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TMI Blog2023 (9) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... permission of shares on a specious and legally unsustainable plea and so the company asks Kaashvi Parasher to withdraw the intimation letter, as she is not entitled for transfer of shares as per the last Will of Shri Gagan Parasher. The Learned Counsel for Appellants had emphasised on the condition regarding sale of said shares back to the company which is included in the Last Will of Shri Gagan Parasher to claim that Kaashvi Parasher is not entitled to transmission or transfer of the said shares - there was no need for the Company to have interpreted or acted upon the provisions included in the Will of Shri Gagan Parasher, since the intimation under section 56 of the Companies Act was merely about transmission of said shares and not about execution of Shri Gagan Parasher s Will. In such a situation, it was not only undesirable, but also unlawful for the Company to have refused transmission of said shares when other Class-I legal heirs of Shri Gagan Parasher had given explicit no objection for transmission of the said shares in favour of Kaashvi Parasher. These no objections were submitted by Kaashvi Parasher along with letter of intimation to the Appellant Company. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing large revenue from infrastructure projects being carried out by the Company. Shri Gagan Parasher, the elder brother, owned 45000 equity shares in the Appellant Company, while Shri Gunjan Sharma owned the rest of equity shares in the total shareholding of the company. Shri Gagan Parasher passed away on 25.04.2020, leaving a Will whereby he bequeathed his entire shareholding of 45000 equity shares in the Appellant company to his younger daughter Kaashvi Parasher, who is Respondent No. 1 in Company Appeal (AT) No. 148 of 2023. 3. It is stated by the Appellant that Shri Gagan Parasher and his wife had matrimonial issues which resulted in divorce decree dated 11.7.2018 between them, and subsequently Smt. Priti Parasher, his former wife started living separately with her elder daughter Kashish Parasher. After Shri Gagan Parasher s death, his younger daughter Kaashvi Parasher sent a letter dated 27.1.2021 addressed to the Board of Directors of Shanivi Constructions Pvt. Ltd. for transmission of 45,000 equity shares held in the Appellant company by late Shri Gagan Parasher to her. In view of the fact that the Will of Shri Gagan Parasher, by which he had bequeathed his 45000 shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arasher and they obtained divorce in the year 2018. He has further submitted that, in view of the fact that the Company was doing quite well in its line of business, the elder brother Gagan Parasher thought it fit to make a Will dated 6.1.2017, whereby among other stipulations, Kaashvi Parasher was designated as the sole inheritor of his shares in the Appellant Company with an added condition that Kaashvi Parasher would have no right to sell or alienate the said shares and the Company would pay the amount equivalent to his shareholding within five years of his death and only in the condition if the company fails to purchase the said shares within five years, Kaashvi Parasher shall have full right to dispose of the shares in the open market. 7. The Learned Counsel for Appellants has further argued that after the demise of Shri Gagan Parasher, a settlement was reached between Smt. Priti Parasher, elder daughter Kashish Parasher, younger daughter Kaashvi Parasher and their uncle Gunjan Sharma whereby a family settlement was worked out and it was agreed that in accordance with this settlement, a major part of expenses relating to the education of Kaashvi Parasher shall be by borne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has further submitted that after the death of Shri Gagan Parasher, his former wife Priti Parasher and daughters Kashish Parasher and Kaashvi Parasher are legal heirs and since the Priti Parasher and Kashish Parasher have given a no objection, the said request sent by Kaashvi Parasher vide letter dated 27.1.20212 should have been acceded to by the Appellant Company. 11. The Learned Counsel for Respondent Kaashvi Parasher has also pointed out that that the requested transmission is in accordance with Kaashvi s inheritance as legal heir of the deceased Gagan Parasher in view of the no objection given by her mother and sister Kashish. He has, thus, argued that there was no reason that, after looking at the no objection given by the two other legal heirs namely, Smt. Priti Parasher and Ms. Kashish Parasher, the Company should have accepted the application and allowed transmission of the said shares. He has also argued that the uncle Mr. Gunjan Sharma, who is controlling the Company presently is coming in the way of the Respondent Kaashvi Parasher in getting lawful dues as her right. 12. The Learned Counsel for Respondent has further argued that the conditionality put in the W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed with cost. 15. We first notice section 56 of the Companies Act, 2013, which is regarding transfer and transmission of securities of a company. This provision is reproduced below for ready reference:- 56. Transfer and transmission of securities. (1) A company shall not register a transfer of securities of the company, or the interest of a member in the company in the case of a company having no share capital, other than the transfer between persons both of whose names are entered as holders of beneficial interest in the records of a depository, unless a proper instrument of transfer, in such form a may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee has been delivered to the company by the transferor or the transferee within a period of sixty days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities: Provided that where the instrument of transfer has been lost or the instrument of transfer has not been delivered withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pees. (7) Without prejudice to any liability under the Depositories Act, 1996, where any depository or depository participant, with an intention to defraud a person, has transferred shares, it shall be liable under section 447. 16. Further, section 68(2) of the Companies Act, 2013 which is the provision regarding power of a company to purchase its own securities is also reproduced below for ease of reference:- 68. Power of company to purchase its own securities xx xx xx xx (2) No company shall purchase its own shares or other specified securities under sub-section (1), unless (a) the buy-back is authorised by its articles; (b) a special resolution has been passed at a general meeting of the company authorising the buy-back: Provided that nothing contained in this clause shall apply to a case where (i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free reserves of the company; and (ii) such buy-back has been authorised by the Board by means of a resolution passed at its meeting; (c) the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and free reserves of the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave full right to dispose off the shares in open market. My elder daughter Kashish Parasher my wife Priti shall not be entitled to any share from any properties. In view of the above, I have been requesting for the transmission of shares held by my father Late Shri. Gagan Parasher to me and enter my name as a member in the register of the company. Despite repeated correspondence with respect to effecting transmission of the said shares, with Shri Gunjan Sharma, one of the director of the company, who also is my uncle, no action thereof has been taken so far by the company or any of its directors. I am herewith making this application to the Company to effectuate a legal transmission of shares to my name within a month of receipt of this intimation as per provisions of clause (c) of Sub section (4) of Section 56 of the Companies Act, 2013. I hereby agree to accept and hold the said shares in my name and also agree to be registered as a member in the Register of Members of the Company as per the memorandum and Articles of the Company and abide by the terms stipulated by my father late Shri. Gagan Parasher. In addition of the above, I hereby submit the following doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 56 of the Companies Act, 2013 for transmission of such securities/shares in her/his name. 20. The present case is a case of transmission of shares to the daughter of deceased Shri Gagan Parasher, as is clear and evident from the letter of intimation dated 27.1.2021 sent by Kaashvi Parasher to the Company. Clause (c) of sub-section (4) of section 56 stipulates that within one month from the date of receipt of intimation of transmission, the company shall deliver the certificates of the relevant securities to the concerned person. We further notice from the reply dated 22.2.2021 sent by the Company through its authorised signatory Abhinav Goyal that rather than considering the intimation to be for transmission of such shares, the company goes on a completely different track and states in reply that Kaashvi Parasher is not entitled for transfer of shares belonging to Sh. Gagan Parasher Ex-Director of Company in view of Last Will of Sh. Gagan Parasher. The reply further goes on to discuss the various clauses of the Will and infers and states that Kaashvi Parasher is only entitled to receive the value of such shares and, therefore, not entitled to transmission of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) is also not applicable in the present case, since that case related to transfer of shareholding of one party to other as per valuation report, and in that context, the Tribunal felt that the interest of the Company was paramount. On the contrary, in the present case, the issue is regarding transmission of shares in accordance with legal right of a party and the working of the Company is not an issue under consideration. 23. The Learned Counsel for Appellant has also cited the judgment of Hon ble Supreme Court in the matter of Navneet Lal Alias Rangi vs. Gokul and Others [1976 SCC (1) 630], wherein Hon ble Supreme Court has laid down the principles of interpretation of Wills. While noting this judgment of Hon ble Supreme Court, we find that distinguishable for the reason that the present matter involves the issue of transmission of shares held by a father to a legal heir and the issue of interpretation of Will does not lie in the present case. 24. We also consider the argument of the Learned Counsel for Appellants that a settlement dated 26.2.2022 was entered into by Kaashvi Parasher, Kashish Parasher, their mother Priti Parasher and uncle Gagan Sharma. We are of ..... 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