2024 (8) TMI 26 - AT - Companies Law

Legal heirs cannot claim rights to shares voluntarily transferred by deceased predecessor who never challenged transfer

The NCLAT dismissed an appeal by legal heirs claiming rights to 2500 shares transferred by their deceased predecessor. The deceased had transferred ... Oppression and Mismangement - Transfer of 2500 shares by deceased - grievance of the appellant is now since the transfer of shares was held to be illegal hence the legal heirs of deceased should get those shares and/or a fair price - HELD THAT:- The contention of appellant cannot be accepted, since initial transfer was challenged only by Respondent No.4 and that too on the ground he should also get a slice of it. The deceased admittedly never alleged/claimed any right on such shares after he had received the entire consideration and after he had executed letter dated 23.06.2015. It is important to mention despite the Hon’ble Supreme Court decision in 2018 the deceased never took any action for transfer of shares in his favour by 2021 i.e. till he was alive. The appellants/legal heirs of the deceased came into action six months after of his death and are now trying to misinterpret the order passed in TP No.106/2016 to their benefit. The transfer of shares by deceased was never an issue pending before Company Law Board or Ld. NCLT and neither the deceased challenged such transfer. It was purely a dispute between other directors and deceased himself opted out of that frame. Hence this appeal has no merit. Even otherwise we find the appellants have no locus to file petition under Section 241-242 under the Companies Act as they are not the member/shareholders of the Company. The appeal thus has no force. Accordingly it is dismissed. Issues:1. Transfer of shares by deceased.2. Allegations of oppression and mismanagement.3. Legal standing of the appellant/legal heirs to file a petition under Sections 241-242 of the Companies Act.Issue 1: Transfer of shares by deceasedThe appeal was filed against an order passed by the National Company Law Tribunal, Ahmedabad, regarding the transfer of shares by the deceased, Mr. Narendra Gopalbhai Patel, to Respondent No.2 and 3 at a price lower than the market value. The deceased resigned from the directorship and transferred his shares at Rs. 275 per share, below the actual price of Rs. 3230.64. A company petition was filed for oppression and mismanagement, challenging the transfer of shares. The deceased's shares were to be re-allotted to the shareholders as per the procedure laid down in the Companies Act and Articles of Association.Issue 2: Allegations of oppression and mismanagementThe main contention was regarding the transfer of 2500 shares by the deceased, which was challenged by Respondent No.4. The shares were transferred only to Respondent No.2, leading to a petition for distribution of shares on a pro rata basis. The order in TP No.106/2016 declared the transfer of shares to be illegal and void, directing re-allotment to all original shareholders. The deceased did not challenge this order and subsequently resigned from any association with the company.Issue 3: Legal standing of the appellant/legal heirsThe legal heirs of the deceased filed a petition seeking to reverse previous judgments and claiming the shares or fair compensation. However, the tribunal found that the deceased never contested the transfer of shares or claimed any right to them after receiving the consideration. The legal heirs' attempt to reinterpret previous orders in their favor was deemed without merit. Additionally, as non-shareholders, they lacked the locus standi to file a petition under Sections 241-242 of the Companies Act, as clarified in a previous tribunal decision.In conclusion, the appeal was dismissed as lacking merit, with the tribunal emphasizing that the legal heirs had no standing to challenge the transfer of shares and that the deceased had not taken any action to reclaim the shares during his lifetime. The tribunal also highlighted the legal requirement for shareholders to have their names entered in the Register of Members to file a petition under the Companies Act.