Company must transfer shares to deceased's daughter as per Will conditions. Directors lack standing to oppose.

The Tribunal ordered the transmission of 45,000 equity shares to the deceased's daughter, as the company wrongly refused based on Will conditions. The interpretation of the Will was deemed irrelevant to the transmission process under the Companies Act. The Tribunal dismissed the influence of a family settlement on the transmission decision, stating it was not within its jurisdiction. The directors lacked standing to oppose the transmission, leading to a cost imposition on them. The NCLT's decision was upheld, directing the transmission of shares to the daughter within thirty days, and both appeals were dismissed.

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Issues Involved:

1. Transmission of Shares
2. Interpretation of Will
3. Applicability of Family Settlement
4. Locus Standi of Appellants

Summary:

Transmission of Shares:

The primary issue was whether the 45,000 equity shares held by the deceased Shri Gagan Parasher should be transmitted to his daughter, Kaashvi Parasher, as per her intimation under section 56(2) of the Companies Act, 2013. The company refused the transmission based on the conditions in the deceased's Will, which stipulated that Kaashvi Parasher could not sell or alienate the shares and that the company would buy them back within five years. The Tribunal held that the company was wrong in refusing the transmission and should have registered the shares in Kaashvi's name, as the intimation was for transmission, not transfer, and the other legal heirs had provided 'no objection' for the transmission.

Interpretation of Will:

The company argued that the Will's conditions prevented the transmission of shares. However, the Tribunal clarified that the interpretation of the Will was not relevant to the transmission process under section 56 of the Companies Act. The issue of any third-party interest created by the Will should be decided by a court of appropriate jurisdiction, not by the NCLT during the transmission process.

Applicability of Family Settlement:

The appellants contended that a family settlement dated 26.2.2022 should influence the transmission decision. The Tribunal dismissed this argument, stating that the settlement was not relevant when considering a letter of intimation under section 56 of the Companies Act. The NCLT does not have the jurisdiction to consider family settlements in such matters.

Locus Standi of Appellants:

The Tribunal found that the directors, Gunjan Sharma and Abhinav Goyal, who filed the appeal, did not have the locus standi to oppose the transmission application. Their involvement was deemed an abuse of the process of law, causing unnecessary delay and hardship to Kaashvi Parasher. The Tribunal imposed a cost of Rupees One Lakh and Fifty Thousand each on the appellants, to be paid to Kaashvi Parasher as litigation costs.

Conclusion:

The Tribunal upheld the NCLT's decision to quash the company's communication dated 22.2.2021 and directed the transmission of shares to Kaashvi Parasher within thirty days. Both appeals were dismissed for lack of merit.

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