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TMI Blog2021 (7) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... oursing through the holding company? - Should the identities of the holding company and its wholly owned subsidiary be blurred so as to be so unidentifiable and practically indistinguishable? As Per Rajasekhar V.K., Member (J): HELD THAT:- Section 89(10) defines beneficial interest in a share to include, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person to - (i) exercise or cause to be exercised any or all of the rights attached to such share; or (ii) receive or participate in any dividend or other distribution in respect of such share - Therefore, for a beneficial interest to be recognised, forms are required to be filed both by the registered owner of the shares as well as by the person holding beneficial interest in the shares. Without that, it is not possible for a company to recognise the beneficial owner of a share. In the case of the Subject Companies, at least upto the filing of the petitions, the holding company, VTL, had not filed or recognised the APL Committee as the beneficial owner of the shares in any of the Subject Companies. Coming back to the definition of Member, it is trite law that when a word has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re all three sections use the expression Member, it is not possible to read the term to include persons who are, to borrow a term in familial relationships, once removed from the company, i.e., who would at best be treated as beneficial owners of shares in the holding company that holds 100% of the shares of the Subject Companies. One must continually remind oneself not to get too carried away to ignore the statute and guard against attempts to read equity into every act at the cost of the statute itself from where one takes appointment. There is no statutory requirement that the shareholders of a company have to give reasons to justify reasons for removing directors. The authorities in which it has been held to be so are too numerous to be recounted here. Suffice it to say that a board or its constituent members can be in office only so long as it enjoys the confidence of a majority of the shareholders. It is also an established principle of law that a shareholder holding the requisite minimum number of shares can always requisition an EGM for removal or for appointment of a director. The effect of these discussions is that the petitions are deemed to be not maintainable, on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ury, Adv, Mr Paritosh Sinha, Adv, Mr Saubhik Chowdhury, Adv, Mr Dripto Majumdar, Adv, Ms Ayusmita Sinha, Adv, Mr Krishnendu Datta, Sr Adv, Ms Manju Bhuteria, Adv, Mr Sarvapriya Mukherjee, Adv, Mr Deepan Kumar Sarkar, Adv, For Respondent No.5 : Mr Ranjan Bachawat, Sr Adv, Mr Sayan Roy Chowdhury, Adv, Mr Satyaki Mukherjee, Adv, Mr Paritosh Sinha, Adv, Mr Saubhik Chowdhury, Adv, Mr Dripto Majumdar, Adv, Ms Ayusmita Sinha, Adv, Mr Sudipto Sarkar, Sr Adv, Mr Sabyasachi Choudhury, Adv, Mr Sankarsan Sarkar, Adv, Mr Darius Khambata, Sr Adv, Mr Abhrajit Mitra, Sr Adv, Mr Debanjan Mandal, Adv Mr Kunal Vajani, Adv, Mr Sanjiv Kumar Trivedi, Adv, Mr Soumya Roy Chowdhury, Adv, Ms Iram Hassan, Adv, Mr Kunal Mimani, Adv, Mr Sanket Sarawgi, Adv, Mr Shahzeb Ahmed, Adv, Mr Tushar Hathiramani, Adv, Ms Mahima Cholera, Adv, Mr Shubhang Tandon, Adv For Intervenor: Ramesh Chandra Prusti, Sanjib Das and Sukriti Dutta, Advocates ORDER Per: Rajasekhar V.K., Member (J) 1. Preamble 1.1. This Court convened by video conference. 1.2. This common order disposes of company applications in CA No. 81/KB/2021, CA No. 82/KB/2021, CA No. 83/KB/2021, CA No. 84/KB/2021, CA No. 85/KB/2021, CA No. 86/KB/2021, CA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmittee; h. Interim Injunction restraining the respondent Nos. 1 and 2 and Respondent No. 7 from acting contrary to and/or in any manner inconsistent with the judgment dated 18th September 2020 and with regard to exercise rights in relation to the shareholding recognized decision dated 9th December 2019 of the APL Committee; i. Interim Injunction restraining the Respondent Nos. 2 to 5 and 7 from holding or convening any meeting of the Board or any Annual General Meeting or any Extra-Ordinary General Meeting of the Respondent No. 1 pending disposal of this Company Petition; j. Interim Injunction restraining the Respondent Nos. 2 to 5 and 7 from committing further acts of oppression and mismanagement of the Respondent No. 1; k. Maintain status quo with respect to Board of Directors of the Respondent No. 1 as on 27th March 2021; l. Interim Injunction restraining the Respondent Nos. 2 to 5 and 7 and or their nominees from managing the Respondent No. 1 and to forbear from taking any decision regarding the running, management, control and administration of the Respondent No. 1. 2. The case of the petitioners as revealed from the pleadings 2.1. The APL Committee was appointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and their nominees, who are allegedly acting contrary to the interests of the estate of Late Priyamvada Devi Birla and creating obstruction and interference in application of various orders passed in relation to the Estate and the decisions of the APL Committee. 2.5. The act of Mr. HV Lodha causes interference in the exercise of rights and powers of the APL Committee in relation to control and management of three Non-Banking Financial Companies (NBFCs), viz., August Agents Limited ("August Agents"), Insilco Agents Limited ("Insilco") and Laneseda Agents Limited ("Laneseda") (collectively referred to as "Respondent No. 1 Companies" or "Subject Companies"). These NBFCs are wholly owned subsidiaries of Respondent No. 2, Vindhya Telelinks Limited, which is an MP Birla Group Company. 2.6. The plaintiffs in TS No. 6/2004 have also obstructed the implementation of the APL Committee's decision dated 09.12.2019, [6] whereby the Estate was declared as the Significant Beneficial Owner ("SBO") of the manufacturing companies of the MP Birla Group including in Birla Corporation Limited (BCL), Vindhya Telelinks Limited (VTL), Unive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guidance and directions to the Boards, since it exercises the ultimate controlling interest in the Subject Companies as well as VTL. The notices dated 27.03.2021 [16]which were issued by VTL to the Subject Companies were as follows: (a) Proposing candidature of Shri Rakesh Puri as a director on the Boards of the Subject Companies; (b) Proposing candidature of Dr. Aravind Srinivasan as an independent director on the Boards of the Subject Companies; (c) Proposing candidature of Shri Shiv Dayal Kapur as an independent director on the Boards of the Subject Companies; (d) Shifting of the Registered Offices of the Subject Companies from Birla Building, 9/1, RN Mukherjee Road, Kolkata - 700 001 to C/o Vindhya Telelinks Limited, 27-8, Camac Street, 5th Floor, Kolkata, West Bengal,700 016 i.e., within the local limits of the city of Kolkata; (e) Requisition for convening EGMs of the shareholders of the Subject Companies for passing the above said four resolutions. 2.13. The Subject Companies also informed that they have also respectively sent a reply dated 14.04.2021 [17] to VTL. In the said reply, the Subject Companies had specifically mentioned that in the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercised as per the directions and guidance of the APL Committee. 2.18. The intent and purport of the VTL Notices, the special notice dated 12.05.2021 [25] as well as the notice dated 25.05.2021 [26] is to severely and adversely affect the controlling interest of the Estate in the Subsidiary Companies. The unwarranted proposals in the VTL Notices, the special notice dated 12.05.2021 as well as the notice dated 25.05.2021 is a camouflaged attempt to render nugatory the collective decision-making process of the lawful directions of the Subject Companies in adherence with the said judgment dated 18.09.2020 [27] and the order dated 01.10.2020 [28] of the Hon'ble Calcutta High Court and the decisions of the APL Committee. 2.19. The said nefarious attempt is part of the larger unlawful device of Mr. HV Lodha to dilute the administration of the APL Committee over the 23.39% shareholding in BCL, which is held by the Subject Companies. It is important to point out that the said unlawful and illegal actions are taken at this stage to severely and prejudicially affect the exercise of voting rights in relation to the controlling shareholding of the Subject Companies in BCL at the ensuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee persons who have been inducted into the board of R1 on 22.04.2021. P1 objected to this and wrote letters to all concerned. So far as the reflection of the names of R3, R4 and R5 on the RoC records are concerned, they have been put on hold for the time being. Shri Krishna Damani (R6) is proposed to be removed in an Extraordinary General Meeting (EGM) scheduled on 19.06.2021. Shri Harsh Vardhan Lodha (HVL or R7) aims to be one of the beneficiaries of the will of the late Priyamvada Devi Birla. HVL has been added as a party to the proceeding is because it is the specific case of the petitioners that all that is being done is at the behest of R7. 3.4. A large number of companies were incorporated, managed, controlled and run by Mr. MP Birla, constituting the MP Birla group of companies. These companies are really in three-four tiers. The individual shareholding of the late Priyamvada Devi Birla is negligible. Therefore, it cannot be deemed that the estate of Priyamvada Devi Birla has any say in the management, control and running of these companies. After her death, probate of her will and codicil have been applied for. Mr. RS Lodha has also passed away. One of his heirs is R7. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies, which would really go to show that PDB was in control. 3.9. Mr. Joy Saha relied on para 5 [33] of the judgment, wherein the submission of the respondents there is no dispute that the late PDB was in control of R1 to R28, has been recorded. He submitted that this position has not been challenged so far, and that he would be relying on this for the purposes of this petition. 3.10. Mr. Joy Saha submitted that it is an admitted fact that before the demise of PDB, even though her direct shareholding in the company was negligible, by virtue of her controlling respondents 1 to 28 which held or hold over 60% shares in the company, she was not only materially interested in the company, and was also able to control the company. This position has also not been challenged. What is again relevant is that the controlling interest was judged to be that of PDB. She was the absolute matriarch of the family. 3.11. Mr. Joy Saha submitted that in at least in four separate places of the CLB's order, the court found that initially Mr. MP Birla ("MPB" for short) was in control; thereafter PDB was in control although she had negligible percentage of shares. Even after her death, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Devi Birla (PDB) came to exercise control over 62.9 percent of the shares of the company which was held by different entities, over which, it appeared that PDB had control. [39] R2 in that proceeding is Harsh Vardhan Lodha, who is the R7 in the present proceedings. 3.16. Mr. Joy Saha drew particular attention to para 16 of the order, which is extracted as follows: -"Foundation of the claim of R2 (HVL) to manage the affairs of the company is derived from his control or influence over the entities having 62.9% of the shareholding of the company. The Division Bench of this court has empowered the APLs to exercise all rights flowing from the ownership of the shares of PDB."[40] 3.17. Mr. Joy Saha thereafter placed the Hon'ble Calcutta High Court Division Bench's order dated 10.04.2019 in the matter of Priyamvada Devi Birla, deceased and Harsh Vardhan Lodha & others v. Ajay Kumar Newar & others. [41] This was the order whereby one of the members of the APL Committee - Hon'ble Justice Mohit Shah - was appointed as the Judicial Member of the committee to prevent any stalemate of the process. [42] Mr. Joy Saha submitted that he anticipated that one of the issues of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant probate proceedings, it has now been settled that exercise of the controlling power over the MPB group of companies is a valuable asset of the estate of Mrs. Birla. .... Such findings of this Hon'ble Court arrived at different stages of the interlocutory proceedings, was not only binding upon the parties but also was binding upon that Court and accordingly the Coordinate Bench held that it had no hesitation to hold that such controlling power was an important and valuable asset belonging to the estate of Mrs. Birla. This finding has never been challenged by the plaintiffs."[47] (Emphasis as in original). 3.20. Mr. Joy Saha stressed on the finding in the said order that if the APL Committee has been appointed by a court earlier and it would be the duty of that court to see that validly taken decision of APL should be implemented.[48] Mr. Joy Saha asserted that this is the court that has the power and complete liberty to deal with the issues. 3.21. Mr. Joy Saha submitted that at page 54 of the judgment, [4 9] the court noticed the decision of the Hon'ble Supreme Court in Vodafone International Holdings BV v. Union of India (2012) 6 SCC 613 decided on 20.01.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the APL Committee would have the right to exercise all such powers and perform all such acts as the late PDB would have exercised had she been alive. PDB had controlling shareholding in the investment companies either by direct investment or along with other investment companies and PDB as the investment companies together with the manufacturing companies through cross shareholdings had controlling interest. This view has been confirmed both by the Division and Single Bench of the High Court, and therefore, the APL Committee is well within its power to ask all entities which were under the control of PDB to exercise their voting right in regard to their investment in the share capital of any of the companies which were under the control of PDB, in the manner considered by the APL as beneficial to the interest of the Estate. Accordingly, such entities would exercise voting rights flowing from their investment in the companies controlled by PDB in the manner to be guided by the APL Committee. [52] Mr. Joy Saha expressed the view that the widest possible amplitude has been granted to the APL Committee. 3.25. From this order, a spate of appeals was preferred, mostly at the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .04.2021, [61] P1 lodged its protest in the matter. On the same day, i.e., 23.04.2021, P1 also wrote to the RoC [62] and RBI [63]. Insilco also wrote a letter dated 26.04.2021 [64] to the RBI. Insilco addressed a letter dated 06.05.2021 [65] to Mr. Krishna Damani for a Board Meeting on 10.05.2021, the meeting was also duly held, and minutes recorded. Requisition for removal of Mr. Krishna Damani is given on 12.05.2021.[66] Notice dated 18.05.2021 [67] for a Board meeting to be convened in this regard on 25.05.2021. After the board meeting, notice for EGM is given on the same day, i.e., 25.05.2021.[68] Explanatory Statement [69] is also attached; however, bereft of any explanations whatsoever as to why Mr. Krishna Damani is sought to be removed, Mr. Joy Saha stated. 3.31. On the interim reliefs, Mr. Joy Saha reiterated the three considerations that govern grant of such reliefs and submitted as follows: - On prima facie case: The prima facie case is based on all the orders of the courts and tribunals which have repeatedly said that all rights will vest in the APL committee, and that control will be exercised by the APL committee. So some meaning has to be attached to them. On bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... silco holds 7.81%, August Agents 7.8% and Laneseda 7.78%. The only one company in which these three don't hold shares is Birla Cables Limited (BCab). It is, therefore, through these companies that control over BCL and Universal Cables Limited (UCL) is exercised. Hence, so far as the affairs of the subject companies are concerned, it must take into question whether by exercising control over the board of the Subject Companies, there is an attempt to influence the affairs of Birla Corporation. The reason why this submission is made is because, ultimately, one will have to answer the question whether the appointment or removal of directors will amount to conduct oppressive or prejudicial to some members. Mr. Jishnu Saha submits that it is through the appointment or removal of directors that there is an attempt to ultimately gain control over BCL, UCL, etc. 4.3. Mr. Jishnu Saha placed the statutory provisions embodied in section 241(1) of the Companies Act, 2013. It postulates that a member may complain of acts that have occurred in the past or is continuing, he may complain, if it is oppressive to himself or other members. The second limb deals with a situation in which a materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt not to read any restricted meaning into the term "member" occurring in section 241 of the Companies Act, 2013. Mr. Jishnu Saha further placed for consideration the judgment of the Hon'ble Supreme Court in Arcelormittal India Private Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1, decided on 15.11.2019 which, in his view, recognises various facets of management and control. 4.7. Mr. Jishnu Saha too placed reliance on the judgment of the Hon'ble Calcutta High Court dated 18.09.2020 and endorsed the submissions of Mr. Joy Saha, learned senior counsel appearing for P1 on the issue of the powers of the APL Committee to ask all entities which were under the control of PDB to exercise their voting right in regard to their investment ... in the manner to be guided by the APL Committee. [77] 4.8. Mr. Jishnu Saha submitted that what flows from this is that the APL committee has stepped into the shoes of PDB, and so the controlling interest now vests in the APL Committee. This is something that has now been decided by the probate court, and is pending appeal before an appellate court, which has not stayed the operation of the order. Therefore, there cannot be a question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jalan, MANU/WB/0222/19981998 decided on 18.09.1998 wherein the Court held that in a complaint of oppression, the corporate veil can be lifted not merely of a holding company but also of its subsidiary when both are family companies. 4.11. Mr. Jishnu Saha thereafter quoted the judgment of the Hon'ble Supreme Court in Shankar Sundaram v. Amalgamations Ltd. & others, Civil Appeal 4575 & 4757/2017 decided on 27.03.2017 and placed paras 3 and 4 of the judgment. He submitted that if one is holding 10% shares in a holding company, then one is entitled to maintain an action in the subsidiary company since both the holding and subsidiary companies have to be regarded as one. 4.12. Mr. Jishnu Saha placed the judgment in Vodafone (supra), (2012) 6 SCC 613 decided on 20.01.2012 and stated that this judgment has been explained away as referring to tax where the parent and subsidiary have to be treated as different entities, but in the context of a petition for oppression and mismanagement, they have to be treated as one entity. For this view, he takes support from the judgment of the Hon'ble Supreme Court in Tata Consultancy Services Ltd. v. Cyrus Investment Pvt. Ltd. & others, (2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a registered owner and beneficial owner in the sense of a beneficiary of a trust or otherwise at the same time. In that case, the Hon'ble Court held that "shareholder," post the 1988 amendment, has only to be a person who is the beneficial owner of shares. Argument that legal representatives can maintain a petition even without being on the Register of Members 4.17. Mr. Jishnu Saha submitted that the APL committee had no legal character. The case in point in World Wide Agencies Pvt. Ltd. v. Margaret T. Desor & others. (1990) 1 SCC 536, decided on 19.12.1989 Here a distinction is made between transfer and transmission. Transmission is automatic and immediate. He placed para 20 of the judgment to submit that the purpose intended to be fulfilled by petitions filed for oppression and mismanagement is to facilitate solution of problems in case of oppression where the member is dead and his heirs or legal representatives are yet to be substituted. He relied on para 21 where the court, notices various judgments, came to the conclusion that the rights of members in similar, though not identical situations, should be construed as belonging to the legal representative or he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Companies Act, control has been recognised. The court has to be examined where the control lies. This is where the real ownership of shares is. Our statutes provide powers of investigation to various bodies. What is important in this case is, the CLB judgment originally and affirmed by the HC, gave a finding that the estate was the real owner of the shares. When that is unchallenged, that title has gone to the Administrator Pendente Lite. This is very important. If the court finds that the majority interest in the company needs to be protected, then the court should examine where the majority interest lies in law. A probate court may be bound by technicalities. Even a civil court may be. But this Tribunal is not so bound. The Tribunal can cut across everything to do whatever is required to do in the interest of the company. 5.3. In support of his contentions, Mr. Sudipto Sarkar quoted the judgment of the Hon'ble Supreme Court in Sangram Sinh P Gaekwad (supra) to submit the court that technicalities should not be looked into. He urged the court to look at the overall situation and do substantial justice. 6. Arguments of Mr. Shyam Divan, learned Senior Counsel appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it be dismissed as against R2, and that R2 be struck off from the array of the Respondents. 6.5. Mr. Shyam Divan led us through the Division Bench judgment of the Hon'ble Calcutta High Court dated 22.04.2021.[80] He drew particular attention to paragraphs 42, 43, 45, 57 and 66 of this judgment. (a) Para 42.[81] records that the APL committee considered the flowchart titled Tier-wise Broad Structure of Control of MP Birla Group of companies through key companies and came to the conclusion that the APL committee was not in a position to take a final decision regarding what formed part of the estate of PDB, but so long the controversy between the parties were alive and pending before the Calcutta High Court, the APL committee would have to proceed on the basis of a possibility that the estate of PDB had a majority share in the MP Birla group of companies. (b) Para 43.[82]"... the committee has not attempted to take over the management and control of any of the listed cos under consideration ... it is the view of the APL committee that it is not possible for the APL committee to virtually takeover or take charge of the management of the listed cos which was also the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no final decision as to what constituted the estate of PDB. 6.7. Mr. Shyam Divan submitted that this is what ought to have been placed before the court when a serious issue of maintainability is raised. Most important, there are alternative interpretations - PDB's influence could have been due to her personality. These findings in para 57[86] factually destroy what the petitioners have placed before this court. This touches upon the maintainability also - although mildly. Even assuming that there may be something on control, these findings that the controlling interest has not been quantified, puts paid to all the submission made by the petitioners. This is the current state of play, and the Court may be guided by this. 6.8. Mr. Shyam Divan then placed the judgment dated 04.05.2020 judgment of the Division Bench of the Hon'ble Calcutta High Court. The learned Single Judge had passed certain directions against third parties. The grievance was how could directions, whether interlocutory or final, be passed. The Division Bench agreed with the appellants and remitted back the matter to the Single Bench. This is what crystallised in the order dated 18.09.2020. [87] 6.9. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it is conceded for arguments' sake that the APL Committee may have control, it has not been quantified at all the APL Committee has absolutely no control over the companies mentioned at Sl Nos. 6 to 9 and 10, 11 & 12 of the list [93] which are wholly owned subsidiaries. Even the case they have come up with in respect of the three companies, are falsified in the findings of the 22.04.2021[94] order. It is also falsified by a close reading of the shareholding pattern of the companies. [95] On maintainability 6.12. Essentially, all the reliefs in the company petition are in respect of R1 - page 112. Now let us understand "membership" in the context of R1. There is an admission that R1 company is a wholly owned subsidiary of R2. [96] If the entire shareholding is of Rs/VTL, then the petitioners do not have any shareholding. On the very next page - para 2(i) [97] - particulars of the petitioners - the estate of PDB is said to be holding 53.89% of R2, which in turn has been stated to be the holding company of R1. There is an acknowledgement for the second time. In para 39, [98] it has been stated that R1 is a wholly owned subsidiary of VTL. This is the acknowledgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumscribed by the provisions - it is only those persons whom the law recognises, who can come before this Tribunal for relief. If one is a member then certainly one can approach. If not, at the threshold itself, the petition must be rejected. There is complete absence of any reference to control. The notion of control is alien to the provisions of section 241, 242 and 244, Mr. Divan submitted. Equally, the concept of SBO is also completely alien to an action under sections 241, 242 etc. Even the waiver provision under section 244 specifically uses the expression so as to enable the members - to apply under section 241. In so far as R1 is concerned, which is a 100% subsidiary, an application such as this is completely incompetent. Even the waiver power cannot be exercised except at the request of a member. 6.16. Mr. Shyam Divan thereafter dwelt on the duties and framework under which the APL committee operates. Their primary task is to prevent any dissipation or depletion of assets. When Hon'ble Justice Raveendran was heading the APL Committee, it had advisedly taken a good decision saying they were there not to run the companies. That is not the remit of the APL committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax AIR 1959 SC 775; Therefore, even assuming that in terms of the Trust Deed the shares had devolved on the beneficiary of the Trust, this would not mean that the owner of the shares as registered with the company would not be competent to file the petition under Sections 397 and 398. This is for the proposition that even beneficial owners are concerned, they cannot maintain a petition complaining oppression and mismanagement. (5) Killick Nixon Ltd. v. Bank of India: 1982 SCC OnLine Bom 57 decided on 18.02.1982 - para 8: Section 41 - definition of members - We are not concerned here with s. 41, sub-s. (1). Under s. 41, sub-s. (2), a person whose name is entered in the register of members shall be a member of the company. Ordinarily, the name of a person who does not hold shares in a company cannot be entered in the company's register of members. Referring to paras 16 and 17, Mr. Shyam Divan submitted that this exposition of the law is correct - the equivalence between shareholding and membership. Secondly, if an action has to be maintained, a person has to be a member. The beneficial owner has no status as far as who will be recognised, if the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of the board of R1: a request sent by a 100% holding company is brushed aside by the board of the 100% subsidiary. This is a disquieting state of affairs, Mr. Divan submitted. 6.23. The APL committee was appointed on 23.08.2012. The AGMs held have been indicated in the table. This will reveal until 24.06.2020 - there was no complaint at all. In all these years, the APL Committee did not insist on any SBO. In any case, the APL committee cannot parachute straight into R1. All of these comes about because of some manoeuvring, Mr. Shyam Divan pleaded, and read on, placing item 24[113] - "Illegal and void submission of Form BEN-2 in the name of the company on 31.12.2020 - it appears that this SBO declaration dated 24.12.2019 from two of the joint APL. "Shri Ravindra Pratap Singh informed the Board that a Form BEN-2 .... It may be noted that even VTL which is holding company of Insilco Agents Ltd. has not recognised the said two joint APLs or any other person as SBO. .... The APL committee is not a SBO of shares of the company within the meaning of section 90 of the companies Act, 2013. VTL is the owner of the shares since 22.09.1999. PDB during her lifetime (she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for the resolution proposed to be moved at the meeting. Nor are the reasons for the resolutions subject to judicial review. ... it does not require the shareholders calling a meeting to disclose the reasons for the resolutions which they propose to move at the meeting. 6.27. Mr. Shyam Divan submitted that this case provides compelling guidance on many of the points that arise in this case. There is a right conferred on the shareholders to convene an EGM, and this cannot be blocked. As far as shareholders is concerned, they are not required to give reasons. Even when so given, they are not subject to judicial review. It is also open for every shareholder to remove some directors and appoint some others. This cuts at the very foundation of the premise on which the petition is built. Any interim relief based on such a petition will cause irreparable loss and injury to the rights of the shareholder of R1 company. On balance of convenience: 6.28. The balance of convenience tilts in favour of the holding company/VTL when a 100% subsidiary suddenly tucks in a circular resolution for filing BEN-1 which itself surfaced after one year. Judgments relied on: 6.29. Mr. Shyam Divan sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Divan's very erudite argument on maintainability, and would only add a few supplementary arguments. 7.2. Mr. Khambata drew attention to the definition of 'Member' occurring in section 2(55) ,[119] of the Companies Act, 2013. He submitted that the first and third categories from the definition of Member is not applicable in the present case, leaving only the third available for application - a person whose name is on the register of members. 7.3. Picking up the baton from where Mr. Shyam Divan left it, Mr. Khambata queried whether PDB herself could have maintained an action here, and submitted that the only answer would be a resounding 'No.' If PDB herself could not have maintained the petition, how could the APL Committee? The entire premise of this petition is, therefore, completely misconceived. Mr. Khambata submitted that howsoever strong the case may be, the relief under section 241 is available and can be exercised only by a member and not an outsider, since it avowedly uses the expression, 'member.' (i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VTL as at 31.03.2020, by exercising control over the shares held by the promoters and persons acting in concert. ,[121] Therefore, the corporate personalities are distinctly marked out. This is the way the petition proceeds. (4) "In the SBO Decision, the APL Committee further determined, identified and quantified the controlling shareholding of the Estate in the MP Birla Group of companies." ,[122] Mr. Khambata asserted that in fact, the High Court has categorically held that it has not. Neither has the APL Committee done that. Therefore, this sentence has to be read only to be discarded. (5) "It is pertinent to point out that the APL Committee in the SBO Decision has held that the Subject Companies are also covered by the provisions of section 90(1) of the Companies Act, 2013, read with rule 2(1)(h) of the SBO Rules ..."[123] The petitioners are essentially saying that they disregard the actual ownership and the register of members and claim beneficial ownership. (6) "It is submitted that the VTL notices and the special notice dated 12.05.2021 admittedly are not in the interest of the Estate. The VTL notices and the special notices dated 12.05.2021 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he registered shareholder and come directly to the subsidiary. On the contrary, there is one case where it has been held that the right of the shareholder of the holding company does not extend to the subsidiary. This was in the matter of Herbertsons Ltd. v. Kishore Rajaram Chhabria & others, 1999 SCC OnLine CLB 6 decided on 09.03.1999 where the CLB found that the applicant was not a shareholder of BDA Limited, against which the petition was filed (para 2). A specific contention was raised therein that while the applicant was not a shareholder of BDA Limited, it has every right to be impleaded as a party in a proceeding against the subsidiary (para 3). This argument was repelled in para 8, where the CLB held that there is no special provision in the Act regarding the rights of members of a holding company in the matter of a subsidiary except in section 214(2) of the Companies Act, 1956, by which the members of a holding company could be treated as members of a subsidiary to exercise the rights under section 235 of the Act ibid. The legislature was conscious of the rights of members of a holding company in the affairs of a subsidiary, and such rights have been restricted only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been restricted only to 500 shares. What is not shown in this long list is that there is not a whisper of the names of the 100% subsidiaries of VTL, and rightly so, because that can never form part of the estate. The assertion that 500 shares is only the thin edge of the wedge, and that the APL Committee actually controls 53.89% of the shareholding in VTL, is still not proper. The controlling block of shares is firmly anchored in the Schedule of Assets. There can be nothing outside this. 7.15. In so far as the APL Committee acting by majority is concerned, Mr. Khambata drew attention to the judgment dated 27.08.2010 passed by Hon'ble Justice Kalyan Jyoti Sengupta appointing the administrator. It was laid down therein that the joint administrator will act ordinarily jointly, but in the case of non-availability of any of the joint administrators, the remaining administrators or administrator will act, however, ratification of the court is to be obtained at the earliest. ,[132] This has not been done in the present case. Even the Division Bench order of 23.08.2012,[133] only holds that nothing prevents the APL Committee from exercising all their rights, powers and privileges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e their asserted any right in the three subsidiary companies - Insilco, August Agents and Laneseda. This action binds P1 today. It would have bound even the old APL committee. But is quite certainly binds P1 today, according to Mr. Khambata. 7.17. Mr. Khambata submitted that the issue of title and interests were to be decided by the High Court because the APL Committee was appointed by the High Court. This much is clear from the judgment dated 10.05.2013,[136] of Hon'ble Justice Anirudh Bose, where the question of freezing of voting rights is discussed. The court found that the foundation of the claim of R2 to manage the affairs of the company is derived from his control or influence over the entities having 62.9% shareholding of the company. The division bench ... the jurisdiction to decide on this issue, thus, in my opinion, has largely shifted form the domain of CLB to the probate court. ,[137] 7.18. At this stage, instead of going simply to the single judge, the APL Committee went to the Supreme Court. On 11.05.2020, ,[138] the Supreme Court dismissed the appeal. Para 2 of the order clarifies that the resolutions which have been passed by the respective companies shall ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly owned subsidiaries of VTL..." Mr. Khambata asserted that we have to respect paras 26 and 34 of the APL decision. The view of the APL committee itself is that they have not determined, quantified the estate. They are open to the possibility that it may include control. They have expressly held that they are not trying to take over the companies, and we must take them at their word. The present petition has to be read in that context. In any case, even if they had controlling interest that would not be enough to maintain a petition under section 241. 7.22. Para 45[147] of the judgment sets the seal on the whole issue, according to Mr. Khambata. The APL Committee had also not decided conclusively on the quantification of the shareholdings (controlling interest) in all MPB Group of cos, but on the possibility that the majority of the shareholdings belonged to the estate of PDB... it is now crystal clear. The decisions of the APL Committee and of the Hon'ble High Court are clear: the APL committee has not come to the final conclusion on this. Paras 54 and 55 of the judgment[148] notices the CLB and High Court judgments. Then comes the para 57[149] which really ends thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the APL, as legal representatives of the court, has a remit which extends beyond the 500 shares, is a matter which the probate court is considering, and this is not a matter which is within the jurisdiction of this Tribunal. 7.25. The APL Committee has to act unanimously and not by majority.[151] It was supposed to act jointly, and the court had directed the other two members to render full cooperation to prevent any stalemate. .[15] All this shows that the APL Committee is like a trustee. While Hon'ble Justice Munshi's judgment of 18.09.2020 .[183] allows the APL committee to act in majority, .[154] the fact that they have to act only pursuant to directions of the probate court, remains right through. It is unblemished. Therefore, at the very threshold, it is not a petition that is maintainable, it may represent the dreams of the APL committee, but at this point it is not, Mr. Khambata concluded. 8. Submissions of Mr. Arun Kathpalia, learned senior counsel for R1 and the applicant in CA No. 84/KB/2021 8.1. Mr. Arun Kathpalia, learned senior counsel, submitted first up that he, and not Mr. Sudipto Sarkar, learned senior counsel, had the locus to appear for R1 company, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n extraordinary prayer - for all times to come. 8.6. Mr. Kathpalia drew our attention to the minutes of the Board meeting of 10.05.2021. In Item 23, .[164] the Board noted that - (a) records of the company do not reveal the existence of notice of board meeting dated 09.02.2021 given to all the directors of the company. The SBO declaration in form BEN-1 received from two of the joint APL was not placed; and (b) The APL committee over the estate of late Smt. PDB is not a significant beneficial owner of the shares of the company within the meaning of section 90. VTL is the owner of these shares since 22.09.1999. No declaration in Form BEN-1 has been filed by VTL. The APL of late PDB cannot claim a better interest that what late PDB herself had. In any case, Mr. Kathpalia submitted, the question of any SBO coming in cannot arise so long as VTL does not recognise the right of the APL Committee or any other person as SBO. VTL has not recognised the APL Committee as SBO. .[165] If the 100% holding company does not recognise anyone as SBO, how can R1 company do so? It cannot be claimed to have been recognised on the basis of a circular resolution of which all directors did not have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could maintain the petition as claimed by P1, why did they need P2 at all? The 10% solution comes from P2. But it still begs the question: is the existence of P2 not a glaring admission of the fact that without a member having 10%, the petition itself is not maintainable? Mr. Kathpalia submitted that this only answers the question of maintainability if the petition is directed against R2. But the petitioners say that it is not an action against R2 but in the matter of R2 exercising shareholding rights against R1. There is much to be said about that, but it should await a competent petition. There are at least ten places in the petition, in so far as R1 is concerned, it is a wholly owned subsidiary of R2. If so, then neither P1 nor P2 has a place in it. 8.11. In so far as the filing of documents with the RoC is concerned, there is a plethora of judgments that it is beyond the scope and jurisdiction of the RoC to refuse to accept documents, some of which are as follows: - (a) Garima Rungta v. UoI - unreported judgment of the Calcutta High Court. (b) Golkonda Industries Pvt. Ltd. v. RoC - placetum B to placetum G. (c) In re Areva T & D India Ltd. of the Calcutta High Court dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court and sought a ruling that their interest was 53.86%. It was reserved for judgment on 13.04.2021. However, during the pendency of the contempt petition, - (a) on 12.02.2021, resolution is passed by the board of directors of VTL recommending the appointment as director of R1. (b) 05.03.2021-there is a letter from VTL to the board of R1 recommending the appointment of Mr. Rakesh Puri. (c) On 27.03.2021 - requisition notice u/s. 160 from VTL to board of R1 proposing the candidate of Rakesh Puri as director. The petitioners could have gone back to the High Court and asked for a direction to stop these actions during the pendency of the contempt proceedings. This was not done. But once the orders were reserved, the very next day (14.04.2021) Mr. SK Daga wrote to the APL Committee seeking guidance on the requisitions. 9.6. On 20.04.2021, Mr. U Varma wrote to the RoC requesting the RoC to mark the company as having a management dispute, which the RoC promptly does. Today, the RoC's action in not taking the document on record is flaunted as a judicial determination. 9.7. On 21.04.2021, directors of all the three Subject Companies write to the RoC requesting that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the territorial jurisdiction threshold. In the present case, all the allegations are against VTL, whose registered office is in Madhya Pradesh. Therefore, this Bench will not have territorial jurisdiction to entertain the petition, Mr. Ramji Srinivasan asserted. 9.12. On control, the petitioners had cited Arcelormittal (supra). This was a petition under the IBC. This cannot be universally applied. There is no relevance, since they are yet to establish controlling interest. Till then, it is his word against mine. Control by itself is no criterion. 9.13. In DHN (supra), the argument was whether it was a single economic entity. It is in that context that the court held that they would be entitled to compensation. This is not a case of compensation. This is a case where a petitioner claims to be a shareholder in 100% subsidiary on the basis of 500 shares in the holding company. 9.14. In New Horizons (supra), the issue was that the corporate veil of the joint venture ought to be lifted for the purpose of enabling the joint venture to claim benefit of the experience and credentials of its constituents, in a case of bidding for tender. This does not apply here which is a case of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariman Point, decided on 10.12.1993 wherein it was held that the issue of maintainability has to be treated as a preliminary issue. 9.24. In the present context, it is impossible for the petitioners to press for and hope to get any injunctive relief at this point of time. There should also be no question of stopping the AGM of the R1 company, Mr. Ramji Srinivasan concluded. 10. Submissions of Mr. Ranjan Bachawat, learned senior counsel for R5: 10.1. R5 is an independent director. Under section 150 of 2013 act, there is a list of independent directors required to be maintained, R5's name is on the list. 10.2. One set of reliefs directly affect me. The others don't prayers (c) and (r) and the interim relief directly affect me. As far as these are concerned, these are acts which they have been aware of at least since 22.04.2021 they did not approach court on the first available opportunity. They waited for two months. Therefore, even on the ground of delay this petition does not deserve any consideration. 10.3. My appointment is in 22.04.2021, and the petition has been filed in June 2021. The status quo that they have asked for is really status quo as on 27.03.2021, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory. In the contempt proceedings also, the APL was not a party. It invited itself in. They were represented when the matter is heard, they are also heard, and on 22.04.2021 the order is passed in the contempt, dismissing the contempt. Mr. Joy Saha is present.[175] for the APL majority committee; they were aware of the dismissal which happened. 10.8. Mr. Ranjan Bachawat further submitted that the basis of action is a letter written by the APL committee on 22.04.2021.[176] It is a very detailed letter. This letter refers to every order passed in every proceeding in para 3. Para 4 discusses the judgments in threadbare detail. But the fact that on 22.04.2021, the learned Division Bench had dismissed the contempt petition on that very date, does not find mention in the letter at all, even though judgment in the contempt petition was pronounced in the presence of Mr. Joy Saha. There was no other matter on that day before the court. The APL letter goes out in the evening. 10.9. The petitioners have been very mysterious. What is not clear in this is this: is the APL Committee actually in control or does it want control? If it is already in control, then the petition would be unnecessary. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the companies shall not be bound by the order [181] - so far as the three noticee companies are not bound by the APL directions. This is mentioned sixteen times in this order. After this, for the petitioners to contend that the companies should be bound by the APL Committee's directions is not proper. So, the entire foundation of the case that Hon'ble Justice Munshi's order has stated that the companies would be guided by the APL Committee, is not correct. In any case, even if we pitch it a bit higher and take it that such an order is there, it would stand only against the companies, and not on R5. 10.13. Rounding up his submissions, Mr. Ranjan Bachawat raised three pertinent points, (1) no court has told the APL Committee that they are entitled to SBO of the shares; (2) no order of any court gives the APL Committee the right to exercise voting rights of shares held in the names of other companies; and (3) the source of the power claimed by the APL Committee to run or manage the company or its business is not clear. On the other hand, what is clear is that the APL Committee was categorical in its meeting of 19.07.2019 that it does not desire to exercise control an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no scope for judicial interference. 11.5. The petitioners have argued that status quo as of 27.03.2021 be maintained, apart from injuncting the EGM. Mr. Bachawat has already addressed the court regarding grant of mandatory injunctions. There are at least two other judgments regarding this. Injunctions are normally passed to preserve the status quo immediately obtaining at the time of filing of the petition. The petitioners seek to prevent a duly appointed board from discharging its functions. This discloses lack of bona fides on the part of the petitioners. This is an abuse of process of the court. 11.6. Mr. Sudipto Sarkar has told the court that the powers under section 241 are vast, that this is a court of justice and that the court has expansive powers. The key to unlocking those powers does not lie in the petition. It lies in section 244. The jurisdiction in law is also as much as it is in equity. While exercising the jurisdiction, the court must keep in mind the bona fides of the petition. They are certainly not members of R1. 12. Mr. Sabyasachi Chowdhury, learned counsel for R6 (Mr. Kishore Damani) 12.1. Mr. Sabyasachi Chowdhury, learned counsel appearing for R6, answe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter is finally decided. In terms of the Explanation to section 11 of the CPC, if one could have urged a matter but chose not to do so, then also constructive res judicata will apply. 13.5. Therefore, if Mrs. Birla was in control of twenty-eight companies and the matter has been decided right upto the Supreme Court, then issue estoppel will apply. The estoppel is an estoppel of accord, because both parties had agreed that Birla had control over twenty-eight companies which had 60% of the shareholding of Birla Corporation Limited. When there is a finding right upto the Supreme Court, it is not open to anyone to now contradict the position. They are estopped from doing so. They can blow hot and hotter, but they cannot hold hot and cold. Controlling interest is one thing, right to vote is quite another. 13.6. Mr. Jishnu Saha led us once again through the order dated 23.08.2012.[188] (Hon'ble Justice JN Patel's order) appointing the APL Committee. It was the contention of the learned counsel for the respondents that the joint APLs will be entitled to exercise all rights arising out of holding of shares as was valuable to the deceased.[189] It was recorded in the said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. 13.13. Mr. Jishnu Saha therefore turned his attention to CA No. 82/KB/2021. He submitted that para 13 to 20 thereof shows why the APL Committee suddenly decided to become proactive. They need not give their decisions, since they have been given power by the HC to represent and vote on the shares, including VTL. That has assumed finality. Para 22 are the so-called acts of contempt. The respondents make a case that the orders passed in the contempt application overrides all other orders passed by the High Court. The court is only on the contempt petition, and not anything else. Mr. Jishnu Saha submitted that therefore, there is no question of any order or observation in the contempt overriding any other order. This is despite the specific case that the order of Hon'ble Justice Munshi takes away all the rights and vests them in the APL Committee. 13.14. Now turning his attention to the question of membership, Mr. Jishnu Saha submitted that the essential challenge is that while the petitioners are not members, how could they maintain a petition. Does this controlling interest cease on her death, or does it pass on to the LRs or to the successors? Lot was said on her influenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are entitled to maintain a petition under section 397/398. Transmission means an immediate or instantaneous sending across in this sense, when one is dealing with transmission of shares, it must mean that upon the death of the last holder of shares .... is recognised by necessary intendment by the proviso to s.108 of the 1956 Act [now section 56(2) under the Companies Act 2013)]. Then there is reference to Jermyn Street Turkish Baths Ltd. So, the petitioners' contention is, therefore, that the shares vest in the APL committee is now concluded. This order has not been altered, modified, or set aside in appeal. So, this order holds good. So, if the issue has been decided, can it be reagitated? There is a matter which has been hit by the doctrine of constructive res judicata and issue estoppel, Mr. Jishnu Saha submitted. 13.17. The APL Committee need not come through VTL. Therefore, the right to maintain the petition is very clear. Margaret Desor has already been placed, interpreted and applied. The order doing so is not challenged. It, therefore, survives. 13.18. In so far as the SBO issue is concerned, there are essentially three arguments advanced - a SBO is an SBO. One can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to say that a member of a holding company should not be treated as a member of a subsidiary. 13.21. Mr. Jishnu Saha pointed out that Mr. Bachawat took such great pains to show who has been authorised - Mr. Rathi - and the allegations. But Mr. RP Singh's letter is not the petition. Every attempt has been made to convert the allegations as the petition. The petitioners have carriage of the proceedings, and to choose the forum. They can choose the kind of action that they wish to bring. Therefore, one can maintain an action for oppression where directors are being appointed only with the object of seizing control, who will then be directed to vote in other Birla group cos. By this analogy, P2 can also maintain an action. 13.22. Here, the attempt has been to appoint independent directors of course with the object of bypassing the RBI guidelines, because otherwise the clearance of RBI would have to be taken. Independent directors are appointed - (b) to take away the bad odour of mala fides, and (b) to keep it away from the RBI regulations. It is also clear that P2 can maintain the petition as 10% shareholder. 13.23. In answer to these questions Mr. Divan relied on a num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directors and so an action cannot lie against them. Mr. Bachawat also said that there is no commonality of interest between P1 and P2. Mr. Jishnu Saha submitted that there is no need for any commonality of interest whatsoever. It was said that action should have been taken against VTL. Mr. Daga and Damani were acting as per the directions of VTL. Therefore, who Mr. Rathi is completely ceases to be of any relevance whatsoever. A lot of effort is being made to say that Mr. Daga and Mr. Rathi are bad persons. Whatever it is, it is not material. If the object is to usurp control by removing earlier directors and appointing new directors, then it must be interdicted. There is every reason to do so, Mr. Jishnu Saha submitted. 13.29. Mr. Bachawat also submitted that that one cannot grant status quo beyond the date of filing of the petition. This was repeated by Mr. Dutta. The judgment relied on - Nandan Pictures Ltd. (supra) AIR 1956 Cal 428 decided on 22.03.1956 was to hand over the prints of a film. It was a mandatory order. This is quite different from an injunctive relief that we are now claiming, and therefore, the propositions laid down therein cannot apply here. 13.30. Ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e promoters' shareholding details, which contains all familiar names including the APL Committee. [200] On Maintainability: 14.4. The concept of control is very well known. PDB with these 500 shares in VTL exercised control. This is admitted by the Respondents also. The natural question is, just because the lady in question died, and the APL Committee comes in, can the companies come and show their true colours? 14.5. R1 company's business is to hold shares of the Birla group. They also have some moneylending business to members within the Birla group. So the question that begs consideration at this stage is why the existing state of affairs is required to be altered when the issue is pending before the HC? Are the respondents trying to steal a march over the orders passed by the HC? These companies have no manufacturing or trading activity. So the respondents were under an obligation to explain the reasons why they needed this change. There was none forthcoming. The HC says that the companies are to act in terms of the APL Committee. This is not possible without notice to the APL Committee. On the board's reconstitution: 14.6. Mr. Joy Saha submitted that the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.11. Much was said of the charitable societies. It is all there in VTL's annual report. The APL Committee has complete control over the charitable societies. So, para 17 spanning over pages 51, 52 and 53 has to be accorded the utmost importance by the Tribunal because these disclose the web which in turn discloses that it was one entity, and that's why it was controlled by PDB. Now these very same persons turn round and say that these are independent entities. On the case law relied upon by the respondents 14.12. In Shantilal Jain, Mr. Shyam Divan relied on para 13, 14 & 31. Para 7 of this order records that this was a case where seven persons who were allotted shares were nominees of one branch. That is the fact situation of the case. 14.13. In Dale & Carrington (para 24) - this is a case for the proposition that merely because one is a private company one cannot shy away from the requirements of the Companies Act. 14.14. India Awake for Transparency case - paras 6, 12, 14 - this is on the question whether a non-member can seek waiver. This was virtually a PIL. Para 6 records that the appellant is an NGO taking up social causes. They wanted to maintain a 397 action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it says anything else - it is clear that RBI permission was necessary if they wanted to change the board. So the term the new appointees as independent directors. This is mala fide. The question is, the motive for appointment of independent director. This company has no business. There is no allegation that the business carried on had completely ruined the company. Therefore, to circumvent an RBI circular, they appoint independent directors. The Tribunal has to ensure that orders passed by other courts and authorities are respected. The "law permits me to do it" argument is the reason why courts exist - to give context. 14.20. Another of Mr. Bachawat's arguments is that the allegations have not been answered. That cannot be the lookout of an independent director. He cannot take sides. 14.21. Alluding to Mr. Krishnendu Dutta's argument principally that there are no allegations against R4, Mr. Joy Saha submitted that the petitioners have nothing personal against R4. We are only challenging the process of his appointment, the rights of the parties who appointed him. We are not seeking removal of the director on the ground that he himself has done something that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with its fold a beneficial owner of shares? (b) Can a Significant Beneficial Owner (SBO) of the shares of a holding company rappel straight into a subsidiary without coursing through the holding company? (c) Should the identities of the holding company and its wholly owned subsidiary be blurred so as to be so unidentifiable and practically indistinguishable? 15.5. These issues cannot be treated as water-tight compartments, since the arguments blend into one another and present a nebulous picture. Therefore, the issues framed are dealt with in the subsequent paragraphs, but not necessarily ringfenced by impermeable membranes. There would be some diffusion of the issues into one another. 15.6. The term 'Member' has been defined in section 2(55) of the Companies Act, 2013. It is in pari materia with the definition of 'Member' in section 41 of the Companies Act, 1956, and reads as follows: - 'Member', in relation to a company, means - (i) The subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members; (ii) Every other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined to mean "a company formed and registered under the Companies Act, 1956 (1 of 1956) and which has been granted a certificate of registration under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992)." 15.11. Therefore, both under the Companies Act, 2013, which leans on the definition of depository in the Depositories Act, 1996, there is no room for reading a "depository" as "RoC" in relation to the Subject Companies, for that would be importing a completely new meaning into the equation. 15.12. The petitioners' case, taken at its highest, is that by virtue of having controlling interest in the holding company, they by extension acquire controlling interest in the wholly owned subsidiary also. For this, at the bare minimum, they should be capable of classification at least as a person having beneficial interest. 15.13. Section 89(1) of the Companies Act, 2013, mandates that any person whose name is entered in the register of members of a company as the holder of such shares in that company, but who does not hold the beneficial interest in such shares, shall make a declaration within such tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions of Mr. Sudipto Sarkar, learned senior counsel appearing for Respondent No. 6, that this Tribunal has been endowed with near-limitless powers to deal with oppression and mismanagement and that this Tribunal should not get bogged down in technicalities. However, I am also acutely conscious of the fact that the legislature has chosen to bestow the favour of approaching the Tribunal only to persons who fulfil a basic condition - he should be a member satisfying the definition under section 2(55) of the Companies Act, 2013. I am absolutely convinced that the provisions cannot be unlocked with any other key. 15.18. There is second aspect to this. Let us take a look at the factual conspectus. The petitioners' case is that the forms regarding beneficial interest were filed with the Subject Companies on 09.12.2019. However, it is the claim of Mr. RP Singh, director, that these forms were never brought to the notice of the board of directors. This allegation has remained uncontroverted even though much has been said in the space of the four days allotted for the hearing. Even after Mr. Ranjan Bachawat, learned senior counsel for R5, specifically raised this during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the matter. The change in composition of the board was first attempted, and successfully at that, on 22.04.2021 after the process was set in motion on 27.03.2021. The EGM was held on 22.04.2021 with three new inductees into the board. If the board of R1 company was indeed aggrieved and concerned that there was an attempt at interference by ignoring the rights of the APL Committee, and that it was a violation of the High Court order of 18.09.2020, as has been specifically averred at para 51 of the petition then they had sufficient time to approach the courts, whether it was this Tribunal or the probate court, of which the APL Committee was itself a creature. 15.24. On record, there was absolutely no action of any consequence, save and except that the RoC seems to have been cajoled into marking the Subject Companies as being under 'management dispute.' This was chicanery on the part of the Subject Companies, since on 22.04.2021, there was no management dispute. The boards of the Subject Companies were united in their decision that VTL should not be allowed to have its way. What was there was that the 100% shareholder was attempting to infuse new directors into the boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marking the Subject Companies by a smoke and mirrors trick as having a management dispute, when there was no such thing in existence on 22.04.2021. What may have been there was that the 100% shareholder lost confidence in the board that it had elected at its last AGM. But that is a shareholder-management dispute at best, and not a management dispute. (g) Though it is the case of the APL Committee that ex facie there appears to be a violation of Hon'ble Justice Munshi's order of 18.09.2020 directing implementation of the decisions dated 19.07.2019 and 30.07.2019, no contempt proceedings are initiated even though there is no stay of the judgment. 15.27. On most of these aspects where we have indicated the options available, there was only a deafening silence on the part of the petitioners. Therefore, the petitioners are guilty of laches in not approaching courts with promptitude. In any view of the matter, they do not have the locus to maintain the present petition, since they have not asserted their beneficial rights in a manner known to law, and except for the controversial surfacing of a BEN-1 Form more than a year later and which was objected to by a lone director eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act, 1956, would in no case include the affairs of a subsidiary company. The other, diametrically opposite view was advanced by Mr. Arvind Datar, learned senior counsel who appeared for the Appellant (Shankar Sundaram) in the section 10F appeal, who urged that in all cases, the affairs of the holding company would include the affairs the subsidiary company. The learned single judge noticed various judgments including the views of the Hon'ble Calcutta High Court in Bajarang Prasad Jalan (supra), where it was held that, over the affairs of a company in question include its entire affairs including those of the subsidiary companies can be looked into, and the Hon'ble Allahabad High Court in Life Insurance Corporation v. Hari Das Mundhra, where it was held that the court is entitled to make an enquiry into the affairs of the subsidiary company if the affairs of the holding company and those of the subsidiary were interfused. In other words, whether question whether the affairs of the subsidiary could be considered to be part of the holding company, is a question of fact in each case. 15.32. In the end, the Hon'ble Madras High Court held that the middle course adopted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies is not quite recognised in law. In any case, the petitioners have not run a case in their petitions that the holding and subsidiary companies should be treated as one economic unit. If at all, they have run the opposite: that there is a distinct identity between the two. 15.38. The wholly owned subsidiaries are an asset of the holding company. A shareholder cannot have an interest in the property of a company or its assets. Their participation in the company is by partaking of the dividends if declared by the company. Bacha F Guzdar (supra)'s propositions have stood the test of time for over sixty-five years since 28.10.1954. 15.39. While the learned senior counsel placed heavy reliance on Shankar Sundaram (supra) on this issue also, we have noticed that the facts are distinct in Shankar Sundaram (supra) and they do not apply here on all fours. The facts in that case are not being repeated again to avoid prolixity. 15.40. As regards the submissions of Mr. Joy Saha made in the Hon'ble Calcutta High Court's order dated 23.08.2012 are concerned, these are legal propositions which are not disputed. The High Court's order, at page 474 of the petition, specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... numerous to be recounted here. Suffice it to say that a board or its constituent members can be in office only so long as it enjoys the confidence of a majority of the shareholders. It is also an established principle of law that a shareholder holding the requisite minimum number of shares can always requisition an EGM for removal or for appointment of a director. 16. Orders 16.1. The effect of these discussions is that the petitions are deemed to be not maintainable, on facts and in law. There is also the small matter of the territorial jurisdiction issue to be overcome, because this is, properly viewed, a case of action directly primarily against VTL whose registered office is situated in the State of Madhya Pradesh. We do not wish to dwell on this aspect too much. But the other facts and the law points remain. 16.2. In the result, this batch of cases is decided as follows:- (a) All the CAs on maintainability - CA No. 81/KB/2021, CA No. 82/KB/2021, CA No. 83/KB/2021, CA No. 84/KB/2021, CA No. 85/KB/2021, CA No. 86/KB/2021, CA No. 87/KB/2021, CA No. 88/KB/2021, CA No. 90/KB/2021, CA No. 91/KB/2021, CA No. 92/KB/2021 and CA No. 93/KB/2021 are, therefore, allowed. (b) Result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been extensively discussed and argued by the learned Senior Advocates on both sides. For reaching the appropriate level of understanding, one will have to go deeper into the background of the case. I. BACKGROUND (i) These three petitions filed by the petitioners invoking Sections 241 and 242 of the Companies Act, 2013 being CP No. 112/KB/2021, CP No. 113/KB/2021 and CP No. 114/KB/2021. All these petitions raise common questions of facts and law for consideration of this Tribunal. Since the facts of all these petitions are identical, this order will be common to all other petitions as well. Therefore, with the consent of the parties a common order is being passed in all the petitions. Respondent Nos. 2, 3, 7 and Mr. Ravinder Pratap Singh, one of the Directors of Respondent No. 1 have filed their respective applications seeking dismissal of these petitions. (ii) The petitioners have challenged the alleged oppressive actions of Respondent No. 2, Respondent Nos. 3 to 5 and Respondent No. 7 in relation to Respondent Nos. 1 and 2. Respondent No. 1 is the wholly owned subsidiary of Respondent No. 2. The main cause of oppression and mismanagement allegedly committed by the above- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3d August, 2012 and 18th September, 2020 have also been placed before the Tribunal. (ii) The learned Senior Advocate further submitted that vide decision dated 9th December, 2019, the APL Committee had determined that the APL Committee is the SBO in various entities of the MP Birla Group as per the provisions of Section 90 read with Section 89(10) of the Companies Act, 2013 and the SBO Rules framed thereunder. In this decision, it was also determined that the Estate is the SBO in respect of 53.89% shareholding in Respondent No. 2 and 100% shareholding in Respondent No. 1. The Counsel further argued that the declaration under Section 90 in Form BEN-1 is sufficient compliance of Section 89(2) of the Companies Act, 2013. Most of the active entities of M.P. Birla Group have accepted and recognised the APL Committee as the SBO including Respondent No. 1 and has submitted Form BEN-2 with the Registrar of Companies. The manufacturing companies including Respondent No. 2, however, have not recognised the APL Committee and Respondent No. 2 has wrongfully withheld recognition of the APL Committee as the SBO. It is submitted that this is an oppressive action taken by Respondent No. 2 at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 had already written to the Registrar of Companies (ROC) indicating that the company is having management dispute. Similarly, the APL Committee also wrote to the ROC requesting it not to give effect to the resolutions, if any. Consequently, ROC did not take the said returns regarding the appointment of directors and change of registered office and restored the master data reflecting the directors and registered office as it existed prior to the said EGM. The APL Committee informed Respondent No. 2 on 22nd April, 2021 that notice dated 27th March, 2021 are contrary to the provisions of the Companies Act, 2013 and such a notice could not have been issued without the directions or intimation to the APL Committee. (iv) On 19th May, 2021 the APL Committee was intimated by Respondent No. 1 regarding another notice dated 12th May, 2021 issued by Respondent No. 2 for calling of another EGM for removal of Mr. K. Damani from the directorship of Respondent No. 1, whose director he has been since 1999, i.e. during the lifetime of PDB. It is submitted that on 10th May, 2021, parallel board meetings were held by the Board of Directors existing since prior to EGM on 22nd April, 2021 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awfully appointed directors. (vi) It is further submitted by the learned counsel that the issue relating to scope and extent of the Estate raised by Respondent Nos. 2 and 7 is pending before the Hon'ble Calcutta High Court and the position regarding the extent of Estate was made clear in the earlier judgment and also reiterated in the judgment dated 18th September, 2021. This judgment was challenged by Respondent Nos. 2 and 7 before the Calcutta High Court. The prayers for stay of operation of the said judgment was declined. Therefore, the notices dated 27th March, 2021 and 12th May, 2021 of Respondent No. 2 and actions taken pursuant thereto being contrary to the said judgment dated 18th September, 2020, need to be stayed. The learned counsel submitted that it is the settled position of law that the courts are not powerless to pass interim orders without adjudicating the questions of maintainability, and made reference to the case Saroj Goenka, Nariman Point Buildings Services & Trading Pvt. Ltd. and C.P. No. 61/KB/2021]. SUBMISSIONS ON BEHALF OF PETITIONER NO. 2 (vii) Mr. Jishnu Saha, Senior Advocate appearing for Petitioner No. 2 at the very outset submitted that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainable. To make this point, the counsels referred to and relied upon J.P. Srivastava and Sons Pvt. Ltd. & Ors v. Gwalior Sugar Co. Ltd. & Ors. 2005 (1) SCC 172, National Travel Services v. Commissioner of Income Tax, Delhi VIII, 2018 (3) SCC 95. The learned counsel finally submitted that the notice dated 27th March, 2021 and 12th May, 2021 are not in the interest of Respondent No. 1 company and are also invalid in law. The whole operations and functions of Respondent No. 1 are carried out from the office at Birla Building, 9/1 R.N. Mukherjee Road, Calcutta. III. SUBMISSIONS ON BEHALF OF THE RESPONDENTS (i) Mr. Sudipto Sarkar, learned Senior Advocate appearing for Respondent No. 1 made his submissions that the Estate of a deceased and the right therein are custodia legis. The executor is initially vested with the Estate and the rights flowing thereto. Such rights as an executor are not inheritable. In the present case, R.S. Lodha claimed to be the executor and was vested with the Estate including the controlling shareholding. After the death of Shri R.S. Lodha, the Hon'ble, High Court has vested such Estate with the APL Committee. He submitted that in probate proceedings, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Respondent No. 2, it cannot have any say in the assets of Respondent No. 2 i.e. Respondent No. 1. The shareholder of a company has no right over the assets of the company. The learned counsel sought support from the judgment Bacha F. Guzdar, Bombay v. CIT, Bombay, AIR 1955 SC 74, to bring home his point. (iv). The learned counsel for Respondent No. 2 further submitted that the controlling interest of the Estate in the M.P. Birla Group of Companies including Respondent No. 1 and 2 is yet to be quantified in terms of judgment dated 22nd April, 2021 and that the APL Committee has not quantified the same in its decision dated 19th July, 2019. The extent of control can also be mere influence of PDB. The learned counsel submitted that the APL Committee cannot virtually take over or take charge of the management of the listed companies and the reliance is placed on judgments dated 4th May, 2020 and 22nd April, 2021 of the Hon'ble High Court of Calcutta. (v). It is further argued that there is no prima facie case for granting an interim relief as per the pleadings and that Respondent No. 2 is well within its rights to call for an EGM and seek appointment/removal of directors in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Tribunal. The learned counsel referred to the judgment passed by Hon'ble Supreme Court of India in Sangramsinh P. Gaekwad (supra) and Aruna Oswal v. Pankaj Oswal & Ors, (2020) 8 SCC 79. (vii) It is submitted that the Probate Court does not go into the question of title of the assets belonging to the Estate of the deceased but in this case the APL Committee is in place for protection and preservation of the Estate for which, the APL Committee is required to ascertain and quantify the extent of scope of Estate. Since the issue of scope and extent of Estate is pending before the Hon'ble Calcutta High Court, the said issue cannot be raised in this petition. (viii) The learned counsel further submitted that the extent or the scope of the Estate is undisputed and only includes the direct shareholding of PDB in the M.P. Birla Group of Companies. Therefore, the Estate only holds 500 shares in Respondent No. 2 and no shares in Respondent No. 1 company. It is submitted that this fact was admitted by the Birlas in the Affidavit of Assets filed before the Probate Court and that vide judgment dated 11th October, 2007 it was held by the Hon'ble High Court that the controlling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court has specifically held that the Probate Court cannot pass orders against third parties which include Respondent No. 2. In terms of the order dated 1st October, 2020, Petitioner No. 1 can only decide upon and regulate the voting power in relation to the shares referable to the Estate which is in the affidavit of assets. (xii) The learned counsel further submitted that even in the contempt proceedings which led to the order dated 22nd April, 2021, it was contended that Petitioner No. 1 has identified and quantified the extent of Estate. However, in the said judgment, the Hon'ble High Court has held that the Petitioner No. 1 has not quantified the extent of the Estate in the decision dated 19th July, 2019. The learned counsel further submitted that mere filing of Form BEN-I by the APL Committee with Respondent No. 2 does not ipso facto make it the SBO of 53.89% shareholding in Respondent No. 2. In terms of Section 89 of the Companies Act, 2013, the APL Committee can only be recognised as the SBO after Respondent No. 2 has made the requisite declarations. Therefore, the APL Committee has no locus standi to maintain the present petition and because the registered shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntment was on the basis of vote cast by the 100% registered shareholders, i.e. Respondent No. 2. It is submitted that the newly constituted Board of Directors held a Board meeting on 10th May, 2021 wherein resolution was passed authorising Mr. Rakesh Puri and Mr. R.P. Singh to take necessary steps in the matter of litigation. He submitted that the parties represented by Mr. Sudipto Sarkar, Senior Advocate are not authorised to represent Respondent No. 1. It is submitted that at the meeting held on 10th May, 2021, a newly constituted Board of Directors recorded that appropriate form regarding appointment of three new directors have already been filed with the Registrar of Companies. Apart from Mr. R.P. Singh, none of the directors of the original Board of Directors attended the meeting. And that no circular resolution was sent to Mr. R.P. Singh wherein the issue of petitioner no. 1 being regarded as the SBO of respondent no. 1 was approved by the Board. It is submitted that so long as respondent no. 2 does not accept petitioner no. 1 as the SBO, the question of respondent no. 1 accepting petitioner no. 1 as the SBO does not arise. The respondent no. 2 is the registered holder of 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of respondent no. 6 that the proposals for appointment of independent directors in respondent no. 1 is malicious and an attempt to do indirectly which cannot be done directly. Respondent no. 1 is an unlisted NBFC. The provisions of Section 149 of the Companies Act, 2013 vis-a-vis appointment of independent directors do not apply to respondent no. 1. The proposal to appoint two independent directors of respondent no. 1 is merely to bypass in circuitous manner the RBI circular dated 9th July, 2015 and obviate taking prior approval of RBI. The prior permission of RBI was a legal mandate in this case since the appointment of three new directors resulted in change of management beyond the stipulated limit of 30%. The notice dated 27th March, 2021 does not provide any reason or justification for appointment of the new directors. (xxi) It is submitted that the taking up of resolution at the EGM regarding authorizing any one of the directors of respondent no. 1 to file appropriate forms/returns for giving effect to the resolution regarding the unlawful appointment of three new directors and shifting of registered office is ex facie bad in law. Such resolution let alone being p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il, 2005, 24th August, 2005 and 10th May, 2013, all record the admission of the companies of the M.P. Birla Group and hold that the controlling majority of shares in the M.P. Birla Group of Companies belongs to the Estate. In addition to this, the Probate Court in the judgments dated 23rd August, 2012, 18th September, 2020 and 1st October, 2020, holds that the controlling block of shares in the M.P. Birla Group companies vests with the Estate which represent the controlling interest therein. (ii) It is submitted that the reliance placed by the opposing respondents on the order dated 22nd April, 2021 is completely wrong. The said order was passed in contempt proceedings. A Contempt Court does not sit in appeal or revision of its own order. The limited scope of adjudication therein is whether a contempt has been committed by the contemnor or not as per prayers made therein. In the order dated 1st October, 2020 also, it has been held that the controlling interest in the M.P. Birla Group belongs to the Estate. (iii) The learned counsel reiterated that there is no requirement of any adjudication on this issue by the Company Law Board in light of the earlier judgments of the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dispute in the company. The appointment of the new directors and their actions are orchestrated by respondent no. 7 as he wishes to run the M.P. Birla Group as his personal property. Submissions made on behalf of petitioner no. 1, as rejoinder to those of the respondents (i) It is submitted in rejoinder to the arguments put forth by learned counsel for the opposing respondents, that Petitioner no. 1 is clearly a member of respondent no. 1 in terms of Section 2(55) of the Companies Act, 2013. The act itself recognizes a beneficial owner as a member of the company. Various Courts have held that the Estate holds 'the controlling interest in the M.P. Birla Group companies'. The documents sought to be relied on including the Affidavit of Assets was considered while passing the said judgments. The opposing respondents cannot now seek to reopen the said issues particularly before this Tribunal. It is submitted that the judgments relied upon by the opposing respondents on the aspect of members and maintainability of a petition under Section 241 and 242 vis-a-vis SBO, have no applicability in the facts of the case. None of these judgments involve a party which is determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices dated 27th March, 2021 and 12th May, 2021 for requisitioning of the EGM and make proposals thereunder have been issued without even informing the APL Committee. (vii) It is submitted that the appointment of directors in respondent no. 1 company of the M.P. Birla Group was carried out contrary to the terms of the directions of petitioner no. 1. By notice dated 27th March, 2021, the proposal to appoint three new directors which alters the constitution of the Board of Directors by more than 30%, for an NBFC such as respondent no. 1 requires prior approval of the RBI. This is an absolute case of mismanagement as the opposing respondents tried to circumvent the law. The reliance on order dated 27th August, 2010 of the Hon'ble High Court is misplaced as the said order has merged into the order dated 23rd August, 2012. (viii) It is the duty of petitioner no. 1 to take steps for preservation and protection of the Estate. This duty has been cast upon petitioner no. 1 by the Hon'ble High Court itself. Petitioner no. 1 has to take steps for protection and preservation of Estate including filing of the instant petition. No separate consent of the Probate Court is required fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the legislative mandate under the old provision that is Section 187C, and the new provision that is Sections 89 and 90 are completely different. Therefore, the contention that PDB did not file such declaration during her lifetime (under the old Act) is inconsequential. (xiii) The learned counsel submitted that this is a classic case of oppression and mismanagement and the opposing respondents seek to deny the proprietary rights of the petitioners in respondent no. 1 and respondent no. 2 companies. Petitioner no. 1 has been continuously writing to respondent no. 2 to act in compliance with law and judgment dated 18th September, 2020. However, the opposing respondents in their undue haste to oppress petitioner no. 1, have not paid any heed to their request. (xiv) It is submitted that the petitioners have a good prima facie case and if the impugned actions are allowed to continue, irreparable injury and continuing harm will be caused to the companies as well as the petitioners. Therefore, the same ought to be stayed. V. CONCLUSIONS DRAWN FROM THE ARGUMENTS (i) So far as the issue of maintainability of the present petition is concerned, this is a complex mixed question of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the appropriate authority. (v) Furthermore, at this stage, the earlier orders and judgments of the Company Law Board and the Hon'ble High Court in relation to proceedings initiated under the Companies Act, 1956 are binding on this Tribunal. (vi) By order dated 25th April, 2005, which was confirmed by the Hon'ble High Court by judgment dated 24th August, 2005, it was held that the Estate was in control of majority shares of the company and the Hon'ble High Court did not order an investigation. The said orders and judgment is claimed to have attained finality. The relevant findings in the judgment dated 25th April, 2005 are extracted hereinbelow: "5. Shri Sundaram, Sr. Advocate appearing for the respondents submitted:.......... There is no dispute that late Mrs. Birla was in control of respondents 1 to 28 and that the Will executed by her is under challenge before the Calcutta High Court.......... In the petition, the petitioners themselves have averred that Shri Lodha is controlling respondents 1 to 28. If it is so, the question of investigation under Section 247(1A) to find out facts about the shares does not arise.........." "8........... In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment dated 10th May, 2013 as well, such findings were reiterated. In these proceedings also both, respondent nos. 1 and 2 were parties along with respondent no. 7 and petitioner no. 2. (ix) All the parties are ad idem that the issues regarding the scope and the extent of the Estate and who will be the ultimate beneficiary of the Estate, is pending before the Hon'ble High Court and therefore, I, Member (Technical) need not delve into the said issue. At this stage, I am bound by the abovementioned orders and judgments of the Company Law Board and the Hon'ble High Court. Most of the documents referred to by the respondents are the same which were also considered in the said judgments and judgment dated 18th September, 2020 and order dated 1st October, 2020 and therefore, they do not require a separate consideration at this stage at least. (x) I have also considered the judgments dated 4th May, 2020 and 22nd April, 2021 of the Hon'ble Calcutta High Court on which heavy reliance is placed by the respondents. The said judgments have to be read in the light of the issues therein before the Hon'ble Calcutta High Court. In both the said judgments, the decision dated 9th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of stay of the decision dated 9th December, 2019 has been passed by the Hon'ble High Court. (f) The decision dated 9th December, 2019 was not the subject matter or considered in the judgment dated 18th September, 2020, 1st October, 2020 and 22nd April, 2021 of the Hon'ble High Court. (g) Previous judgments of the Company Law Board and the Hon'ble High Court have held that the Estate holds the controlling majority shares in the M.P. Birla Group of Companies which inter alia includes respondent nos. 1 and 2. The said judgments are stated to have attained finality. (h) Besides the allegation of oppression and mismanagement, the present case raises a novel issue wherein the registered shareholder and the SBO of shares are at loggerheads. The decisions cited by the parties regarding the locus to maintain an application under Sections 241 and 242 either relate to the old Companies Act, 1956 or do not deal with a case of a SBO. Therefore, this novel issue requires an in-depth consideration and examination in light of the provisions of the Companies Act, 2013. (i) It is also important to recognize the changes brought about by the Companies Act, 2013. The concept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The returns in relation to the said EGM have also been filed with the Registrar of Companies, Kolkata. Respondent no. 2 also has a corporate office in Kolkata. Therefore, my prima facie, view is that this Tribunal has territorial jurisdiction to adjudicate upon the petitions. (n) Substantial contentions have been raised by the parties in regard to the prima facie case for grant of interim relief. The respondents have opposed the grant of interim relief primarily on the plea that respondent no. 2 as the 100% registered shareholder of respondent no. 1 had the absolute and unbridled right to issue the notices dated 27th March, 2021 and 12th May, 2021 and act thereon. The respondents have also questioned the conduct of the Board of Directors of respondent no. 1 in not acting upon the notices of respondent no. 2. (o) The notices dated 27th March, 2021 and 12th May, 2021 are the core battle grounds of the present controversy. The petitioners are aggrieved by the same and claimed that the said notices and the acts thereafter as being unlawful. On the contrary, the respondents claimed that they were well within their rights to issue the said notices and act thereon. (p) It is an undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 company also raises doubts on the bona fides of the actions of respondent no. 2. Mr. Krishna Damani has been a director of respondent no. 1 since 1999. Throughout his acting as a director for over 20 years, no allegation of any misdoing or misutilization has been raised by respondents at all. Such allegations are stated to have now been made against Mr. Krishna Damani by respondent no. 2 only after respondent no. 6 has sought to act in terms of the judgments of the Hon'ble Calcutta High Court and recognition of the APL Committee as the SBO. The proposal to seek such removal immediately after seeking appointment of new directors also demonstrates that the facts of this case and the allegations made against Mr. Krishna Damani are required to be adjudicated upon only after affidavits are filed in this case. (v) The returns filed in relation to the resolutions supposed to have been passed at the EGM held pursuant to the notice dated 27th March, 2021 have not been accepted by the Registrar of Companies recognizing that respondent no. 1 company is having a management dispute. The master data of respondent no. 1 company even as of date reflects the position of directorship and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. Gujarat Bottling Co. Ltd. vs. Coca Cola Company 1995(5) SCC 545. It is well settled that for grant of temporary injunction three factors have to be satisfied which are prima facie case, balance of convenience and irreparable loss. In Dalpat Kumar V/s. Pralhad Singh, AIR 1993 SC 276, Hon'ble Apex Court explained these three factors as follows:- i] There is a serious disputed question to be tried in the court and that on the facts before the court, there is probability of his being entitled to the relief asked for by the applicant; ii] The Court's interference is necessary to protect the party from the species of injury. In other words irreparable injury or danger would ensue before the legal right would be established at trial; and iii] That the comparative hardship or mischief or inconvenience which is likely to occur from withholding the injunction will be greater than the one likely to happen by granting it. Prima facie case does not mean that the plaintiff should have a cent percent case which wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish prima facie case but also the irreparable loss that would be caused in case of denial to grant relief and that the balance of convenience lies in his favour. Thus rationale behind the provision of Order 39 of the Code of Civil Procedure, as laid down by Hon'ble Supreme Court in the case of M. Gurudas and Ors. Vs. Rasaranjan and Ors. - AIR 2006 SC 3275, can be summarized as "While considering an application for injunction, the Court would pass an order thereupon having regard to prima facie, balance of convenience and irreparable injury". Having considered the facts stated in the petitions in details, and all the documents placed before us, including the applications filed by the respondents praying for dismissal of the applications, and having heard all the learned Senior Advocates at length, I have considered and placed all the facts straight in sequence necessary to resolve the whole controversy between the parties. Before proceeding to take a decision as regards interim relief, I was given to understand that my brother Member (Judicial), has decided to dismiss all the petitions. Since I have my different view, I do not concur with him or share his view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for is not granted, and the EGMs are allowed to be held by the concerned respondents with the newly appointed Board members or for removing the existing members, and certain unpalatable decisions are taken which are not in favour of respondent no. 1 company, the whole purpose of the appointment of the APL Committee/petitioner no. 1, by the Hon'ble High Court will become meaningless and frustrated, which would result in further multiplicity of litigation. I would therefore, deem it fit to grant, and grant the interim reliefs to the petitioners in terms of prayers (a), (b) and (d) of the three petitions, namely CP/112/KB/2021, CP/113/KB/2021 and CP/114/KB/2021, till the final disposal of the petitions. In view of the peculiar facts and circumstances, the final hearing of the petitions shall, however, be expedited. **************** [1] Pages 112-115 of the petition [2] Pages 115-117 of the petition [3] Pages 126-161 of the petition [4] Pages 356-380 of the petition [5] Pages 383-402 of the petition [6] Pages 590-629 of the petition [7] 90. Register of significant beneficial owners in a company.- (1) Every individual, who acting alone or together, or through one or more p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition [38] Page 418 of the petition [39] Page 421 of the petition [40] Page 435 of the petition [41] Page 353 of the petition [42] Page 354 of the petition [43] Page 843 of the petition [44] Page 855 of the petition, first paragraph [45] Pages 868-869 of the petition [46] Pages 870-871 of the petition [47] Pages 886-887 of the petition [48] Page 888 of the petition [49] Pages 892-893 of the petition [50] Page 939 of the petition [51] Page 984 of the petition [52] Pages 992-993 of the petition [53] Pages 1047-1061 of the petition [54] 89(2): Every person who holds or acquires a beneficial interest in share of a company shall make a declaration to the company specifying the nature of his interest, particulars of the person in whose name the shares stand registered in the books of the company and such other particulars as may be prescribed. [55] 90(4): Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed. [56] Page 1684 of the petition [57] Page 1704 of the petition [58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting. [80] Page 1062 of the petition [81] Page 1095 of the petition [82] Page 1096 of the petition (first quoted para on that page) [83] Page 1096 of the petition [84] Page 1097 of the petition [85] Page 1105 (8th line from the top and last two lines at the bottom of the page) [86] Page 1105 (8th line from the top and last two lines at the bottom of the page) [87] Page 840-999 of the petition [88] Page 239 of CA No. 85/KB/2021 [89] Page 240 of CA No. 85/KB/2021 (middle of the page) [90] Page 240 of CA No. 85/KB/2021 (five lines from the bottom) [91] Page 51 of the petition [92] Page 53 of the petition [93] Pages 52-53 of the petition [94] Pages 1062-1109 of the petition [95] Pages 52-53 of the petition [96] Page 25 of the petition [97] Page 26 of the petition [98] Page 73 of the petition [99] Page 31, para 3 of the petition [100] 2(55). "Member," in relation to a company, means - (i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. [103] 244. Right to apply under section 241.- (1) The following members of a company shall have the right to apply under section 241, namely:-- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of CA No. 82/KB/2021 [142] Page 275 of CA No. 82/KB/2021 [143] Page 1062 of the petition [144] Page 1095 of the petition [145] Pages 60-61 of the petition [146] Page 1096 of the petition [147] Page 1097 of the petition [148] Pages 1101-1102 of the petition [149] Page 1105 of the petition [150] Page 237 of CA No. 82/KB/2021-para 159. Also see paras 160, 274 and 276. [151] Page 60 of CA No. 82/KB/2021 [152] Page 143 of CA No. 82/KB/2021 [153] Pages 840-1000 of the petition [154] Page 855 of the petition [155] Page 1990 of the petition [156] Page 1612 of the petition [157] Page 1613 of the petition [158] Page 1613 of the petition [159] Page 1614 of the petition [160] Page 1610 of the petition [161] Page 91 of the petition [162] Minutes at page 1990 of the petition [163] Pages 112 & 114 of the petition [164] Page 2006 of the petition [165] Page 2008 of the petition, item (5) [166] Page 2008 of the petition [167] Page 1647 of the petition [168] Page 1649 of the petition [169] Page 112 of the petition [170] Page 275 of CA 90/KB/2021 [171] Page 239 of CA No. 90/KB/2021 [172] Page 122 of the petition [173] Page 1500 of the petition (also page 1646) [174] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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