2010 (8) TMI 1142 - HC - Companies Law

Summary

Issues Involved:
1. Appointment of Administrator Pendente Lite (APL) for the estate of Priyambada Devi Birla.
2. Scope and extent of powers and duties of the APL.
3. Eligibility and suitability of Harsh Vardhan Lodha (HVL) as APL.
4. Legal implications and precedents related to APL's powers over shares and voting rights.

Detailed Analysis:

1. Appointment of Administrator Pendente Lite (APL) for the estate of Priyambada Devi Birla:
The applications were filed due to the death of R.S. Lodha, the executor of the 1999 Will, leaving no one to manage the estate. The Court recognized the necessity to appoint an APL to protect and preserve the estate until the testamentary suit is resolved. The Court decided that the estate should be managed by independent persons to avoid conflicts of interest among the parties involved.

2. Scope and extent of powers and duties of the APL:
The Court examined whether the APL should have limited powers as suggested by HVL or full powers similar to a general administrator. It was determined that the APL should have all the rights and powers of a general administrator, excluding the right to distribute the estate. This includes taking possession of shares and exercising voting rights to protect the estate from loss and deterioration. The Court rejected the notion of limiting the APL's powers to merely collecting dividends and meeting outgoings.

3. Eligibility and suitability of Harsh Vardhan Lodha (HVL) as APL:
The Court considered HVL's application for appointment as APL but noted that appointing a party with an interest in the estate could lead to conflicts of interest. The Court referred to precedents that generally favor appointing an impartial person as APL. Despite HVL's claims of capability and trust, the Court decided to appoint independent persons to ensure unbiased administration of the estate.

4. Legal implications and precedents related to APL's powers over shares and voting rights:
The Court addressed whether the APL could exercise voting rights attached to the shares held by the deceased. It was established that voting rights are an integral part of shareholding and can be exercised by the APL. The Court cited various Supreme Court decisions affirming that voting rights are essential and cannot be separated from the shares. The Court also clarified that the APL's powers are derived from Section 247 of the Indian Succession Act, which grants broad administrative powers, including the management of shares.

Conclusion:
The Court appointed Mr. Prodosh Kumar Mullick, Dr. Asish Kumar Bhattacharyya, and Mr. Sukumal Chandra Basu as Joint Administrators Pendente Lite over the entire estate of Priyambada Devi Birla. They are tasked with making an inventory, taking possession of shares and other assets, operating bank accounts, collecting dividends, and meeting statutory obligations. They are also authorized to participate in shareholder meetings and exercise voting rights, subject to Court oversight. The decision ensures the estate's protection and efficient management until the testamentary suit is resolved.