TaxTMI 
TaxTMI 
2021 (1) TMI 816
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. Vanita Bhargav, Ajay Bhargava, Advs. Aspi Chinoy, Sr. Adv., Deepak Joshi, Akashh Lamba, Ms. S. Baweja, S. Pundora, Sakya Sen, Paritosh Sinha, Saubhik Chowdhury, Dripto Majumdar, Advs., Kalyan Kumar Bandopahdyay, Vineet Naik, Ranjan Bachawat, Amitesh Banerjee, Sr. Adv., Anubhav Sinha, Sayan Roychowdhury, Satyaki Mukherjee, Advs. Joy Saha, Sr. Adv., Yash Vardhan Deora, Ms. Asmita Roychaughuri, Advs., Kishore Dutta, Ld. Adv. General and Ms. Sumita Shaw, Adv. ORDER 1. The Court: Plaintiffs and defendants altogether filed four applications. G.A. No. 1735 of 2019 and GA No. 1845 of 2019 have been filed by the defendants whereas the other two applications being G.A. No. 1761 of 2019, G.A. No. 1786 of 2019 have been filed by the plaintiffs. 2. G.A 1735 of 2019 has been taken out by the defendants in the form of an affidavit in support of master summons affirmed on 30-7-2019 by one Arvind Kumar Newar defendant No. 1(b)/applicant with the following prayers: "(a) A direction do issue upon the plaintiffs to implement the decision dated 19th July, 2019 of the Committee. (b) A direction do issue upon the Committee to exercise its voting rights flowing from the share....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irectors of Vindhya Telelinks Limited and Birla Cables Limited at their Annual General Meetings convened to be held on 5th August, 2019 and 6th August, 2019 respectively; (d) A direction do issue upon plaintiff Harsh Vardhan Lodha to forthwith recall, rescind and/or withdraw his consent, if any, given to Vindhya Telelinks Limited and Birla Cables Limited for re-appointment as a Director of the said Companies or holding any position whatsoever therein; (e) A direction do issue upon the plaintiff Harsh Vardhan Lodha restraining him from seeking or withdrawing or claiming any profit based remuneration or commission from Vindhya Telelinks Limited (VTL), Birla Cables Limited (Bcab), Universal Cables Limited (UCL) and Birla Corporation Limited (BCL); (f) An injunction do issue restraining the plaintiff Harsh Vardhan Lodha from acting as Chairman or Director of Vindhya Telelinks Limited and Birla Cable Limited under any circumstances whatsoever; (g) Ad interim orders in terms of prayers above;" 4. Initially after the prayers made in G.A. 1735 of 2019, supplementary affidavit was filed thereto containing some independent prayers and also another appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the plaintiffs. In fact, the plaintiffs mentioned in their affidavits to the above two applications that this Court refused to allow the defendant's prayer to stop the election. These two applications being G.A. 1735 of 2019 and G.A. 1845 of 2019 were taken up for hearing after affidavits were exchanged. 11. Learned senior counsel appearing for the defendants/applicant made threadbare submissions on merits of those two applications and opposing the same learned senior counsel for the plaintiffs also made his submission at length which continued for days together. Learned senior counsel appearing for the plaintiffs although concluded his submission but wanted to sum up his argument which could not happen due to lockdown throughout the country declared by the Government due to Covid-19 pandemic. During lockdown, however, an order was passed by the Hon'ble Chief Justice whereby all the applications have been assigned before this Court and with the assignment this Court found that an order was passed by the Division Bench on 4th May, 2020 whereby this Court's interim order dated 2nd August, and 5th August, 2019 were set aside and remanded the matter back to this cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the parties when counsels for the defendants were to make their submission on written notes only for 45 minutes but actually submitted from 11.00 am for rest of the day. 13. The plaintiffs have filed affidavit-in-opposition to GA 1735 of 2019 affirmed by HVL on 28-8-2019. Following objections have been raised by the plaintiffs in their affidavit-in-opposition: i. Probate Court does not have jurisdiction to pass any order in those applications and by the prayers made therein an attempt has been made to interfere with the matters relating to the internal management of companies. ii. APL's decision by two members not being unanimous cannot be accepted to be a valid decision. iii. APL is one single body and there cannot be any question of decision by a majority as Court has used the word 'Joint Administrators'. iv. Decision of APL with Justice H.P. Shah by 2:1 majority is in violation of natural justice. v. Petitioner/defendants being not aggrieved by the decision of APL cannot move the probate Court as per order dated 23rd August, 2012. vi. There has been deliberate omission from order of the Division Bench dated 23....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ajority decisions dated 19th July, 2019 and 30th July, 2019 of the APL Committee should be set aside. In view of the discussion hereinbefore made on the issue of APL Committee and its decision I do not justify allowing the prayers made in the application. The application seems to be without any merit as the Hon'ble Division Bench never intended that the decision which ever was to be taken should be not by majority but by unanimity. The application therefore, cannot survive. Here the respondents have not prayed for filing affidavit and the application is disposed of, holding that it does not warrant interference. 15. Moreover, when the plaintiffs contended that APL has exercised its jurisdiction having adjudicated over issues to be governed under the Companies Act and when the same plaintiffs contended that Probate Court has no jurisdiction over matters relating to Companies Act, the argument advanced on behalf of the plaintiffs appears to be self-contradictory and mutually destructive. 16. G.A. No. 1786 of 2019: This is also an application filed by the plaintiffs making the same prayer which has been made in application being G.A. 1761 of 2019 with the only difference tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... filed before the Probate Court it is necessary to plead that Probate Court had jurisdiction over the matter. Such pleading being absent. The Court cannot consider the prayer made by the petitioner. • He submits Order 7 Rule 1 CPC requires a party to plead that the Court has got jurisdiction over a matter but the same not having been done the application is not maintainable. • He submits that according to Section 141 CPC all the provisions of CPC are applicable to a civil proceeding including probate proceeding. Therefore, noncompliance of Order 7 Rule 1 attracts dismissal of the application on the ground of jurisdiction. He is also submits that according to Section 495 of the Indian Succession Act jurisdiction of the Court is to be decided first. • GA No. 1845 of 2019 : Drawing attention to the prayers, Mr. Mitra submits that prayers in GA 1845 of 2019 are not at all maintainable as those have been sought for against a third party companies and Probate Court has no jurisdiction to pass order against such Companies. He relies on the following decisions (2017) 4 CHN 114. He refers to section 269 of Indian Succession Act particularly section 269....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iction on the Court which inherently lacks. A Probate Court only decides the possibility of the grant of Probate or refusal thereof. 21. It is the further case of the opposite parties/plaintiffs that the estate was limited in its extent to only the share holdings directly in the name of PDB and shares held by certain Investment Companies had nothing else excepting any opportunity of all the principal manufacturing companies those were Revenue Generating Companies of the MP Birla Group. It was contended by the plaintiffs/opposite parties that the shareholding of the estate in Birla Corporation is limited only to the extent of 16.04%. 22. It is important here to take note that Mr. A.K Mitra learned senior advocate had occasion to argue on behalf of HVL in support of the aforesaid prayer. He submitted that Administrator Pendente Lite (APL) is to be appointed for preservation and protection of the shares held by PDB. His submission as recorded by the learned Single Judge was that "The main estate of the said deceased are the share held by her, of the various companies. He submitted that an APL is to be appointed for preservation and protection of these shares." Therefore, accordi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at, in fact, the Division Bench of this Court in the decision ILR 2007 (II) Cal 377 held that shares cannot be registered in the name of APL. 25. On the issue of jurisdiction or no-jurisdiction of the probate Court Mr. Anindya Kumar Mitra on behalf of HVL relied heavily on the above two decisions Priyambada Debi Birla (supra) by a Single Bench and ILR 2007 (II) Cal 377 by Division Bench. Mr. Mitra also submitted that decision rendered by the Division Bench earlier reported in ILR 2007 (II) Cal 377 on the question of APL over shares, is to operate as precedent in this case. He also submitted referring to a decision of Hon'ble Supreme Court Hansanbhai Valibhai Qureshi v. State of Karnataka AIR 2005 SC 2377 that the judgment will not be precedent only if the point was not raised or no consideration was given to that point. On the contrary the defendants submitted that the main estate is the controlling block of shares of MP Birla Group of Companies as such APL has to be appointed over the same. 26. It was also submitted on behalf of the defendants that during the period when RSL was administering, charges had been brought in the board of directors of the MP Birla Group of Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g or revoking any probate or any grant of letters of administration the Court may appoint an administrator of the estate of such deceased person, who shall have all the rights and powers of a general administrator, other than the right of distributing such estate, and every such administrator shall be subject to the immediate control of the Court and shall act under its direction." 27. It was also held "It is plain from the above provision that all the powers of General Administrators are conferred upon APL, only exception that unlike executor and administrator, APL cannot give assent to legacy or distribute assets on estate in terms of Will. It would further appear from the said Section that the Probate Court has power to appoint APL over the estate of the deceased pending any proceedings in which the validity of the will of the deceased person is questioned, or for obtaining or revoking probate or grant of Letters of Administration. The said section also provides that power of appointment of APL is not only conferred upon the probate Court, but the Civil Court too is clothed with power to appoint in any suit adjudging the validity of the will of a deceased person. The aforesai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Law is now well settled by the Supreme Court by a large number of decisions that voting right is essentially impartible adjunct to the share as correctly pointed out by Mr. Pal. This proposition of law cannot be disputed nor has been disputed by Mr. Mitra, still I feel to quote same authorities". "I am of the view provision of Section 247 of the said Act cannot be read in isolation of Section 211 of the said Act, for word Administrator owes its origin to Section 211, which undisputably provides vesting, hence, incident of vesting inheres in Section 247 temporarily. Thus, I think that the appointment of APL as suggested by Mr. Mitra's client, HVL in his prayer or in the body of the petition for limited purpose is neither acceptable nor tenable under law. When the statute provides for the power of general administration, it encompasses all powers and it cannot be truncated as suggested. No authority has been cited as APL will act for limited purpose to represent the estate in a situation like this when no one can legally take charge of the estate. It is legally incorrect to urge that appointment of Administrators over estate including shares of deceased....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be said to have been conducted in a manner oppressive to some part of the members of the company where shareholders, having a dominant power in the Company, either exercised that power to procure that something was or was not done in the conduct of the Company's affairs or procured by an express or implied threat of an exercise of that power that something was not done in the conduct of the company's affairs. The Court held that "The position of an APL is similar to that of a Receiver, with this distinction that the APL represents the estate for all purposes (except distribution) whereas the Receiver does not represent the estate nor the parties but simply holds the estate for the benefit of the successful litigant. In our opinion, the rights and powers of the General Administrators over the estate of the deceased depends on the nature of the property both movable and immovable and the respective statute which governs acquisition and enjoyment of such property in so far as stocks and shares of the companies are governed by the Companies Act. In the light of the rules and regulations under the Companies Act, there are two modes by which shares of a company can be obtained, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingle Judge (Probate Court will hand over the assets to the Joint Administrators. Recievers/Special Officers appointed by the Probate Court will on handing over the assets out of the estate of the deceased for which they were appointed will stand discharged on their submission and settlement of accounts by the Court. The appeals and applications stand disposed of, however, there shall be no order as to costs" 34. After this order was passed a prayer was made for grant of stay of the effect and operation of the order for a period of four weeks in so far it relates to joint administrator exercising their rights relating to the shares and stocks of the Company to enable the appellants to take appropriate steps in the matter. On such prayer a limited stay for a period of four weeks was granted. The said Division bench order was challenged before the Hon'ble Apex Court by HVL and others which was numbered as Special Leave Petition (Civil) No. 30109 of 2012. The points of attack against the Division Bench judgment, inter alia, were on the issue of jurisdiction of the Probate Court and also the issue whether APL has any right and/or authority to be exercised over the co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns, 2015; 7. Mt. Kulwanta Bewa v. Karam Chand Soni AIR 1938 Cal 714; 8. Sufiya Bee v. Mohd. Vajahath Hussain alias Fasi [2011] 2 SCC 94; 9. Western Coalfields Ltd. v. Special Area Development Authority [1982] 1 SCC 125; 10. Vodafone International Holdings BV v. Union of India [2012] SCC 613; 11. Subarban Bank (P.) Ltd. v. Thariath AIR 1968 Kerala 206; 12. Jagadish Prasad v. P.T. Paras Ram AIR 1941 ALL 360 and 13. Murarka Paint & Varnish Works (P.) Ltd. v. Mohanlal Murarka 1965 CWL 32. 37. Mr. Mitra has also relied on (i) Regulation No. 17 of SEBI (listing obligation and disclosure requirement) Regulation, 2015 (listing Regulation) and (ii) Written submission filed by respondent 1(a) to 1(c) of Khaitan and Company advocate during earlier stage of this proceeding. From the written submission he relied on point no. 3.2, 5.2, 5.3, 5.4 and 7.1.5. He tried to illustrate the scope of Administrator and General Administrator within the meaning of Section 247 of the Indian Succession Act and relied on (Kali Kumar Chatterji v. Rash Vehari Bannerjee ILR 1947 (2) Cal. 195). 38. Mr. Mitra submitted that APL is also the legal re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....into whether the fact situation of the case decided by the Coordinate Bench in Harsh Vardhan Lodha (supra) has got the same set of fact in the present applications now being considered by this Court. 42.Mrs. Bacha F Guzdar (supra) has been cited to argue that share holders are not owners of the property of the Company. However, the analogy sought to be drawn by the appellant that share holders in a Company is analogous to that of partners inter se is wholly inaccurate. The Hon'ble Apex Court held partnership is merely an association of persons for carrying on the business of partnership and in law the firm name is a compendious method of describing the partners. Such is, however, not the case of a company which stands as a separate juristic entity distinct from the shareholders. Description of the fact involved in the case is required to be discussed to appreciate the ratio of the decision and it is applicable in our case. In the cited case the appellant, share holder in two different companies received dividends. The two companies carried on business of growing/manufacturing Tea. By Rule 21 of the Indian Income-tax Rules, 1922, made in exercise of the powers conferred by Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Companies Act and should lie before the Company Court. The decision was rendered by Coordinate Bench on May 19, 2016 on an application being GA 508 of 2016 and two other applications being GA 654 of 2016 and GA 354 of 2016 in connection with TS No. 06 of 2004. GA 508 of 2016 is a demurer application filed by plaintiffs having caveatable interest in probate proceeding. To oppose certain transaction sought to be made by HVL. During pendency of the probate proceeding the executor RS Lodha (RSL) died and the legal heirs (present plaintiffs) were substituted in place of deceased executor who filed an application on the basis of which the proceeding was converted into a proceeding to one for grant of letters of administration. In an appeal from the order passed by the Probate Court the Hon'ble Division Bench presided over by the then Chief Justice, appointed a committee of Administrators Pendente Lite and in absence of one of the members being Retired Judge of the Supreme Court having tendered resignation, Committee became non-functional, and as a result whereof, the estate was not being looked after by the committee. In such situation the defendants who came to know from various new....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ose any cause of action. He submitted that entire application was based on certain information collected by the applicants from various newspaper reports and that such reports were not admissible in evidence and further that the reliefs sought for were without any foundation. Mr. Mitra pointed out that probate Court while dealing with a testamentary suit only acts as a Court to find out as to whether the Will was the last Will of the testator or not and further as to whether the Will was duly executed by him and properly attested by the attesting witnesses or not and further as to whether at the time of execution the testator was physically fit and mentally alert or not, or is there any suspicious circumstances in executing the Will. Therefore, according to Mr. Mitra Testamentary Court will have no jurisdiction to decide any dispute relating to the title of the testator in the property bequeathed under the Will and the business of the testamentary Court is very restricted. He submitted that Probate Court has no jurisdiction to decide any foreign issue. 45. While arguing these points of maintainability and the business of the testamentary Court in respect of foreign issue Mr. Mit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h on 19th May, 2016 on the Interlocutory administration arising from T.S. 06 of 2004 is binding on this Court while deciding this application one has to scrutinize the scope of the application on which the Coordinate Bench rendered the decision on 19th May, 2016 and the scope of the present applications which are being decided by this Court now. Before the Coordinate Bench it was the grievance of the defendants made through their applications that Birla Corporation Ltd. in which PDB had some shares was negotiating with Reliance Infrastructure Ltd. by acquiring four of its cement manufacturing units by purchase of its shares in other states involving huge investment and the defendants took out applications before the Probate Court on the apprehension that debt burden of Birla Corporation Ltd. will increase enormously. It was alleged in those applications that since the estate of PDB is the promoter of Birla Corporation Ltd. and it was being controlled by PDB directly or indirectly through interlinking, chain and cross holding of shares, whenever any policy decision which has material impact on the future of the company, the promoter group of the said company should be consulted. Pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions made in the past and applications those have been made now before this Court. Another point of distinction has been shown in this case where prejudice has already been caused and defendants raised alarm about dissipation or the value of the assets because of the action of the plaintiff no. 1, who happens to be The Chairman of the Board of Directors of Birla Corporation. 48. Further, if jurisdiction under section 247 is allowed to be assumed then APL has certainly got a role in the decision making process to protect the interest of the estate of the deceased and any party having caveatable interest would be entitled to agitate before the Court in case of any prejudice being caused to the ultimate benefit derivable from the grant or refusal of the Letter of Administration. 49. It has also been noticed that the Coordinate Bench clearly arrived at a finding that in view of the several decisions of this Court at various interlocutory stages in the instant probate preceding, it has now been settled that exercise of the controlling power over the MP Birla Group of Companies is a valuable asset of the estate of Mrs. Birla. Such findings of this Hon'ble Court arrived at diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... estate of the deceased, the Probate Court at best can pass necessary direction upon "APL" to initiate appropriate proceeding before appropriate forum for seeking appropriate reliefs in accordance with law and it is only that appropriate forum which in my view, can pass appropriate order after adjudicating the rights of the parties including that of the stranger." 52. Further, it is equally important to take note of the observations made by the Co-ordinate Bench holding that it is the 'APL' to safeguard the interest of the estate of the deceased. Paragraph 160 is important and is set out below: '160. The applications are thus, rejected with the observation that the estate of the deceased cannot be left uncontrolled and since the "APL" has now become defunct, the parties may approach before the appropriate forum for making such "APL" functional so that whenever the Probate Court feels necessary, the probate Court can pass appropriate direction upon the "APL" for safeguarding and/or protecting the estate of the deceased.' 53. In view of the above thus there should not any doubt, and I also hold that this Court has jurisdiction to consider the aspect of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to provide for representation of the deceased's estate for purpose of administration, and is not intended to cut down the rights of the beneficiaries. This is the settled principles of law in probate proceeding. When APL is functioning this issue is no more important. APL has been authorized to take care of the beneficial interest of the parties. The interest is protected inasmuch as APL is not authorized to distribute the share. 60.Sufiya Bee (supra) has been cited to apprise this Court about the value of precedent. The decision lays down that pronouncing of law by a Division Bench of a Court is binding on another Division Bench of the same or a smaller number of judges of that Court. This Court does not confront at all with this settled proposition of law. I am quite aware of this binding precedent which is the Constitutional mandate upon all Courts including Sub-ordinate Judiciary. The decision has been cited to impress upon this Court that the judgment and order dated 19th May, 2016, passed by a Coordinate Bench is binding upon this Court but unfortunately, fact situation are so different, it cannot be said that the same is binding on this Court as to deal with present ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has got no application in the present case. 63.Suburban Bank Pvt. Ltd. (supra) has been placed to clarify the extent of powers of share holder in General Meeting. The decision is distinguishable on fact. Inasmuch as it has been held that "The directors had acted fully within their powers in deciding to enforce the liability under the promissory-note, notwithstanding the recommendation contained in the resolution Ext. P-10 passed by the shareholders at their general meeting. The view taken by the lower appellate court that the Board of Directors had no authority to over-ride the decision of the General Body is, therefore, incorrect." 64. This finding was arrived at in the decision which was based on the fact that the trial Court rejected the defence contention and held that the resolution of the general body relied on by the defendant was a mere recommendation which was not binding on the board of directors of the company and in that the power as decided to realize the full amount due by the defendants on the said promissory-note. In this view the suit was decreed by the trial Court as prayed for in the plaint. 65. In the appeal of the 2nd defendant the lower Appellate Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....administrator and General Administrator, he submitted that the decision of 19th May, 2016 in GA 654 of 2016 arising from TS 06 of 2004 be taken note of as regards the findings of Court on the issue 'control of a company'. We have already discussed the point earlier and same may not be repeated once again. 69. Mr. Jishnu Chowdhury learned counsel for the plaintiff appearing physically in Court mentioned that this Court should decide only two applications i.e., G.A. 1735 of 2019 and 1845 of 2019 and not the other three applications being G.A, 1761 of 2019, G.A. 1786 of 2019 and G.A. 2007 of 2019 filed by the plaintiffs as affidavits were not called for. 70. Mr. Kapoor learned counsel for the defendants/applicants, submitted, however, that all these intra parties applications involve identical questions of law and fact and should be heard analogously. This Court, however, on perusal of the judgment and order dated 4-5-2020 passed by the Division Bench holds that all those five applications should be heard and disposed of analogously by a common judgment. Relevant portion of the said judgment is quoted below: "The learned Single Judge leaving the issue to be deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect holding, through chain and cross holdings in various companies, controlling interest in several M.P. Birla Group Companies, particularly the companies with the percentage of shareholdings set out in the chart annexed at as Annexure- "X" to this decision, APL Committee is of the considered view that during pendency of the Probate proceedings before the Calcutta High Court in relation to the estate of late Mrs. P.D. Birla, it is necessary for the protection and preservation of the estate of late Mrs. P.D. Birla to see that - A. all three Members of APL Committee are nominated as Directors on Board of directors of: (i) East India Investment Co. Pvt. Ltd., (ii) Gwalior Webbing Co. Pvt. Ltd., (iii) Boroda Agents & Trading Co. Pvt. Ltd., (iv) The Punjab Produce & Trading Co. Pvt. Ltd., and (v) Punjab Produce Holdings Ltd. There can be no dispute that the estate of late Mrs. P.D. Birla has, directly or indirectly, majority shareholding in all the above companies and APL Committee will get weightage on the Board of the above companies. This will also ensure that in case Justice Mohit S. Shah (Retd.) is unable to attend any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the said treatise read as under: "Majority Definition 7-30. Majority is a term signifying the greater number. In legislative and deliberative assemblies, it is usual to decide questions by a majority of those present and voting. This is sometimes expressed as a "simple" majority, which means that a motion is carried by the mere fact that more votes are cast for than against, as distinct from a "special" majority where the size of the majority s critical. The principle has long been established at the will of a corporation or body can only be expressed by the whole or a majority of its members, and the act of a majority is regarded as the act of the whole". "A majority vote binds the minority 7-31. Unless there is some provision to the contrary in the instrument by which a corporation s formed, the resolution of the majority, upon any question, is binding on the minority and the corporation, but the rules must be followed". 42. The same propositions in "Shackleton on the Law and Practice of Meetings", in the Eleventh Edition (2014), have been approved by the Apex Court in State of Madhya Pradesh Vs. Mahendra Gupta & Ors.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd; (c) Mr. Justice D.G. Karnik (Retd.) will be appointed as a Director on the Boards of (i) August Agents Ltd., (ii) Insilco Agents Ltd and (iii) Laneseda Agents Ltd.; (d) Mr. Justice J.P. Devadhar (Retd.), Former Judge, Bombay High Court and former Chairman, Securities Appellate Tribunal, Mumbai, will be a Director on the Board of Directors of Hindustan Gums and Chemicals Ltd., upon vacancy arising in the said Board of Directors; (e) Mr. Justice J.P. Devadhar (Retd.) will be a Director on the Board of Directors of Birla Cables Ltd. 73. Secretary to the Committee was directed to communicate all the 13 Companies about the said decision along with a true copy of it within a week from date when the decision was taken and was further directed to send copies thereof to all the directors of each of the said companies. 74. By this affidavit the defendant no. 1(b)/petitioner agitated that it is necessary to the meaningful and proper implementation of the order dated 19th July, 2019 which held that the estate has control over the direct and indirect share holding in various companies, trust and societies of the MP Birla Group. The estate is under control of the Committee b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to sub-serve their personal interest. The plaintiff/respondent by passed the decision and/or direction of the committee and rendered it a paper decision only. According to the petitioner, the plaintiffs have been continuously acting in a manner detrimental to the estate. Therefore, the petitioner has prayed for implementation of the decision of the Committee passed on 19th July, 2019. According to the petitioners, this Hon'ble Court should also direct the committee to exercise its voting rights in the share holdings of the estate (directly and indirectly by casting of votes to the ensuing General Meeting of UCL, VTL. BCab and BCL through the chairman Justice M. S. Shah or any person(s) as the Hon'ble Court may deem fit in terms of the decision of the Committee. It has also been prayed that if circumstances necessitate in view of what has been pleaded in the present affidavit notice may also be issued to the concerned companies, trust and societies of MP Birla Group for taking effective decision. The petitioner also prayed to keep in abeyance the impugned resolutions in the notices for convening the annual general meeting of UCL, VTL, BCab, and BCL. 78. Mr. Kapoor submits....
X X X X Extracts X X X X
X X X X Extracts X X X X
....companies and therefore, APL should be allowed to intervene in the management of the Company as those companies are the assets of PDB. He has specifically pointed out that controlling block of shares of PDB in the companies in question had already been accepted by the plaintiffs as has been duly recorded by the Division Bench presided over by the Hon'ble Justice Patel, where APL was appointed. The decision was challenged before the Supreme Court but SLP was dismissed. According to Mr. Kapoor if controlling block of shares of PDB were never disputed rather admitted no further evidence is required to be shown by the defendants to argue that PDB had controlling block of shares in the companies in question and that being so APL is the only authority to manage those companies but not the plaintiffs. He further submitted that plaintiffs' father being an executor was in possession of the estate including companies but as soon as the executor died an Administrator Pendente Lite has been appointed and HVL should not be in management of those companies and cannot claim any interest therein. He should have handed over the assets of the company and other assets to APL instead of keepin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Board of Directors and/or Committee(s) thereof or for any other purpose whatsoever as may be decided by the Board of Directors within the limit as prescribed under section 197(5) of the Act and reimbursement of expenses for participation in the Board and other meetings. 82. Item No. 7 of the notice is a subject resolution which accorded for payment of remuneration/compensation by way of profit related commission or otherwise as permissible (excluding Goods and Services Tax, if any, thereon) of an amount not exceeding 0.75% (seventy five basis points)of Net Profits of the Company for the financial year 2019-20 (1st April, 2019 to 31st March, 2020) to Shri Harsh. V. Lodha, Non-Executive Chairman of the Company, which may exceed fifty percent of the total annual remuneration/compensation by way of profit related commission or otherwise payable to all Non-Executive Directors of the Company, within the overall maximum limit of 1% (one percent) per annum of the Net Profits of the Company to all Non-Executive Directors as fixed/approved by the members of the Company. It was further proposed to be resolved for remuneration/compensation by way of profit related commission or otherwise (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....utive directors of the company, within the overall maximum limit of 1% per annum of the net profits of the Company to non-executive directors as fixed/approved by the members of the Company. 85. Mr. Hirak Mitra, learned senior advocate appearing for the defendant no. 2, while submission at the initial stage before lockdown was declared on the following decisions: 1. Smt. Radhika Bhargava v. Dr. Rajun Sahagal AIR 2019 Bom 68; 2. British American Tobacco Co. Ltd. v. Inland Revenue Commissioners [1943] ELR 1; 3. Zacharia v. Republic of Cyprus [1963] HL 634; 4. Films Rover International Ltd. v. Cannon Films Sales Ltd. [1986] 3 ALL ER 772. 86 Smt. Radhika Bhargava (supra) has been cited by Mr. H. Mitra to argue on the issue of jurisdiction of probate court. He argues that not only probate Court has authority to pass order, this Court has rightly passed the interim order on 2nd, 5th & 9th August, 2019 and the same must continue till disposal of the suit. In the cited decision question arose whether the application under Section 301 of Indian Succession Act, 1925 can be made only by a beneficiary or legatee, who accepts the Will and, as to whether....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a is a decision rendered by the House of Lords on the issue of 'controlling interest' in a Company. 88. In the given case appellant Company held shares of 11 companies operating outside the United Kingdom, which were not, therefore, liable to be assessed to National Defence Contribution. In the case of four of those companies, the appellant Company itself controlled more than 50% of the votes. In the case of the remaining seven companies more than 50% of the votes were controlled by the appellant company in conjunction with a company or companies in this the appellant company controlled more than 50% of the votes. In the decision House of Lords held "The appellant company had a controlling interest in all the companies within the meaning of Finance Act, 1937 Sched. IV, para 7(b) and the dividends received by the appellant company from these companies should be included in his income liable to National Defence Contribution." In the editorial of the decision so cited it has been mentioned that it was unsuccessfully contended that a control by a bare majority holding is insufficient. The argument was that, who have a controlling interest, a controlling company must have suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g of the appeal, question arose whether the appeal under section 10 of the Act of 1881, being in a Criminal cause or matter, could be entertained by the House of Lords notwithstanding that no certificate was asked for or given by the Court below pursuant to Section 1(2) of the Administration of Justices Act 1960, that a point of Law of General public importance was involved in the decision. 91. The Divisional Court dismissed the application under both heads and refused leave to appeal. Subsequently leave was granted by House of Lords. 92. In the cited decision it was held "(1) that the House of Lords had jurisdiction to hear the appeal merely on leave granted, for the court's power to grant relief under section 10 of the Fugitive Offender's Act, 1881, were an adjunct to its power to protect by habeas corpus, and that, accordingly, where, as here, an application for the writ was joined with proceedings under section 10, and the provision of Section 15(3) of the Administration of Justice Act, 1960, that struck out the statutory restriction on the grant of leave to appeal applied to both forums of proceedings. (2) That a court acting under section 10 of the Act ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l of the injunction may enable a party to achieve a commercial objective by a calculated disregard of the basic principle of a civil society that 'men perform their covenants made.' The film would is tough and ruthless but not a state of nature. In weighing the risks of injustice which granting or refusing the injunction would entail, I have taken this qualitative consideration into account." 95. It was argued on behalf of plaintiff/opposite parties that no direction and or order even can be passed against plaintiff if cannot be passed against Birla Corporation of which plaintiff is the chairman of The Board of Directors. It was also argued that no jurisdiction to interfere with internal management of the company and lastly that APL has got minority share. On the issues the decision referred to by Mr. H. Mitra in Films Rover International (supra) is very apt to hold that the Court has all the discretionary power to exercise or to protect the estate. In this regard it may be mentioned that power of APL had already been categorically specified in the order of the Division Bench presided over by Chief Justice, Patel as His Lordship then was and which was challenged before t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the interest of Mrs. P.D. Birla in the company and respondents Nos. 1-19 shall devolve in the legal heirs immediately on her demise, who is the lawful legal heirs is an issue before the Calcutta High Court and Board declined to assume jurisdiction to enquire into the same. 101. Aforesaid Order dated 25-4-2005 was passed on an application by the petitioners who collectively held 0.0016% shares in M/s Birla Corporation Ltd. (29th respondent of the Company) sought for an investigation into the membership of the Company in terms of Section 247(1A) of the Companies Act, 1956 for determining the true persons who are or have been financially interested in the success or failure, whether real or apparent, of the company. 102. The said application was dismissed by the order dated 25th April, 2005 and while dismissing the said application the Company Law Board found that estate of Mrs. Birla, controlling majority of the shares in the company was indicated and that the said estate had not brought about any change in the compensation of the Board of Directors of the company. In other words, it was the estate of Late Mrs. Birla controlling majority shares in the company, which was found ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riate judicial forum in relation to the Succession to the Estate of PDB (since deceased). 104. While dealing with the said matter this Hon'ble Court took note of the fact that on the death of M.P. Birla his widow Priyamvada Devi Birla came to exercise control over 62.9% of the shares of the Company, which was held by different entities, over which, PDB had control. On her death, there was a dispute over succession of her estate and a probate proceeding was pending before this Court in respect of her Will, the legality of which was under challenge. Under the said Will, which was subject matter of a probate proceeding R.S. Lodha being father of respondent no. 2 claimed to be the executor of the said Will, under which the property of PDB was also claimed to be bequeathed to him. Said R.S Lodha passed away. A Division Bench of Our Court in an appeal proceeding arising out of the probate suit being T.S. 6 of 2004, appointed a three member panel as Administrator Pendente Lite (APL) over the estate of late PDB. The said action was prosecuted by the respondent no. 2. In the said appeal the Court observed "The basic reasoning on which the appellants' claim is based on this count,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en discussed in the decision. On the expression 'control' the Hon'ble Apex Court says the expression 'control' is defined in Section 2(27) of the Companies Act, 2013. Section 2 (27) is set out below: "S.2(27). "Control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner." 108. The Hon'ble Apex Court says that the expression 'control' has been defined in two parts, the first part refers to the de jure control, which includes the right to appoint a majority of the director of a Company. The Second part refers to de facto control. So long as a person or persons acting in concert, directly or indirectly, can positively influence, in any manner, management or policy decisions, they could be said to be 'in control'. 109. Mr. Mukherjee, therefore, submitted, the Birla Group of Companies are within the control of PDB and forms part of the Estate because ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te Priyambada Devi Birla during pendency of the above T.S. No. 6 of 2004, (iv) Submission of account to the estate of late Priyambada Devi Birla in terms of the order of the Hon'ble Division Bench dated 11th October, 2007. 112. Mr. Viswanathan appearing for the defendant no. 1(d) and 2 submitted from his written note that (1) even a third party is not beyond the control of the Probate Court dealing with the Letters of Administration with Will annexed. (2) Companies and institutions within the M.P. Birla Group are not third parties/strangers. (3) Testamentary Court as well as APL Committee has jurisdiction to pass order against third parties and/or strangers to the proceeding in question. (4) Testamentary Court as well as APL Committee has jurisdiction to pass order against HVL irrespective of his position and capacity. (5) The plaintiffs and noticee companies are estopped from disputing the decision dated 19th July, 2019 and 30th July, 2019 of the APL Committee. Reliance placed by plaintiffs on the first interim report of the APL Committee in relation to the purported inventory is an act of trickery and mis-representation and (6) HVL and his nominee in the APL Commi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udgment dated 25th April, 2005 (paragraph 47 at page 50, 51B and 51C; page 52 and page 61 of vol.2 of G.A. 1735 of 2019.) 116. Mr. Viswanathan has placed reliance on a few decisions in Atulabala Dasi v. Nirupama Devi AIR 1951 Cal 561; Nagubai Ambal v. B. Shama Rao AIR 56 SC 593; State of Madhya Pradesh v. Mahendra [2018] 3 SCC 635; Election Commission of India v. Suvramaniyam [1994] 4 SCC 104 but since these decisions have been cited for the first time in reply, on the objection raised by the plaintiffs, those are not taken into consideration to form an opinion. 117. Mr. Sibal appearing for defendant no. 3(a) in support of the prayers made in the application filed by the defendants submitted (a) The decision dated 19th July, 2019 and 30th July, 2019 of the APL Committee as also the consequential action of the said APL has to be implemented. (b) APL is entitled to take decision by majority. (c) HVL should be injuncted from offering himself as a Director or proposing himself as a candidate for re-appointment as a Director or holding any decision whatsoever in 'VTL' 'BCL', 'Universal Cable Limited' and 'Birla Corporation Limited'....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the deceased over the companies in proceedings of the year 2005. To argue that word 'control' has been established from the acts and conducts of the parties; their submissions in various proceedings before this Court and the Company Court; and acceptance of intra party decision passed by the Company Court and the High Court as well. In this regard he refers to the order passed by a Coordinate Bench of this Court presided over by Justice Indira Banerjee where all the companies in the Birla Group were parties. He also referred to the order passed by the Division bench presided over by Justice Pinaki Chandra Ghosh (page 331 para 301 of G.A. 1761 of 2019). He pointed out that the Division bench, in fact, affirmed the decision of the Single Bench with the only exception that prayer for appointment of Administrator was refused by the Division Bench holding that interim injunction which was passed by the Single Judge was sufficient to preserve the interest of the beneficiaries. According to Mr. Sibal the Division Bench presided over by Justice Patel itself authorized the APL to act and took note of the controlling power of the deceased (Vol.2 of G.A. 1735 of 2019 at pages 229 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. (6) Point of the jurisdiction having already been decided earlier in an intra party proceeding the same issue cannot be reopened and lastly, (7) He submitted if the balance of convenience and inconvenience is to be weighed, it is not to change existing status quo of the Company. He further adds that Administrator Pendente Lite appointed by this Court in its Probate jurisdiction has no right of management by the Company. According to him APL is nothing but an ordinary shareholder which has got only 1,20,000/- shares out of 3 crores held by the Company. According to Mr. Bachawat with this negligible amount of shares APL is trying to control the Company by introducing a concept which is not recognized by the Company Law. 124. On the issue of Court's lack of jurisdiction to pass an order against third party he relied on a decision in West Bengal Housing Board v. Pramila Sanfui [2016] 1 SCC 743 wherein the Hon'ble Apex Court held "The learned Subordinate Judge has erred in passing order of temporary injunction under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908, in respect of the property in question after it was included to the suit schedule as order of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....G.A. 834 of 2020 which has been filed can be decided even without calling for any affidavit from the respondent, in fact, the opposite party namely, the defendants have also not prayed or filing any written objection to this application. I am of the view that in this case also the noticee company can neither be joined as a party defendant nor can any order of restrain be passed against such company who is not a party to the proceeding. Therefore, further elaboration on the submission of Mr. Bachawat is not necessary. Where he made submission on merit whether or not the APL's decision should be implemented or whether APL has rightly taken decision as Administrator Pendente Lite or not, is not a matter to be gone into in detail. Therefore, G.A. 834 of 2020 stands disposed of to the effect that his Probate Court cannot decide any issue against a stranger to the probate proceeding and no order in this probate proceeding can be passed against this noticee company. 126. G.A. 843 of 2020 has also been filed by Birla Cable Limited seeking an order for necessary correction in the order dated 12th June, 2020 by recording its submission as indicated in paragraph 5 of the application. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decisions in Krishna Kumar Birla v. Rajendra Singh Lodha [2008] 4 SCC 300; Rajendra Singh Lodha v. Ajoy Kumar Newer ILR 2007 (2) Cal 327 and an un-reported judgment dated 4th May, 2020 of the Division Bench. 131. He submitted that the jurisdiction of the Probate court is very limited to the extent that it can only examine genuineness of the will and other consequential issues like testamentary capacity of the testatrix to make the Will, due attestation of the Will and whether the same is the last will of the testatrix. 132. There is no controversy to the proposition relied on by Mr. Chinoy that this court cannot extend its jurisdiction to his client who is not a party to the present proceeding. Since this Court lacks jurisdiction over an entity which is not a party to the proceeding this Court does not feel it prudent to deal with other issues particularly the intricacies of all the provisions of Companies Act. 133. Mr. Chinoy, fairly submitted that so far the jurisdiction of this Court is concerned he adopt the same submission as has been advanced by Mr. Bachawat on behalf of Birla Cable Limited. He has also filed a written notes of submission of Birla Corporation. It is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 8(2). Mr. RSL as executor of the last will and testament of Late Mrs. Priyamvada Devi Birla, as a matter of caution has been included on the said list. According to him the APL ought to have registered its name in accordance with the articles of association with the company but in absence thereof it cannot enjoy any privilege incidentally to the ownerships of the shares. It is his submission that Birla Corporation Ltd. had recorded the names of the APL Committee upon the share certificates and in the company's register of members in respect of Late Priyamvada Devi Birla said 1260 shares as "representatives of the estate of deceased PDB in the capacity as Administrator Pendente Lite." From 2012 till 2019 APL Committee had exercised voting only in respect of the said 1260 shares on diverse dates when Annual General Meetings of the Committee were held. Therefore, Mr. Chinoy submits that it is the settled position of law under section 47 and Section 2(55) and Section 88 as also Section 105 and Section 113 of the Companies Act, only a person or entity whose name has been recorded as a member in company's "registrar of members" can exercise voting rights at any General Meeti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Court to paragraph 7 where it has been quoted "The company recognises no person except one whose name is on the register of members, upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the company is legally payable." 140. Next decision relied on by Mr. Chinoy is Balkrishnan Gupta (supra) and has drawn attention of this Court to paragraph 29 which says "Mere appointment of a Receiver in respect of certain shares of a company without more cannot, therefore, deprive the holder of the shares whose name is entered in the Register of Members of the company the right to vote at the meetings of the company or to issue a notice under section 169 of the Act." 141. He next relied on Life Insurance Corporation of India (supra) and submitted that the ratio in the earlier judgment has been followed by the Hon'ble Apex Court. He relied on paragraph 84 of the decision to demonstrate the rights of a shareholder namely to say (i) to elect directors and thus to participate in the management through them; (ii) to vote on resolutions at meetings of the company; (iii) to enjoy the profits of the company in the shape of dividends; (iv) to apply to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....expressed that the noticee company/appellants at whose instants the Division Bench passed orders holding that the impugned order would not have been passed against one who was not party to the proceeding cannot survive. After the said order passed by the Division Bench remanding the matter back for rehearing I had directed to issue notice upon the companies who challenged my order in appeal before the Hon'ble Division Bench. Since notices were duly served upon the said noticee companies and in pursuance thereof they have argued the matter at length including the question of jurisdiction it is no more open for them to pray for recall of the order dated 8-6-2020 because of the further development and the noticee companies having made their submission both on merit and jurisdiction, the application being G.A. 831 of 2020 has become infructuous and the same is, therefore, rejected. 146. G.A. 842 of 2020 has also been filed by Birla Corporation Limited seeking an order for necessary correction in the order dated 12th June, 2020 by recording its submission as indicated in paragraph 5 of the application. Since this Court has already observed that no order can be passed against stra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ointed APL could have filed the application but the defendants cannot do so rather they have been trying to convert the probate Court into an Execution Court which is not permissible in law at the same time Mr. Bandopahdyay argued that an application has also been filed by his client to set aside the resolution of the APL which is also pending herein by this Probate Court. And without first deciding the said application the present application filed by the defendants/petitioners cannot be considered; (4) over the issue of controlling block as contemplated by the APL Mr. Bandopahdyay submitted that the new concept has been introduced and cannot be applicable irrespective of the fact that R.S. Lodha sought protection from the Court on the controlling interest of the estate of the deceased; (5) Mr. Bandopahdyay specifically submitted that the APL's decision is an adjudication over the issue of controlling interest which is not permitted under the law. He, however, submitted that such adjudication is not permissible and that apart, because of Section 430 of the Companies Act Probate Court's jurisdiction has also the authority exercised by APL is barred under the law. Mr. Bandop....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and therefore, no order passed by the Probate Court can bind him. According to the said decision jurisdiction of the Probate Court is limited being confined only to consider the genuineness of the will. The proposition is a settled proposition of law there cannot be two opinions to it. 153. Mr. Bandopahdyay cited decision Saroj Agarwalla v. Yasheel Jain [2017] 14 SCC 285 to bring it to the notice of the Court that when Court passed an order without jurisdiction the same would be nullity. On this proposition he relied on Chief Engineer, Hydel Project v. Ravinder Nath [2008] 2 SCC 350. This is well settled proposition on corum non-judice. 154. He submitted that the entire matter should have been taken to the National Law Tribunal because the grievance of the defendants/petitioners touches the provisions of Company Act and Probate Court has nothing to do in it. 155. G.A. 833 of 2020 has been filed by noticee company Vindhya Telelinks and has challenged the jurisdiction of the Probate Court in the same line the other noticee company Birla Corporation has moved. Therefore, the observation made in G.A. 831 of 2020 and 832 of 2020 is applicable for disposal of this G.A. 833 of 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....look beyond the Registrar of Members in accepting the votes at such Annual General Meeting. (iv) They have, for the first time sought to raise question on the decision passed by the APL Committee. 161. Since the core issue in the applications under hearing is whether three Administrators appointed by this Court should act by majority or unanimously, certain clarifications were necessary from the end of the Administrators. Leave was granted to Mr. Joy Saha, to represent two of the Administrators (Hon'ble Mr. Justice (Retd.) Mohit S. Shah and Mr. A.C. Chakrabortti) who took the decision by majority declining the note of objection and/or note of descent made by the other Administrator Mr. M.K. Sharma. Mr. Joy Saha, learned senior advocate appeared before this Court and made very precious submission as regard the stand taken by two of the members of the APL Committee. 162. Mr. Saha has drawn attention of this Court of the order dated 10-4-2019 whereby a Division Bench of this Court inter alia observed "For effective functioning of the APL Committee, which shall consists of the Hon'ble Justice Mohit Shantilal Shah (Retired) and two nominees of the respective parti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the meetings. It was also decided that the other members of the APL Committee namely, Mr. A.C. Chakrabortti and Mr. M.K. Sharma would continue to be Directors of Tier-I and Tier-II companies, where they had been previously appointed. In those cases, where Mr. A.C. Chakraborty or Mr. M.K. Sharma were not Directors in the specific Tier-I and Tier-II Investment Companies, the Chairman would invite them to attend the meeting. These decisions were taken with the concurrence of Mr. H.V. Lodha. Therefore, it was decided that the APL Committee would be able to monitor the functioning of the Tier-I and Tier-II companies. These minutes were signed by all three members of the APL. He has also pointed out that on a previous occasion while a minute was prepared on 26-3-2017 and 21-7-2017 it was categorically mentioned about the nomination of directors which is now being opposed. The relevant portions of the said minute is set out below: - "During the hearings, the APL Committee suggested to the lawyers appearing on behalf of Mr. H.V. Lodha that Justice (Retd.) A.P. Shah, the Chairperson of the APL Committee, would be nominated as Director in the Tier I and Tier II Investment Companies. This sug....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... even by the present Administrators. Mr. Saha has drawn attention of this Court to various documents being a letter dated 8-7-2013, 2-2-2014 and 18-3-2014. Letter dated 8-7-2013 was issued by Justice R.V. Raveendran former Judge, Supreme Court which speaks of controlling block of shares and the relevant portion is set out below : "In view of the aforesaid, the controlling block of shares in your company vests with the estate of late Smt. Priyamvada Devi Birla, which is represented by this Committee. The above position had been intimated to you and it is surprising that no mention about this important matter, which has a bearing on ownership, control and management of the company, has been made in the Directors Report to the shareholders. The disclosure of this material factor would be in the interests of good Corporate Governance." 168. Letter dated 2-2-2014 was also issued by Justice R.V. Raveendran which also speaks of control of Mrs. P.D. Birla over the companies and disclose that request was made to furnish companies financial result and other matters; and letter dated 18-3-2014 written by Justice R.V. Raveendran also speaks of a subject "Information regarding financial r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial; (iv) Where the member is a trust (through trustee), the identification of beneficial owner)s) shall include identification of the author of the trust, the trustee, the beneficiaries with not less than ten per cent interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership; Explanation II. - It is hereby clarified that instruments in the form of global depository receipts, compulsorily convertible preference shares or compulsorily convertible debentures shall be treated as 'shares' for the purpose of this clause;" 169.According to Mr. Saha, therefore, the members of the APL committed no wrong in passing a majority view and on the basis thereof any decision taken by them as a representative of the estate. 170. The Division Bench of this Court by its judgment and order dated 23rd August, 2012 appointed three member Committee of Administrators Pendente Lite (APL Committee) to administer the estate of Late PDB for its preservation and protection until the Probate Court decides on the issue of ultimate beneficiaries. APL Committee while arriving at its decision which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hould act jointly (emphasis supplied by me). 174.Mahinder Singh Gill (supra) the decision is not at all applicable in this case. The ratio which has been decided there "...when a statutory functionary makes an order based on a certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out." It has been sarcastically mentioned by Their Lordships "Orders are not like old wine becoming better as they grow older." 175. Mr. Dutta, however, in his notes of argument has pointed out that M.K. Sharma ('MKS'), Joint Administrator Pendente Lite was appointed by a Division Bench of this Hon'ble Court upon being nominated on behalf of the plaintiffs by an order dated 19th January, 2012. As an officer of the Court, MKS had confined himself to bring to the notice of the Court the factual matters relating to Administration of the Estate of the deceased/PDB whose last registered Will is the subject matter of the testamentary proceedin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....joint APLs prepared and signed the unanimous inventory report dated 15th October, 2013 which was supplied to the parties. Since then, in the last 7 years none of the parties have questioned the contents of the said inventory report that it does not reflect truly and correctly the assets of the Estate. According to Mr. Dutta MKS any other interpretation being sought to be now given upon change in personnel of the third member (Justice M.S. Shah (Retd.)) is contrary to the unanimous report of the 3 joint APLs, prepared and signed in 2013. 5. After 15th October, 2013 and till Justice Mohit S. Shah (Retd.) became the third member in the year 2019, never has the APL committee claimed shareholding right, right to vote, right to direct voting in respect of any shares which were not stated in the affidavits of assets and/or the said inventory report. 6. The APL Committee held 23 number of meetings when Justice Raveendran (Retd.) was the third member and had without any exception only to decide to act when all three members had unanimously agreed on the manner of acting. 7. Justice Raveendran (Retd.) resigned by letter dated 2nd October, 2014 stating that as one o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....written notes filed and oral arguments advanced before this Court. 178. After considering in detail the discussion herein before on the issue of jurisdiction this Court holds :- (i) Section 247 of Indian Succession Act demonstrates larger scope for the court to exercise a jurisdiction to protect and preserve the estate of the deceased through such machineries it deems fit and in the present case through APL, without the right of distributing the assets. (ii) Section 247 in my view enjoins a duty upon the Court as guardian of estate of deceased to not only appoint an Administrator but to render all protection to the administrator during pendency of the suit or proceeding touching the validity of the Will left behind by the deceased. (iii) I am further of the view that while arguing upon the appointment of APL and the parties having subjected themselves to the jurisdiction of such APL it is no more permissible to any one of them to argue that this Court has no jurisdiction to look into the complaint against the APL or to seek orders to ensure smooth functioning of the APL. (iv) On a proper understanding the scope of Section 247 an Administrator ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eservation of the estate of the deceased is concerned in a pending suit or proceeding. Therefore, this Court has no hesitation to hold that it has jurisdiction to pass an appropriate order in favour of protection and preservation of the estate of the deceased subject to the entertainability of the prayers made in the application filed by the defendants. 179. Contrary to what has been submitted by Mr. Mitra I hold that because of the very nature of Indian Succession Act which is a self-contained code no provision from the Civil Procedure Code is required to be borrowed for carriage of a proceeding under this Act, consequently his submission that the defendants has not complied with the provisions of Order 7 Rule 1 by not making pleading of jurisdiction the application could not be entertained, is not based on sound principle of law and, therefore, I hold that such submission of Mr. Mitra has no force in the present case. Defendants' application is very well maintainable. 180. On going through the provisions of Section 247 it appears that a probate Court also takes the responsibility to administer the properties as left by the deceased and to preserve the status quo of such....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d "It would be for the APL to take appropriate steps so far as the estate of PDB is concerned, in terms of the direction of the Division Bench of this Court." The said Court also found "foundation of the claim of respondent no. 2 to manage the affairs of the company is derived from his control or influence over the entities having 62.09 % shareholding of the company. The division Bench of this court has empowered to exercise all rights flowing from the ownerships of the PDB. The jurisdiction to decide on this issue thus, in my opinion has largely shifted from the domain of CLB to the probate Court and from trial of suits." As mentioned herein before the decision of the Hon'ble Apex Court in Arcellormittal India Private Limited (supra) says that expression "control" has been defined in two parts, the first part refers to the de jure control, which includes the right to appoint a majority of the director of the company. The second part refers to de facto control, so long a person or persons acting in concert, directly or indirectly, can positively influence, in any manner, management or policy decision they could be said 'in control'. Incidentally this Court also takes no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pleadings of the parties, exhaustive written notes filed by them and the Administrators as also three noticee companies and their elaborate oral submission, the following undisputed facts are apparent namely : (1) Late Priyamvada Devi Birla (PDB) died on 3rd July, 2004. She left a Will and Codicil wherefrom T.S. 6 of 2004 arose. In the said Will plaintiffs R.S. Lodha was nominated as Executor to take over the entire management and control over the business and the properties owned by her and left by the deceased directly or indirectly. In the Will directions were issued to the effect: (i) "He will exercise all powers, rights, duties and responsibilities in respect of the business concerns, properties and institutions to the extent I have been exercising; (ii) He will take such steps as are necessary for overseeing of and the control and management of all industries and investment companies owned and managed by me when I was alive..." (2) After demise of PDB Late R.S. Lodha took over the control of all management and investment companies along with the trust, and institutions coming under the group as Executor of the Will left by PDB. (3)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....capacity as representatives of the beneficiaries to execute all such rights which flow from the ownership of the shares and so enjoyed by the deceased during her lifetime. Therefore, we have no hesitation to hold that in their capacity as representative of the deceased estate of the deceased vests in them for that limited purpose of administering the same for the benefit of estate of which succession is in abeyance. It is true that in order to enjoy certain rights flowing from the shares and stocks of companies held by the deceased they will have no apply to the respective companies to obtain such benefits viz in case the company comes out with right issue and/or bonus shares which otherwise can only be subscribed by the shareholder. We do not want to discuss the various facets of such exercise of rights of ownership of shares by the Joint Administrators as we think it better to leave it to their best discretion and wisdom and, according to the exigency found to exist. In such an event it would be always open to the parties if they are aggrieved to approach the Probate Court (which has appointed a committee of three persons) as Joint Administrators (who) are subject ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceased had controlling shareholding in the investment Companies either by direct investment or along with other Investment companies. APL while exercising its authority over the estate of the deceased does not appear to have violated the order dated 23rd August, 2012 and therefore, it cannot be said that parties are not bound by the decision of the APL unless a contrary is proved. If a party is aggrieved by the decision of APL, it can reasonably be concluded now that since, the APL without any specific order from the Court has taken decision by majority instead of unanimity the same could have been agitated long before but having accepted the same and having subjected itself to the jurisdiction of the APL Committee recognizing that APL has got the authority to exercise within the scope of the order dated 23rd August, 2012, it is now an absurd proposition raised by the plaintiffs that since the APL has not taken any unanimous decision the same cannot be either implemented or be made binding upon the parties. 186. In my view once the parties allowed themselves and they participated in the meeting without raising any objection that its decision if not unanimous cannot be deliberat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ily founded their action as minority shareholders of the company. Some discussion on the said probate proceeding, however, would be necessary, as the right of the respondent no. 2 to continue as a director of the respondent no. 1, as the his authority to influence the decision making process of other entities who together exercise control over the said 62.9% shares in the company has been questioned on behalf of the appellants." "8. On the issue of freezing of voting rights on the respondent no. 1 of HVL and the other entities over which HVL is alleged to have control, my opinion is that the directions issued by the Division Bench in the said order passed on 23rd August, 2012, would cover that aspect of the matter.... The basic reasoning on which the appellants' claim is based on this count, however, is directly relatable to the issues being examined in the probate proceeding. Claim of the appellants on this point in this appeal, in my prima facie view would have overlapping effect vis-à-vis the issues involved in the probate proceeding. In these circumstances, I do not think it would be proper for me to pass any order to express opinion pertaining to the estate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are reproduced below: "Section 2 (27). "Control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner. Section 2(69): "Promoter" means a person- (a) Who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92; or (b) Who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or (c) In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act: Provided that nothing in sub-clause (c ) shall apply to a person who is acting merely in a professional capacity; Section 47: (1) Subject to the provisions of section 43, sub-section (2) of section 50 and sub-section (1) of section 188,- (a) every member of a company limited by shares and holding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y virtue of their shareholding or management rights or shareholders agreements or voting agreements or in other manner: Provided that a director or officer of a target company shall not be considered to be in control over such target company, merely by virtue of holding such position;" 190. If the contention raised by the noticee companies are to be accepted the entire concept "control", "Promoter" or "Promoter Group" and "Beneficial interest", the provision of Companies Act, 2013 and SEBI Regulations as pointed out thereby appears to be superfluous. 191. In my view denial of these concepts under the Companies Law and the aforesaid regulation will run counter to the estate of PDB and will consistently give rise to a conflict of interest between the estate of PDB and the plaintiffs if such conflict is not removed or at least stopped by action of the Court as an interim measure then ultimate beneficiaries under the Will may be deprived seriously as this growing conflict with the interest of the estate may ultimately, lead to dissipation of the estate without any cheques and balances. Therefore, this Probate Court being a Court Under Section 247 has to to preserve and p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and "irreparable loss" are to be considered based on the facts of each particular case and to meet myriad situations presented by man's ingenuity in given facts and circumstances, it is to be decided with sound exercise of judicial discretion to meet the ends of justice. Prima facie case is that which raises substantial question, of course bona fide, which needs investigation and, ultimately, a decision on merits. 196. A case of temporary injunction is an action preventive in nature and a specie of precautionary justice intended to prevent apprehended wrong or anticipated mischief which if allowed to happened may not be un done and cannot be compensated by money. 197. The principles which largely govern the exercise of discretion by the Court are to the effect that a person who seeks an order injunction must satisfy the Court - firstly, that there is a serious question to be tried in the suit and that on the facts before the Court there is a probability of his being entitled to the relief asked for by him. Secondly, That the Court's interference is necessary to protect him from that species of injury which the court calls irreparable, before his legal right can be est....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... vis-à-vis the apprehended injury which might be suffered by the ultimate beneficiaries of the estate of the deceased, this Court is of the view that the defendant/petitioners have made out sufficient case to get an interim order/temporary injunction to preserve and protect the interest of the ultimate beneficiaries under the Will of PDB concerning the estate of the deceased and this Court in aid of the final relief in the Testamentary Suit in exercise of the power conferred under section 247 of Indian Succession Act, passes the following orders: (a) The plaintiffs shall implement the decision dated 19th July, 2019 and 30th July, 2019 of the APL Committee taken by majority as also all consequential decisions of the APL in furtherance of the said decisions and shall be restrained from drawing any benefit personally from out of the assets of the estate of the deceased during pendency of the Testamentary Suit. (b) Plaintiffs are also restrained from interfering with the decisions of the APL and any decision which might be taken by it in future by majority if the same directly or indirectly relates to the estate of the deceased and further the plaintiff no. 1, ....