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2022 (9) TMI 280 - AT - Companies LawSeeking repayment of loan - deposit by means of Clause 9 (iii) of the Private Trust Deed - conveyance subject to stamp duty or not - principles of natural justice - HELD THAT - This Tribunal comes to a consequent conclusion that the impugned order dated 26.05.2022 bristles with legal infirmities, because of the fact that it had not taken into account of the contents of notes of the submissions furnished by the Appellants and the 1st Respondent/Trust in Comp. App (AT) (CH) Nos. 43 and 45 of 2022 in a Qualitative, Quantitative and Threadbare fashion, not discussed about the pros and cons of the submissions made in a detailed manner, in the absence of Adjudication / Determination of Controversies relating to the Movables owned by the Applicant (Deceased), in an appropriate proceedings by the Competent Forum, including the aspect of the plea of the Appellant that the 1st Respondent / Trust cannot Claim any Tangible or Intangible property, based on the Two Trust Deeds dated 09.02.2015 and 16.02.2015 respectively - not obtained the sanction of any Court of Law, and there being a conspicuous silence in regard to the applicability of Regulation 28 of the CLB Regulations 1991, permitting the Legal Heirs to prefer an Application for Substitution. Unless the pending Lis between the Parties are finally decided, no interest in the property can said to be that of them, so as to substitute / implead them, as Party / Parties, especially when the validity of the Will dated 18.02.2015, is yet to be established, in the manner known to Law and in accordance with Law. Viewed in that perspective, this Tribunal, is perforced to interfere with the impugned order and sets aside the same, to secure the ends of justice. The matter is remitted back to the National Company Law Tribunal, Division Bench-I, Chennai, for fresh consideration, and for passing a reasoned speaking order (ofcourse, un-influenced and untrammelled with any of the observations made by this Tribunal in these Appeals), granting liberties to the respective Parties to make a mention and to proceed further, in the subject matter in issue, soon after the adjudication of pending Testamentary Proceedings, between the Parties before the Hon ble High Court of Madras. Application disposed off.
Issues Involved:
1. Nature of the financial transaction (loan vs. deposit). 2. Validity and effect of the oral gift and the will. 3. Locus standi of the parties involved. 4. Substitution of legal representatives. 5. Procedural aspects and application of relevant legal provisions. Detailed Analysis: Nature of the Financial Transaction: The primary issue revolves around whether the financial transaction between the deceased and the appellant (Chettinad Coal Washeries Pvt. Ltd.) was a loan or a deposit. The appellant argued that the transaction was a "short-term-interest-free loan" converted into a long-term (10 years) interest-free loan, payable only in March 2023. The respondent claimed it was a deposit, thus requiring repayment under Sections 73 and 74 of the Companies Act, 2013. The Tribunal noted that the determination of whether the transaction was a loan or deposit depends on the intention of the parties and the surrounding circumstances. Validity and Effect of the Oral Gift and the Will: The respondent argued that the deceased had orally gifted all his movable properties, including the loan/deposit, to a private trust, which subsequently transferred these properties to the public trust (1st Respondent) upon his death. The appellant contested the validity of this oral gift under Section 123 of the Transfer of Property Act, 1882, which requires a registered instrument or delivery for the gift of movable property. The Tribunal emphasized that the validity, execution, and legality of the will and the oral gift need to be established in the pending testamentary proceedings before the High Court. Locus Standi of the Parties Involved: The appellant claimed it had the locus standi to file the appeal as its rights would be seriously and irreversibly prejudiced by the Tribunal's order. The Tribunal agreed, stating that the appellant was an aggrieved party as it was directly affected by the order directing repayment of the deposit/loan. The Tribunal also considered the appellant's detailed submissions and various pleas taken before the Company Law Board and the National Company Law Tribunal. Substitution of Legal Representatives: The Tribunal addressed the substitution applications filed by the 1st Respondent (public trust) and the appellant (son and legal heir of the deceased). The Tribunal noted that the substitution of legal representatives should await the outcome of the testamentary proceedings regarding the validity of the will and the trust deeds. The Tribunal emphasized that the pending litigation between the parties concerning the will and trust deeds must be resolved before any substitution can be finalized. Procedural Aspects and Application of Relevant Legal Provisions: The Tribunal highlighted the procedural errors in applying Rule 53 of the NCLT Rules, 2016, instead of Regulation 28 of the Company Law Board Regulations, which was applicable at the time of filing the substitution applications. The Tribunal also pointed out that the National Company Law Tribunal had adjourned the matter sine die, awaiting the outcome of the testamentary proceedings, which should have been considered before passing the impugned order. Conclusion: The Tribunal set aside the impugned order dated 26.05.2022, passed by the National Company Law Tribunal, Chennai Bench, allowing the substitution of the 1st Respondent and dismissing the appellant's substitution application. The matter was remitted back to the National Company Law Tribunal for fresh consideration and a reasoned speaking order, to be passed after the adjudication of the pending testamentary proceedings before the High Court of Madras. The appeals were disposed of with no costs, and the interim stay application was closed.
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