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TMI Blog2024 (1) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... the importance of a valid Succession Certificate in a matter where the Applicant was seeking transmission of shares under Section 58 of the Act. In this matter this Tribunal upheld the refusal to direct transmission of shares even though a Succession certificate was issued, the same was under challenge. There are force in the contention of the Learned Counsel for the Appellant that considering the same ratio, the prayer of the first Respondent herein seeking transmission of Shares without even obtaining a Succession Certificate, cannot be sustained. A Company cannot refuse `Transmission of Shares , once the `legal heirs proves his/her entitlement to them, through a `Probate , a `Succession Certificate . It is to be pointed out that `transfer is an act of parties or law by which the title to the party is conveyed from one person to another. This would lapse by `Operation of Law or `Succession . `Transmission of Shares on the basis of `will can raise complicated issues which require an `evidence , to be read by the parties and need to be determined by a Court of Law. The Succession Certificate, specifies the debts and securities entitles a legal heirs not only to receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his name by issuing a Demand Notice to the Appellant dated 01.11.2021. It is submitted that there are three Legal heirs: the first being Mrs. Kusum Gupta, his wife, the second being the eldest son, Mr. Alkesh Gupta and Mr. Kushal Gupta, the second son. It is submitted that the Respondent had issued the Notice without intimating the other legal heirs and subsequently approached the NCLT by way of C.P. No. 138/2022 filed under Section 58 of the Companies Act 2013, (hereinafter referred to as the Act ) seeking transmission of the shares of Mr. Arun Gupta in proportion to his stated entitlement as a Legal heir, in his name. 3. It is argued that such transmission can only be done following the proper procedure and submitting the necessary documents namely, a. Original share certificate, b. Certified copy of death certificate and Legal heirship certificate. Succession Certificate d. Probate e. Specimen signature of the Successor etc. It is submitted that the NCLT has ordered the transmission of the shares without such necessary documentation, which is erroneous. Clauses 8.14 and 8.15 of the Articles of Association of the Appellant Company read as hereunder: 8.14 On the death ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parting with the case, this Tribunal makes it abundantly quite clear that the dismissal , of Comp. App (AT) (CH) No.76/2023, will not preclude the Appellant , to file necessary Interlocutory Application , before the National Company Law Tribunal , Chennai Bench and to recall the Impugned Order in CP/138/(CHE)/2022 on the file of the Tribunal . Since, the Appellant, has come out with a plea that the Impugned Order was passed and leaving behind one of the legal heirs Mr. Kushal Gupta of Mr. Arun Gupta, who died on 22.1 1.2020 and if the said Application is filed, within one week from Today , before the Registry , after scrutiny 1s to number the same and the said Application shall be disposed of, by hearing Petitioner / Appellant as well as the Respondent . Because of the fact, that the fraud alleged by the Petitioner / Appellant , the said Order shall be passed, within two weeks thereafter. The Learned Counsels are permitted to raise before this Tribunal and this Tribunal , by taking into consideration the pleas, averments made in this regard, pass a reasoned / speaking Order, of course, uninfluenced and untrammelled by any of the observations mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that in cases where there is no valid will, by operation of law, no Succession or Probate is required. Assessment : 9. At the Outset, this Tribunal finds it relevant to reproduce Section 44 of the Companies Act, 2013 which reads as hereunder: Section 44 : 44. Nature of shares or debentures. The shares or debentures or other interest of any member in a company shall be movable property transferable in the manner provided by the articles of the company. (Emphasis Supplied) 10. It is seen from the aforenoted Section that shares are construed as movable property governed by the Articles of Association of the Company and Article 8.15 mandates that a Succession Certificate is required for the transmission of the shares. When Section 44 of the Act provides that shares of any member in a Company are required to be transferred in the mode and manner provided for under the Articles of Association of the Company, the sole Respondent is bound to meet the requirements of the said article 8.15. The Judgment relied upon by the Learned Counsel for the Respondent in C.P. No. 1243/KB/2020 NCLT Kolkata Bench Order dated 20.02.2023, is not applicable to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticles of Association of the Appellant Company, is required for the transmission of shares of the deceased Member. 13. A Company cannot refuse `Transmission of Shares , once the `legal heirs proves his/her entitlement to them, through a `Probate , a `Succession Certificate . It is to be pointed out that `transfer is an act of parties or law by which the title to the party is conveyed from one person to another. This would lapse by `Operation of Law or `Succession . `Transmission of Shares on the basis of `will can raise complicated issues which require an `evidence , to be read by the parties and need to be determined by a Court of Law. 14. It is needless for this `Tribunal to make a mention that a `will is probated by a `Competent Court is binding on the parties, unless it is set aside by a `Competent Forum . If the `Probate Proceedings are pending in a `Civil Court , then the `Petition under the `Companies Act for `rectification of register would not be maintainable. Where there is a dispute as to the heirship of a `deceased shareholder , the Company could refuse `transfer of shares , until such dispute is resolved by a `Competent Court of Law . 15. The `Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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