh Vardhan Lodha & Ors.\
Versus
Devendra Kumar Mantri & Anr.
In the High Court at Calcutta
Civil Appellate Jurisdiction
Original Side
--
Present:
The Hon'ble Justice Nishita Mhatre And The Hon'ble Justice Tapabrata Chakraborty Dated: 23rd September, 2016 Appearance:
Mr.Anindya Kumar Mitra, Sr. Adv., Mr. Pratap Chatterjee, Sr. Adv. Mr. Malay Kr. Ghosh, Sr.Adv.
Mr. Abhrajit Mitra, Sr. Adv. Mr. Debanjan Mandal, Adv. Mr. Sanjiv Kr. Trivedi, Adv. Mr. Jishnu Chowdhury, Adv. Mr. S. Ray Chowdhury, Adv. Mr. Sarvapriya 2 Mukherjee, Adv. Mr. Satadeep Bhattacharjee, Adv. and Mr. Aritra Basu, Adv. appear and submit Mr. S.Pal, Sr.Adv. Mr. S.P. Sarkar, Sr. Adv. Mr. D.N. Sharma, Adv. and Ms. Vineeta Meharia, Adv. appear and submit Mr. Hirak Mitra, Sr. Adv. Ms. Suchismita Ghosh, Adv.
appear and submit Mr. N.K. Poddar, Sr. Adv. Mr. Vineet Tibrewal, Adv.
Mr. N.G. Khaitan, Adv. and Mr. Pratik Mukhopadhyay, Adv. appear and submit Mr. Kishore Dutta, Sr. Adv. and Mr. Ambar Nath Banerjee, Adv. for Administrators (APL) GA No. 2820 of 2016 & TA No. 42 of 2016 (Renumbered as GA No. 2952 of 2016) The Court: GA No. 2820 of 2016 has been filed by defendant Nos. 1(d) and 2 praying that the Annual General Meetings (AGMs) of the Investment Companies in which Priyamvada Devi Birla, the deceased, had shares should be adjourned. An alternate prayer has also been made that the AGMs of several companies in which the deceased held shares should be adjourned till the reconstitution of the Committee of Administrators pendente lite (APL).
The other application has been filed by the appellants Harsh Vardhan Lodha and others praying for release of GA No. 2820 of 2016 and placing it before the Probate Court, and alternatively, to dismiss the application filed by the defendant Nos. 1(d) and 2.
Priyamvada Devi Birla expired leaving behind a Will with Rajendra Singh Lodha as the Executor. The testatrix controlled the majority of the shares in MPB Group of Companies. Disputes arose regarding the administration of her estate and a probate petition has been filed in this Court. A Committee of Administrators pendente lite was constituted by the Court to administer the estate of the deceased by acting as an agent of 3 the Probate Court. These Administrators consisted of a former Judge of either the Supreme Court or the High Court and two nominees, one each from the Lodhas and A.K. Newar and others. Justice C.K. Thakkar, a former Judge of the Supreme Court of India initially accepted the task. However, he resigned in October, 2012, and thereafter, Justice R.V. Raveendran, another former Judge of Supreme Court of India was appointed in October, 2012. However, Justice R.V. Raveendran has also resigned in October, 2014. An application is pending for reconstitution of the APL Committee before this Court.
In the meantime, AGMs of various Companies in MPB Group are to be held tomorrow i.e. 24th September, 2016. The nominees of each group i.e. Lodha Group and the defendants have signed the Board's report of the East India Investment Company Pvt. Ltd. on 27th August, 2016 as members of the APL, representing the estate of the Testatrix. The Board of Directors of East India Investment Company Pvt. Ltd. have decided to hold the AGMs of the shareholders of the Company on 24th September, 2016, as mentioned earlier. The solicitors of some of the defendants requested the remaining members of the APL to ensure that independent directors are appointed and the Appellant No.1 is not re- appointed. However, Mr. A.C. Chakraborti, the nominee of the defendants has responded expressing the view that the AGM should not be held without the majority shareholding, being represented by the APL when it is fully constituted. Mr. M.K Sharma, the nominee of the Appellants, the Lodha Group, has by a communication dated 12th September, 2016 addressed to the same Solicitors informed them that it would be impermissible for the 4 remaining members of the APL to vote at the AGMs or take any decision with respect to the resolution at the AGM without the APL being properly constituted. Such a decision has been taken when earlier AGMs were held in respect of the Investment Companies of MPB Group without the formation of the APL.
Mr. Poddar, learned counsel appearing for the defendant No.1(d) submits that if the AGM is not postponed, the minority shareholders would gain an advantage by having their own directors appointed. He points out that the two directors, Mr. Harsh Vardhan Lodha and Mr. Krishna Damani, who retired by rotation have offered themselves for reappointment and this would greatly prejudice the defendants as there is no properly constituted APL. He, therefore, submits that the AGMs should be postponed till after the constitution of the APL. He has relied upon a judgement of the Delhi High Court in the case of S.P. Arora vs. Roshanara Club (DRJ 1992 (22) to submit that there would be no illegality if the AGM is postponed as on the adjourned date the meeting would be held as a continuation of the AGM which was to be held on 24th September, 2016.
Mr. Anindya Kumar Mitra, learned counsel appearing for the Lodha Group submits that the defendants have approached the court belatedly. He points out that they were aware on 27th August, 2016 that the AGM was to be held on 24th September, 2016. Therefore, according to him, the filing of the application (GA No. 2820 of 2016) on 15th September, 2016 has greatly prejudiced the Lodha Group. Furthermore, he submits by drawing our attention to the observation of the Supreme Court made in a previous 5 litigation between the parties, namely, in SLP (C) Nos. 16521-16522 of 2016 decided on 5th July, 2016 that it is not necessary that the AGM should be adjourned. He further submits that, in any event, the Appeal Court cannot pass any order with regard to adjournment of the AGM and it is for the Probate Court, if at all, to pass such orders. He further points out that none of the Investment Companies are parties before us and, therefore, it would not be proper for us to direct that the AGM of these Companies should be postponed. Furthermore, Mr. Mitra submits that the AGM of these companies were regularly held in 2013, 2014 and 2015 when the APL was functioning. The directors who retired by rotation at that stage in those years were reappointed and continue to hold office till today. He, therefore, submits that there is no necessity to pass any orders regarding the AGM which will be held tomorrow (24.9.2016).
We have considered the submissions made by the learned counsel for the parties. In our opinion, having regard to the past practices, there is no need to issue any direction for adjournment of the AGM. Moreover, the contention of Mr. Poddar that at the very least the two members of the APL should be directed to seek an adjournment of the AGM is also not tenable. It is true that the AGM of a Company can be adjourned and such eventuality has been dealt with under the Companies Act. However, there must be valid reasons for adjourning an AGM. It may be true that the estate of the deceased consists of a majority shareholding of the Investment Companies and that estate is to be represented by the APL which is to act as an agent of the probate court. However, as the retiring 6 directors have already been reappointed in three previous years when the APL was functioning, no fruitful purpose would be subserved by adjourning the AGM. Moreover, no order can be passed for adjourning the AGM without the companies being before us.
It must be borne in mind that a similar situation had arisen when a prayer was made for adjourning the AGM of a Company where the question of acquisition of the interest in Reliance Cement Company Pvt. Ltd. was to be considered. The Supreme Court in the aforesaid SLP did not concede to the prayer made for an adjournment of the AGM; instead the Supreme Court directed that APL should be reconstituted as early as possible and that the probate proceeding should be heard expeditiously. The Supreme Court passed the aforesaid order on 5th July, 2016 for a meeting which was scheduled to be held on 8th July, 2016.
In these circumstances, we are not inclined to grant any relief to the applicant in GA No. 2820 of 2016. The application is, therefore, dismissed.
The other application being TA No.42 of 2016 renumbered as GA No. 2952 of 2016, therefore, becomes infructuous and is also dismissed as infructuous.
[NISHITA MHATRE, J.] [TAPABRATA CHAKRABORTY, J.] km