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Issues: Whether a petition under sections 397 and 398 of the Companies Act, 1956 filed by the legal heirs of a deceased shareholder could be rejected at the threshold for want of registration of their names as members and for alleged non-compliance with section 399.
Analysis: For deciding a preliminary objection of this nature, only the averments in the petition and the jurisdictional facts relevant to section 399 could be examined. The dispute as to transmission, the alleged will, the pending succession proceedings, and other contested factual matters could not be relied upon to defeat the petition at the demurrer stage. The pleadings disclosed that the petitioners claimed entitlement to a substantial part of the deceased shareholder's holdings, which on the face of the petition satisfied the qualifying shareholding requirement. The position that legal representatives of a deceased shareholder may maintain proceedings under sections 397 and 398 was recognised, and the subsequent emergence of a disputed will did not negate maintainability on the date of filing.
Conclusion: The petition was maintainable and could not be dismissed preliminarily on the ground of section 399.
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