2026 (4) TMI 165 - AT - Companies Law

Estate preservation and company liability for a deceased claimant's deposit may be pursued independently of pending probate.

A company forum may examine whether an alleged deposit held by a company must be refunded or safeguarded even while probate proceedings remain pending, ... Application under Section 74(1) to be read with Section 73(4) of the Companies Act, 2013 for the repayment of the deposit - Jurisdiction of the National Company Law Tribunal to examine the alleged deposit and its repayment or safe keeping without awaiting final determination of the probate proceedings - Right of claimant-beneficiary to prosecute proceedings before probate Jurisdiction over repayment and safeguarding of company deposits - HELD THAT:- The earlier appellate judgment was confined to the question as to who should be substituted in place of the deceased petitioner in the company petition, and that question was rightly left to await the result of the probate proceedings. It did not stay or foreclose adjudication on the distinct controversy relating to the alleged deposit, namely whether such deposit was made, what amount and interest were due, whether its retention by the company was contrary to Sections 73(4) and 74(1) of the Companies Act, 2013, and whether the amount should continue with the company or be placed elsewhere for safe keeping. Those questions arise under the Companies Act, 2013 and therefore fall within the jurisdiction of the NCLT, whereas the High Court in testamentary proceedings would determine only who is entitled to inherit the estate. In view of the apprehension that the asset forming part of the estate may be frittered away, the NCLT ought to take up the interlocutory application and the principal proceedings on their own merits without waiting for the conclusion of the probate proceedings. [Paras 12, 13, 14, 15] The NCLT was required to consider the application and the company petition on merits on the question of the fate of the alleged deposit, notwithstanding the pendency of probate proceedings. Right of claimant-beneficiary to prosecute proceedings before probate - Protection of estate pending probate - HELD THAT: - The absence of a finally determined legal heir for substitution did not leave the estate without protection. The Appellate Tribunal held that any or all claimants asserting benefit in the estate of the deceased petitioner would be entitled to pursue proceedings seeking protection of the estate. Relying on Binapani Kar Chowdhury v. Sri Satyabrata Basu & Anr.[ 2006 (5) TMI 541 - SUPREME COURT], it held that the right of a beneficiary to institute proceedings for protection of the estate until probate is granted is not hit by the bar under Section 213 of the Indian Succession Act. Since both rival claimants were already parties to the company petition, and any direction to place the deposit to the credit of the probate proceedings would preserve the asset without prejudicing rival succession claims, the proceedings could validly be pursued for that limited protective purpose. [Paras 15] The appellant, as one of the claimants to the estate, was entitled to pursue the proceedings for protection and preservation of the alleged deposit pending adjudication of the probate dispute. Final Conclusion: The appeal was allowed and the matter was remitted to the NCLT to decide the interlocutory application and the principal company proceedings on their own merits regarding the alleged deposit and its protection. The pending probate dispute was held not to bar such adjudication, and the claimant-beneficiaries were held entitled to pursue protective proceedings for the estate. Issues: (i) Whether the National Company Law Tribunal should examine the alleged deposit and its repayment or safe keeping without awaiting final determination of the probate proceedings; (ii) Whether a claimant to the deceased's estate could prosecute proceedings to protect the estate pending probate.Issue (i): Whether the National Company Law Tribunal should examine the alleged deposit and its repayment or safe keeping without awaiting final determination of the probate proceedings.Analysis: The controversy before the Tribunal was confined to the alleged deposit made by the deceased petitioner, the amount lying with the company, the interest accrued, and whether the company could continue to retain it in the face of the obligations under Section 73(4) and Section 74(1) of the Companies Act, 2013. That question was held to fall within the jurisdiction of the company forum and not within the probate court's domain, because the probate proceedings were concerned only with identification of the person entitled to inherit the asset, not with the company's liability to account for or safeguard the deposit. The possibility of the asset being dissipated was treated as a relevant ground for immediate consideration by the Tribunal.Conclusion: The issue was answered in favour of permitting the Tribunal to decide the deposit-related relief on its own merits without waiting for the probate result.Issue (ii): Whether a claimant to the deceased's estate could prosecute proceedings to protect the estate pending probate.Analysis: The competing claimants to the deceased's estate were already before the company forum, and the absence of a concluded substitution did not bar either claimant from pursuing protection of the estate. Reliance was placed on the principle that a beneficiary's right to institute proceedings for preservation of the estate is not defeated merely because probate is still pending and no final legal heir has been declared. On that basis, continuation of the company proceeding was treated as permissible so that the alleged asset could be safeguarded until the succession dispute is finally determined.Conclusion: The issue was answered in favour of allowing the claimants to proceed before the Tribunal for protection of the estate.Final Conclusion: The matter was remitted to the Tribunal for adjudication of the interlocutory application and the main proceeding on merits, with liberty to decide the fate of the alleged deposit independently of the pending probate proceedings.Ratio Decidendi: A company forum may determine liability to refund and safeguard a deposit belonging to a deceased claimant's estate even while probate is pending, because preservation of the estate and identification of the ultimate heir are distinct questions.