Share transmission on death and composite oppression petition held maintainable for heirs under the Companies Act.

Heirs of a deceased shareholder whose title to shares had devolved by operation of law, and whose transmission had not been refused by the company, were treated as members for maintainability under sections 397 and 398 of the Companies Act. The absence of registration under section 108 did not defeat their pre-existing beneficial title where they had obtained the succession certificate and the necessary permission. A composite petition under sections 397, 398 and 433 was also held maintainable because relief under section 397 is linked to the just-and-equitable winding-up ground under section 433, and a prior Division Bench view supporting such joinder was followed. The preliminary objection therefore failed.

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Issues: (i) Whether the heirs of a deceased shareholder, whose title to the shares had devolved by operation of law and whose transmission had not been refused by the company, could maintain a petition under sections 397 and 398 of the Companies Act; (ii) Whether a composite petition under sections 397, 398 and 433 of the Companies Act was maintainable.

Issue (i): Whether the heirs of a deceased shareholder, whose title to the shares had devolved by operation of law and whose transmission had not been refused by the company, could maintain a petition under sections 397 and 398 of the Companies Act.

Analysis: Transmission of shares on death operates by succession and vests the beneficial ownership in the heirs from the moment of death. The requirement of registration under section 108 does not defeat that pre-existing title where the company has not refused transmission. The petitioners had obtained the succession certificate and the necessary reserve bank permission, and their title to the deceased shareholder's holding was treated as perfected for the purpose of membership under sections 397 and 398. The authorities relied upon by the objecting respondent were distinguished on facts, as they dealt with outright refusal of registration or materially different situations.

Conclusion: The objection to maintainability on the ground that the petitioners were not registered members was rejected. The petition was maintainable by the heirs of the deceased shareholder.

Issue (ii): Whether a composite petition under sections 397, 398 and 433 of the Companies Act was maintainable.

Analysis: Relief under section 397 is linked to the statutory requirement that the company's affairs must be such that it would be just and equitable to wind up the company, which in turn connects with the grounds specified in section 433. A prior Division Bench decision of the same court had upheld the maintainability of such a composite petition, and that view was followed. The contrary authority cited was distinguished and not accepted as governing the facts of the case.

Conclusion: The composite petition was held maintainable.

Final Conclusion: The preliminary objection failed, the petition was allowed to proceed, and evidence was directed to be recorded on the merits of the oppression and mismanagement allegations.

Ratio Decidendi: Where title to shares has devolved by operation of law on the death of a shareholder and the company has not refused transmission, the heirs may be treated as members for the purpose of maintainability under sections 397 and 398, and a composite petition invoking sections 397, 398 and 433 is maintainable where the statutory conditions are otherwise satisfied.

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