R S Lodha would continue as the director and co-chairman of the M P Birla group until the Company Law Board decides on the petition filed by shareholders on grounds of oppression and mismanagement, asking for investigation into ownership pattern of the company.
In an order issued on Tuesday, CLB quashed the request for adjournment of the annual general meeting but prohibited transfer of shares. It said re-election of R S Lodha and two other directors of the board would be conducted through polls.
Birla vs Lodha: War over a will
The results of the poll, however, would be withheld and be in custody of CLB which would reveal the results, when it considers fit.
No director seeking reappointment could chair the AGM. This ruled out Lodha, K K Birla's daughter Nandini Nopany and independent director Vikram Swarup and Pracheta Majumdar, all of whom were seeking reappointment.
The date for the next CLB hearing has been set at 22 November. The order said the notice for the Annual General Meeting was issued in July, but the petition was filed only a day before the meeting.
"The company is a listed one, having large number of shareholders. It would thus be inadvisable to adjourn the AGM without adequate notice, even as the maintainability of the petition is yet to be established," it said.
During the hearing, the counsel for shareholders, Sudipto Sarkar, alleged the shareholders were unaware of what was happening in the company, and feared that there was a risk of shares and assets being disposed of without their knowledge.
Sarkar said that the shareholders had lost confidence in the company, where a director of the company had become hostile to the promoters. There was uncertainty over who controlled the company, he added.
In his reply, Lodha's counsel, A Sundaram said that 139 petitioners holding a mere 0.0014 per cent of shareholding was not representative of all shareholders. In addition, 130 of the petitioners became shareholders only in August, when the change of management had already occurred.
"It is clear that these 130 stakeholders, were well aware of the dispute over the authenticity of Priyamvada Birla's will, when they chose to buy the shares," Sundaram said.
Moreover, while R S Lodha has been on the board since 2001, other two directors slated for re-election have also been on the board since 2003 and April 2004, which meant that there was no change in composition of the board and hence no change in control.
Alleging the petition to be motivated, Sundaram said that 63 of the petitioners had a direct relation with the B K Birla group, as they had given Birla Building in Kolkata as their address.
Sources in Kolkata said Lodha did not hold a single share in the company.
Birla Corporation was expected to face a stormy AGM with shareholders clearly divided over the Birla-Lodha issue.
The shareholding pattern of Birla Corporation as on June 30 indicates that public holding in the company was at 64.28 per cent. Institutional investors were at 23 .01 per cent, while promoter holding was at 64.28 per cent.
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