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2023 (9) TMI 966 - AT - Companies LawRefusal of Transmission of shares - Transfer of title in accordance of Will of the deceased, in favor of Daughter - full right to dispose of the shares in the open market, restricted by agreement - power of company to purchase its own shares - HELD THAT - The present case is a case of transmission of shares to the daughter of deceased Shri Gagan Parasher, as is clear and evident from the letter of intimation dated 27.1.2021 sent by Kaashvi Parasher to the Company. Clause (c) of sub-section (4) of section 56 stipulates that within one month from the date of receipt of intimation of transmission, the company shall deliver the certificates of the relevant securities to the concerned person - The reply of the Company is to refuse the request for transmission permission of shares on a specious and legally unsustainable plea and so the company asks Kaashvi Parasher to withdraw the intimation letter, as she is not entitled for transfer of shares as per the last Will of Shri Gagan Parasher. The Learned Counsel for Appellants had emphasised on the condition regarding sale of said shares back to the company which is included in the Last Will of Shri Gagan Parasher to claim that Kaashvi Parasher is not entitled to transmission or transfer of the said shares - there was no need for the Company to have interpreted or acted upon the provisions included in the Will of Shri Gagan Parasher, since the intimation under section 56 of the Companies Act was merely about transmission of said shares and not about execution of Shri Gagan Parasher s Will. In such a situation, it was not only undesirable, but also unlawful for the Company to have refused transmission of said shares when other Class-I legal heirs of Shri Gagan Parasher had given explicit no objection for transmission of the said shares in favour of Kaashvi Parasher. These no objections were submitted by Kaashvi Parasher along with letter of intimation to the Appellant Company. The Company was wrong in sending the letter dated 22.2.2021 to Kaashvi Parasher - on the basis of the material available, and as required under law, the company should have transmitted the said shares in the name of Kaashvi Parasher without getting into the issue of execution of the Will or examining any settlement . The point in the Last Will of Shri Gagan Parasher that interest of a third party has been created vis- -vis Kaashvi Parasher, would be a matter to be decided by a court of appropriate jurisdiction and therefore, not an issue to be decided by NCLT when considering a case for transmission of shares. Both the directors of the Company namely, Gunjan Sharma and Abhinav Goyal have preferred appeal in a matter that was quite clearly between the Company and Kaashvi Parasher. Why third party like them should oppose the application of Kaaashvi Parasher is not explained in the appeal. In fact, both the Appellants have caused prejudice to the case/appeal of Kaashvi Parasher and dragged her into litigation for no ostensible or logical reason and to the detriment of the Kaashvi Parasher. The NCLT has not committed any error in quashing the communication dated 22.2.2021, which is the reply to the intimation letter dated 27.1.2021. Further, the said shares should be transmitted in the name of Respondent Kaashvi Parasher within thirty days of this order - Appeal dismissed.
Issues Involved:
1. Transmission of Shares 2. Interpretation of Will 3. Applicability of Family Settlement 4. Locus Standi of Appellants Summary: Transmission of Shares: The primary issue was whether the 45,000 equity shares held by the deceased Shri Gagan Parasher should be transmitted to his daughter, Kaashvi Parasher, as per her intimation under section 56(2) of the Companies Act, 2013. The company refused the transmission based on the conditions in the deceased's Will, which stipulated that Kaashvi Parasher could not sell or alienate the shares and that the company would buy them back within five years. The Tribunal held that the company was wrong in refusing the transmission and should have registered the shares in Kaashvi's name, as the intimation was for transmission, not transfer, and the other legal heirs had provided 'no objection' for the transmission. Interpretation of Will: The company argued that the Will's conditions prevented the transmission of shares. However, the Tribunal clarified that the interpretation of the Will was not relevant to the transmission process under section 56 of the Companies Act. The issue of any third-party interest created by the Will should be decided by a court of appropriate jurisdiction, not by the NCLT during the transmission process. Applicability of Family Settlement: The appellants contended that a family settlement dated 26.2.2022 should influence the transmission decision. The Tribunal dismissed this argument, stating that the settlement was not relevant when considering a letter of intimation under section 56 of the Companies Act. The NCLT does not have the jurisdiction to consider family settlements in such matters. Locus Standi of Appellants: The Tribunal found that the directors, Gunjan Sharma and Abhinav Goyal, who filed the appeal, did not have the locus standi to oppose the transmission application. Their involvement was deemed an abuse of the process of law, causing unnecessary delay and hardship to Kaashvi Parasher. The Tribunal imposed a cost of Rupees One Lakh and Fifty Thousand each on the appellants, to be paid to Kaashvi Parasher as litigation costs. Conclusion: The Tribunal upheld the NCLT's decision to quash the company's communication dated 22.2.2021 and directed the transmission of shares to Kaashvi Parasher within thirty days. Both appeals were dismissed for lack of merit.
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