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Issues: Whether the legal heirs of a deceased shareholder could be substituted in an oppression and mismanagement proceeding under the Companies Act, 2013, even though one of them had later transferred the inherited shares and was no longer a member of the company.
Analysis: The proceeding was treated as representative in character. On the death of a member, the estate and associated rights in the shares vest in the legal representatives, and Rule 53 of the National Company Law Tribunal Rules, 2016 permits substitution of the deceased party by the legal representative. The absence of continuing membership in the company did not, by itself, bar substitution, because there is no rule requiring a legal representative to become a member before coming on record in pending proceedings. The objection based on subsequent transfer of shares was rejected, since the substitution was sought to continue the existing proceeding and the maintainability of the original action was judged in the context of the pending proceedings.
Conclusion: The legal heirs were entitled to be substituted, and the objection that one heir had ceased to be a member after transfer of shares did not defeat the substitution application.
Final Conclusion: The appeal failed, and the substitution order was sustained, leaving the parties free to raise their factual and legal pleas in the pending company petition in accordance with law.
Ratio Decidendi: In a pending oppression and mismanagement proceeding, the legal representatives of a deceased member may be brought on record to continue the litigation, and such substitution is not defeated merely because a legal representative has subsequently ceased to be a member by transfer of inherited shares.
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