2020 (12) TMI 1178 - Tri - Companies Law

Transmission of shares made by the Applicants - Section 58 of Companies Act - HELD THAT - The Petitioners are admittedly natural legal heirs of deceased shareholder and have submitted representation/ request to the Company along with requisite documents and the Company failed to act upon, forcing the Applicants to approach the Tribunal bearing the cost of litigation. Section 58 clearly mandates the Company to act within stipulated period. However, the Company failed to do so. Since the issue is mere transmission of un-disputed shares of mother of the Petitioners, and it do not involve any contentious issues to be adjudicated upon by the Tribunal, it would be just and proper to direct the Company to take appropriate action for transmission of shares in question to the Applicants. And no prejudice would be caused to the Company to accede the request of Applicants, their inaction is illegal and against the said provision. The Contention of learned counsel for the Respondent that the Applicants have not submitted Will of deceased share holder is not tenable in the instant case. The Respondent Company is directed to take appropriate action for transmission of shares held in the name of Mrs. Parvathamma to the Petitioners, within a period 3 (three) weeks from today - petition allowed.

Summary

Issues:
Transmission of shares upon the death of a shareholder, Failure of the company to act on the request for transmission, Legal rights of natural legal heirs, Compliance with provisions of Companies Act 2013.

Analysis:
The case involves a petition filed under Section 58(3) of the Companies Act 2013 seeking the transmission of 12,000 equity shares held by a deceased shareholder to the natural legal heirs. The applicants, being the son and daughter of the deceased shareholder, submitted all necessary documents for transmission. The company failed to act on the request, prompting the applicants to approach the Tribunal. The relevant legal provision, Section 58 of the Companies Act 2013, outlines the process for refusal of registration and appeal against refusal in cases of share transmission. The Tribunal noted that the applicants are undisputed natural legal heirs and that the company's inaction was unjustified. The Tribunal directed the company to proceed with the transmission of shares to the applicants within a specified time frame. The contention that the applicants did not submit the deceased shareholder's will was deemed irrelevant as the applicants were recognized as legal heirs based on the documents provided.

The Tribunal emphasized that the company's failure to act within the stipulated period was a violation of the law. Since the issue of transmission involved undisputed shares and did not require adjudication, the Tribunal found it appropriate to order the company to facilitate the transmission to the applicants. The Tribunal rejected the respondent's argument regarding the absence of the deceased shareholder's will, stating that the applicants' status as natural legal heirs was established through the submitted documents. The Tribunal concluded that the applicants were entitled to the transmission of shares, subject to the submission of necessary documents to the company. The case was disposed of with directions for the company to act on the transmission and for the applicants to provide required documents promptly. No costs were awarded in the judgment.