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TMI Blog2020 (10) TMI 1243X X X X Extracts X X X X X X X X Extracts X X X X ..... er if it is only one share or bulk of shares and stocks; the voting rights and the involvement in the company on the strength of the shares would stand regulated, primarily by Sections 47 and 88 of the Companies Act - The power of the Probate Court under Section 247 of the Succession Act necessarily includes the power to regulate and permit such shares which are in the domain of commercial activity to be utilised to generate appropriate income and to better utilise the same in the best interest of the affairs of the estate of PDB, which would ultimately reflect on the end beneficiaries, which also includes charitable trust, educational institutions and other such activities. The prayer for ad interim stay of the judgement and order impugned dated September 18, 2020 is declined. - APO 89 OF 2020 WITH TS 6 OF 2004, I.A. NO. GA/1/2020, APO 90 OF 2020 I.A. NO.GA/1/2020, APO 91 OF 2020 IA NO: GA/1/2020, APO 95 OF 2020 I.A.NO. GA/1/2020, APO 96 OF 2020 I.A. NO. GA/1/2020 - - - Dated:- 1-10-2020 - THE HON BLE CHIEF JUSTICE THOTTATHIL B. RADHAKRISHNAN AND THE HON BLE JUSTICE SHAMPA SARKAR Mr.Saktinath Mukherjee,Sr.Advocate, Mr. Arindam Banerjee, Adv, Mr. Paritosh Sinha, Adv., M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit for grant of probate of the alleged last will and testament of late Priyamvada Debi Birla (PDB). Upon death of the executor it was converted to a suit for grant of Letters of Administration. These appellants are not parties to the testamentary suit. The appellants filed individual appeals along with an application for leave to prefer the appeal and for further interim reliefs. Leave was granted in terms of prayer (a). Hearing proceeded on the application for stay. The parties were requested to restrict their arguments only on the point of interim stay of the operation of the order impugned. 2. They challenge the directions given in the impugned order to the extent that Administrator pendente lite Committee; APLC for short; appointed in the course of probate proceedings, has essentially been given superlative authority in matters touching the affairs of the appellants/companies. The directions issued through the order essentially requires the plaintiffs to implement the decisions dated July 19, 2019 and July 30, 2019 of APLC, taken by its majority, as also all consequential decisions of the APLC in furtherance of those decisions. The modality of operating the directions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inct legal entities. APLC cannot dictate to the share holders of these companies the manner in which voting right should be exercised. The appellants referred to the affidavit of assets filed by the defendants to show that the defendants had admitted in the probate proceedings that the estate of PDB in terms of share holding in these companies was 1% or less of the total shares of the companies. Most of the companies are public limited companies and listed with the Bombay Stock exchange and National Stock exchange. That the plaintiff No. 1 Harsh Vardhan Lodha (HVL) had been a director of these companies prior to the death of PDB in his individual capacity and he became the elected Chairman since 2007-2010. The judgement impugned had the effect of annulling the resolutions passed in the Annual General Meetings. Moreover, by the judgement and order impugned the APLC was given the power to adjudicate administer and manage these companies and the society. Several portions of the judgement have been pointed out by the appellants to show apparent contradictions. While recording that the APLC has the liberty to approach the appropriate forum in case they detected any mismanagement in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hav Prasad Birla (deceased) reported in AIR 2006 Cal 6. 9. Reference was further made to the decision of Bacha F Guzdar, Bombay vs. Commissioner of Income Tax, Bombay, reported in AIR 1955 SC 74, in support of the contention that a share in a company could not be likened to a sum of money settled upon and subject to executory limitations to arise in future. It was rather to be regarded as an interest of the share holder of the company, measured, for the purpose of the liability and dividend, by a sum of money. According to the appellants APLC could not be considered as the owner of the companies in which PDB had some shares which were her personal estate and not in the nature of real estate. The company stood as a separate juridical entity distinct from the share holders. 10. Reference was also made in the decision of Western Coalfields Limited vs. Special Area Development Authority, Korba and Anr., reported in (1982) 1 SCC 125, wherein it was held that property of the company was not the property of the share holders. The shareholders had merely an interest in the company arising under its Articles of Association, measured by a sum of money for the purpose of a liability and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate that it will be prejudicial to the interest of the estate and the management of the various companies which come under the M P Birla Group of Companies, if the order impugned in these appeals is stayed. It is argued that at any rate there is no ground made out for ad interim order of stay since the prima facie case is in favour of sustaining the impugned order and the balance of convenience is definitely in favour of its continued sustenance in the interest of preserving the estate of PDB. It is also argued that irreparable injury would be caused to the estate if the plaintiff no. 1 is permitted to ride on the companies on the large controlling interest referable to the estate of PDB in those companies. It is also pointed out on behalf of the defendants that cross holdings in different companies, trusts and institutions coming under the M P Birla Group have definitely to be borne in mind while dealing with the jurisdiction over the estate of PDB. It is argued out that the impugned order issued by learned Probate Court is well within the jurisdiction under Section 247 of the Succession Act and the fundamental issues involved relating to the management of the estate of PDB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in (2012) 6 SCC 613, the Hon ble Supreme Court held, inter alia, that the control and management is a facet of holding of shares and voting rights whose shares represent congeries of rights and controlling interest is an incident of holding majority shares. Their Lordships further held that control of a company vests in the voting powers of its shareholders and that the shareholders holding a controlling interest can determine the nature of the business, its management and various other matters touching the affairs of the company. Obviously, therefore, the controlling interest is definitely referable to the shareholdings. In the case in hand, it, truly is part of the estate of PDB. The power of the Probate Court under Section 247 of the Succession Act necessarily includes the power to regulate and permit such shares which are in the domain of commercial activity to be utilised to generate appropriate income and to better utilise the same in the best interest of the affairs of the estate of PDB, which would ultimately reflect on the end beneficiaries, which also includes charitable trust, educational institutions and other such activities. 19. We have studied the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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