India: petition fails to stop Birla Corp and Reliance deal

India: petition fails to stop Birla Corp and Reliance deal
20 May 2016

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 INR4.8bn (US$711m).

The Birlas sought an order to postpone the high profile cement deal entered between MP Birla Group's Birla Corporation and Anil Ambani-owned Reliance Infrastructure.

Birla Corporation had on 4 February 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 15.5Mta, but would also enhance mineral concessions in the states of Madhya Pradesh, Maharashtra, Rajasthan, Karnataka, Andhra Pradesh and Himachal Pradesh.

The first petition was filed on or about 19 January 2016, before the deal was announced while the second petition was filed on or about 18 February 2016, shortly after the deal was announced, said the Economic Times. 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 HV 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' media statement stated.

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

Published under Cement News