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TMI Blog2020 (4) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon - Rajkumar Devraj and Rajkumari Lalitya (1st and 2nd respondents) can not claim title on the basis of succession certificate dated 19.2.2009. The alleged acts of oppression complained of by 1st and 2nd respondents occurred around 2001. Maharani Gayatri Devi on the death of Maharaj Jagat Singh on 5th February, 1997 became his sole legatee by virtue of Will dated 23.6.1996. Therefore, Rajkumar Dev Raj and Rajkumari Lalitya (1st and 2nd respondents) cannot claim inheritance on original 5050 shares to be legal heirs of Late Maharaj Jagat Singh on his death i.e. 5.2.1997. Once the claim of Rajkumar Devraj and Rajkumari Lalitya (1st and 2nd Respondent), on the total original 5050 shares of Late Maharaj Jagat Singh is determined by Hon ble High Court and Hon ble Supreme Court on the basis of Will issued in favour of Maharani Gayatri Devi and giving legatee herself bequeathed her rights in favour of Rajkumar Dev Raj and Rajkumari Lalitya, they cannot claim their right on such shares by way of inheritance on the death of Maharaj Jagat Singh, which will amount to altering the finding of Hon ble Delhi High Court and Hon ble Supreme Court - The Tribunal failed to consider the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to Maharani Gayatri Devi and not to the petitioners (1st and 2nd respondent herein). 2. National Company Law Tribunal, Bench III, New Delhi vide judgement dated 01.08.2018 allowed the company petition and passed the following orders:- I) All the resolutions which have been passed in the meetings of the Board of Directors, or in the Extraordinary General Meeting or Annual General Meeting with regard to appointment of Respondent No.4 to Respondent No.8 as directors of the 1st respondent company including those passed in the Board of Directors meeting held on 31.03.1999 and 27.03.2001 and their subsequent confirmation of Respondent No.5 to 8 in the general meeting held on 30.08.2001 are hereby set aside and in relation to the strength and directors of the Board, this Tribunal restores the position ante immediately upon the death of Late MJS. II) Similarly, all the resolutions which have been passed in relation to the increase in the authorized capital of the 1st respondent in the Board Meeting or in the Extra Ordinary General Meeting dated 27.03.2001 are set aside and in relation to the same this Tribunal restores the position ante 27.03.2001 and any forms filed in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of demise of Late MJS, until the period 31.03.2018. The purpose of the Special Audit shall be in relation to identifying any siphoning of amounts of the 1st respondent company by the other respondents as well as in relation to identifying transactions, if any prejudicial to the interest of the 1st respondent company. The amounts so identified resulting in the siphoning or leakage of funds and thereby loss to the 1st respondent company shall be duly recovered from such of the respondents who had been party to the same. The 1st respondent company and other respondents and persons in the management of the company shall duly co-operate with the auditor appointed herein by making available all documents including books of accounts in this regard. The fees payable to the auditor shall be negotiated with the auditor by the parties and the petitioners will be responsible to pay the same to be suitably reimbursed by the 1st respondent company and recoverable from other respondents, if found culpable to funds leakage. VIII) Reliefs, other than those granted above, however which may have been sought for, if any, stands denied. IX) Respondents 2 to 4 shall be liable to pay c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son of Late Maharaj Bahadur Singh. 8. Late Maharaj Jagat Singh was married on 10.05.1978 to a Thai National. The marriage was not successful and two children were born namely Rajkumar Devraj and Rajkumari Lalitya (1st and 2nd Respondent), who are holding Thai Passports and stayed all along in Thailand away from Late Maharaj Jagat Singh. 9. In the covenant entered into by Late Maharaja Sawai Man Singh Ji, amongst various properties declared to be his private properties, was one Palace known as Jai Mahal Palace . A Partnership Deed was entered into on 18.10.1980 wherein and whereunder the said Jai Mahal Palace was envisaged to be run by a Partnership firm. The name of the Partnership Firm was Jai Mahal Palace Hotel . In fact the partners of the said firm were Late Maharaja Jagat Singh and Maharaja Prithviraj Singh (Respondent No.4). As per Clause 6 of the Partnership Deed the net profit or loss of the Partnership was to be divided between the two partners in equal share. M/s Jai Mahal Palace Hotel Pvt Ltd, the appellant herein was incorporated as a Private Limited Company on 5.8.1981. 10. The entire affairs of the company from its inception till date were looked after by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was given to the legal representatives of Late Maharaj Jagat Singh. 18. Maharani Gayatri Devi by her letter dated 10.04.2001 addressed to appellant company, declined to subscribe to any further allotment of shares and requested the company to offer the shares to other existing shareholders. All actions of the appellant company were specifically approved by her. 19. The case of the appellant is that the Tribunal sought to nullify this letter by mysteriously relying on a non-existent affidavit of Maharani Gayatri Devi s Secretary which is nowhere on record and neither pleaded by the Rajkumar Devraj and Rajkumari Lalitya (1st and 2nd Respondent), in its rejoinder as referred to in the impugned judgement. 20. Further case of the appellant is that as on 28.4.2001 when the shares of the company was allotted, the contesting respondents were not legal heirs of Late Maharaj Jagat Singh on this date and had no rights in any of the affairs of the appellant company. Maharani Gayatri Devi was the sole legal heir and had approved of all the actions of the company. 21. In March 2006, Maharani Gayatri Devi herself discovered the Will of Late Maharaj Jagat Singh in which he had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellant Company replied to Maharani Gayatri Devi on 03.07.1996 expressing its difficulty to transmit the shares lying in the name of Late Maharaj Jagat Singh to Maharani Gayatri Devi or any other Claimant till resolution of pending disputes. 27. Case No.134/1998 for succession and Case No.327/2006 being heard simultaneously but separately, Maharani Gayatri Devi filed an application for consolidation before the District Judge, Jaipur to avoid the likelihood of conflicting decisions in both the cases. 28. A perusal of the reply filed in the consolidation application in Probate Case No.327 of 2006 by the contesting Respondents shows the extent of hostility that they harboured towards Maharani Gayatri Devi. The contesting respondents contended that the actions of the Maharani Gayatri Devi were with malafide and oblique motive. The High Court on 20.08.2008 stayed the proceedings of Succession Case No.134/1998. 29. On 14.11.2008 the health of Maharni Gayatri Devi became very unstable and she fell terminally ill. Appellant alleged that Rajkumar Devraj and Rajkumari Laliyta (1st and 2nd Respondent) forced and coerced Maharani Gayatri Devi and allegedly forged the signatures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharaj Jagat Singh/Maharani Gayatri Devi 38. Appellant sent letter dated 09.07.2010 to Urvashi Devi s Group declining transmission of shares. 39. On 21.09.2010, application for implementation on behalf of Princess Urvashi Devi s group filed in Section 111 proceedings initiated by contesting Respondents before Company Law Board. 40. Princess Urvashi Devi s group also filed petition under Section 111 of the Companies Act being C.P. No.22/111/2010 before the Company Law Board, New Delhi Bench. 41. By Judgment and order dated 16.03.2011 the Company Law Board which decided petitions under Section 111 filed by both the groups viz the contesting respondents and the Urvashi Devi Group held that the Board exercising its summary jurisdiction under Section 111 cannot decide complicated questions of fact and law which undisputedly arise in the present case where the title to the shares standing in the name of the Late Maharaj Jagat Singh is under serious dispute. 42. Subsequently, on 16.03.2011, the Company Law Board stayed the proceeding in the present matter sine die till the adjudication of the appeal in the Section 111 Petition. 43. Rajkumar Dev Raj and Rajkumari Lalitya ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns sought are thus, of no relevance to such a situation. 22. We sum up our conclusion as follows: (i) LMJS executed Will in favour of the mother-GD which is not in dispute. (ii) GD and DR jointly obtained succession certificate; (iii) GD signed the transfer deeds and communicated the same to the Board of Directors; and (iv) The civil court vide order dated 28th July, 1991 declined to grant temporary injunction finding no prima facie case against the succession certificate. 23. In above circumstances, even in summary jurisdiction, the CLB had no justification to reject the claim of the DR Group. The High Court rightly reversed the said order. 24. In view of the above, we find no merit in these appeals. The same are dismissed with costs quantified at ₹ 5 lakhs in each of the appeals. 45. Learned counsel for the appellant, Jai Mahal Hotels Pvt Ltd, and Rajkumar Vijit Singh in Company Appeal (AT) No.271 of 2018 submitted that in view of the finding of the Hon ble Delhi High Court and the Hon ble Supreme Court, the legal position of the contesting 1st and 2nd Respondents (Rajkumar Devraj and Rajkumari Lalitya) is clear and have binding effect on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj Jagat Singh expired on 05.02.1997 leaving behind 1st and 2nd Respondent, Rajkumar Devraj and Rajkumari Lalitya, and Maharani Gayatri Devi, mother, as his Class I legal heirs as per the Schedule to the Hindu Succession Act, 1956. b) Upon the death of Maharaj Jagat Singh, the shares belonging to him devolved equally upon the 3 Class I legal heirs as per the general rules of succession provided in Section 8 of the Hindu Succession Act, 1956 and the said shares stood instantaneously transmitted to the legal heirs by operation of law. c) Under the 2nd proviso to Section 108 of the Companies Act, 1956, the Company was bound to register the above transmission. This statutory provision for registration of transmission has been duly recognised in the Articles of Association of the Company. d) However, inspite of the clear mandate, both under the statute and the Articles, the Company did not register the transmission. Instead, Maharaj Prithvi Raj, who was managing the company led the legal heirs to believe that succession certificates are necessary for the registration. As admitted in the letter dated 06.05.2003, Maharaj Prithvi Raj filed the case for succession certificates i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard composition was changed by inducting the wife of Rajkumar Vijit Singh and two others on the Board. None of these Directors were shareholders. ii) The changed Board composition was used tgo dramatically increase the authorised capital of the Company tenfold from Rupees Ten Lakh to Rupees One crore. iii) The entire allotment of 60882 shares was made in favour of Maharaj Prithvi Raj (58794 shares) and Rajkumar Vijit Singh (10000 shares) m) The contesting respondents, Rajkumar Devraj and Rajkumari Lalitya, had always asserted their succession rights. They laid claim on Maharaj Jagat Singh s shareholdinig in the company on the basis of their succession. But Maharaj Prithvi Raj and his son Rajkumar Vijit Singh insisted upon succession certificates for registration of the transmission, thereby delayed the transmission. Late Maharaj Prithvi Raj and his son Rajkumar Vijit Singh diluted the 99% shareholding to 6%. n) The entire process of the impugned alteration in the shareholding and Board position of the company was conducted surreptitiously, behind the Contesting Respondents , Rajkumar Devraj and Rajkumari Lalitya, back and without notices required under law. o) Even afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inherited rights from LMJS. Will in favour of GD is beyond any dispute. Thus the DR Group derived rights from the GD by documents executed by her in her lifetime and conveyed to the Company. Even if the Will of GD is not taken into account, for purposes of issue of rectification, the documents executed by GD clearly entitled the DR Group to have the rectification made. 22. We sum up our conclusion as follows: (i) LMJS executed Will in favour of the mother-GD which is not in dispute. (ii) GD and DR jointly obtained succession certificate; 54. In view of the aforesaid findings of the Delhi High Court and the Hon be Supreme Court of India, it is evident that Rajkumar Devraj and Rajkumari Lalitya had no interest in the estate and for the purposes of these proceedings the shares of Late Maharaj Jagat Singh in the Company before 14.11.2008. In other words after the said demise of Late Maharaj Jagat Singh in 1997 Maharani Gayatri Devi became the absolute legatee and legal heir of Late Maharaj Jagat Singh s estate in terms of the undisputed will dated 23.6.1996. Therefore, Succession Certificate dated 19.02.2009 issued by the District Judge, Jaipur jointly in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m any infirmity. We, therefore, uphold it. It is made clear that we have not expressed any opinion on the merits of the case relating to succession application. 56. In view of the aforesaid position of law we hold that Rajkumar Devraj and Rajkumari Lalitya (1st and 2nd respondents) can not claim title on the basis of succession certificate dated 19.2.2009. 57. The Hon ble Supreme Court finally settled all aspects relating to succession of original 5050 shares which belong to Late Maharaja Jagat Singh. The Hon ble Delhi High Court and Hon ble Supreme Court considered the Will of Maharaja Jagat Singh dated 23.06.1996; Will of Maharani Gayatri Devi dated 10.05.2009 and succession certificate dated 19.02.2009. The lis pertaining to the company, Rajkumar Dev Raj and Rajkumari Lalitya (1st and 2nd Respondents) and Maharaj Prithviraj and his sons, all of whom are parties to the present appeals relating to 5050 shares of appellant company was finally decided which has reached finality. Thus, the Tribunal was bound by such final and binding determination relating to these original 5050 shares which belong to Maharaja Jagat Singh and it is not open to it to give any contrary finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary of Maharani Gayatri Devi either in the pleadings or in the arguments. 61. Maharani Gayatri Devi by her letter dated 10.04.2001 specifically records the following:- a) That she herself had received the notice in her capacity as the legal heir of the estate of Late Maharaja Jagat Singh; b) That she herself left it open to the Company to offer the shares to other existing shareholders and declined to subscribe to any shares. 62 Therefore, the contesting Respondents company petition deserved to fail in terms of Section 399 of the Companies Act, 1956 (Section 244 of Companies Act, 2013) as they were not shareholders nor did they have any right, title or interest in the shares and the grounds taken in the company were grossly inadequate to invoke the equity jurisdiction of this Tribunal under Section 397/398 of the Companies Act, 1956. Thus it ought to have been dismissed. Maharani Gayatri Devi was at all material times including in 2001 the sole legatee of Late Maharaja Jagat Singh. 63. Thus crucial letter dated 10.4.2001 has neither been denied nor been dealt with by the Respondents and the Tribunal has attempted to nullify this letter based on a mysterious/imaginar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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