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        Companies Law

        2020 (5) TMI 153 - HC - Companies Law

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        Appellants succeed in appeal due to lack of jurisdiction and reasons in probate court orders. The appeals were allowed as the appellants, being bound by the orders and facing potential contempt, were considered 'persons aggrieved.' The probate ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                        Provisions expressly mentioned in the judgment/order text.

                            Appellants succeed in appeal due to lack of jurisdiction and reasons in probate court orders.

                            The appeals were allowed as the appellants, being bound by the orders and facing potential contempt, were considered "persons aggrieved." The probate court was found to lack jurisdiction in interfering with company AGMs, leading to the set-aside of orders due to lack of reasons. The court emphasized the necessity of reasons in orders affecting third parties. The balance of convenience favored the appellants, directing the matter to be reheard, clarifying that the findings were solely for the appeal determination. A stay request by respondents was denied.




                            Issues Involved:
                            1. Person aggrieved and the appellant’s right to maintain the appeals.
                            2. Jurisdiction of the probate court.
                            3. Requirement of reasons in ex parte ad-interim orders.
                            4. Balance of convenience.

                            Issue-wise Detailed Analysis:

                            a) Person aggrieved and the appellant’s right to maintain the appeals:
                            The respondents argued that the appellants were not "persons aggrieved" as they were not wrongfully deprived of any rights. However, the court found that since the appellants were bound by the orders and could be held in contempt for violating them, they were indeed "persons aggrieved" and thus entitled to file and maintain their appeals.

                            b) Jurisdiction:
                            The court examined whether the probate court had jurisdiction to interfere with the AGMs of companies where the deceased held shares. The court noted that the issue of inherent lack of jurisdiction should have been decided at the threshold. The probate court's jurisdiction is limited to deciding the genuineness of the will and does not extend to interfering with the functioning of companies. The court concluded that the probate court erred in passing orders without first deciding on its jurisdiction.

                            c) Reasons to be contained in ex parte ad-interim orders/ad-interim orders:
                            The court emphasized that reasons are mandatory in ex parte ad-interim orders, especially when they affect third parties. The orders dated 2nd August 2019, 5th August 2019, and 9th August 2019 were found to be lacking in reasons. The court held that a judge of a Chartered High Court does not have the privilege of not assigning reasons while passing such orders. The absence of reasons rendered the orders unsustainable.

                            d) On conveniences:
                            The court highlighted that the estate of the deceased is protected by an Administrator pendente lite and that a shareholder is not the owner of the company's assets. Interference with the AGMs of companies was deemed uncalled for without first deciding the jurisdiction. The court found that the balance of convenience did not favor the respondents and that the probate court should have first decided on its jurisdiction before passing any orders affecting the companies.

                            Conclusion:
                            1. The orders dated 2nd August 2019, 5th August 2019, and 9th August 2019 were set aside due to the probate court's failure to first decide on its jurisdiction and the lack of reasons in the orders.
                            2. The appeals were allowed, and the learned Single Judge was directed to hear the matter on all issues, giving the appellants an opportunity to present their cases.
                            3. The court clarified that its findings were only for the purpose of deciding the appeals and should not influence the learned Single Judge's decision.

                            Later:
                            A prayer for stay of the operation of the order was made by the respondents and was rejected by the court.
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                            ActsIncome Tax
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