Deceased's shares in two companies must be divided equally among three children per will

Delhi HC upheld CLB's decision regarding division of deceased's shares among three children. Court found 100 shares in Vantage Construction (P) Ltd and 5 shares in Earl Chawla Company (P) Ltd constituted movable property under testator's will, requiring equal division. CLB's cancellation of 9800 shares allotted to one heir was affirmed, finding the allotment was made without valid board meeting and behind other heirs' backs. Court rejected appellant's challenge, noting deceased had acknowledged other heirs' 1/3rd entitlement but sought compensation for alleged losses. Appeal dismissed as CLB's judgment showed no patent illegality or perversity.

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Issues Involved:

1. Interpretation of the Will dated 04.07.1986 regarding the inclusion of shares as part of the estate.

2. Jurisdiction of the Company Law Board (CLB) u/s 111 of the Companies Act, 1956 to cancel the allotment of shares.

Summary:

1. Interpretation of the Will:

The appellants challenged the CLB's conclusion that the shares held by the deceased testatrix were included within the meaning and scope of the "movable properties" in the Will dated 04.07.1986. The CLB directed equal division (1/3rd each) of the shares among the three children of the testator. The High Court upheld the CLB's interpretation, noting that the Will bequeathed all movable and immovable properties equally among the three children. The Court found no merit in the appellants' argument that the shares were not part of the estate, as the testatrix's wealth tax returns reflected the shareholdings, and there was no challenge to the Will's validity by HPSC.

2. Jurisdiction of CLB to Cancel Allotment of Shares:

The appellants argued that the CLB committed a jurisdictional error by cancelling the allotment of 9800 shares in a summary proceeding u/s 111 of the Act. The High Court dismissed this argument, stating that the CLB has the jurisdiction to rectify the register of members if there is a wrong entry without holding a valid meeting. The Court found that HPSC unilaterally allotted shares to himself without proper authorization, which was invalid and without sufficient cause. The High Court directed the appellant company to comply with the CLB's order to rectify the register and delete the invalid allotments.

Conclusion:

The High Court dismissed the appeals, upholding the CLB's interpretation of the Will and its jurisdiction to cancel the allotment of shares. The Court directed the appellant company to comply with the CLB's orders and imposed exemplary costs on the appellants for prolonging the litigation with unsubstantiated claims.

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