2020 (2) TMI 1375 - Tri - Companies Law

Transmission of shares - Sections 58 241 of the Companies Act, 2013 - HELD THAT - It is true, that the shares of the Company is under the control of Board of Directors of the Company. However, the Board of Directors of the Company cannot exercise their powers in an arbitrary manner, especially, in the instant case, where the identity and legal authority of Petitioners are admittedly (except raising un-tenable grounds) not in dispute as they are not strangers to the Company. In the instant case, it is not in dispute that late Mr. Mondal was holding 5000 equity shares in R-1 Company and he died intestat.e. The Petitioners are wife and Daughter of Mr. Mondal respectively and they are deemed to be natural heirs of Mr. Mondal. It would be unfair on the part of R-1 Company to put Petitioners forcing them to approach the Tribunal. The Petitioners have produced the requisite documents required for transmission of shares in question. And the Respondents are estopped from raising un-tenable objections, after the petitioners producing requisite documents as asked by them. It is not the case of the Respondent that any rival is received in respect of impugned transmission of shares. Normally succession certificate is required to be produced when such succession is in dispute and not supported by relevant evidence. In order to avoid any further litigation on the issue, the Petitioner also sought permission from the Tribunal to cause paper notification in English Newspaper The Hindu and in Kannada Newspaper Udayavani . The contentions of the Respondent that the instant Petition is premature as there is no rejection of claim of the Petitioners is without basis. The Petitioners time and again requesting the Company to effect transmission of shares in question by producing all requisite documents as mentioned supra. The other objections raised by the Respondents, for rejecting the case of Petitioners, are baseless and liable to be rejected and thus hereby rejected. Petitioners are entitled for transmission of shares of Mr. Mondal for 5000 equity shares of R-1 Company, basing on the documents already submitted - Application allowed.

Summary

Issues Involved:
1. Whether late Mr. Santanu Mondal was the shareholder of 5,000 equity shares in Respondent No. 1 Company.
2. Whether the Petitioners filed requisite documents as per law to prove they are legal heirs of Mr. Mondal to claim transmission of his shares.
3. Whether the Respondents are justified in delaying the transmission of shares, forcing the Petitioners to approach the Tribunal.
4. Whether the Respondents' refusal to transmit shares amounts to acts of oppression.

Detailed Analysis:

Issue 1: Shareholding of Late Mr. Santanu Mondal
- The Tribunal confirmed that late Mr. Santanu Mondal held 5,000 equity shares in Respondent No. 1 Company and died intestate. It was undisputed that he was a shareholder and that his shares were to be transmitted to his legal heirs.

Issue 2: Legal Heirs and Requisite Documents
- The Petitioners, being the wife and daughter of Mr. Mondal, provided necessary documents such as an affidavit, death certificate, and application for transmission of shares. The Tribunal noted that the Petitioners had submitted all requisite documents needed for the transmission of shares.

Issue 3: Justification of Respondents' Actions
- The Tribunal observed that the Respondents had not denied the Petitioners' identity and legal authority but had raised untenable objections to delay the transmission. The Tribunal found that the Respondents' actions were arbitrary and unjustified, forcing the Petitioners to seek Tribunal intervention.

Issue 4: Acts of Oppression
- The Tribunal concluded that the Respondents' refusal to transmit the shares and forcing the Petitioners to approach the Tribunal amounted to oppression. The Petitioners were deemed to be shareholders from May 1, 2017, as they had submitted all required documents by April 1, 2017.

Conclusion and Directions:
- The Tribunal directed Respondent No. 1 to effect the transmission of shares in favor of the Petitioners and rectify the Register of Members within two weeks.
- The Petitioners were entitled to all consequential benefits on par with other shareholders from May 1, 2017.
- The Tribunal dismissed the objections raised by the Respondents and did not award any costs.

This judgment underscores the importance of adhering to legal procedures for transmission of shares and the consequences of arbitrary refusal by company directors.