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TMI Blog2022 (12) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant alone is the legal heir and therefore the shares had to be transmitted only to the heir as shown in the Succession Certificate as on the date of the Impugned Order. Instead NCLT had given Notice to the Rival Claimant Smt. K. Sumathi only because there was a collusion between the said Smt. K. Sumathi and the Respondent Company. Having regard to the Order in K. SUMATHI, S. UMAMAHESWARI VERSUS NALINI HARI, UMAMANI VIJAY SWAMI RAO, R.K. SHANKAR, R.K. CHANDRASHEKAR [ 2022 (3) TMI 1450 - MADRAS HIGH COURT] , whereby the Hon ble Madras High Court has condoned the delay and the Order issuing Succession Certificate dated 28.05.2019, is under challenge, we are of the considered view that the decision regarding transmission of shares by the Respondent Company and the Rival Claims ought to be decided subject to the Order of the Hon ble Madras High Court. This Tribunal does not find the Judgements relied upon by the Appellant, applicable to the facts of the attendant case - appeal dismissed. - COMPANY APPEAL (AT) (CH) NO. 55 of 2021 & I.A. Nos. 630 & 631/2021 - - - Dated:- 5-12-2022 - [Justice M. Venugopal] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Order, NCLT has disposed of the Company Petition with the following directions: 7. In the above facts and circumstances of the case, and the matter involve rival claim, it would be just and proper to dispose of C.P.No.18/BB/2021, with the following directions: i. Executor (K. Dushyantha Kumar) is directed to issue notice to the rival claimant namely Smt. K. Sumathi Ors., by granting six weeks' time to get necessary clarification or review order of the Succession Certificate dated 28.05.2019 granted in O.P.No.1118 of 2018, duly impleading the Petitioner herein, as Respondent, from Competent Court of law. ii. In case, the rival claimant's failed to get any order within above period, the Company as well as the Executor are directed to take appropriate action basing on the Succession Certificate dated 28.05.2019 to give effect to transmission of shares held by deceased shareholders in the Company, in favour of the Petitioner, with all consequential benefits, within a period of four (4) weeks thereafter. iii. The Petitioner is directed to submit necessary documents as sought for by the Company and the Executor. iv. The Registry is directed to forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , some of whom are also legal heirs of the deceased. Accordingly, even though the board had the power to call for documents as per article 33, yet in the instant case, considering the facts and circumstances of the case, we are of the view that the company should have waived the requirement of production of these two documents. As far as the second ground taken by the company is concerned that the petitioner is disqualified to be a member (since he ceased to be a member on expropriation of shares held by him earlier) on account of his running a competing business, even though the respondent has produced various documents to establish this fact of his running a rival business, we do not propose to go into the same for the reasons that the matter is already under appeal. As we have already pointed out, the power to refuse transfer/transmission should be exercised in accordance with the articles. Articles 25 and 26 deal with shares held by a member who is running a competing business. While as per article 25, the company would acquire the shares of such members, article 26 provides for expropriation. We have already pointed out that we are not going into the validity of these articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal heir for the shares in question and there is no other claimant for the said shares, the company ought to have effected the transmission of shares on the basis of Succession Certificate produced. Accordingly, in pursuance of sub-section (5) of section 111, the respondent-company is hereby directed to effect the transmission of 50 equity shares standing in the name of Dr. Kewalram Banirm Israni at the time of his death and various bonus shares, dividends and rights accrued from time to time on the said shares in the name of the appellant on the basis of Succession Certificate produced within 10 days from the date of receipt of this order. Learned Counsel for the Appellant placed reliance in the Judgement of the Hon ble Supreme Court in Jai Mahal Hotels Pvt. Ltd. Vs. Devraj Singh (2016) 1 SCC 423, wherein it is observed as follows: 20. In the present case, as already observed, there is no real dispute between the parties. DR Group followed the due procedure. It had the succession certificate in its favour apart from the transfer deed from GD, who admittedly inherited rights from LMJS. The will in favour of GD is beyond any dispute. Thus, DR Group derived rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Succession Certificate is under challenge, the Appellant cannot rely on the said Succession Certificate for claiming the transmission of shares in the present case. Learned Counsel denied that there was any collusion between the Respondent Company and Ms. K. Sumathi and contended that the said allegations are without any proof and the fact that Ms. K. Sumathi was not added as a Respondent in the Company Petition, is only a motivated attempt to protect the Appellant from any litigation. It is submitted that the Respondent Company neither supports the Appellant nor Ms. K. Sumathi and is only duty bound to examine the case in accordance with law. It is argued that the Respondent Company is relying on the Will as an additional factor to exhibit the rival claims since the Will expressly states that Ms. K. Sumathi is the wife of the testator. The Learned Counsel placed reliance on the Judgement of the Hon ble Supreme Court in G. Ganesan Vs. P. Sundari 2011 (2) CTC 435 , wherein it is observed as follows: It is submitted that this Hon'ble Tribunal was misled on the legal position during the arguments on 01.11.2022 that the will cannot be taken into account b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lodging Claim for the transmission of the same 15,419/- shares held by her father, with a request not to entertain any Claim from any person other than the children of late Mr. R. Kapanipathi Rao. 7. A perusal of the material on record shows that the Respondent Company had received various letters of communication from both Smt. K. Sumathi and Ms. Nalini Hari in respect of the shares held by late Mr. R. Kapanipathi Rao. It is the main case of the Appellant that the NCLT has erroneously given time for Smt. K. Sumathi to obtain clarification regarding the Succession Certificate issued by the Hon ble Madras High Court on 25.08.2019, as essentially the date on which NCLT has decided the matter, the Succession Certificate of the Appellant was subsisting which evidence that the Appellant alone is the legal heir and therefore the shares had to be transmitted only to the heir as shown in the Succession Certificate as on the date of the Impugned Order. Instead NCLT had given Notice to the Rival Claimant Smt. K. Sumathi only because there was a collusion between the said Smt. K. Sumathi and the Respondent Company. 8. This Tribunal is conscious of the fact that Smt. K. Sumathi is in po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that the Petitioner had obtained the Succession Certificate from the Trial Court by misrepresentation and concealing the material facts and directed her to redeposit the amount. In the instant case, though, the Appellant has not misrepresented regarding her status as a daughter of the late Mr. R. Kapanipathi Rao, the fact remains that Smt. K. Sumathi was never made a party to the Petition. At the cost of repetition, the said Smt. K. Sumathi is in possession of the Will and the Original Share Certificates. 10. It is pertinent to mention that the said Smt. K. Sumathi has not been made a party in the Original Petition CP No. 18/PB/2021, wherein the Appellant had sought inter alia for a direction for transmission of shares in her name, held by her father. The communication addressed by both Smt. Nalini Hari and Smt. K. Sumathi to the Respondent Company is filed before the Tribunal. Be that as it may, the said Smt. K. Sumathi has filed an Application before the Hon ble Madras High Court seeking to revoke the Order dated 28.05.2019 passed in OP No. 1118/2018. An Application A. No. 3640/2021 in OP No. 1118/2018 was filed seeking condonation of delay, which was condoned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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