2020 (11) TMI 632 - AT - Companies Law

Transmission of shares - estoppel by conduct - Appellants are alleging that the respondents are putting pressure on the Appellants for transmission of 5000 equity shares erstwhile held by Mr. Mondal in the Appellant No.1 Company without complying with the Indian Laws Intestate Succession - HELD THAT - It is very much clear that both the Appellants and the Respondents are known to each other for a long time and knows each other families also. It is not in dispute that the Appellant No.2 has purchased the share of California, US based Company on the same identity from the Respondents. It is also not in dispute that in the objections filed by the Appellant before the Tribunal, they have not raised the issue of mother as an inheritor. The Appellants (Respondent at Tribunal) have raised only the issue of production of probate and appropriate legal heir Certificate from Respondents at Tribunal. The issue of mother of Late Mr. Mondal, legal heir was not raised at Tribunal and hence a new ground. In any case the mother has already released her rights as far as back on 25.12.2015 by way of a letter. Even the Respondents are agreeable that let the shares be transmitted in the name of the all three (mother, wife and daughter). Identity is not denied, he cannot take a plea topsy-turvy. He is prohibited by his conduct-estoppel by conduct. In the present case the Appellant company have not assigned a tenable or sound reason as well as taken the correct approach to the issue of transmission. The appellant himself has purchased the shares of the respondents of USA based company at a consideration on the same plea, no doubt, but taking a different plea in India and without communicating in explicit terms when this fact was known to the Appellant no.2 since the date of death of Late Mondal or earlier. Indian Evidence Act, 1872 does not permit taking one stand at one place a different stand at other place. Companies Act, 2013 vide chapter IV specifically regulates the mechanism for Transfer Transmission of Securities. Hence, as per Section 430 of the Companies Act, Civil Court not to have Jurisdiction on such issues. Appeal dismissed.

Summary

Issues involved:
- Appeal against order of National Company Law Tribunal regarding transmission of shares of deceased director and shareholder.
- Applicability of Indian laws on intestate succession.
- Discretion of Board of Directors in transmission matters.
- Estoppel by conduct in legal proceedings.
- Jurisdiction of Civil Court in matters under Companies Act, 2013.

Analysis:
1. Appeal against NCLT Order:
The appeal was filed under Sections 421, 58, and 241 of the Companies Act, 2013 challenging the NCLT's order directing the transmission of shares of the deceased director to the respondents. The Appellant contested the order, arguing that the transmission was not in compliance with Indian laws of intestate succession.

2. Indian Laws on Intestate Succession:
The Tribunal held that the respondents, being the wife and daughter of the deceased director, were entitled to the shares and related benefits as per Indian laws of intestate succession. The Appellant's argument regarding the mother's inheritance rights was considered invalid as she had released her rights earlier. The Tribunal emphasized the need for compliance with relevant laws in transmission matters.

3. Discretion of Board of Directors:
The Appellant claimed that the Board of Directors had the discretion in transmission matters, and the Tribunal's interference amounted to overreach. However, the Tribunal found the Appellant's failure to provide a valid reason for withholding the transmission, especially when relevant documents were submitted by the respondents.

4. Estoppel by Conduct:
The Tribunal invoked the principle of estoppel by conduct, highlighting that the Appellant had purchased shares from the respondents in the US but contested the transmission in India. The Tribunal emphasized consistency in legal proceedings and the prohibition against taking contradictory stands.

5. Jurisdiction of Civil Court:
The Tribunal clarified that matters related to transfer and transmission of securities are specifically regulated under the Companies Act, 2013, and hence, the Civil Court lacks jurisdiction in such issues. Citing Section 430 of the Act, the Tribunal affirmed its authority to decide on such matters.

In conclusion, the National Company Law Appellate Tribunal upheld the NCLT's order, dismissing the appeal. The Tribunal found no merit in the Appellant's case and emphasized the importance of compliance with legal requirements in transmission matters. No costs were awarded in the judgment.