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TMI Blog2020 (5) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Anindya Kumar Mitra, Mr. Jayanta Kumar Mitra, Mr. Partha Sarathi Sengupta, Sr. Advocates, Mr. D. Mandal, Mr. Sanjiv Trivedi, Ms. Iram Hassan, advocates. Arindam Mukherjee, J. : A) Facts of the case : 1) In a Testamentary Suit, [TS No.6 of 2004 [Harsh Vardhan Lodha & Ors. vs. Arvind Kumar Newar & Ors.] fiercely contested for over one and a half decade which was initially for grant of probate (with the Will annexed) and now for grant of Letters of Administration (with the will annexed) due to the death of the named executor in between, the defendant nos.1[b] and 1[c] have filed an application being GA No.1735 of 2019, inter alia, for directing the plaintiffs to implement the decision of the APL Committee(Administrator pendentelite) dated 19th July, 2019 and if necessary to adjourn the Annual General Meeting of Vindhya Telelinks Ltd. [in short, VTL], Universal Cables Ltd. [in short, UCL], Birla Cable Ltd. [in short, BCL] and Birla Corporation Ltd. [in short, Birla Corp.] and issuance of notice, if necessary to the said Companies, Trust and Societies of MP Birla Group as indicated in the schedule to the said application. 2) The said application on being moved an adinte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a further order was passed on 9th August, 2019 by the same learned Single Judge who passed the previous two orders. 8) It will appear from the said order dated 19th August, 2019 that the ambit of the order dated 2nd August, 2019 read with order dated 5th August, 2019 was further extended to include the "result of the election and/or voting" scheduled to be held on 13th August, 2019 pursuant to the notice dated 1st July, 2019 and the same shall not be published as indicated in the original order dated 2nd August, 2019. The notice dated 1st July, 2019 and the AGM scheduled to be held on 13th July, 2019 was that of Birla Corp. This order is challenged by Birla Corp. in APO No.95 of 2019. 9) Records reveal that none of the appellants are parties to the above Testamentary Suit. Therefore, the appellants prayed for leave to appeal as "person aggrieved" to prefer their respective appeals as aforesaid. We being prima facie satisfied about the appellants' right to prefer their respective appeals granted each of them the leave to file their respective appeals. The stay applications filed in each of the appeals were disposed of. 10) We felt that passing of any interim order in the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited Company listed with the Stock Exchanges. As the appellant is unable to declare the dividend being an issue which does not require election, the appellant is receiving complaints from the shareholders/members regarding the declaration and payment of dividend. The appellants say that in respect of Birla Corp. there is no election or reelection of Harsh Vardhan Lodha (in short 'HBL'), the plaintiff no.1 as a director and, as such, there is no question of holding any election in its AGM in this regard, the result of which was directed not to be published for six weeks or without the leave of the Court by the order dated 2nd August, 2019. 2) The appellant say, it is the prime allegation of the respondent nos. 1 and 2 (defendant Nos. 1[c] and 1[a]) that HBL by getting himself reelected and thereby receiving fancy remuneration is depleting the value of the estate, cannot be the case in Birla Corp. It is also submitted that the respondent nos. 1 and 2 were not satisfied with the order dated 2nd August, 2019 and, as such, obtained the classification on 5th August, 2019. Finding that the classification will be of no help in respect of Birla Corp. the further modification w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke Birla Corp. Having not given any reason the order dated 9th August, 2019 passed by the learned Single Judge is not sustainable and requires to be interfered with. In support of the proposition that reasons are mandatory in an ex parte adinterim order, the appellant has cited the following decisions : [i] [2010] 3 SCC 732 [paragraphs 4041]; [ii] 2000 [1] CHN 614 [paragraphs 2136, 32] ; and [iii] 2014 SCC OnLine Cal 10452 [DB] [paragraphs 17, 19, 2427]. 4) The appellant submit that it is bound by the order dated 9th August, 2019 which prejudicially affects its right, and, as such, it is a "person aggrieved". The appellant, is, therefore, entitled to file and maintain the appeal. 5) The appellant say that in a suit no order can be passed against a third party. Since Birla Corp. is not a party to the subject Testamentary Suit no order as an interim relief in aid of the final relief in the suit can be passed against them. The impugned order, therefore, has to be interfered with on this count. In support of this submission, the appellant has cited a decision reported in [2016] 1 SCC 743 [paragraphs 24, 25 and 28]. 6) The appellant then submit that the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased held shares during her lifetime which is now part of the subject estate. The appellants says that Priyamvada Devi Birla [in short, PDB], the deceased only hold about 12.58 of shares in the appellant Company. The deceased, therefore, was only a shareholder and had the right to participate in the election and entitled to dividend. Administrator pendente lite (ABL Committee) has been appointed to preserve the estate. There is as such no question of meddling with the said shares. The ABL Committee had already decided to vote in respect of the said shares by a majority decision and, therefore, could resist the various agenda at the AGM by casting the votes commensurate to such shareholding at the instance of the said respondents if the ABL Committee was satisfied that the estate will be depleted. The respondents have also claimed to be in control of about 98% shares in the Birla Corp. So, it was not difficult to defeat any agenda to the disliking of the respondents no.1 and 2. The probate Court at the instance of the respondent nos.1 and 2 have interfered with the functioning of the Company being a separate juristic entity. In this context, the appellants have cited a judgment re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, sought for the order impugned to be set-aside. C) Submission of VTL and UTL : 1) The appellant in the other two appeals respectively being APO No.94 of2019 [In the goods of Priyanbada Devi Birla and Birla Cables Ltd. vs. Arvind Kumar Newar & Ors.] and APO No.95 of 2019 [In the goods of Priyanbada Devi Birla and Birla Corporation Ltd. vs. Arvind Kumar Newar & Ors.] have adopted the submissions made by Birla Corp. In APO No.95 of 2019 on the ground of jurisdiction, order devoid of reasons and maintainability of appeals and sought for interence to the orders impugned. Save and except that in VTL and BCL there is an agenda of reelection of HBL as a director, the theme of the notices issued to hold AGM in VTL and BCL are the same according to the said appellants. It also submitted that though there is no restraint as to the publication of the results of voting in respect of the agenda which does not include election in the case of VTL and BCL but the order dated 2nd August, 2019 as modified by the order dated 5th August, 2019 has prejudiced their interest and as such they have appealed against such order. The order dated 9th August, 2019 though was not necessitated in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies to challenge the orders which is impermissible in law. This is also an abuse of process of law. The Court, therefore, should lift the corporate veil and see that who is the actual person behind these appeals. HBL is actually the person effected and as such is trying to get out of the shackles by preferring the appeals through the alter ego, the appellant companies. The said respondents also submitted that a probate Court is empowered to lift the corporate veil to identify the actual face behind the façade (in these cases HBL). The real facts will be then revealed. In this regard they cited a judgment reported in 2008 [3] CHN 384 [paragraphs 2, 45, 79, 2021, 25, 2734]. 3) The said respondents further submit that the purpose of passing an interim order was to preserve the status quo so that the proceedings are not rendered infructuous when the matter is finally decided. They say that the plaintiffs in the suit are trying their best to meddle with the assets of the estate on diverse pretexts despite there being an administrator pendente lite (being the ABL Committee) appointed. The value of the estate will be diminished if the plaintiffs and in particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts next submitted that there are sufficient and satisfying reasons contained in the order impugned. In any event, assuming without admitting that there are no reasons in the order then also failure to give reasons solely would not be the ground for setting aside an order. It is submitted that a Judge of a Chartered High Court like that of our High Court, derives His/Her authority under the Letters Patent and the rules framed in terms of the provisions of section 122 of the Code of Civil Procedure, 1908. He or She does not exercise the jurisdiction or derives source of power only under the Code. A Judge of a Chartered High Court, therefore, enjoys a privilege and is not required to assign any reason in respect of all orders passed, if the order otherwise demonstrate consideration of materials on record and subjectively satisfy the conclusion drawn therefrom. This is apart from the fact that there are reasons apparent on the face of the orders impugned and is inconsonance with the materials available before the learned Single Judge at the time of passing the orders impugned. In any event, if the appellate Court is satisfied from the records that the orders impugned were passed after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a third party to the suit against whom no orders cannot be passed. According to the said respondents, assuming without admitting that the probate Court does not decide the title then also in view of the fact that sufficient materials being made available before the learned Single Judge the order impugned are justified in the fact situation alleged and requires no interference. 7) The respondent nos.1 and 2 also submitted that they are entitled to file a separate suit for declaration before a competent Civil Court or even maintain an application for oppression and mismanagement before the National Company Law Tribunal [In short, NCLT] under the Companies Act. It is submitted that as a legatee the respondents/defendants are jointly entitled to 12.58% shares of and in Birla corp. and more than 10% in VTL and BCL, the other appellants being the shares belonging to the deceased. Even if, the testamentary suit fails or is decreed against them, the said respondents have a claim in respect of title of such shares which is more than 10% being the shareholding necessary to maintain such an action for oppression and mismanagement. Moreover, in the event the suit fails the respondents/defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the APL Committee dated 15th October, 2013 expressly say that the estate of PDB comprises of the assets as enumerated in the respective affidavit of assets of the two erring groups. The Court exercising probate jurisdiction therefore cannot interfere with the affairs of the third party companies only because a pervasive control is alleged. 2) The jurisdiction issue raised by the plaintiffs have remained undecided due to dilatory tactics adopted by the said respondents. Attempts were made to distinguish the judgments relied upon by the appellants of which we also took note of. F) Findings : 1) The three appeals are against adinterim orders when only the parties to the testamentary suit were present before the Court. So far as the appellants are concerned, the orders can be construed as ex parte ad-interim orders as they are neither parties nor were served with the notice and copy of the application or were heard before passing of such orders. 2) The scope of an appeal in respect of an ex parte adinterim order or an adinterim order is very limited. The Appellate Court normally does not interfere with such orders unless such order is either perverse or bare erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riving him which goes to the root of the jurisdiction of the Judge. In the instant case, according to them, none of the appellants have been wrongfully deprived of anything which will cause them a real grievance thereby entitling them to maintain the appeal. It will appear from paragraph 23 of the said judgment that the Hon'ble Supreme Court relied on a dictum that if a person is brought before the Court to be bound by the order is a "person aggrieved". The appellants are not parties to the proceedings or were heard before passing of the orders impugned but by the order they are brought before the Court and are bound by the orders. They are, as such, "person aggrieved". The other judgment cited by the respondents on this issue reported in AIR 2003 SC 1989(paragraph 8) is on the general principles and needs no detailed discussion at this stage. However, the said respondents have cited a judgment reported in 1997 (3) SCC 443, which says that even if it is found at the end that the Court did not have the jurisdiction to hear a particular matter or pass any order therein then also an adinterim order passed in such a proceeding is binding and on its violation proceedings under Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of administration is treated as the plaint and the objection as a written statement and the matter is tried as far as practicable as a suit. The provision of the Code and the Original Side Rules of this Court are applicable for procedural purpose in case of trial of the suit. There is no pecuniary jurisdiction as to a testamentary suit. The territorial jurisdiction is governed by the place of residence of the deceased and the location of the properties comprising the estate of the deceased. The High Court exercises concurrent jurisdiction with the District Judge under Section 300 of the Act of 1925. Our Court being a Chartered High Court exercises jurisdiction under Clause 34 of Letters Patent, 1865 and Section 300 of the Act of 1925. In case of a person who had his residence within the ordinary original civil jurisdiction of this Court and all properties are within such jurisdiction, the City Civil Court at Calcutta exercises jurisdiction under Section 5(3) of the City Civil Court Act, 1953 and the second schedule thereto. 3) On a perusal of the order dated 2nd August, 2019 when only the plaintiffs and the defendants in the above Testamentary suit were present before the Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2019 was in the list. The learned Single Judge could have easily treated such application as plaintiffs' objection on the ground of jurisdiction and decided the same. A probate Court apart from appointing an Administrator pendente lite under the provisions of Section 247 of the Act of 1925 can grant injunction as held by a Division Bench of this Court in a judgment reported in AIR 1951 Cal 561 [Atula Bala Dasi & Ors. vs. Nirupama Devi & Anr.] to protect the estate. In paragraph 8 of the said report following another judgment of this Court reported in 1919 CWN 205 [Barani Devi vs. Chamatkarini Devi] the Division Bench held that the probate Court under section 247 of the Act of 1925 cannot obviate the difficulties or protect the properties, the powers of that Court are wide enough to issue temporary orders restraining other persons from interfering with the properties, which are the subject matter of testamentary disposition. It was also clarified in the said paragraph of the report the distinction between a civil suit and a testamentary suit. It has also been clarified in the said report that in extreme cases such order of injunctions are to be passed. The learned Single Judge, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th August, 2019 and the order dated 9th August, 2019 are devoid of reasons, which is contrary to the ratio laid down by the Hon'ble Supreme Court and, as such, the said order are liable to be set aside on that ground alone. The appellants then cited the judgment reported in 2000 [1] CHN 414 wherein a Division Bench of this Court following the judgment of the Supreme Court reported in [1993] 3 SCC 161 [Shiv kumar Chadha vs. Municipal Corporation of Delhi & Ors.] and [1994] 4 SCC 225 [Morgan Stanley Mutual Fund vs. Kartick Das] held that reasons are mandatory. The appellants thereafter relied upon a Division Bench judgment of this Court in Binod Khanna vs. Sunny Sales, reported in 2014 SCC OnLine Cal 10452 to show that reasons are to be given by the Court while passing ex parte adinterim order. In the judgment of Binod Khanna [supra], a Division Bench judgment of this Court reported in AIR 2003 Cal 96 [The Bengal Club Ltd. vs. Susanta Kumar Choudhary] has been considered. In the Bengal Club judgment the Division Bench apart from considering the Division Bench judgment reported in AIR 1988 Cal 25 [Sm. Muktakesi Dawn & Ors. Vs. Haripada Mazumdar & Anr.] have considered the two Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) We hold that a judge of a Chartered High Court does not enjoy anyprivilege of not assigning any reason while passing an ex parte adinterim order or an adinterim order. 5) There is no dispute as to the ratio laid down in Bhaskar Gayen's case.The Appellate Court will be well within its jurisdiction if it finds that the materials disclosed before the learned Single Judge were considered and the order impugned read as a whole satisfies the test laid down in the various judgments of the Supreme Court referred to hereinabove. In that case, the Court was considering an order in writ appeals which may not be in the same footing as in case of a civil matter. The parameters for granting interim relief in aid of mandamus or any other writ is not the same as an injunction in a civil case, particularly when, the Court is exercising probate jurisdiction. The Division Bench, in that case, found that there were reasons which satisfied the Division Bench and, as such, the order impugned therein was upheld. The Civil Procedure Code, 1908 in Order 41 Rule 22 has given the authority to the Appellate Court even can supplement reasons when the appellate Court finds that on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a Probate Court granting probate is a judgment in rem as against a judgment in personam in case of a decree in a civil suit. It is also equally settled that there is a clear distinction between a Company and its shareholders, even though that shareholder may be only one and is either the Central or a State Government. In the eye of law a Company registered under the Companies Act is a distinct legal entity other than the legal entity or entities that hold its shares in the said company. In this regard, reliance can be placed on the judgment reported in [(1999) 4 SCC 458 considered in Kamal Kumar Mitra [supra] relied upon by the respondent nos.1 and 2.]. It is also a settled position of law that interference to the holding of the AGM by a Company can be done only in extreme cases. The Companies Act, 1956 now replaced by the Companies Act, 2013 is a complete Code in itself so as to the functioning of a company. We do not want to go into a detailed discussion as to the provisions relating to management and administration of a company, or appointments of Directors as the same is not necessary for the purpose of adjudicating the present appeal. The shareholders, however, have adequate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also for being devoid of reasons as stated hereinabove. 4) We have also taken note of the fact that the adinterim orders/ ex-parte adinterim orders continued for around eight (8) months but when it involves an inherent lack of jurisdiction the said orders have to be set aside. The same is our conclusion even if the order is treated as an ad interim order. 5) So far as the other issues are concerned, we are reminded of our jurisdiction while hearing an appeal arising out of an ex parte interim order or an ad interim order. We do not want to go into the other issues argued as that would amount to usurping the jurisdiction of the learned Single Judge. Moreover, when the affidavits have been completed and the matter had been heard by the learned Single Judge to a great extent by the time the appeal had been preferred, we do not want to decide anything apart from the issues discussed as aforesaid. We make it clear that the learned Single Judge should hear the matter on all issues that may be raised by giving opportunity to the appellants to place their respective cases as any order that may be passed will bind them. The learned Single Judge shall also be not influenced by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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