2003 (12) TMI 440 - HC - Companies Law

Legal heir's standing to object permit transfer upheld, injunction lifted, emphasizing due process.

Drivers Conductors Bus Service (P.) Ltd. Versus Regional Transport Authority

The court concluded that the third respondent, as a legal heir with a stake in the company, had the standing to object to the permit transfer. As a ... Transfer of permit Issues Involved:1. Legitimacy of the deponent's claim as managing director.2. Validity of the transfer of permit decision by the board of directors.3. Locus standi of the third respondent to object to the transfer of permit.4. Applicability of Section 82(1) of the Motor Vehicles Act, 1988.5. Role of legal heirs in the transfer of permits under the Motor Vehicles Act.Issue-Wise Detailed Analysis:1. Legitimacy of the deponent's claim as managing director:The deponent, Mr. S. Rasool, claimed to have become the managing director after the death of the previous managing director, Mr. S.R. Subramaniam, on December 11, 2000. This claim was contested by the third respondent, who argued that the deponent self-styled himself as the managing director without legal authority. The Company Law Board had directed maintaining the status quo regarding the permit transfer, indicating ongoing disputes about the deponent's legitimacy as managing director.2. Validity of the transfer of permit decision by the board of directors:The board of directors of the petitioner company decided by majority to transfer the stage carriage permit to the second respondent due to financial crises. However, the third respondent and other directors opposed this decision, arguing that no proper resolution was passed authorizing the transfer. The court noted the dispute over the board's decision and the lack of unanimity in the decision-making process.3. Locus standi of the third respondent to object to the transfer of permit:The third respondent, daughter of the deceased managing director S.R. Subramaniam, claimed a right to object to the transfer of the permit. The petitioner argued that under Section 82(1) of the Motor Vehicles Act, only the transferor and transferee are entitled to notice and hearing, not third parties. However, the court found that since the permit was in the company's name and not an individual's, the third respondent, as a legal heir with a potential interest in the company, had the locus standi to object.4. Applicability of Section 82(1) of the Motor Vehicles Act, 1988:Section 82(1) stipulates that a permit transfer requires the permission of the transport authority and involves an inquiry to ensure no trafficking in permits and the transferee's qualification. The court noted that while Section 82(1) typically involves only the transferor and transferee, in this case, the third respondent's objections were valid due to her legal interest in the company's assets.5. Role of legal heirs in the transfer of permits under the Motor Vehicles Act:The court referenced the Supreme Court's decision in World Wide Agencies (P.) Ltd. v. Mrs. Margaret T. Desor, which recognized the rights of legal heirs to maintain applications under Sections 397 and 398 of the Companies Act. Applying this principle, the court held that the third respondent, as a legal heir of S.R. Subramaniam, had devolved rights over the permit and could object to its transfer.Conclusion:The court concluded that the third respondent had the locus standi to object to the permit transfer due to her legal interest as a shareholder's heir. Consequently, the writ petition was dismissed, and the interim injunction restraining the Regional Transport Authority from hearing the third respondent was vacated. The court emphasized the necessity of considering the third respondent's objections in the permit transfer inquiry.