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TMI Blog2005 (4) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... se [ 1989 (12) TMI 245 - SUPREME COURT] , that on the death of a shareholder, the shares devolve on the legal heirs instantaneously. Therefore, all her interest in the company and the respondents 1-19 stood devolved on the legal heirs immediately on her demise. Who is the lawful legal heir is an issue before the Calcutta High Court and this Board has no jurisdiction to enquire into the same. The petitioners have not shown that there had been any change in the shareholdings in the respondents 1 to 19 by which the control of these respondents had changed or there are changes in the Board of Directors of these respondents or that these respondents have transferred the shares held by them in the company. Similarly, there is no allegation that there is any change in the management of the respondents 19-28. In other words, the controlling interest in the company is still with the estate of late Priyamvada. As rightly pointed by Shri Sundaram, from the averments of the petitioners in the petition it is seen that their own case is that Shri Lodha is controlling the interests of late Mrs Birla and that is the reason why they have raised the issue of Take Over Code. Likewise, while denying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 0.0016% shares in M/S Birla Corporation Limited (29th respondent-the company) have sought for an investigation into the membership of the company in terms of Section 247(1A) of the Companies Act, 1956 (the Act) for determining the true persons who are financially interested in the success or failure of the company or who have been able to control or materially influence the policy of the company. They have also sought for, as an interim measure, imposition of certain restrictions on the shares held by the respondents 1 to 28 in the company, in terms of Section 250(2) of the Act. 2. The case of the petitioners is: The company is a part of M.P. Birla Group and has always been known as a Birla company. The respondents 1 to 28 hold, collectively among themselves, 63.8% -shares in the company. Respondents 1 to 19 are incorporated companies and respondents 20 to 28 are charitable institutions/societies. All these entities were under the control and management of M.P. Birla till 1990 when he expired. Thereafter, his wife Mrs. Primada Birla came to be in control of these entities. She died in July, 2004. Since these entities held more than 63% shares in the company, the person/persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be ascertained as to who controls the promoter's shares. Further, Shri Lodha's gaining control of the respondents 1 to 28 is in violation of the provisions of Take Over Code as by virtue of this, he would be in a position to appoint majority of directors and control the management and policy decisions of the company as envisaged in Regulation 2(1)(c) of the Take over Code, read with Regulation 2(1)(h). This being the case, in terms of Regulation 12, he could not have acquired control of the company without making public announcement as envisaged in the Take Over Code. Once an order of investigation in terms of Section 247(1A) of the Act is passed, all these aspects could be investigated. 5. Shri Sundaram, Sr. Advocate appearing for the respondents submitted: This petition has been filed for a collateral purpose for restraining the respondents from exercising voting rights in the ensuing AGM of the company. There is no dispute that late Mrs Birla was in control of respondents 1 to 28 and that the Will executed by her is under challenge before the Calcutta High Court. In the petition, the petitioners themselves have averred that Shri Lodha is controlling respondents 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest is involved as the shareholders have interest in knowing as to who controls the majority shares in the company. Even though, the petitioners have alleged in the petition that Shri Lodha is claiming control of respondents 1 to 28, the same has been denied in the replies filed by these respondents. Their denial itself would indicate that investigation is necessary to find the correct position relating to the shares. Further, this petition has nothing to do with the Will and none of the respondent companies is a party to the proceedings before the Calcutta High Court. 7. I have considered the pleadings and arguments of the counsel. I had reserved the order on this petition to be delivered along with the order on CP 57 of 2004. However, the petitioners filed CA No. 68 of 2005 seeking for issue of the order on this petition. This application was heard at length. At the conclusion of the hearing of this application, both the counsel suggested that the poll results of the of the AGM relating to the election of certain directors, which were kept under sealed cover, be opened as the same would indicate as to who is in control of the interests of late Mrs Birla. The sealed cover was ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held by the Supreme Court in Worldwide Agencies (P) Ltd v. Margaret T Desor (67 CC 607) case, that on the death of a shareholder, the shares devolve on the legal heirs instantaneously. Therefore, all her interest in the company and the respondents 1-19 stood devolved on the legal heirs immediately on her demise. Who is the lawful legal heir is an issue before the Calcutta High Court and this Board has no jurisdiction to enquire into the same. The petitioners have not shown that there had been any change in the shareholdings in the respondents 1 to 19 by which the control of these respondents had changed or there are changes in the Board of Directors of these respondents or that these respondents have transferred the shares held by them in the company. Similarly, there is no allegation that there is any change in the management of the respondents 19-28. In other words, the controlling interest in the company is still with the estate of late Priyamvada. As rightly pointed by Shri Sundaram, from the averments of the petitioners in the petition it is seen that their own case is that Shri Lodha is controlling the interests of late Mrs Birla and that is the reason why they have raise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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