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TMI Blog2007 (10) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... nafter referred to as "LDN"). His Lordship was pleased to pass the following order: ...Hence I appoint joint Administrator, pendente lite, consisting of following persons (i) Mr. Hiranmoy Dutta, Bar-at-law of Bar Library Club; (ii) Promotha Nath Chatterjee, Learned Advocate of Bar Association, Room No. 1; (iii) Mr. Prabir Kumar Roy, ex-Sheriff of this Court of 10, N.S. Roy Road, Behala, Kolkata-700019; (iv) Mr. Sujit Bhattacharjee of 52-C; Ballygunge Circular Road, Kolkata - 700019, who shall take charge and control of all the shareholding of the deceased Lady in all the companies and they should function as could be functioned by under law by virtue of the controlling shareholding of all the Companies left behind by the said Lady. They shall take step for rectification of all the share registers of the Companies recording their names. They shall immediately make an enquiry as to the dealings of Lodha vis-a-vis dividends and investment of the dividends and submit a report to the Court and they shall place themselves in the Board of Directors wherever it is possible by virtue of the shareholding. They shall, in consultation with each other, decide to dissolve the Board i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Executors have been substituted in the probate proceedings. Admittedly, after the death of PDB, RSL, on July 12, 2004 read out the said registered Will at Birla Park before the members of Birla family. On July 19, 2004, RSL filed the probate application before this Hon'ble Court being P.L.A. No. 204 of 2004.9. It further appears that a suit being C.S. No. 221 of 2004 was filed on August 17, 2004 by KKB, GPB and others claiming that MPB and PDB had left earlier Wills dated July 13, 1982 and the said two Wills are Mutual Wills. The claim in the plaint is that there is an irrevocable agreement between MPB and PDB that they would not revoke the said Wills. 10. On August 18, KKB and others filed a petition for probate of the alleged Will of MPB dated July 13, 1982 which has been marked as P.L.A. No. 241 of 2004. It is pointed out that the said petition was filed for probate 14 years after the death of MPB (i.e. in the year 1990). Another petition for probate was filed by GPB and others for probate of the alleged Will of PDB dated July 13, 1982 being P.L.A. No. 242 of 2004. 11. After the death of PDB, RSL, as Executor, took the charge of the Estate of PDB. The said fact is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en for removal of any of the Directors only prior seven days notice shall be served upon the Defendants. I direct the profounder by his controlling share holding shall not move any resolution nor support any resolution aiming to sell, encumber any assets of the MPB Group of Companies nor closure thereof, without express leave of the Court. The profounder shall also, maintain status quo in relation to the other properties. 15. At the ad-interim stage the Hon'ble First Court held prima facie that: ...do not find any allegation of mismanagement, destruction and devastation of the Estate only an allegation has been made that a jute mill is sought to be closed and the same is sought to be shifted. Explanation has been given by Lodha in his separate application stating that for economic viability of the above jute mill the said decision was taken to shift mill at a different place as the existing site does not have any scope for expansion.... So, I think, keeping in view the interest of the group of companies on the one hand and to safeguard the interest of the Estate of the deceased lady on the other hand slightly regulatory measure is to be taken.... After hearing the parties t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He further submitted that under Section 247 of the Indian Succession Act, the Court has power to appoint Administrators Pendente Lite. No specific guidelines are mentioned in the said section. Therefore, Courts have laid down the guideline through judgments. Mr. Mitra submitted that the principles for appointment of Administrators emerge from decided cases and the principles laid down therein are still undisputed. 19. Appointment of Administrator is analogous to that of appointment of Receiver and he pointed put that the said position has also been accepted by the Hon'ble First Court and he drew our attention to page 45 line 7 of the said judgment in this regard. Under Order 40 Rule 1 of the Code of Civil Procedure, the appointment of Receiver should not only be just but must also be convenient. 20. He further pointed out that the Respondents before the Hon'ble First Court relied upon the following judgments: AIR 1933 Bom 342 Pandurang Shamrao Laud and Ors. v. Dwarkadas Kalliandas and Ors.; AIR 1951 Mad 393 Adapala Subba Reddy and Anr. v. Adapala Andemma and Ors.; AIR 1952 Cal 418 Goods of Borendranath, Mitter & Sudhindranath Mitter v. Arunendranath Mitter; 126 ITR 74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctice of the probate division is to appoint an Administrator Pendente Lite in all cases where the Court of Chancery would appoint a Receiver. The same principle was followed in the decision reported in 13 CLJ 47 (Bhuban Mohini Debi vs. Kiran Bala Debi) 25. He further pointed out that the appointment of Administrators Pendente Lite under Section 247 of the Indian Succession Act the criteria of necessity is also to be fulfilled. Necessity of presentation of the Estate of the deceased testatrix is the more important criteria. Unless grounds for necessity are established, there is no jurisdiction to appoint Administrators. Reliance was placed upon the decision reported in 13 CLJ 34 (Jogendra Lal Chowdhury vs. Atindra Lal Chowdhury) where the Hon'ble Court has held that whether there is anything against the appellant personally which would necessitate the Court taking the Estate out of his hands. In the decision reported in 13 CLJ 47 (supra) the Court expects a necessity to be shown for the temporary grant namely, that there is something required to be done and there is no person empowered to do it. Therefore, the Court held that the necessity for the appointment of an Administrato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endente Lite. 30. He further drew our attention to Woodruff on Receiver 7th Edn. page 98, line 15 which is reproduced as hereunder: The Executor will not be displaced upon slight grounds, and a strong case must be made out to warrant the appointment of a Receiver where the Executor is willing to act. Where, however, the circumstances above mentioned exist, such as, would justify the appointment as against a trustee and where the abuse of trust is manifest, and it is plainly apparent that there has been serious waste and misappropriation of the funds, relief will be granted, especially is this true when the mismanagement is shown not in a single instance but from as habitual course of dealing, involving the property in danger. 31. The following judgments were cited on behalf of the Respondents: In the decision reported in AIR 1933 Bom 342 (supra) where the Court has held that before exercising its jurisdiction to grant Administrator Pendente Lite, it has also to be satisfied whether there is a necessity for such a grant has been made. It has been held in the said decision that each case must depend upon its own facts and upon the facts of that case, the appeal court came to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions were cited on behalf the Appellant in the above context: In the decision reported in AIR 1956 Mad 409 (Kunjammal v. Malayappa Iyer and Anr.) the Court specifically held that: there is no authority for the position that whenever the Estate, or a large part of it consists of movable property and cash and the person, in possession of the Estate is a limited owner a Receiver should be appointed, it is not the law. There must be proof of a further fact, namely, that the conduct of the limited owner has been such as to raise a reasonable apprehension. We are unable to follow the seasoning of the learned Judge on which he finds that though no positive acts of waste or spoliation have been proved, there is room for reasonable apprehension of such waste or fraudulent secretion to the detriment of the reversionary. This finding is totally inconsistent with his earlier finding that there is no positive proof of any fraud, or waste. 37. In another decision reported in AIR 1995 Kant 258(F.C.S. Amalnathan and Ors. v. J.S. Victor Basco) it appears that ordinarily the desire of the testatrix as to who should administer her Estate and execute her Will, will have to be respected an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble First Court has appointed the Administrator Pendente Lite only over the shareholding in the M.P. Birla Group of Companies. 42. Mr. Mitra humbly raised the question of dichotomy and contended that when there was no necessity for appointment of Administrator Pendente Lite over the other assets, what was the necessity for appointment of Administrator Pendente Lite over the shares of PDB in M.P. Birla Group of Companies. No reason has been given in the judgment by the Hon'ble First Court for appointment of administrator Pendente Lite over a part of the Estate and continuing the named Executor to manage the remaining part of the Estate. It clearly reveals that the Hon'ble First Court did not consider RSL untrustworthy. There is no finding of waste, mismanagement or devastate in the judgment of the Hon'ble First Court in respect of the controlling block of shares over which Administrators were appointed, or for that matter in respect of any other part of the Estate. The Respondents in their cross objection have not taken any ground that allegation regarding mismanagement should have been upheld by the Learned Single Judge. 43. The following questions, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Order 1 Rule 8 of the Code of Civil Procedure. Undoubtedly a large number of members of public will be affected by this appointment of Administrator pendente Lite. Even the companies who will be directly affected by the impugned order for appointment of Administrator Pendente Lite were not given notice. In short, the persons interested in proper management and well running of these companies have not been before the Court. It is also submitted that it would not be "just" in the facts and circumstances of this case to appoint Administrator Pendente Lite over block of shares in M.P. Birla Group of Companies. There has been failure of procedural justice and fairness. 46. Mr. Mitra drew our attention to page 3 of the judgment of the Hon'ble First Court and pointed out that His Lordship held as follows: Going by the prayer portions to the-applications made by the caveatrix, I think the prayer for appointment of the Administrator in terms of Prayer 'b' cannot be considered for if granted, that mount to taking over of management and control of separate juristic bodies by the Probate Court as it has no jurisdiction to do. 47. He further pointed out that His Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble First Court. Although His Lordship held that the probate court has no jurisdiction to take over management and control of separate juristic bodies, even then have passed an order contrary thereto. The impugned order is without jurisdiction and contrary to principle of law as laid down by the Hon'ble First Court. The order for appointment of Administrator Pendente Lite over block of shares and directions given regarding management of the Companies should be set aside on this ground. The order of the Hon'ble First Court is contrary to law and, therefore, suffers from vice of error of law on the face of the judgment. 51. According to his further submission, no case of necessity for appointment of Administrator Pendente Lite over the part of Estate, namely controlling block of shares of PDB has been established and in absence thereof, the Hon'ble Court had no jurisdiction to pass the impugned order. The necessity is to preserve the Estate which has been achieved by an ad interim order of injunction and there has been no complaint of dilution of shareholding. 52. Mr. Mitra further pointed out that there is a subsisting order of injunction restraining any dilu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Hon'ble First Court in the judgment do not give rise to necessity for appointment of Administrator. Some of the grounds have got no factual basis and are dehorns the pleadings of the parties. The order is not supported by reasons and based on non-existent facts and, therefore, liable to be set aside. 56. Mr. Mitra further contended that even assuming the case of necessity is established, is it just or convenient to appoint Administrator Pendente Lite in view of nature of that part of the Estate over which Administrator Pendente Lite has been appointed, namely running the businesses which includes separate public listed companies with thousands o" public shareholders and lenders? 57. There is not a single judgment cited by the Respondent cavettos where a Court has appointed Administrator over an Estate having interest in running business. On the contrary, in the judgment of Justice Wilde noted with approval in the case cited by the Respondents reported in (1948) 1 All E R 271 (supra) it has been held that: ...In Horell v. Witts the deceased had been in partnership and the surviving partner was in a perfectly good position to carry on the business, collecting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Estate or proceeding being filed by the Estate for collection of debts. Dividends by the companies and mutual funds are sent by cheques or automatic credit to bank through ECS. 61. The Hon'ble First Court further stated in the judgment that Lodha is a tainted person as because criminal proceeding has been instituted against him and his challenge in the criminal prosecution at the initial stage failed right upto Hon'ble Supreme Court. Mr. Mitra further pointed out that this criminal proceeding has been instituted at the behest of the Respondents which is clearly demonstrated and, therefore, they cannot take advantage thereof. This proceeding is not one instituted by the State and there is no FIR against RSL. Even, there is no allegation in the petition or in the Affidavit-in-reply that RSL is a tainted man and as such he should be removed and Administrators be appointed. This is again dehorns pleadings. Criminal proceeding does not relate to the period of Executorships of RSL. The Hon'ble Justice has held that, "the criminal charges labeled against him is a personal charge and this charge is related and in connection with the breach of trust which is alleged to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have kept have kept the Court informed about the transmission of shares of PDB in the investment companies in his own name as Executor and that he should have also sought the direction from the Court with regard to discovery of all the movable and immovable properties of the deceased. This has already become a suit being Testamentary Suit No. 6 of 2004. RSL is the Plaintiff. All parties to the suit will be bound by any order passed in the suit and are under the control of the Court. The Court can always given directions to the parties to the suit. 64. According to Mr. Mitra, such findings are without any material and the pleadings. The Hon'ble First Court further held that the properties of MPB have got mixed up with the property of PDB and consequently Executor should be appointed to take control and management of the Estate of MPB (see page 53 of the impugned judgment). Mr. Mitra drew our attention to the fact that the finding of the same Hon'ble Judge in the caveat discharge judgment is just opposite which would be evident from a decision reported in AIR 2006 Cal 6 Phyamvada Devi Birla v. Madhav Prasad Birla) wherefrom it appears that: 88. ...He (Yash Birla) is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these shares in the investment companies and through these investment companies the entire M.P. Birla Group of Companies are controlled. Therefore, RSL was under a duty and obligation as Executor to take control of the shares and transmission was applied for not in his personal name but as Executor to the Estate. The Court held that the shares of PDB in the investment companies transferred in his own name before filing of probate petition and before the completion of 'shardh' ceremony. 70. The said view is contrary according to Mr. Mitra since the Hon'ble First Court is of the view that the Executor should take immediate control of the Estate. Although the Hon'ble Judge held to the contrary which would be evident from the following passage of the decision as follows: …on the strength of the 1999 testamentary document the control of the entire Estate has been taken by Lodha. According to Mr. Mitra and Mr. S.N. Mukherjee and so also the provision of the law the Estate and properties vest unto him as named Executor under the provision of Section 211 of the said Act…. 71. Mr. Mitra further pointed out that RSL failed to disclose PDB's undivided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate papering on behalf of the Respondents also accepted the said position and contended that no mutual investment company has ever been floated by RSL nor any part of the Estate of PDB invested in mutual fund by RSL. 75. According to the Hon'ble First Court, RSL was unmindful of his function as Executor as because he was busy appointing himself as Chairman of the Board of Directors of M.P. Birla Group of Companies (see page 57 of the impugned judgment). Mr. Mitra pointed out that there was no pleading, no argument, no document. On the contrary, RSL was already the Chairman of all the five investment companies since 1999. He was also the Co-Chairman of Birla Corporation Ltd., Universal Cables Ltd. and Vindhya Telelinks Ltd., the three main manufacturing companies of the Group. He was appointed Chairmar by the Boards of Directors of these Companies. 76. The Hon'ble First Court Further stated in the said decision that the search and discovery exercise have to be undertaken by persons to find out what is the value of the assets left by the deceased and whether RSL's version of Birla's version of the value of assets as stated in their respective affidavits of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and he pointed out that RSL is also a man of independent means. However, this part of the judgment was also not supported by Mr. Pal, Learned Senior Advocate appearing on behalf of LDN during the course of hearing. In the year 2003-04, the share of profit of RSL from Lodha & Co., Kolkata was ₹ 37.51 lakhs; there was a sum of ₹ 84.09 lakhs to the credit of his capital account and his drawings in that year from this firm was a sum of ₹ 22.56 lakhs. 80. Similarly, in the year 2003-04, the share of profit of RSL from Lodha & Co., Mumbai was ₹ 76.15 lakhs; there was a sum of ₹ 89.05 lakhs to the credit of his capital account and his drawings in that year from this firm was a sum of ₹ 68.50 lakhs. So, the total drawings in the first year was more than ₹ 10C lakhs from the two firms. He further contended that not a single penny spent from the Estate for litigation expenses. 81. Therefore, he submitted that the grounds relied upon by the Hon'ble First Court are not the grounds taken by the Respondents but the Hon'ble First Court, which are imaginary and are not, supported by records. The judgment is, therefore, legally perverse. 82. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets but the estimated values are to be given for court fees Maximum court fees have been given in this case. The Birlas have not given details of Jewellery, coins etc. in their affidavit of assets filed in connection with alleged Wills of 1982. Birlas have given ad hoc higher value of estimated ₹ 50 lakhs in order to complicate taxation matters of the Estate. RSL has given valuation as per Trial Balance of PDB maintained during her lifetime. 83. According to Mr. Mitra the judgment given on the basis of "admitted facts" in fact, are not admitted at all and thereby the entire judgment is vitiated. 84. The block of shares were held by PDB at the time of her death and the nature of the Estate is nothing but the block of shares held, by PDB in M.P. Birla Group of Companies. 85. It is submitted that there is no dispute that main asset of the Estate is the controlling block of shares held by PDB in M.P. Birla Group of Companies. It is further submitted that the affidavits of assets filed by RSL disclose full details of shareholding including distinctive numbers of shares etc. The number of shares as disclosed by RSL tally with that of the Respondents also (see page 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... praying for appointment of Administrator Pendente Lite over that part of the Estate of PDB "to act in accordance with law" viz. Administrators over the shareholding of PDB, are in fact trying to achieve indirectly what they know cannot be achieved directly, viz. to have Administrators appointed over the M.P. Birla Group of Companies, if Administrators are appointed over and in respect of these shares with power to exercise voting rights in respect thereof, that would enable Court Officers to play with the fate of the Companies within M.P. Birla Group of Companies. It would show the appointment of Administrator over several running businesses having an employment force of 12,500 persons and a turn over of ₹ 1780.32/-crores. Even the news of appointment of Receiver over the companies will have disastrous consequences for employees, stakeholders, Financial Institutions and Banks, public shareholders, business collaborators, joint venture partners, managerial cadre, suppliers, customers and any one having dealings with these companies who would become wary to deal with these companies in apprehension of interference of Administrators and/or litigation. That is one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral Companies of the M.P. Birla Group even during the lifetime of MPB [see affidavit in support of Caveat para 15(d) to (f) page 154 vol. I of the Paper Book]. (ii) After the death of M.P. in 1990, PDB Supra 11 reposed complete trust and confidence in RSL in matters pertaining to all the financial affairs of Group as also concerning management of all the Companies [Affidavit in support of Caveat para 15 (g) page 155 vol. I). As a matter of fact RSL was appointed founder Trustee of M.P. Birla Foundation by MPB himself in 1986 [see on record at page 828 vol. Ill of the Paper Book]. (iii) PDB was at ail material times accustomed to act as per the wishes of RSL [see affidavit in support of Caveat para 15(g) & 15(o) pages 155 to 156 Volume I of the paper Book]. (iv) RSL was someone "who had familiarised himself with all aspects for control" of PDB's Estate [see Administrator petition para 15 page 120 Volume I of the Paper Book]. (v) RSL has been at the helm of affairs and actively involved in the management of the 4 manufacturing companies for last several years [See A/R to Administrator petition para 8(a) page 890 Volume III of the Paper Book]. 94. Therefore, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Minute of the Meeting the following fact revealed "The Chairman mentioned how RSL had, on the request of Late MPB, been helping all these years in many of the Group's matters from time to time and how she keenly wanted him to succeed her. She also added how she had been desiring since a couple of years that RSL take over as Chairman of the company but RSL was keen that she continued as Chairman as long as she can. After discussion and on the suggestion of the Chairman, the Board unanimously resolved that RSL be and in hereby appointed as Co-Chairman of the Company with immediate effect." 97. The minutes was signed by PDB as the Chairman of the Company. Mr. Mitra submitted that all the facts go to show that PDB had confidence in the managerial ability of RSL and after her death, the foreign partners, Financial Institutions' nominee Directors of the companies etc. also continued to have confidence in RSL. Incidentally, none of the other Respondents/Birlas have ever been involved by PDB in the management or running of those companies. 98. Mr. Mitra further contended that since the demise of PDB, the Respondents have not been able to show any change in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee and Company Law advisory Committee constituted under the Companies Act. RSL has in the past served as a Director and also Executive Committee member of the Central Board of the SBI and has been the past President of the Indian Council of Arbitration. In a comprehensive annual ranking of India's business leaders for 2004 brought out by the 'Economic Times', largest selling business daily and IMRB International, RSL has been placed at the rank of 48. 101. Mr. Mitra pointed out that other Birlas have no stake in M.P. Birla Group of Companies but want to intervene in the management. The Birlas in support of their prayer for appointment of Administrators have made a false case that the following persons have been recently appointed on the Boards of various Companies of the Group at the instance of RSL and this would upset the well settled pattern of administration. However, according to him, these following persons have already been Directors of and or associated with the following Companies of the M.P. Birla Group of Companies since long and during the life time of PDB. He contended that RSL was a Director of 12 number of Companies of M.P. Birla Group of Companies duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppointment of a few other persons as independent Directors in the manufacturing Companies. These appointments are made by the Boards of those Companies and confirmed at the shareholders' meetings. However, these independent Directors are all eminent persons from different walks of life and he drew our attention to annexure 'L' appearing at page 644 vol. Ill of the Paper book in this context. 108. Hence, he submitted that the application which has been filed by the Respondents is nothing but malafide application with an oblique motive. He contended that Birlas are business rivals. They have cement Companies, namely, Grasim Industries Ltd., Kesoram Industries Ltd., Century Textiles & Industries Ltd., Mysore Cements ltd. etc. Birla Corporation Ltd. the flagship company of M.P. Birla Group of Companies is a cement manufacturing company. It is in their private interest to ruin a rival company. With this oblique motive the application of Administrator Pendente Lite and charges of mismanagement were made, which were all proved to be false. In page 59 of the impugned judgment, the Hon'ble First Court after close scrutiny had held that no mismanagement by RSL has surfaced a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Mitra, after a lapse of over 5 months after the demise of PDB, Birlas through Kashinath Tapuriah (hereinafter referred to as "KNT") filed the applications for Administrator Pendente Lite on December 16, 2004. The cause of action of the Administrator petition appearing at page 115, vol. 1 of the paper book is summarized as follows: (a) Closure of Soorah Jute Mill, an Unit of Birla Corporation Ltd., in March, 2004, this closure was during the life time of PDB. (b) Sale of machinery of Birla synthetics, an unit of Birla Corporation Ltd., this sale also took place during the life time of PDB when she was the Chairman of the Company. (c) Transmission of shares standing in the name of PDB to RSL as Executor to the Estate of PDB in 2 Companies. He further submitted that had he not done so, the Birlas would have contended that RSL has failed to discharge his obligations a Executor and to take control of the entire Estate of PDB. In fact, this was the allegation made by the Birlas against RSL when large number of gold coins were found intact in the strong room at Madhu Kunj, Birla Park. (d) Appointment of Directors on the Board of directors of some of the Companies of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two Rights Issues, M.P. Birla Group of Company's shareholding in Birla Corporation Ltd. substantially increased and thus the Group benefited. It was also suppressed that the other Birla Companies and members of the Birla family, which held shares in Birla Corporation Ltd. substantially profited from these Rights Issues by relinquishing their rights entitlements in favour of M.P. Birla Group of Companies at a premium. (e) Apart from Soorah Jute Mills and Birlas Synthetics, some other Units of M.P. Birla Group of Companies have been closed down. The divisions which were closed down were in fact all loss making and most had been closed down during the life time of PDB, full particulars whereof have been given in the Supplementary Affidavit in reply to the Affidavit in Reply. Disclosure in this regard have also been contemporaneously made in the Director's Reports of the respective Companies, full particulars whereof have also been given in the Supplementary Affidavit (appearing at page 1901-1907, vol. VI, Para 15 & 18, page 1851, vol. VI of the Paper Book). (f) Mr. Mitra further contended that performance of the cable companies belonging to the M.P. Birla Group of Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 15(e) in the Affidavit-in-Reply 7. Losses of Birla DLW Ltd. Appearing at para 15(f) in the Affidavit-in-Reply 8. Theft of Cement Bags from Satna of ₹ 15 lakhs Appearing at para 15(c) in the Affidavit-in-Reply 9. Cable Companies are far behind their competitors Appearing at para 8(e) & 8(f) in the Affidavit-in-Reply 10. Chairmanship of RSL of Birla Ericsson Appearing at para 9 in the Affidavit-in-Reply 11. Manipulation of share price due to low liquidity Appearing at para 8(k) in the Affidavit-in-Reply 12. Inspection of records of Companies by third parties refused Appearing at para 33 in the Affidavit-in Reply and para 28 in the Petition SI. No. Grounds taken in the Administrator petition and Affidavit in Reply Reference 13. Constitution of Committee of Directors of BCL to make the Board defunct Appearing at para 15(g) in the Affidavit-in-Reply 14. Companies worked overtime to fabricate records Appearing at para 36 in the Affidavit-in-Reply 15. Appointment of key executive Appearing at para 18 in the Affidavit-in-Reply 16. Transfer of shares between Group Companies Appearing at para 12 in the Affidavit-in-Reply 17. RSL & HVL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g four keys in course of inventory by Special Officers and subsequent production of further keys, (dealt with para 8.9 at page 63 of the Paper Book.) (ix) Pendency of disciplinary proceeding against RSL before the Institute of Chartered Accounts as also pendency of criminal proceeding against RSL. (Dealt with at para 8.10 at page 65 of the Paper Book.) (x) Flexibility of Human mind as in possibility of RSL misconduct himself in future as Executor to the Estate. (Dealt with at para 8.11 at page 66 of the Paper Book.) (xi) Discretionary order - no interference called for. (Dealt with at para 8.12 at page 67 of the Paper Book.) 115. Mr. Mitra further contended that the vastness and complexity in itself cannot be a ground for appointment of Administrator. On the other hand, complexity of the Estate as in this case would be a ground in itself for rejecting an application for Administrator when the Executor is admittedly in absolute control of the complex Estate and when the testatrix herself had put the Executor / RSL in charge of such complex Estate during the life time and for at least last 5 years before her demise. He further drew our attention to AIR 1933 Bom 342 (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naged and it may be noted that the Estate is such that involves participation of third parties namely large block of outside shareholders who had admittedly reposed full faith and confidence on RSL by electing and re-electing him as Chairman of the Companies year after year by supporting all the resolutions proposed by him. Ouster of RSL and appointment of Court Administrator would be against the wishes of these shareholders who an not before this Hon'ble Court. 120. With regard to the serious challenge to the Will by the Birlas, Mr. Mitra, Mr. Shaktinath Mukherjee and others contended that the last Will and Codicil was prepared by Dr. V. Gourishankar, Learned Senior Advocate of the Hon'ble Supreme Court, according to the instruction of PDB and has been witnessed by P. L. Agarwal, Senior Partner of Khaitan & Company who has also affirmed an affidavit dated July 7, 2004 as an attesting witness, which is also part of the probate petition appearing at page 17 of vol. I of the paper book. The other witnesses are Dr. Madan S. Vaidya senior Doctor attached to Belle Vue Clinic and M.P. Sharma, PDB's personal secretary. The Affidavit dated July 8, 2004 has also been filed by D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Affidavit in support of caveat that it would be natural for PDB to give her Estate to them or they would be her natural heirs. On the other hand, PDB's relationship with KNT and several male members of the Birla family was far from cordial. None of the male members of the Birla family were ever involved with PDB in running her businesses. Mr. Mitra drew our attention to the references in this connection, stated hereunder: (a) Letter dated September 19, 1985 of Ashok Birla (father of YB and only son of M.P. Birla's only brother Late Gajanan Birla) to MPB complaining that "...you have exhibited your intense bitterness towards me and your family.... I refer to the numerous occasions when you have condemned Uncle BK & SKB and Auntie Mrs. BK..." appearing at page 684 of vol. Ill of the paper book. (b) Letter of YB dated April 8, 1998 where YB states that PDB finds him 'incapable', appearing at page 1962 vol. VI of the paper book. (c) Hand written note of PDB showing MPB was unhappy about division of assets, appearing at page 679 vol. Ill of the paper book. (d) Letter of KNT dated January 18, 1996 and December 19, 1998 to PDB, appearing at page 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the last 22 years which was to be opened after the demise of both PDB and MPB. When production of the envelope is asked for 2 weeks after the envelope was illegally opened, the Birlas however claimed that after the alleged Will was discovered they have not preserved the same, appearing at pages 3224 and 3227 of vol. X of the paperbook. 3. The Birlas case is that the alleged Wills of 1982 were under instructions of the couple to be probated after the death of both-however the first named Executor in MPB's alleged Will is PDB, and vice versa in PDB's alleged Will of 1982 where MPB is named as Executor; they are also legatees in each other's Wills - thus, the Birlas' case is absurd. No mention of this alleged Will in any of the 4 letters written by N. G. Khaitan, Partner, Khaitan & Co., the Advocates-on-Record of Birlas between the time of PDB's demise on July 3, 2004 and July 30, 2004 when there was for the first time reference to this alleged Will, in the Affidavit in support of caveat. 5. In a large number of deeds, documents and even affidavits of PDB, MPB is stated to have died intestate. Admittedly, these documents were not executed when PDB was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs of M.P. Birla Group of Companies to be managed by Company Executives which would be evident from the will where it has been specifically stated that, "to the extent have been exercising" would mean the same pattern of management as followed by PDB should be continued. Therefore, the allegations made against RSL that he is acting with undue haste in taking control a few days the death of PDB is nothing but bald allegation. 131. The further allegation which has been made out that 1/5" undivided share of PDB in Kumaon Orchards included in the Affidavit of Assets. According to Mr. Mitra's submission, the application for amendment of the Affidavit of Assets made in December, 2004. The application was not opposed and the affidavit of assets amended by consent, (order dated 16th December, 2004 appearing at para 82 of vol. 1 of the paper book) Admittedly, Kumaon Orchards is a joint immovable property being managed by KKB. Neither it is alleged nor it can possibly be conceived that RSL had nothing to gain by not including this asset in the affidavit of assets. Petition has been filed by RSL for direction upon KKB to pay amounts admittedly by due in respect of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at least since 1999. Birlas themselves have annexed Accounts Statements of such mutual funds, in vested through PLC Securities Ltd. during the lifetime of PDB. 136. None of those mutual funds are owned or controlled by RSL. There is no allegation that PLC Securities Ltd. realizing any extra benefit or any loss caused to Birla Corporation Ltd. in any manner. 137. He further pointed out that PDB used to invest most of her own surplus money in mutual funds which would be evident from the affidavit of assets annexed to the probate petition filed by Birlas as also the probate petition of RSL. Replacement of PLC Securities Ltd. by any other concern would amount to altering the system established and followed during the life time of PDB who was the Chairman of Birla Corporation Ltd. It is to be noted the Birla Corporation Ltd. is a separate legal entry. It is not the case of the Birlas that the funds of the Estate of PDB are being invested through PLC Securities Ltd. and neither this has been done. 138. The further allegation has been made that RSL as Executor to the Estate of PDB transmitted the shares of PDB in Investment Companies immediately after her demise and in this context Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention to the decision reported in (2004) 7 SCC 505 (Commissioner, Jalandhar Division and Ors. v. Mohan Krishan Abrol and Anr. with Mohan Krishna Abrol v. State of Punjab) Where the Hon'ble Court held as follows: …a bare reading of Section 211 shows that the property vests in the Executors by virtue of the Will and not by virtue of the probate. Will gives property to the Executor; the grant of probate is only a method by which the law provides for establishing the Will. In the case of Kulwanta Bewa v. Karam Chand Soni it has been held that Section 211 provides that the Estate of the deceased vests in the Executor; that the vesting is not of the beneficial interest in the property; but only for the purposes of representation. In the case of Meyappa Chetty v. Supramanian Chetty the Privy Council has held that Executor derives his title from the Will and not from probate. The personal property of the testator (including right of action) vests in the Executor (s) on the death of the testator…. 144. He further contended that there is a bar under Section 213 of the Indian Succession Act, 1925 (hereinafter referred to as "the said Act") as to requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application for inventory was made in March, 2005. The scope of the petition was to inventories movable including small coins and Jewellery on allegation post inventory of any missing items. On the contrary, what was found by the Joint Special Officers in course of inventory in Birla Park, is much more than what the Birlas themselves has disclosed in the Affidavit of Assets to the probate petition filed by them being P.L.A. No. 242 of 2004. He further pointed out that there are two sets of security guards present at the Birla Park, one at the common entrance and the other at the entrance for the residence of PDB, KKB and BKB. There is no allegation of theft or removal of any valuables from PDB's residence. 146. The further point that was urged before the Court that the pendency of disciplinary proceeding against RSL before the Institute of Chartered Accountants as also the pendency of criminal proceeding. Mr. Mitra contended that these proceedings are sub-judice before the concerned forums, the Institute of Chartered Accountants of India and the concerned Criminal Courts. In any event, these proceedings cannot be made subject matter of or taken into account in the present pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocutory remedy is to preserve status quo. By the impugned order/the status quo since the death of PDB will be drastically disturbed without any necessity and when ad-interim injunction restraining transfer and dealing with shares was adequate to preserve the controlling block of shares in status quo. (ii) Ignoring the settled principles of law and settled principle of law in the matter of Supra 24 appointment of Administrator Pendente Lite is (a) established act of mismanagement and waste by the executor and (b) necessity, which the cavettos failed to make out and (c) just and convenient - the Hon'ble First Court has failed to consider this important aspect viz. it is not just or convenient to appoint officers of Court in respect of running business. (iii) Relying on the said decisions of Wpratima Dutta v. Nilima Seal and (1997) 2 CLJ 409 ; (1990) Supp SCC 727 (supra), he submitted that the Hon'ble First Court acted unreasonably or perversely or capriciously. 150. He further submitted that the ground of waste or mismanagement has not been argued in this appeal by the Respondents and the Hon'ble First Court applied wrong principles of law which is the ground for int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in unknown. The Hon'ble First Court having held that the probate Court has no jurisdiction to take over management and control of separate juristic bodies, have passed an order contrary thereto. According to his own ratio, the impugned order is without jurisdiction and contrary to principle of law as laid down by the Hon'ble First Court. The order for appointment of Administrator Pendente Lite over block of shares and directions given regarding management of the Companies should be set aside on this ground alone. The order of the Hon'ble First Court is contrary to law and suffers from vice of error of law on the face of the judgment. xii. When the Hon'ble First Court passed an order not consistent with the evidence on record and not in accordance with the principles on which judicial discretion may be exercised, the Appeal Court will exercise its own discretion in deciding whether or not the Administrators should be appointed and he relied upon a decision reported in AIR 1928 PC 49 Binoy Krishna Mukherjee and Ors. v. Satish Chandra Giri and Ors.) in support of his contention. 151. Hence, Mr. Mitra concluded that the Appellant humbly prays before the Appeal Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decisions reported in (1990) Supp. SCC 727 and 13 CLJ 34 in this context and submitted that the Appeal Court should not interfere unless the Court was convinced that the discretion had not been fairly exercised. 154. He further submitted that the Hon'ble First Court found that there exists bonafide dispute arising out of serious challenge to the validity of the Will and Testament dated April, 18 1999. In these circumstance, the Court held that a tainted person should not be allowed to manage the Estate. The Hon'ble First Court further held that the challenge on the grounds of undue influence, existence of suspicious circumstances, lack of testamentary capacity, unnaturalness of the bequest, concealment or delay in production of the Will, Executor taking substantial benefit under the Will, change of lawyer for preparation of the Will do raise serious bonafide Dispute. 155. The Hon'ble First Court further held that in 1982 two Mutual Wills were executed by MPB and PDB whereby properties were given away to charity. Probate applications of these wills are pending and RSL has been contesting the probate application. Consequently, the property of MPB is in 'medio& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble value and extent, and for the safeguarding and preservation of it, proper arrangements is to be made especially when very wide discretionary powers have been given to the Executor under a Will. 159. He further pointed out that the Executor is the sole beneficiary under the Will. Relying on ten decision of 1930 PC. 24 Vellaswamy Servai and Ors. L. Sivaraman Servai he submitted that the consideration for appointment of Administrator Pendente Lite was that "the Respondent, the profounder of the Will, is the principle beneficiary under the Will." He further submitted that an Executor is considered to be a fiduciary. Methods adopted to increase his control on the Boards of different companies were neither transparent nor clean and accordingly he relied upon the decisions reported in AIR 2003 SC 4351 Krishna Mohan Kul alias Nani Charan Kul and Anr.. v. Pratima Malty and Ors.) and submitted that when a person is in a fiduciary relationship with another and the latter is in a position of active confidence the burden of proving the absence of fraud, misrepresentation or undue influence is upon the person in the dominating position. 160. Further reliance was placed on the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... why the safe and such a huge number of boxes etc. had been lying empty. RSL never disclosed to court, which he should have done immediately after the filing of the probate application, as to why the existence of jewelleries, ivory, silver, artifacts, rare gold coins etc. as also empty containers found by Special Officers were kept concealed. Moreover, RSL never made any inventory of the jewelleries, gold coins, ivory, Silver, artifacts etc. after the death of PDB. The inventory made by the Special Officers cannot be compared with any other inventory. Therefore, he submitted that the finding of the jewelleries etc. could not be stated to have been kept intact and this statement is intended to cloak the personal interest of the Executor. 164. According to him, RSL produced 4 number of keys of the almirahs and safes etc. and further stated that he did not nave access to almirahs, safes, cupboards, boxes, pouches, strong room etc. because when PDB went to Belle Vue Clinic she only gave four almost useless keys to RSL. Thereafter, at the instance of Court, the Joint Special Officers after broke open the safes and almirahs etc., to have the locks of the safes and almirahs etc., recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on behalf of RDM (Radha Devi Mohatta) submitted before us that the principal point which has been argued before the Hon'ble Appellate Court that whether or not the Hon'ble First Court justified, in the facts and circumstances of the case, to appoint the Administrators Pendente Lite under Section 247 of the Indian Succession Act which provides that pending any suit touching the validity of the Will of a deceased person or for obtaining or revoking any probate or any grant of letters of administration, the Court may appoint an Administrator of the Estate of such deceased person, who shall have all the rights and powers of a general Administrator other than the right of distributing such Estate and every such Administrator shall be subject to the immediate control of the Court and shall act under its discretion. Hence, he pointed out the other points that have been urged on behalf of the Respondents and member of the Birla family which are as follows: a) Appointment of an Administrator Pendente Lite is a matter of judicial discretion of the Hon'ble Court of first instance and the Appellate Court would not normally interfere with the exercise of such discretion if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es held by the testatrix in various companies, through a complex interlocking structure. The testatrix held shares, inter alia in six investment companies. The said investment companies, in turn, control the majority or substantial shares in five manufacturing companies which included the flagship company, Birla Corporation Ltd. The right to control is also a valuable property and, therefore, the Administrator Pendente Lite should be appointed over the share holding of the testatrix in all the six investment companies including right to control all other companies of M.P. Group specified as annexure 'J' which was exercised by the testatrix during her life time. The application for appointment of Administrator Pendente Lite accordingly seeks such appointment not only over the movable and immovable properties of the testatrix, but also over the voting rights and the right to control including de facto control which the testatrix exercised in respect of various companies specified in annexure 'J' to the application for appointment of Administrator Pendente Lite, appearing at page 293 of vol. 1 of the paper book. He submitted that the above position laid down in the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ministrator Pendente Lite application. iii) Attempt was made by RSL to conceal the assets and properties of testatrix by not disclosing the details of such assets even though he had prior knowledge of the same. iv) Even during the process of inventory being conducted at Birla Park by the Joint Special Officers, attempt was made by RSL to conceal the strong room in the residential premises of testatrix at Birla Park, Kolkata. v) RSL being the Executor of testatrix did not show the existence of the strong room in the sketch plan supplied by the representatives of RSL before the Joint Special Officers. d) According to his further submission, RSL is not a reliable person which would appear from inter alia, the following facts: i) a complaint has been filed before the Institute of Chartered Accountants of India against RSL in respect of professional misconduct for false declaration regarding the number of persons in the firm Lodha & Co. to procure more business than what his firm was eligible for. The said proceedings are pending. Such instance of professional misconduct by RSL shows him in extremely poor light. ii) RSL made incorrect statements in the Affidavit with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar v. Mahahir Prasad and Ors.) and submitted that the Hon'ble Supreme Court held that there would be nothing improper in giving the Plaintiff a decree upon the case which the Defendant himself makes. 174. Further reliance was placed on the decision reported in AIR 1952 S.C. 47 (Kedar Lal Seal and Anr. v. Hari Lal Seal) Contending that the Court would be slow to throw out a claim on a mere technicality of pleading when the substance of the thing is there and no prejudice is caused to the other side, however, clumsily or inartistically the plaint may be worded. He further contended that in the instant case the Court shall judge the situation as a whole without taking a narrow legalistic view with regard to the lack of pleading in the petition. 175. He further pointed out that there is a distinction between Sections 247 and 301 of the said Act of 1925. Section 301 provides for removal of Executor or Administrator and provision be made for his successor and the section goes on to lay down that the High Court may en application suspend remove or discharge any private Executor or Administrator and provide for the succession of another person to the office of any such Executor or Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly would depend upon the Court's perception, based on the materials and facts brought to its notice, regardless of pleadings filed by the parties. A strict adversarial approach is not appropriate in testamentary matters for conscience of the Court has to be satisfied not only in the matter of granting a probate by removal of suspicious circumstances, but also in the matter of protection and preservation of the Estate even at the intermediary stage until the question of grant is finally decided either way. This idea is reinforced by the fact that an Administrator Pendente Lite be appointed under Section 247 of the said Act even without any application being made by a party to the Court. This position is made clear by contrasting the provisions of Section 247 and 301 of the said Act. 178. He further submitted that under Section 301 of the said Act, the Court could remove the Executor only on an application being made by a Party, whereas under Section 247 of the said Act the Court is free to appoint an Administrator Pendente Lite without any application being made by a party. 179. He further argued that on merit, the main thrust of the counsel's argument has been that neith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the death of testatrix. The whole affair over the discovery of the Treasure Trove and conduct of RSL would show the dishonest conduct of RSL by itself is enough to discredit him as Executor to be trusted any further with the Estate. In fact, the biggest safe with combination lock inside the strong room when broke open was found to be totally empty (see page 2909, vol. IX of the paper book). Arguments advanced on behalf of RSL that the criminal cases were also been filed against RSL with regard to the improper and unprofessional conduct in the affairs of his running the business as a Chartered Accountant and with regard thereto nothing has been proved so far in connection with the criminal case or the improper or unprofessional misconduct of RSL, therefore, it is submitted on behalf of the Appellant that the Court should not be influenced by the said factors. Hence, Mr. Mookherjee submitted that at least the complaint would show and can support a prima facie view for the Court to decide the question whether RSL should be allowed to continue as the Executor. 183. He further pointed out that elaborate submissions were advanced on behalf of the Appellant with reference to various d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s, cash, Jewellery etc. but of a special type comprising antiques and coins of mourya age which are invaluable. Further, the shares of various companies of M.P. Birla Group and through the said share-holdings controlling of substantial industrial units, constitutes the true nature and represent the most Valuable constituent of the Estate. He also drew our attention to Clause 4 of the Will in question and submitted that the Will itself expressly refers to control. 187. According to Mr. Pal, the Indian Succession Act, 1925 (hereinafter referred to as the said Act of 1925) to be considered for the judicial" exercise of discretion for appointing Administrator Pendente Lite on the ground of serious challenge to the Will, vastness of the Estate, nature of the Estate, Executor's conduct and performance as Executor and when the Executor is the sole beneficiary, a general overall perspective of the Court regarding necessity of appointing Administrator Pendente Lite. 188. He further tried to contend that the cases which identify necessity as an important factor do not, however, lay down (and it cannot be so) that the categories or constitutes of necessity are closed. The overall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate suit (including all appellate stages) will determine. According to him, he may not act in his own interest when the sword of the Court in the form of application for Administrator Pendente Lite is hanging over the Executor. But it is reasonable to form the view when the sword is not there his acts and deeds may be guided by his self interest and not the interest of the Estate. This is so because the human mind can and is often too frail to withstand temporal temptations which is life's experience. According to the words of Justice Holmes, the life of the law is experience not logic. A factor which is relevant in this cases in particular is the animosity between the parties at a personal level. Negative mental attitude which has descended to a sole beneficiary cum executor is most likely to have negative results for Estate and in a given background Administrator Pendente Lite may be a matter of course, i.e. vastness of the Estate and its complexity and when the Executor is sole beneficiary and with regard thereto he drew out attention to the decision delivered by the Hon'ble First Court in this matter. 192. Mr. Pal further contended that Section 247 of the said Act appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of shares of PDB in different companies held not bonafide by the CLB. 198. He further placed his reliance upon the decisions reported in (7) 13 CLJ 47 (supra); 10 CLJ 263 (supra) and (5) AIR 1952 Cal 418 (supra) and submitted that on the basis of the principles laid down in the said decisions, the Hon'ble First Court found that the Estate is in medio and huge amounts invested in mutual investment companies of Lodha is a clear abuse and breach of fiduciary position in fact. According to Mr. Pal's further point of submission, although no mismanagement has surfaced in the judgment, but mismanagement is not the only factor for appointment of Administrator Pendente Lite. According to him, the Appellant has failed to prove that the judgment delivered by the Hon'ble First Court suffers on the ground of perversity. 199. He further submitted that the Estate admittedly consists of the following: a) Controlling block of shares in M.P. Birla Group of Companies, and power and control is the main assets. b) Immovable properties in important cities in substance owned and occupied by PDB although ostensibly in the name of companies namely, Punjab Producing & Trading (Kol); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utensils, paintings, sculptures, furniture including gold plated furniture and other items) were found. 203. According to him, neither had the above-named assets been disclosed by RSL in the affidavit of assets nor had RSL taken any step to collect the same for safe custody. He submitted that the grounds of necessity would depend on the true implication or concept of necessity in the context of appointment of Administrator Pendente Lite and necessity arises by reason of cumulative factors. 204. He further pointed out the reliability and credibility of Executor qua-Executor in the facts and circumstances of the given case and contended that RSL made false statement on oath regarding the date on which the shradh ceremony was held. The Joint Special Officers discovered the files at Gurusaday Road during their inventory while RSL denied that the files were with him. Pecuniary gains made by RSL by investing funds of M.P. Birla Group through companies controlled by him. A fiduciary must not act in a manner that there is a conflict of interest and duty. Such persons loose their capacity to be impartial and fair. 205. According to Mr. Pal, RSL should not be allowed to be the Executor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were found out by the Special Officers. The items of ivory are of immense value and the gross undervaluation of the Estate in the affidavit of assets assumes critical importance and clearly undermines the credibility, reliability and integrity of RSL qua Executor and no confidence can be placed upon RSL to continue to be in sole and exclusive charge of the Estate under the impugned Will. Admittedly, the Estate comprises PDB's control through the shareholders and with such control one decides regarding the policies, accounts etc. If the Hon'ble Court controls, RSL has nothing to lose. 209. According to his further submission, the status of the companies has been preserved and the concerned companies are doing well under RSL as Executor. This submission regarding status has no relevance or any bearing on the question of appointment of Administrator Pendente Lite. If the Companies are doing well it is not because of RSL, but general buoyancy in the economy, and infrastructural demand, cement, cables etc. and RSL cannot claim any credit thereof. All have been done at the instance of professional executives since the Companies are managed by professional executives as admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scoveries were subsequent events and the impugned judgment proceeded not on the basis of wrong assumptions, but on the findings, those are as follows: a) Company proceeding before CLB were against companies and not RSL; b) Estate had not vested in charitable trust; c) There is no explanation regarding dividends; d) Source of funds for litigation expenses; and e) RSL does not have any mutual fund company. 214. The argument put forward by the Appellant that no Administrator Pendente Lite could be appointed over companies because administrator Pendente Lite is like Receiver and the Court does not appoint the Receiver over the companies, Mr. Pal answered that the impugned judgment does not appoint any Administrator Pendente Lite over the companies as such and the management of the companies are not replaced or suspended. The Joint Administrators have been appointed in relation to the controlling shareholdings of PDB. The Hon'ble First Court being prima facie satisfied gave certain directions including inter alia that: a) The controlling shareholdings which PDB had, should be so utilized that all rights attaching to such controlling shares and all matters incidental to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved the sell on June 15, 2004 to M/s Kalantry Textiles at a price of ₹ 12.85 crores. 217. The allegation was made that the cement worth ₹ 1 Crore was stolen from Birla Corporation Ltd. and such loss of cement was worth ₹ 15 lakhs - that too during the lifetime of PDB. total group turnover of ₹ 2000 crores -pilferage of cement worth ₹ 15 lakhs is insignificant Action taken against suspected persons, officers dismissed, FIR lodged and accused persons arrested. It is also submitted that the surplus fund of Birla Corporation Ltd. is invested in mutual funds while at the same time, the company was 'borrowing money from Banks and Financial Institutions. 218. Mr. Mitra further pointed out that the investment of mutual funds made for last many years and at least for last 5 years during the life time of PDB. This is not a new practice introduced by RSL, he submitted and there is no case that Birla Corporation Ltd. has suffered any loss out of investment in mutual funds. Thereafter, he pointed out that apart from Soorah Jute Mills and Birla Synthetics, other units of M.P. Birla Group of Companies have been closed down during the lifetime of PDB. Committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther submission, in the decision of AIR 1952 Cal 418 (supra), a case of necessity was made out on existing facts which would be evident from paragraphs 24 to 29 of the judgment. Even there is not an allegation that amounts due to the Estate which are not being collected. There is no allegation of misuse of the funds of the Estate and/or inability of RSL to manage the Estate. 223. In an another decision reported in 126 ITR 748 (supra), according to him, it is not a case of appointment of Administrator and thus, the said case has no application in the facts and circumstance of this case. In the decision of AIR 1973 Cal 450 (supra), he pointed out that the said judgment has been cited by the Birlas in support of the proposition that the control is an asset. This is a judgment delivered in respect of the MRTP Act. The Act contains a definition of 'inter connected undertaking' vide Section 2 (g). Paragraph 23 of the judgment makes it clear that reference to 'control' in this judgment is in view of the object and scheme of the aforesaid statute as also in view of the wide and comprehensive connotation given to the term 'control' under the said Act. Thus, the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be noted that this was a case of passing-off where the interim injunction was refused by the Hon'ble First Court and granted by the Appeal Court. The Hon'ble Supreme Court did not restore the Trial Courts' order on the principle that the appeal court ought not to have interfered with the exercise of discretion by the Hon'ble First Court but after full re-assessment of the materials on record. 227. He further pointed out that the decisions reported in 1997 (2) CLJ 409 (supra); 1999 (1) CHN 10 (supra) and 1983 AC 191 (supra), these cases have also been cited for the same propositions as in the case of (1990) Suppl. SCC 727 (supra). 228. In the case of (Supra ) AIR 1966 Cal 512 the Court should not restrict the scope of enquiry to the petition alone but subsequent affidavits in the petition should also be taken note of. For this proposition, the Birlas have relied upon this case which is a decision on the practice and procedure of hearing petitions under Section 397/398 of the Companies Act has no application in the facts and circumstances of this case. 229. He further pointed out that the case reported in 1896 AC 44 (Supra) has no application to the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted position that PDB had indeed executed her last Will in 1999 and bequeathed all her properties to RSL - it has been recorded in the same para of the judgment that PDB executed her last Will of 1999. On the other hand, the Birlas are disputing this very execution which is the subject matter of these probate proceeding. 233. In paragraph 25 of the said judgment, the submissions of the counsel of the Petitioner before the Hon'ble Supreme Court is recorded that "the complainant's case" is that "two alleged Wills allegedly made by couple on July, 13 1982 claiming the same to be mutual Wills". Counsel for the Birlas next placed the part of the judgment where the Hon'ble Supreme Court lays down a concept of mutual Wills. There is no dispute as to the doctrine of mutual Wills. The case reported in 1993 (4) ILL ER 129(Re: Dale) is only referred to in the said pare without any approval. In the same para, the Hon'ble Supreme Court holds that mutuality of Wills depends on circumstances, inter alia that the last Will has been made by one of the testators Without reference to revocation of previous Wills. In the present case by the Will of 1999, PDB expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o KNT should contain copies and not the originals of these alleged Wills, is an unanswered question, also unbelievable. KNT surprisingly did not preserve the alleged envelope even though this was opened and the alleged Wills taken out after the disputes had started with RSL. Khian & Co. also were unable to give inspection of the alleged envelope a few days after it was opened at it was allegedly not preserved", after having been allegedly preserved for 22 long years since 1982 which is an incredulous statement and destroys the very case of the Birlas which seeks to be established by them. 238. We have heard the Learned Advocates for the parties extensively. We have also scrutinized the facts of this case. 239. After analyzing the facts of this case and after perusing the materials on record placed before us and the decisions cited before us on the question of appointment of Administrator Pendente Lite, the question arose that whether the Respondents/Birlas in their pleadings have been able to make out a case that necessity rises in the facts and circumstances of this case to appoint an Administrator Pendente Lite. 240. After analyzing the decisions cited before us we have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st for it. 245. In the case of Borendranath Mitter & Surendranath Mitter v. Arunendranath Mitter (supra), the Court also specifically speaks about the same principle and further held that the reason of the thing seems to be this that though a man makes a Will and appoints an executor, yet if the executor be under any incapacity or disability of acting as such, during his incapacity, in many respects there is no executor and, therefore, for that time it is considered as a necessity. 246. We have also been able to find out that the Court of Chancery appoints the Receiver "where the property as is it were in medio", in the enjoyment of non-one it is the common interest of all parties that the Court should prevent a scramble and a Receiver is readily appointed (see kerr on Receiver, 9th Edn., Page 6). 247. During the contest, touching the validity of the Will, there is a necessity when the deceased's property is, "in medio". Therefore, applying the principle of Court of Chancery for the appointment of a Receiver the Court may appoint an Administrator Pendente Lite see AIR 1952 Cal 418 (supra). In the said decision, it is also held in paragraph 19 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission subsequently but before that we have to find out the grounds on which the Court came to the conclusion and appointed the administrator pendente lite in the matter. 251. It appears that His Lordship summarised the allegations and counter-allegations in the judgment and found out that the purported Will propounded by the Executor RSL is a manufactured and procured document. Similarly, the codicil relied upon and propounded by the Executor is also manufactured and procured. The genuineness of the aforesaid two testamentary documents have been seriously challenged. His Lordship also found that the said disposition is wholly unnatural. In our opinion, such finding can not be accepted at this stage when the probate proceeding is pending. 252. The allegation is also that the lady was not at all in the good health and condition and suffers from various ailments and used to travel abroad for medical treatment and within the clutch and influence of the executor. But that allegation has to be- treated at this stage only as an allegation against the Will only and finally to be decided by the Court. 253. The other ground that there was a mutual Will was executed on July 13, 1982 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Learned Counsel for the parties that in view of the execution of the two said mutual Wills, a separate suit for specific performance has been filed and the same is pending for adjudication. We have also informed that the said suit is ready for hearing. 259. The further allegation that has been made is that RSL deliberately suppressed the real value of the Estate and as it would be evident from the submissions made before us by the Learned Counsel appearing for the parties and the documents placed before us and/or relied upon by the parties including the applications so filed by the Birlas before the Court, it is submitted by Mr. Mitra that such valuation is being given only for the purpose of the Court Fees which has to be paid in respect of the application so filed by RSL for grant of probate and nothing else. Therefore, the purpose of giving such valuation is nothing but for the purpose of giving Court fees only. 260. The further allegations have been made on behalf of the Respondents that RSL took steps to rectify the respective share registers of the respective Companies mutating his name in place and stead of PDB as such Executor. Further emphasis has been made on the eno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the good number of litigations. It has to be taken into account that such question not even pleaded or urged before the Court by the Learned Counsel for the parties. 266. Therefore, with utmost respect to His Lordship, we hold that His Lordship came to the conclusion without any pleadings and documents. Therefore, in our opinion, such finding of His Lordship is nothing but a hypothetical assumption and has to be set aside and hence, cannot be created as a ground for appointment of administrator Pendente Lite. 267. It further appears that His Lordship also relied upon the allegations that there is a criminal proceeding is pending against the Executor and he is one of the accused persons and he challenged the said criminal proceeding at the initial stage fought right upto the Hon'ble Supreme Court. Mr. Mitra has specifically pointed out that the application which has been filed before the Hon'ble Supreme Court was not filed by RSL. 268. It further appears that His Lordship held that RSL is facing trials and proceedings which were initiated for search and seizure in connection with these proceedings, therefore, it is difficult for the Court to allow such person to control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. His Lordship further came to the conclusion that the Will of 1999 and the Codicil are seriously challenged inter alia on the ground of undue influences, undue influences and the same were executed in the suspicious circumstances and further lack to testamentary capacity of the testatrix and His Lordship particularised that these are not bare allegations. 274. Mr. Mitra and Mr. Mukherjee alongwith others appearing for the Appellant pointed out before us that the Hon'ble First Court did not pass any order appointing Administrator over the valuable movable assets such as Jewellery, ornaments, gold coins, shares and mutual funds held by PDB personally and allowed the Executor to remain in control and management of the same. The Respondents argued that RSL had suppressed Jewellery, ornaments, gold coins and other valuable assets but even then no order was passed against him. 275. Therefor, it was the contention of Mr. Mitra and Mr. Mukherjee that the Hon'ble First Court had confidence in RSL and after perusing the order so passed by the Hon'ble First Court we have been able to find our that His Lordship also came to the conclusion that there was no mismanagement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders in the probate proceedings, the Court has no power to appoint Administrator Pendente Lite over the said block of shares and after perusing the materials on record, we have not been able to find out any document which would suggest or can act in favour of such appointment on the controlling block of shares Merely for the purpose of taking over the possession and control over the Companies the Probate Court, cannot appoint Administrator Pendent Lite to Preserve such shares. 281. Hence, in our opinion, the order of injunction so passed at the ad interim stage was enough to preserve the Estate. The Court can also direct the Appellant, RSL to furnish the accounts in respect of the dividends received on such shares to the parties and furthermore, injunction can also be passed by the Court directing RSL to open an account of dividends and to keep the dividend intact except for the purpose of maintenance of the assets of the deceased and he shall have no right to use the said money. 282. We have also considered the materials which were placed before us by the parties and from the pleadings, we have also been able to find out that the Respondent did not make out such case before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us by the Learned Counsel for the parties, we must come to the conclusion that the matter of appointment of administrator pendente lite under Section 247 of the said Act, the main criteria is nothing but necessity, necessity to preserve the Estate of the deceased. 288. It is an admitted fact that if all grounds go, even then if the Court finds that for preservation of the Estate, appointment of an Administrator Pendente Lite is necessary, then the Court would have power to appoint an Administrator and, in our opinion, case of necessity has to be established. After perusing and analyzing the decisions cited before us and relevant provisions of the said Act and the facts and circumstances of the present case we hold that there is no necessity to appoint the Administrator Pendente Lite. 289. In the instant case, after examining the materials on record placed before us, we have not been able to find out that a case of necessity has been made out by the petitioners. We have considered the decision of AIR 1956 Madras 409 (supra) and AIR 1995 KANT 258 (supra) wherefrom we found that there is no authority for the proposition that the Estate of the large part of the movable property, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned judgment which can satisfy our conscience that why His Lordship was pleased to appoint Administrator Pendente Lite over a part of the Estate that is the controlling block of shares and allowed the Executor to manage the remaining part of the Estate e.g. valuable movable assets, Jewellery, gold coins etc. 295. The Hon'ble First Court observed that the dividend income of the Estate and mode of utilisation has not been disclosed to the Court. This fact was never stated in the petition by the Respondent, nor was even argued before us in course of their argument. Therefore, in our opinion, if any allegation is made against a person, the person must get a chance to answer the same. 296. Hence, in this case, we have not been able to find out any such chance which was given to the Appellant and, therefore, we cannot treat it as a ground which can be stated to be a necessity for appointment of Administrator Pendente Lite. The other grounds which have been stated by the Hon'ble Judge, have not been taken in the pleadings or argument ever put forward on behalf of the Respondents before the Hon'ble First Court. 297. We also must keep it on record that whenever a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Companies as specifically held by His Lordship are not in "serious jeopardy" in the hands of RSL. We do not find that the Respondents have been able to make out a case thereof. 304. After scrutinizing the facts and circumstances of the case and analyzing the decisions cited before us and perusing the materials on record we have to come to the conclusion that the vastness of the Estate is nothing but the controlling block of shares in the M.P. Birla Group of Companies, and in the facts and circumstances of the case, it does not call for an appointment of Administrator Pendente Lite when it is a settled law that the Administrator/ Receiver should not be appointed over running businesses and in the decision reported in AIR 1987 Cal 194 (State Bank of India v. Jayashree Ceramics Pvt. Ltd.) the Court held as follows: …It has also been shown that the petition does not disclose any material to show that the securities are in imminent danger of being wasted or disposed of or are likely to be attached before judgment at the instance of any other third party creditor or the company is likely to be would up. If there is any apprehension of such threat to the securities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , after considering the facts and circumstances of the case and the materials on record placed before us. We have to come to the conclusion, with utmost respect to His Lordship, that His Lordship has mis-appreciated the fact and held that the Estate is "in medio". Such conclusion of His Lordship, in our opinion, cannot be sustainable in the eye of law in the facts and circumstances of this case. 308. The further question that whether the Court has jurisdiction to apply discretion in the facts and circumstances of this case, it is needless to mention here that the Court will apply its discretion providing that the case is being made out by the parties calling for such discretion in a case where the case of necessity for appointment of Administrator Pendente Lite has been made out. 309. Hence, we are unable to find out such situation in this matter and unable to uphold the decision of His Lordship and according to us, the Court has not appreciated the facts of the case properly and has not exercised its discretion properly in appointing the Administrator Pendente Lite. 310. Hence, we pass an order of injunction restraining the Appellant not to deal with and not to transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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