HC trashes pleas against Birla Corp cement deal with Reliance

KOLKATA: Calcutta High Court justice Jyotirmoy Bhattacharya on Thursday dismissed petitions filed by a Birla faction seeking injunction in Birla Corporation's (Birla Corp) plan to buy Reliance Infrastructure's cement business for an enterprise value of Rs 4,800 crore.
The petitions were dismissed as not maintainable.

It may be recalled Birla Corporation had, on February 4, 2016, entered into an agreement with Reliance Infrastructure to acquire its entire cement business. At the time, Birla Corp officials had said that the acquisition would not only increase the company's total capacity to 15.5 million tonnes per annum, but would also enhance mineral concessions in the states of Madhya Pradesh, Maharashtra, Rajasthan, Karnataka, Andhra Pradesh and Himachal Pradesh.

The Birlas moved court seeking an order to postpone the high profile cement deal entered between M P Birla Group's Birla Corporation and Anil Ambani-owned Reliance Infrastructure.

The first petition was filed on or about January 19, 2016, before the deal was announced while the second petition was filed on or about February 18, 2016, shortly after the deal was announced. Lodhas too moved court seeking dismissal of the two petitions.

In his order passed on Thursday, Justice Bhattacharya said that the petitions filed by the Birla faction are not maintainable.

The order also held that Birla Corp is a separate juristic entity and that its shareholders' have no right over the assets of the company. “It also held that the decision taken by the board of directors could not be called into question by the Probate court.

It also held that if injunction sought for against H. V . Lodha or Birla Corp was granted, that would amount to interfering with the internal affairs of a separate juristic entity which is beyond the scope of the probate proceedings,“ the Lodhas' mediastatement stated.

When contacted, Birla group sources in said they plan to file an appeal before a division bench against this order.