TaxTMI 
TaxTMI 
2007 (10) TMI 705
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....) and Laxmi Devi Newar (hereinafter referred to as "LDN"). His Lordship was pleased to pass the following order: ...Hence I appoint joint Administrator, pendente lite, consisting of following persons (i) Mr. Hiranmoy Dutta, Bar-at-law of Bar Library Club; (ii) Promotha Nath Chatterjee, Learned Advocate of Bar Association, Room No. 1; (iii) Mr. Prabir Kumar Roy, ex-Sheriff of this Court of 10, N.S. Roy Road, Behala, Kolkata-700019; (iv) Mr. Sujit Bhattacharjee of 52-C; Ballygunge Circular Road, Kolkata - 700019, who shall take charge and control of all the shareholding of the deceased Lady in all the companies and they should function as could be functioned by under law by virtue of the controlling shareholding of all the Companies left behind by the said Lady. They shall take step for rectification of all the share registers of the Companies recording their names. They shall immediately make an enquiry as to the dealings of Lodha vis-a-vis dividends and investment of the dividends and submit a report to the Court and they shall place themselves in the Board of Directors wherever it is possible by virtue of the shareholding. They shall, in consultation with each other....
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....Executors have been substituted in the probate proceedings. Admittedly, after the death of PDB, RSL, on July 12, 2004 read out the said registered Will at Birla Park before the members of Birla family. On July 19, 2004, RSL filed the probate application before this Hon'ble Court being P.L.A. No. 204 of 2004.9. It further appears that a suit being C.S. No. 221 of 2004 was filed on August 17, 2004 by KKB, GPB and others claiming that MPB and PDB had left earlier Wills dated July 13, 1982 and the said two Wills are Mutual Wills. The claim in the plaint is that there is an irrevocable agreement between MPB and PDB that they would not revoke the said Wills. 10. On August 18, KKB and others filed a petition for probate of the alleged Will of MPB dated July 13, 1982 which has been marked as P.L.A. No. 241 of 2004. It is pointed out that the said petition was filed for probate 14 years after the death of MPB (i.e. in the year 1990). Another petition for probate was filed by GPB and others for probate of the alleged Will of PDB dated July 13, 1982 being P.L.A. No. 242 of 2004. 11. After the death of PDB, RSL, as Executor, took the charge of the Estate of PDB. The said fact is also....
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....lear in the event any step is taken for removal of any of the Directors only prior seven days notice shall be served upon the Defendants. I direct the profounder by his controlling share holding shall not move any resolution nor support any resolution aiming to sell, encumber any assets of the MPB Group of Companies nor closure thereof, without express leave of the Court. The profounder shall also, maintain status quo in relation to the other properties. 15. At the ad-interim stage the Hon'ble First Court held prima facie that: ...do not find any allegation of mismanagement, destruction and devastation of the Estate only an allegation has been made that a jute mill is sought to be closed and the same is sought to be shifted. Explanation has been given by Lodha in his separate application stating that for economic viability of the above jute mill the said decision was taken to shift mill at a different place as the existing site does not have any scope for expansion.... So, I think, keeping in view the interest of the group of companies on the one hand and to safeguard the interest of the Estate of the deceased lady on the other hand slightly regulatory measure....
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....management has been established, even prima facie. 18. He further submitted that under Section 247 of the Indian Succession Act, the Court has power to appoint Administrators Pendente Lite. No specific guidelines are mentioned in the said section. Therefore, Courts have laid down the guideline through judgments. Mr. Mitra submitted that the principles for appointment of Administrators emerge from decided cases and the principles laid down therein are still undisputed. 19. Appointment of Administrator is analogous to that of appointment of Receiver and he pointed put that the said position has also been accepted by the Hon'ble First Court and he drew our attention to page 45 line 7 of the said judgment in this regard. Under Order 40 Rule 1 of the Code of Civil Procedure, the appointment of Receiver should not only be just but must also be convenient. 20. He further pointed out that the Respondents before the Hon'ble First Court relied upon the following judgments: AIR 1933 Bom 342 Pandurang Shamrao Laud and Ors. v. Dwarkadas Kalliandas and Ors.; AIR 1951 Mad 393 Adapala Subba Reddy and Anr. v. Adapala Andemma and Ors.; AIR 1952 Cal 418 Goods of Borend....
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....ilar to that of Receiver. [see page 763] 24. In Williams on Executors & Administrators, 14th Edn. Page 206, the practice of the probate division is to appoint an Administrator Pendente Lite in all cases where the Court of Chancery would appoint a Receiver. The same principle was followed in the decision reported in 13 CLJ 47 (Bhuban Mohini Debi vs. Kiran Bala Debi) 25. He further pointed out that the appointment of Administrators Pendente Lite under Section 247 of the Indian Succession Act the criteria of necessity is also to be fulfilled. Necessity of presentation of the Estate of the deceased testatrix is the more important criteria. Unless grounds for necessity are established, there is no jurisdiction to appoint Administrators. Reliance was placed upon the decision reported in 13 CLJ 34 (Jogendra Lal Chowdhury vs. Atindra Lal Chowdhury) where the Hon'ble Court has held that whether there is anything against the appellant personally which would necessitate the Court taking the Estate out of his hands. In the decision reported in 13 CLJ 47 (supra) the Court expects a necessity to be shown for the temporary grant namely, that there is something required to....
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....re an Executor, whose appointment was not in dispute, was willing to act, and was competent to discharge the function of an administrator, the Court refused to grant administration Pendente Lite. 30. He further drew our attention to Woodruff on Receiver 7th Edn. page 98, line 15 which is reproduced as hereunder: The Executor will not be displaced upon slight grounds, and a strong case must be made out to warrant the appointment of a Receiver where the Executor is willing to act. Where, however, the circumstances above mentioned exist, such as, would justify the appointment as against a trustee and where the abuse of trust is manifest, and it is plainly apparent that there has been serious waste and misappropriation of the funds, relief will be granted, especially is this true when the mismanagement is shown not in a single instance but from as habitual course of dealing, involving the property in danger. 31. The following judgments were cited on behalf of the Respondents: In the decision reported in AIR 1933 Bom 342 (supra) where the Court has held that before exercising its jurisdiction to grant Administrator Pendente Lite, it has also to be sat....
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....d waste and mismanagement of the Estate by the Executor; (b) Where there is debt due to the Estate and not being collected; (c) Dilution of the Estate by the Executor and consequently necessity for preservation of the Estate arises; and (d) nature of the Estate. 36. The following decisions were cited on behalf the Appellant in the above context: In the decision reported in AIR 1956 Mad 409 (Kunjammal v. Malayappa Iyer and Anr.) the Court specifically held that: there is no authority for the position that whenever the Estate, or a large part of it consists of movable property and cash and the person, in possession of the Estate is a limited owner a Receiver should be appointed, it is not the law. There must be proof of a further fact, namely, that the conduct of the limited owner has been such as to raise a reasonable apprehension. We are unable to follow the seasoning of the learned Judge on which he finds that though no positive acts of waste or spoliation have been proved, there is room for reasonable apprehension of such waste or fraudulent secretion to the detriment of the reversionary. This finding i....
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....nts invested in mutual funds, Government and other Bonds, undivided 1/5 share in Kumaon Orchard, ornament Jewellery and gold coins and silver utensils, household article and plates and antiques, etc. This clearly reveals that the Hon'ble First Court had found that there was no necessity for appointment of Administrator Pendente Lite over those valuable assets. The Hon'ble First Court has appointed the Administrator Pendente Lite only over the shareholding in the M.P. Birla Group of Companies. 42. Mr. Mitra humbly raised the question of dichotomy and contended that when there was no necessity for appointment of Administrator Pendente Lite over the other assets, what was the necessity for appointment of Administrator Pendente Lite over the shares of PDB in M.P. Birla Group of Companies. No reason has been given in the judgment by the Hon'ble First Court for appointment of administrator Pendente Lite over a part of the Estate and continuing the named Executor to manage the remaining part of the Estate. It clearly reveals that the Hon'ble First Court did not consider RSL untrustworthy. There is no finding of waste, mismanagement or devastate in the judgment of the Ho....
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..... The number of outside members vary from 10,000 to 40,000 in these four manufacturing companies, [see para 4.5 page 29 of the impugned judgment]. None of the companies are party to the probate proceedings and in the application for appointment of Administrator Pendente Lite. No notice of this application for appointment of Administrator Pendente Lite was given to the public shareholders by issuing a general notice through newspaper or otherwise. This is not a proceeding under Order 1 Rule 8 of the Code of Civil Procedure. Undoubtedly a large number of members of public will be affected by this appointment of Administrator pendente Lite. Even the companies who will be directly affected by the impugned order for appointment of Administrator Pendente Lite were not given notice. In short, the persons interested in proper management and well running of these companies have not been before the Court. It is also submitted that it would not be "just" in the facts and circumstances of this case to appoint Administrator Pendente Lite over block of shares in M.P. Birla Group of Companies. There has been failure of procedural justice and fairness. 46. Mr. Mitra drew our attention to page 3....
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....and the order is contrary to the provisions of the Companies Act. 50. He further submitted that there are specific provisions in the Companies Act for rectification of share register, appointment of Directors. Neither shareholders nor Directors have been empowered under the Companies Act to dissolve the Board of Directors. It can only be done by Company Law Board in proceedings under Section 397 and 398 read with Section 402 of the Companies Act. All the statutory provisions have been by-passed by the Hon'ble First Court. Although His Lordship held that the probate court has no jurisdiction to take over management and control of separate juristic bodies, even then have passed an order contrary thereto. The impugned order is without jurisdiction and contrary to principle of law as laid down by the Hon'ble First Court. The order for appointment of Administrator Pendente Lite over block of shares and directions given regarding management of the Companies should be set aside on this ground. The order of the Hon'ble First Court is contrary to law and, therefore, suffers from vice of error of law on the face of the judgment. 51. According to his further submission, no c....
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....te mill the said decision was taken to shift the jute mill at a different place as the existing site does not have any scope for expansion...so, I think, keeping in view the interest of the group of companies, on the one hand and to safeguard the interest of the Estate of the deceased lady on the other hand slightly regulatory measure is to be taken.... 55. Therefore, the appointment of Administrator Pendent Lite over the controlling block of shares and intervention in running business are not at all justified. The grounds mentioned by the Hon'ble First Court in the judgment do not give rise to necessity for appointment of Administrator. Some of the grounds have got no factual basis and are dehorns the pleadings of the parties. The order is not supported by reasons and based on non-existent facts and, therefore, liable to be set aside. 56. Mr. Mitra further contended that even assuming the case of necessity is established, is it just or convenient to appoint Administrator Pendente Lite in view of nature of that part of the Estate over which Administrator Pendente Lite has been appointed, namely running the businesses which includes separate public listed companies with th....
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....Hon'ble First Court held that there is strong possibility of proceeding being initiated or defended in connection with the Estate and for collecting debts from the debtors. Mr. Mitra again pointed out that the said allegation was neither placed nor argued by the Respondents. According to him, there is no proceeding pending, nor any debt outstanding except a loan given by PDB to East India Investment Co. (P) Ltd., a company in which PDB is the major shareholder. The Estate is such that there is very little likelihood of any proceeding being initiated against the Estate or proceeding being filed by the Estate for collection of debts. Dividends by the companies and mutual funds are sent by cheques or automatic credit to bank through ECS. 61. The Hon'ble First Court further stated in the judgment that Lodha is a tainted person as because criminal proceeding has been instituted against him and his challenge in the criminal prosecution at the initial stage failed right upto Hon'ble Supreme Court. Mr. Mitra further pointed out that this criminal proceeding has been instituted at the behest of the Respondents which is clearly demonstrated and, therefore, they cannot take adv....
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.... in the petition. Administrators Pendente Lite are appointed by the Hon'ble First Court are also human beings with human mind. He also drew our attention to the fact that under the Indian Succession Act, there is no provision for keeping control over the Executor during the pendency of the proceeding except by appointment of Administrator (see page 47 line 7 and page 52 line 14 of the impugned judgment). 63.2 Mr. Mitra said that this finding itself is contrary to what has been held in pages 56 and 57 of the judgment, where the Learned Judge held that RSL should have kept have kept the Court informed about the transmission of shares of PDB in the investment companies in his own name as Executor and that he should have also sought the direction from the Court with regard to discovery of all the movable and immovable properties of the deceased. This has already become a suit being Testamentary Suit No. 6 of 2004. RSL is the Plaintiff. All parties to the suit will be bound by any order passed in the suit and are under the control of the Court. The Court can always given directions to the parties to the suit. 64. According to Mr. Mitra, such findings are without any material a....
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....ir own resources and funds. On the contrary, it is alleged that the Charitable Trusts/Societies have been set up from the resources of M.P. Birla Group. 69. His Lordship further held that RSL hurriedly got the shares of PDB in the Investment Companies transferred in his own name before filing of probate petition and before the completion of Shradh ceremony which would go to show that he was anxious to take control of all the Companies including other assets and properties (see page 55 of the impugned judgment). According to the Respondents, 99.84% of the Estate of PDB is comprised of these shares in the investment companies and through these investment companies the entire M.P. Birla Group of Companies are controlled. Therefore, RSL was under a duty and obligation as Executor to take control of the shares and transmission was applied for not in his personal name but as Executor to the Estate. The Court held that the shares of PDB in the investment companies transferred in his own name before filing of probate petition and before the completion of 'shardh' ceremony. 70. The said view is contrary according to Mr. Mitra since the Hon'ble First Court is of the view th....
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....immovable properties of the deceased has been misplaced or wasted. On the contrary, the Special Officers have inventoried the movables which were found to be much more than what the Respondents have stated in their affidavit of assets or inventory petition. 74. It is also stated in the decision of the Hon'ble First Court that huge amounts are being divested by RSL in mutual investment company floated by RSL. Hence, Mr. Mitra contended that there are no pleadings, no documents, no arguments put forward before the Hon'ble First Court and it is factually incorrect. Mr. Pal, Learned Senior Advocate papering on behalf of the Respondents also accepted the said position and contended that no mutual investment company has ever been floated by RSL nor any part of the Estate of PDB invested in mutual fund by RSL. 75. According to the Hon'ble First Court, RSL was unmindful of his function as Executor as because he was busy appointing himself as Chairman of the Board of Directors of M.P. Birla Group of Companies (see page 57 of the impugned judgment). Mr. Mitra pointed out that there was no pleading, no argument, no document. On the contrary, RSL was already the Chairman of a....
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.... The performance of manufacturing companies have substantially improved and value of shares were increased. 79. According to Mr. Mitra the Hon'ble First Court further held that it is not known that wherefrom RSL is meeting the cost and expenses of fighting the good numbers of litigation and specially the criminal prosecution in the High Court and in the Apex Court and whether the litigation expenses are being met out from the Estate or by the Executor from his own account is not known to Court. On this point Mr. Mitra submitted that it is neither pleaded nor argued before the Hon'ble First Court and he pointed out that RSL is also a man of independent means. However, this part of the judgment was also not supported by Mr. Pal, Learned Senior Advocate appearing on behalf of LDN during the course of hearing. In the year 2003-04, the share of profit of RSL from Lodha & Co., Kolkata was Rs. 37.51 lakhs; there was a sum of Rs. 84.09 lakhs to the credit of his capital account and his drawings in that year from this firm was a sum of Rs. 22.56 lakhs. 80. Similarly, in the year 2003-04, the share of profit of RSL from Lodha & Co., Mumbai was Rs. 76.15 lakhs; there was a sum o....
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....ng basis that RSL has admitted that the entire Estate has vested in charitable trust. (d) The Learned Judge has also proceeded on the basis that proceeding under Section 247(1)(A) of the Companies Act has been instituted against RSL. RSL is not even a party to such proceeding. (e) The same applies to suppression of gold coins, Jewellery and artifacts etc. from the affidavit of assets. Not only is this factually incorrect and there is no question of any admission, but in fact RSL has included those items under proper prescribed heads in the affidavits of assets. Details are not required to be given in the affidavit of assets but the estimated values are to be given for court fees Maximum court fees have been given in this case. The Birlas have not given details of Jewellery, coins etc. in their affidavit of assets filed in connection with alleged Wills of 1982. Birlas have given ad hoc higher value of estimated Rs. 50 lakhs in order to complicate taxation matters of the Estate. RSL has given valuation as per Trial Balance of PDB maintained during her lifetime. 83. According to Mr. Mitra the judgment given on the basis of "admitted facts" in fact, are....
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....B's residence in Birla Park. It is also admitted from the facts as well as from the petition filed before the Hon'ble First Court by the Respondents that the Estate involves running of the business. 88. Mr. Mitra further contended the part of the Estate over which the Administrator Pendente Lite has been appointed is concerned with running business and any appointment of Court Officer over the controlling block of shares will tantamount to appointment over these companies; something which the Hon'ble First Court held that the probate court has no jurisdiction to do. In fact, during the hearing of the appeal, the Respondents by praying for appointment of Administrator Pendente Lite over that part of the Estate of PDB "to act in accordance with law" viz. Administrators over the shareholding of PDB, are in fact trying to achieve indirectly what they know cannot be achieved directly, viz. to have Administrators appointed over the M.P. Birla Group of Companies, if Administrators are appointed over and in respect of these shares with power to exercise voting rights in respect thereof, that would enable Court Officers to play with the fate of the Companies within M.P. Birla....
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.... our attention to the fact that the Respondents admit that the M.P. Birla Group of Companies was under the control and management of MPB and thereafter since 1990 it was under PDB. PDB was the Chairman of all the 4 public limited manufacturing companies during her life time and the Executor, RSL was inducted as a Director of several companies of the M.P. Birla Group of Companies curing the life time of PDB. 93. Mr. Mitra submitted summarizing the case of the Respondents/Birlas with regard to involvement of RSL with the management and affairs of the M.P. Birla Group of Companies is as follows: (i) RSL was involved in financial matters, of several Companies of the M.P. Birla Group even during the lifetime of MPB [see affidavit in support of Caveat para 15(d) to (f) page 154 vol. I of the Paper Book]. (ii) After the death of M.P. in 1990, PDB Supra 11 reposed complete trust and confidence in RSL in matters pertaining to all the financial affairs of Group as also concerning management of all the Companies [Affidavit in support of Caveat para 15 (g) page 155 vol. I). As a matter of fact RSL was appointed founder Trustee of M.P. Birla Foundation by MPB hi....
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....k 1 Birla Corporation Ltd. 12.06.1991 Director Vol. Ill page 641 23.04.1996 Advisor to Chairman Vol. Ill page 642 15.09.2001 Director/Co-Chairman Vol. Ill page 643 2 Hindustan Gum & Chemicals Ltd. (Joint 16.07.1999 Director Supplementary Paper Book Page 175 venture with Rhodia of USA) 05.05.2004 Co-Chairman 3 Vindhya Telelinks Ltd. 24.10.2001 Director Supplementary Paper Book 05.05.2004 Co-Chairman Page 175/ Vol. Ill page 765 4 Universal 05.05.2004 Director/ Vol. Ill Cables Ltd. Co-Chairman page 765/830 95. In July, 2005, RSL became Chairman of the Birla Ericsson Optical Ltd., which is a joint venture Company with Ericsson AB of Sweden, at the request of President of the Foreign Company. 96. It further appears from the fact that a Board Meeting of Birla Corporation Ltd. held on September 15, 2001 chaired by PDB from the Minute of the Meeting the following fact revealed "The Chairman mentioned how RSL had, on the request of Late MPB, been helping all t....
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....ensex Sensex as on 02.07.04 Sensex as on 02.01.07 %of increase Bombay Stock Exchange 4870.58 points 13942.24 points 288.25% 99. Thereafter, Mr. Mitra contended that it would thus appear that these manufacturing companies under the leadership of RSL 2CAL CALCUTTA SERIES 449 performed better. The argument of the Respondents regarding the increase of the share price because of general increase of sensex is thus far from truth. 100. He further submitted that RSL i-s a past President of Federation of Indian Chambers of Commerce and Industry, one of the apex trade and industrial bodies of the country and has also served inter alia on various committees including Prime Minister's Council on Trade & Industry and Central Direct Taxes Advisory Committee set up by the Government of India. He is a Director on the Boards of National Securities Depository Ltd., Mumbai, SBI Life Insurance Company ltd., Mumbai and several other important Boards etc. He continued that RSL has also served on important policy making and regulatory committees constituted by the Government of India/ Regulatory Bodies including SEBI. Take Over Code Review Committee and Company Law ad....
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....he year 2001 he became a Director of Canberra Traders Pvt. Ltd.; thereafter in the year 1999 he became a Director of Shreyas Projects & Trading Co. Ltd. 104. Shri S.K. Daga (hereinafter referred to a "SKD") was a Director of Punjab Produce & Trading Co. Pvt. Ltd. in the year 1990; thereafter he became a Director of Punjab Produce Holdings Ltd. in the year 1999; thereafter he became a Director of Mazbat Tea Estates Ltd. in the year 1999; thereafter he became a Director of Shreyas Projects & Trading Co. Ltd. in the year 1996. 105. Shri D. L. Rathi (hereinafter referred to as "DLR") became a Director of Gwalior Webbing Co. Pvt. Ltd. in the year 1984; thereafter in the year 1999 he became a Director of Baroda Agents & Trading Co. Pvt. Ltd.; thereafter in the year 1999 he became a Director of Shreyas Projects & Trading Co. Ltd. 106. Shri Umesh Verma (hereinafter referred to as "UV") who was appointed as the Director of Shreyas Projects & Trading Co. Ltd. upon resignation of SKD, was employed in the Investment Companies of the Group since 1990. 107. Mr. Mitra further contended that the Birlas have also questioned the appointment of a few other persons as independent Directors....
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....ed that by taking these Companies out of the fold of M.P. Birla Group of Companies, the real motive of disintegration of the M.P. Birla Group by other Birlas has come out on the surface. (iii) He further contended that another company namely, Indian Smelting & Refining Company Ltd. has been taken out of the fold of M.P. Birla Group within 48 hours of cremation of PDB. This Company is shown as part of M.P. Birla Group in suit filed by Birlas being C.S. No. 221 of 2004. However, the name of the Company was removed from the list of Companies of M.P. Birla Group over which Administrator has been sought and he drew our attention to Administrator Petition - Annexure 'J' page 293 Vol. I in this context. (iv) Thereafter, he submitted that the - proceedings for destabilizing the Companies of M.P. Birla Group have been initiated by the Birlas. Four such proceedings started in Company Law Board - 2 against Birla Corporation Ltd. and 2 against Vindhya Telelinks Ltd. However, the Birlas have been unsuccessful in getting favorable orders from Company Law Board. Even the appeal filed by them in this Hon'ble Court has been dismissed. 110. According to M....
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....Group of Companies is not attributable to the good management of RSL but due to favorable market condition and this is a complete turn around from the case of mismanagement made out in the petition appearing at para 8(c) page 893 vol. Ill for the Paper Book. (b) Loss of cement worth Rs. 15 Lakhs from Satna Plant of Birla Corporation Ltd. This one off, insignificant incident occurred during the lifetime of PDB. However, action was taken against Head of Marketing of Satna Division and was replaced. (Reliance placed on supplementary affidavit para 18, page 1853, vol. VI of the Paper Book). (c) Investment of surplus funds of Birla Corporation Ltd. in Mutual Funds and simultaneous borrowings from Banks and Financial Institutions and it appears that the Birlas conveniently suppressed the fact that this is a common industry practice followed not only by many large companies in India but also by the Companies belonging to the Birlas, he submitted. (Attention drawn to para 23 of Supplementary Affidavit at page 1855 vol. VI of the Paper Book). (d) Two Rights Issues of shares of Birla Corporation Ltd. in the years 1999 and 2001 respectively at high....
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.... loans of Financial Institutions in order to have their nominee on the Board removed. Mr. Mitra submitted that this is in the interest of the Companies, it cannot prejudice the interest of the Companies. 113. Mr. Mitra also pointed out that apart from the above, several other points were taken in the Hon'ble First Court though not of any substance. At the hearing of the appeals, Respondents/Birlas have chosen to abandon all the points taken in the pleadings. The following are the particulars of the various grounds were taken in the administrator petition and affidavit in reply and which have not been argued at the hearing of the appeals. He drew our attention to the following chart in this respect: SI. No. Grounds taken in the Administrator petition and Affidavit in Reply Reference 1. Closure of Soorah Jute/Mills Appearing at para 29 in the Petition 2. Sale of Plant & Machinery of Birla Synthetics Appearing at para 30 in the Petition 3. Cement division of BCL making comparatively less profits than other Birla Companies Appearing at para 8(c) and (d) in the * Affidavit-in-Reply 4. Closure of Auto Trim Division ....
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....ans Appearing at para 15(g) in the Affidavit-in-Reply 25. Fiduciary relationship - Chartered Accountant and client Appearing at para 6 in the Petition 114. Those above points were not argued in the appeal. Mr. Mitra submitted that at the time of the appeal only the following grounds have been urged by the three Learned Senior Counsel appearing on behalf of the Respondents in the 2 (two) several appeals: (i) Considering the vastness and complexity of the Estate, it should not be left in the hands of RSL. (Dealt with at para 8.2 at page 47 of the Paper Book) (ii) Serious challenge to the said last Will. (Dealt with para 8.3 at page 49 of the Paper Book.) (iii) RSL is not in management of day to day affairs of the M.P. Birla Group of Companies and those are left in the' hands of professional executives. (Dealt with at para 8.4 at page 55 of the Paper Book.) (iv) Nn-inclusion in the Affidavit to Assets of (a) 1/5th undivided share of PB in Kumaon Orchards, (b) antiques and Gold Coins (Dealt with at para 8.5 at page 56 of the Paper Book.) (v) Rights Issues of shares of Birla Corporation L....
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....eholding of 4 quoted public manufacturing companies. Therefore, if an Administrator is appointed as prayed for by the Birlas, displacing RSL, that Administrator would be in control of large numbers of running businesses constituting part of M.P. Birla Group of companies. It is a settled law that the Administrator/ Receiver cannot be appointed over running businesses and he placed reliance on judgments reported in AIR 1987 Cal 194 (supra) and AIR 1951 Madras 393 (supra) in support of such contention. 117. He further drew our attention to a decision reported in 1988 (1) CLT 61 (Supra) where the Hon'ble Court held as follows: ...We should not lose sight of the fact that the proceedings in the instant case is by way of suit where interlocutory relief's have been claimed. Unless there are extraordinary or special circumstances, the Court should not take up the full time * management of running company which will entail supervision of numerous and day to day details and work.... 118. Hence, he contended that even the Hon'ble single Judge in the present case at page 3 of the impugned judgment came to the conclusion that the Administrator cannot be appointe....
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....ealth at the time of execution of her last Will which will be evident from the following: (a) Her various foreign trips since 1999 including pleasure trips to Antarctica, Arctic, Hawaii, China and Mexico, (full particulars whereof are appearing at page 818 vol. Ill of the paper book). (b) Letter of her regular physician in U.K., Professor John Cunningham certifying her condition of health, (appearing at page 1960 vol. VI of the paper book). (c) PDB regularly attended and chaired Board Meetings of M.P. Birla Group of Companies at least since death of her husband (particulars of which are appearing at page 850 of vol. Ill of the paper book) II) PDB had sufficient mental capacity to make the Will which would be evident from the following: (a) Attendances of Board Meetings of different companies including Century Textiles & Industries Ltd. (BKB controlled Company) where she had attended 14 out of 18 Board meetings in last 3 years (see page 780 para 29 vol. Ill of the paper book.) (b) Photographs of PDB's interactions with various eminent personalities including former Chief Justice of India, Governor of Karn....
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....pute with regard to PDB's command over English language! 124. He submitted that the so-called serious challenge to the Will is merely on the basis of bare pleadings not supported by any evidence and in fact country to the materials on record. In an endeavour to create some kind of a so-called challenge, the Birlas Made out a contradictory case on facts. There is allegation of forgery of the Will simultaneously with an allegation of exercise of undue influence of PDB to execute the Will both are self-contradictory. 125. He placed reliance upon a decision reported in AIR 2006 SC 1975 (Gurdev Kaur and Ors. v. Kaki and Ors.) and contended that it has been held that there is a presumption of due execution of a Will where it is shown that the Will has been executed and attested in accordance with the requirements of statute. Further, reliance was placed on the decisions reported in Theobald on Wills, 16th Edition page 39; AIR 2005 SC 52 (Meenakshiammal and Ors. v. Chandrashekaran and Anr.) and AIR 2005 Cal 212 Chanchal Kumar Das and Ors. v. Pasupati Nath Das and Ors.). On the question of burden of proof, onus to prove forgery, undue influence and coercion lies on the person who....
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.... a) Affidavit dated April 3, 1991 affirmed by PDB and not aroused by N. C. Shah, Advocate and Notary ( of Khaitan & Co.) (See page 3179 vol. X of the paper book) b) Affidavit dated August 19, 1992 affirmed by PDB and notarized by N. G. Khaitan, Advocate, (see para 3199 Vol. X of the Paper Book). c) Indenture dated September 22, 1992 executed by and between PDB and The Punjab Produce and Trading Company Ltd. (see page 3205 Vol. X of the Paper Book). d) Deed of Declaration Dated March 12, 1997 executed between PDB, Jiyajeerao Cotton Mills and The Punjab Produce and Trading Company Ltd. (see page 3216 Vol. X of the Paper Book). 127. Mr. Mitra also pointed out that the suit being C.S. No. 221 of 2004 filed by the Birlas for enforcement of alleged mutual Wills of MPB and PDB of 1982 is ready for hearing but the Respondents/Birlas are opposing early hearing of the said suit. 128. Mr. Mitra further drew our attention to the fact the Birlas have also contended that there is a serious challenge put up by them to the probate of the said last Will and Codicil of PDB and on the ground, Administrators can be appointed. Without admitting the above prop....
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....ntact and preserved in boxes with all notes and papers at Birla Park and he drew our attention to 2nd Inventory Report appearing at pages 2747, 2750 of vol. IX of the paper book and page 3285 at para 51 of vol. X of the paper book and at pages 117-140 of Inventory Report. He further contended that the value of movable articles stands only about 0.04% of the total Estate. Several silver and other articles including ivory items found in Allahabad, (our attention drawn at page 144 & 147 of the 1st Inventory Report). Best possible security arrangement has been made for the aforesaid four properties. Birlas have also engaged security guards at the main gate of the compound at Birla Park. Security arrangements made by RSL not denied in affidavit-in opposition. 133. According to him, under Section 317 of the Indian Succession Act, inventory to be made within six months from grant of probate. Collection of properties under Section 319 of the said Act cannot mean physical collection. Mr. Mitra contended that Affidavit of Assets is relevant only for the purpose of court fees and he relied upon the decisions reported in AIR 1980 Del 57 (In re: Anita Rewai); AIR 1965 Pun 138 (Channan Devi u....
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....he Companies of the M.P. Birla Group as also the Companies belonging to the other Birlas functioned normally. Official business was transacted normally. In fact several staff of the M.P. Birala Group of Companies did over time on that day as also on other days during the month of July, 2004 as would appear from the chart disclosed, appearing at page 1930 vol. VI of the paper book. The said chart would show that similar over time work was done during the month of July every year, inter alia for finalisation of accounts. In fact, all the M.P. Birla Group of Companies observed one day's mourning on July 5, 2004 as a mark of respect to PDB. Only on this day all the Companies of the said M.P. Birla Group were closed. 140. He further submitted that it also to be noted that the Birlas within 72 hours of the demise of PDB took over the management and control of the Indian Smelting & Refining Company Ltd. which was a part of M.P. Birla Group of Companies as admitted by Birlas in the plaint being C.S. No. 221 of 2004. Birlas have laid much stress on the submission made on behalf of RSL before the Company Law Board being C P. No. 825 / 111(4) ERB/2004. The following is the submission q....
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....orted in (2001) 4 SCC 325 (supra) in support of his contention. 145. He further submitted that comments were made with regard to the conduct of RSL in producing four keys in course of inventory by the Special Officers and subsequent production of further keys, Mr. Mitra submitted as follows: a) The 4 keys produced by RSL to the Special Officers at the commencement of inventory were those keys which had been made over by PDB to him when she left for Belle Vue Nursing Home on June 27, 2004. These were PDB's personal keys attached to a gold key ring, Mr. Mitra submitted. b) It is not expected of RSL to know which key open which door / almirah at Birla Park and neither did he know. c) RSL did whatever he could to assist the Joint Special Officer in carrying on the inventory. In their 2nd Interim Report, the Special Officers have expressed their full satisfaction with the cooperation rendered by both sides, d) These 4 kesys of PDB have substantially helped the Special Officers in opening and / or could have opened several cupboards, lockers etc. During the hearing, a chart was handed over to the Court showing how these 4....
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....ore Courts are concerned these are instituted by one R.P. Pansari, an employee of Essel Mining Ltd., an Aditya Birla Group Company, our attention was drawn in the affidavit of R.P. Pansari dated 16th February, 2005 at page 2019 vol. VII of the paper book. None of these proceedings have been started suo motu by the institute or by the State. These are Private Complaints. There is no FIR. Having caused these multifarious proceedings to be instituted against RSL, the Birlas themselves cannot thereafter contend that RSL is being proceeded against before various forums. 147. Mr. Mitra further pointed out that the Hon'ble First Court discussed the flexibility of human mind and possibility of RSL misconduct himself in future as Executor to the Estate. This is not a ground urged by the parties in their pleadings. Human beings are appointed Executors. Court Officers are also human beings. The Court, if on that ground, appoints the Administrator or Receiver then it has to be stated that this ground is legally perverse. The word "may" used in Section 247 of the said Act and the same as judicially interpreted during the last 2 centuries will become redundant and in that case, the Admini....
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....ounds not raised by the parties as indicated while dealing with the grounds relied upon by the Hon'ble First Court. ii. Contradictory finding of the Hon'ble First Court. iii. Incorrect basis of approach namely describing disputed facts as admitted facts which is the worst example of perversity. iv. There is no provision for accountability to Court by the Executor/profounder during the pendency of probate proceedings. v. Grounds neither pleaded nor argued. vi. Relying on criminal case - "trained" without considering who have tried to taint The' criminal case has been initiated by the Birlas, in which even charge has not yet been framed. The State has not filed the criminal case. This is also not a ground taken in the petition or affidavit in-reply. He drew our attention to the Criminal case referred to in petition para 44 page 130 vol. I of the paperbook in this respect. vii. Allegations not supported by any document or established even prima facie, that the couple had charitable intention or had formed large number of trusts/societies with own funds. viii. Contrary t....
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....udge is set aside However, the Appellant renews his assurance/undertaking not to deal with and/or transfer any of the assets and properties constituting the Estate of PDB as more fully stated in the affidavit of assets filed by the Appellant in connection with the present probate petition as also in the affidavit of assets filed by the Birlas in connection with the probate petition filed by them. He submitted that the ad-interim order passed by the Hon'ble First Court reported in the decision (2005) 2 WBLR 311 (supra) may be continued. He also submits that the second part of the ad-interim order may kindly be reconsidered in the light of the affidavits since then filed by the parties and may kindly be withdrawn, since no case in support of confirmation of the above order has been shown. The closure of a business undertaking, sale of assets of Companies and encumbrances thereof are subject to severe regulatory measures imposed by statutes and cannot be done by the management at their sweet will. Birla Corporation Ltd. is at the threshold of expansion and growth, namely expansion of capacity, setting up two captive power generation plants of 27 MW at Satna and Chandberia, cement ....
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....f MPB's Estate. The Appellant further challenged the RSL is not tainted because he is not yet an accused which is not correct because once a formal complaint is made in Court which has been done in this case, RSL is an accused. In support of his contention, the Leaned Advocate-General relied upon a decision reported in AIR 1981 SC 379 (Balkishan vs. State of Maharashtra). 156. The Appellant disputes that there is any serious challenge to the probate application. According to the Appellant, the grounds are stereotyped and general. What Appellant has missed is that if those ground are accepted then no probate is likely to be granted in favour of the Appellant. The probate Court has to protect and preserve the Estate and secure safety free from waste and mismanagement of the property. 157. He further pointed out that the Hon'ble First Court held that the Administrator Pendente Lite would be more beneficial to the Estate than the Executor, who is the sole beneficiary. The Estate is indisputably vast consisting of controlling block of shares, Jewellery, ivory, silver, rare gold coins, artifacts etc. of high value and real properties of considerable worth. The application o....
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....awlinson Ford) submitted that a person in a fiduciary position is not entitled to make a profit, even he is not allowed to put himself in a position where his interests and duty conflict. Therefore, he contended that the concealment of high value movable assets without proper explanation, and in breach of statutory duty, is not only example of such a conflict but also surrender of duty to his personal interest. 161. According to the Learned Advocate-General, RSL participated in the preparation of the Will. Imprint of RSL is so clear and loud on the Will and the codicil that only probability is that he took part in preparation of the Will and the codicil. Before such Will was executed by PDB, it has to be accepted that RSL discussed and prevailed upon PDB to execute the said Will. Reliance was placed upon the decisions of AIR 1959 SC 443 (H. Venkatachala Iyenger v. B.N. Thimmajamma and Ors.) and 1930 PC 24 (supra) in support of such contention submitting that the Court held that the Respondent took a leading part in giving instructions for the Will and procuring the execution and registration. Accordingly, he submitted that it would be unsafe to give the Estate in the hands of an....
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....efore, he submitted the RSL was trying to conceal those valuable articles. Under the codicial he accepted the legacy as to the real properties as personal properties of PDB and RSL applied for probate of those house properties. 165. He further pointed out that in the affidavit-in-opposition of RSL (being G.A. No. 553 of 2005), RSL disclosed that PDB was using those houses as guest houses and various companies owned those houses and 'Prayer (c)' would show his personal interest is in conflict with his duty Grant of probate would jeopardize the title of the companies. Hence he submitted that RSL is clearly an unreliable person and as such welfare of the Estate cannot be safe in the hands of the said Executor. 166. His further point of submission was on the ground of allegation against RSL in respect of professional misconduct before the Institute of Chartered Accountant. He contended that RSL has deliberately made false statement with regard to the shradh ceremony of PDB. Attempt was made to hide the impropriety of transmission of shares of East India Investment at this time of grief and on shradh ceremony day. RSL made blatantly false statement with regard to the medic....
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....en exercised in a due and proper manner and upon noting the relevant and mater facts as also the case laws bear on the subject. b) The exercise of discretion in making appointment of Administrator Pendente Lite by the Hon'ble First Court is based upon and guided by certain well settled principles and these are to be found not only in Section 247 itself but also in a large number of decisions of the Courts of India and of England bearing on the subject. c) Apart from the section itself, the Hon'ble First Court is also required to take into account several other facts such as, the nature of the Will, the nature of the Estate, serious challenge to the Will, unnaturalness of the Will, the kind of person who has been appointed as Executor and other material points. 170. The other points that were urged by him before us were on the ground of the above arguments on behalf of the Respondents that a discretionary order passed by the Hon'ble First Court should not be lightly interfered with by the Hon'ble Appellate Court unless the exercise of discretion by the Hon'ble First Court is based on an erroneous view of law and a mis-appreciation....
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....r Pendente Lite, appearing at page 293 of vol. 1 of the paper book. He submitted that the above position laid down in the decision reported in AIR 1973 Cal 450 (Hindustan Motors Ltd. v. M.R.T.P. Commission). b) The credibility of RSL is doubtful as writ appear not only from his conduct before execution of the alleged Will of 1999, but even after such execution also. The relevant and material facts in this regard are stated hereunder: i) Mr. and Mrs. M.P. Birla had executed the Mutual Wills on or about July 13, 1982 whereby they made a bequest of all their assets to charity. During their life time they created trusts in 1988 in conformity with the said Mutual Wills but it appears that the Trusts were dissolved on or about 15th April, 1999 and the purported Will which is the subject matter of the instant proceeding was executed three days thereafter, i.e., on or about 18th April, 1999 and the concept of Mutual Wills has been accepted in the instant case by the Hon'ble Supreme Court of India in the case of (2006) 2 SCC 757 (Shiva Nath Prasad v. State of West Bengal and Ors.). ii) RSL without waiting for the alleged Will of 1999 to be pr....
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....in the firm Lodha & Co. to procure more business than what his firm was eligible for. The said proceedings are pending. Such instance of professional misconduct by RSL shows him in extremely poor light. ii) RSL made incorrect statements in the Affidavit with regard to Shradh ceremony of PDB. iii) Changes in directorship not disclosed by RSL. The same may be evident from the notice dated July 21, 2004 convening the AGM of Birla Corporation Ltd. at page 355 of vol. II of the paperbook. In the said notice it has not been mentioned that RSL was also a director of Mazbat Tea Estate, Mazbat Properties Pvt. Ltd. and Mazbat Investment Pvt. Ltd., wherein his appointment had already taken place on June 14, 2004. It is submitted that such appointment were made and back dated after the demise of the testatrix. iv) Investments made by the MPB Group routed through Lodha Capital Markets which is a merchant banking company and controlled by RSL himself. The said fact has been denied by Lodha in his supplementary affidavit, which is incorrect statement. All the investments were made through PLC Securities Ltd., which is a subsidiary company of Lodha Capi....
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....e said Act of 1925. Section 301 provides for removal of Executor or Administrator and provision be made for his successor and the section goes on to lay down that the High Court may en application suspend remove or discharge any private Executor or Administrator and provide for the succession of another person to the office of any such Executor or Administrator who ceases to hold office and the vesting in such successor of any property belonging to the Estate. The case of the applicants for appointment- of Administrator Pendente Lite is not for the removal of the Executor but for the making of an interlocutory order under Section 247 of the said Act. According to him, RSL claims to be a non executive Director in all the companies of the M.P. Group and he being a mere figure head is not involved in the day to day affairs of the companies which are all professionally managed. 176. Hence, Mr. Mookherjee submitted that RSL not have any objection if an Administrator Pendente Lite is appointed. Be it noted that RSL has not been removed in his capacity of Executor but only an interlocutory order has been passed under Section 247 in respect of the Estate of the maker of the alleged Will....
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....he said Act, the Court could remove the Executor only on an application being made by a Party, whereas under Section 247 of the said Act the Court is free to appoint an Administrator Pendente Lite without any application being made by a party. 179. He further argued that on merit, the main thrust of the counsel's argument has been that neither there is any evidence of waste, mismanagement or siphoning off of the fund of the Estate, nor is there any ground for apprehension, having regard to the nature of the Estate and conduct of the Executor so far. A careful analysis of the circumstance is therefore, necessary to ascertain whether those circumstances exist for apprehension that the Estate is not safe in the hands of the Executor and such question was raised in the following manner: a) Whether the Estate by its nature is so vulnerable that it can be exploited easily by the Executor during the pendency of the probate application? b) Whether the conduct of the Executor in the matter of handling the affairs of the Estate or otherwise is dubious and uninspiring ? 180. Mr. Mookherjee further pointed out that it is the case of the Appellant that th....
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....the Court should not be influenced by the said factors. Hence, Mr. Mookherjee submitted that at least the complaint would show and can support a prima facie view for the Court to decide the question whether RSL should be allowed to continue as the Executor. 183. He further pointed out that elaborate submissions were advanced on behalf of the Appellant with reference to various directorial appointments in favour of RSL made by the testatrix to urge that those were measures of her confidence in him. According to him, so long Pdb. was alive and at the helm of affair, chance of his abusing and misusing the position was entirely unlikely and, in any event, this notion falls flat when one looks at the ground reality after her death. Hence, Clause 4 of her purported Will dated April 18, 1999 virtually bequeath every conceivable and inconceivable right over the Estate (which in any event is under challenge), She neither in her long association with him not in course of her ultimate journey to Belle Vue Clinic when she made over 4 keys to him, had taken him into confidence to say that there was a hidden strong room in the house and which locks would be opened by which of the 4 keys Event....
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....mance as Executor and when the Executor is the sole beneficiary, a general overall perspective of the Court regarding necessity of appointing Administrator Pendente Lite. 188. He further tried to contend that the cases which identify necessity as an important factor do not, however, lay down (and it cannot be so) that the categories or constitutes of necessity are closed. The overall concept of necessity must emerge from the above factors. Sometimes these factors may overlap and it is also not necessary that all these factors must be present cumulatively i.e. all must exist on their own strength. In the exercise of discretion in a given case one or more factors may suffice and in this context he relied upon a decision reported in 1948 (1) ALL E R 271 (Supra). 189. He further submitted that the said Act of 1925 has specially provided for Administrator Pendente Lite inspite of the fact that there are provisions relating to interim protection of property by general law of injunction or Receiver under Code of Civil Procedure. The predominant intention was to ensure that a deceased's Estate is protected by the Court, the only trustworthy institution, adequately, properly and m....
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.... to have negative results for Estate and in a given background Administrator Pendente Lite may be a matter of course, i.e. vastness of the Estate and its complexity and when the Executor is sole beneficiary and with regard thereto he drew out attention to the decision delivered by the Hon'ble First Court in this matter. 192. Mr. Pal further contended that Section 247 of the said Act applies when a suit is filed "touching the validity of the Will" and the final decision of course will be arrived at while pronouncing the final judgment in the probate suit after final hearing. The prima facie aspect will also be related to the aspect of necessity since in such a case the court will be prima facie satisfied that there is no will at all and the Executor is, therefore, prima facie in wrongful possession of the Estate. 193. He further submitted that merely because a person is appointed Executor, he must administer the Estate until probate is refused cannot be a rule. Undoubtedly, discretion is conferred upon the court. However, Mr. Pal placed his reliance upon a decision reported in AIR 1976 SC 232 (Swarn Singh and Anr. v. State of Punjab and Ors.) and submitted that the impugne....
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....e ground of perversity. 199. He further submitted that the Estate admittedly consists of the following: a) Controlling block of shares in M.P. Birla Group of Companies, and power and control is the main assets. b) Immovable properties in important cities in substance owned and occupied by PDB although ostensibly in the name of companies namely, Punjab Producing & Trading (Kol); Baroda Agents (Mumbai); Punjab Produce (Delhi) and Baroda Agents (All). These are investment companies which have no public holding and the codicil gives power to RSL as Executor to dispose of these properties. c) Invaluable ivory artifacts, gold coins of mourya dynasty, Ivory inlaid furniture, paintings, Jewellery etc. d) Other assets mentioned in the affidavit of assets filed in the petition for probate. The inventory disclosed only those valuables which were found. This is quite apart from many others for which the Receiver application was made, based on returns etc. filed before the concerned statutory authorities. 200. Mr. Pal further pointed out that it would be evident from the Administrator Pendente Lite petition of RDM which adopts th....
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....ent on oath regarding the date on which the shradh ceremony was held. The Joint Special Officers discovered the files at Gurusaday Road during their inventory while RSL denied that the files were with him. Pecuniary gains made by RSL by investing funds of M.P. Birla Group through companies controlled by him. A fiduciary must not act in a manner that there is a conflict of interest and duty. Such persons loose their capacity to be impartial and fair. 205. According to Mr. Pal, RSL should not be allowed to be the Executor and he is a human being with all the frailties of human character. He submitted that it is an inflexible rule of Court of equity that a person in a fiduciary position, such as the Respondent's is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict. Mr. Pal submitted that this rule is, as has been said, founded upon principles of morality. It should be regarded rather as based on the consideration that human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty an....
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.... companies has been preserved and the concerned companies are doing well under RSL as Executor. This submission regarding status has no relevance or any bearing on the question of appointment of Administrator Pendente Lite. If the Companies are doing well it is not because of RSL, but general buoyancy in the economy, and infrastructural demand, cement, cables etc. and RSL cannot claim any credit thereof. All have been done at the instance of professional executives since the Companies are managed by professional executives as admitted by RSL. He further submitted that the criminal case which is pending, is a negative factor against RSL's continuance. His integrity is under criminal trial and relates to the very Will of PDB. 210. Mr. Pal further drew our attention to the biography written by Dr. Gaurishankar Pointing out that Dr. Gaurishankar was the draftsman of the Will. In fact, in the said biography he himself stated that both MPB and PDB decided to dedicate their property to the Charity and took the decision at the temple to Tirupati Subsequent thereto, when the instructions are consequences of undue influence, suspicious circumstances like unnatural Will etc., then Gaur....
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.... does not appoint the Receiver over the companies, Mr. Pal answered that the impugned judgment does not appoint any Administrator Pendente Lite over the companies as such and the management of the companies are not replaced or suspended. The Joint Administrators have been appointed in relation to the controlling shareholdings of PDB. The Hon'ble First Court being prima facie satisfied gave certain directions including inter alia that: a) The controlling shareholdings which PDB had, should be so utilized that all rights attaching to such controlling shares and all matters incidental to the same should be with the Administrators and not with the Executor. b) RSL will not act as a Chairman or director in the board of any of the companies on the strength of shareholding of PDB although RSL would be free to act as a director or Chairman, if he is entitled to do so by reason of his own personal qualifying shareholding. These directions are essential in the special facts of this case which involves succeeding to the property which undoubtedly includes control. This is a unique situation calling for intervention of the court pending the decision as to whet....
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....und of Birla Corporation Ltd. is invested in mutual funds while at the same time, the company was 'borrowing money from Banks and Financial Institutions. 218. Mr. Mitra further pointed out that the investment of mutual funds made for last many years and at least for last 5 years during the life time of PDB. This is not a new practice introduced by RSL, he submitted and there is no case that Birla Corporation Ltd. has suffered any loss out of investment in mutual funds. Thereafter, he pointed out that apart from Soorah Jute Mills and Birla Synthetics, other units of M.P. Birla Group of Companies have been closed down during the lifetime of PDB. Committee of the Directors was constituted when PDB was present. The appointees were highly qualified and experienced, some of whom have left other Birla Groups to join M.P. Birla Group and no case has been made out or that they are in any way related to RSL. 219. According to him, pre-payment of loans is in interest of Companies, any other suggestion is absolutely absurd and no case has been made out so that the companies were prejudiced. Mr. Mitra submitted that the case of AIR 1933 Bom 342 (supra) in fact supports the case of the....
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....aid case has no application in the facts and circumstance of this case. In the decision of AIR 1973 Cal 450 (supra), he pointed out that the said judgment has been cited by the Birlas in support of the proposition that the control is an asset. This is a judgment delivered in respect of the MRTP Act. The Act contains a definition of 'inter connected undertaking' vide Section 2 (g). Paragraph 23 of the judgment makes it clear that reference to 'control' in this judgment is in view of the object and scheme of the aforesaid statute as also in view of the wide and comprehensive connotation given to the term 'control' under the said Act. Thus, the meaning of the word 'control' as enunciated in this judgment has no relevance to our case. Hence, this case has no application to the instant case. 224. He further drew out attention to the decision reported in AIR 1976 SC 232 (supra) and contended that this case is based on limits of judicial review under Article 226 of the Constitution of India where the order of domestic Tribunal is sought to be quashed by a writ of certiorari. As such, this judgment has no relevance to the facts and circumstances of the pr....
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.... 10 (supra) and 1983 AC 191 (supra), these cases have also been cited for the same propositions as in the case of (1990) Suppl. SCC 727 (supra). 228. In the case of (Supra ) AIR 1966 Cal 512 the Court should not restrict the scope of enquiry to the petition alone but subsequent affidavits in the petition should also be taken note of. For this proposition, the Birlas have relied upon this case which is a decision on the practice and procedure of hearing petitions under Section 397/398 of the Companies Act has no application in the facts and circumstances of this case. 229. He further pointed out that the case reported in 1896 AC 44 (Supra) has no application to the present case. This was relied upon for the proposition that human nature is such that a person in fiduciary position may be swayed by interest rather than duty, thus, Supra 25 Supra 33 Supra 32 Supra 24 Supra 36 Supra 30 "prejudicing those whom he was bound to protect". 230. According to him, in the decision of AIR 1966 SC 81 (supra), the Hon'ble Supreme Court proceeded in the matter after coming to the conclusion that a specific finding on facts that there was no defect in the affidavit in support of the wri....
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....alleged Wills allegedly made by couple on July, 13 1982 claiming the same to be mutual Wills". Counsel for the Birlas next placed the part of the judgment where the Hon'ble Supreme Court lays down a concept of mutual Wills. There is no dispute as to the doctrine of mutual Wills. The case reported in 1993 (4) ILL ER 129(Re: Dale) is only referred to in the said pare without any approval. In the same para, the Hon'ble Supreme Court holds that mutuality of Wills depends on circumstances, inter alia that the last Will has been made by one of the testators Without reference to revocation of previous Wills. In the present case by the Will of 1999, PDB expressly cancelled all previous Wills, thus, satisfying the test laid down by the Hon'ble Supreme Court it can be argued by RSL that alleged Wills of 1982 are not mutual Wills and the later Will of 1999 of PDB revokes the earlier and contains a statement to this effect too. 234. Therefore, the position regarding the narration of the facts is also made clear in para 48 where the Hon'ble Court states that "at this stage" the Hon'ble Court is required to "read the complaint as it is" and that it suffices to state "at th....
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.... by them. 238. We have heard the Learned Advocates for the parties extensively. We have also scrutinized the facts of this case. 239. After analyzing the facts of this case and after perusing the materials on record placed before us and the decisions cited before us on the question of appointment of Administrator Pendente Lite, the question arose that whether the Respondents/Birlas in their pleadings have been able to make out a case that necessity rises in the facts and circumstances of this case to appoint an Administrator Pendente Lite. 240. After analyzing the decisions cited before us we have to come to the conclusion that the test for necessity must be waste, mismanagement, misconduct, just and convenient which are the grounds for appointment of Administrator Pendente Lite. Section 247 of the Indian Succession Act, 1925 provides as follows: Section 247 - Administration, pendente lite - Pending any suit touching the validity of the Will of a deceased person or for obtaining 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 powe....
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.... is it were in medio", in the enjoyment of non-one it is the common interest of all parties that the Court should prevent a scramble and a Receiver is readily appointed (see kerr on Receiver, 9th Edn., Page 6). 247. During the contest, touching the validity of the Will, there is a necessity when the deceased's property is, "in medio". Therefore, applying the principle of Court of Chancery for the appointment of a Receiver the Court may appoint an Administrator Pendente Lite see AIR 1952 Cal 418 (supra). In the said decision, it is also held in paragraph 19 of the said decision that: (19) - I do not for a moment suggest that it is an inflexible rule that whenever there is a suit pending, touching the validity of a Will, it is obligatory upon the Court to appoint an administrator 'pendente lite'. We may take the following illustrations. A man makes a Will, & appoints an executor. He dies leaving rupees ten lakhs in the Imperial Bank of India & a dwelling house in Calcutta, say of the value of Rs. Ten lakhs. The executor named in the Will applies for probate. The Will is contested as a forgery. Assuming the contest to be 'bonafide' should the Cour....
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....also found that the said disposition is wholly unnatural. In our opinion, such finding can not be accepted at this stage when the probate proceeding is pending. 252. The allegation is also that the lady was not at all in the good health and condition and suffers from various ailments and used to travel abroad for medical treatment and within the clutch and influence of the executor. But that allegation has to be- treated at this stage only as an allegation against the Will only and finally to be decided by the Court. 253. The other ground that there was a mutual Will was executed on July 13, 1982 by MPB and PDB. In terms of the said Will, the lady did not have any right or capacity to publish any document subsequently after the death of her husband, but the suspicion comes in mind when it appears to us that the original mutual Wills were never produced before the Court. The envelope which was received by Tapuriah, was also not produced since it is allegedly missing. Only Copy of the Will was tried to be relied upon on the basis of which the application for probate of the mutual Wills have been filed. The question arose with regard to the genuineness of the said mutual Wills a....
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....so filed by the Birlas before the Court, it is submitted by Mr. Mitra that such valuation is being given only for the purpose of the Court Fees which has to be paid in respect of the application so filed by RSL for grant of probate and nothing else. Therefore, the purpose of giving such valuation is nothing but for the purpose of giving Court fees only. 260. The further allegations have been made on behalf of the Respondents that RSL took steps to rectify the respective share registers of the respective Companies mutating his name in place and stead of PDB as such Executor. Further emphasis has been made on the enormity of the Estate left behind by the said deceased and it would not be safe at all to keep all the properties in his hands, before grant of probate of the said Will since he is not only acting as Executor but also started acting as the sole beneficiary under the said Will. 261. Mr. Mitra for the Appellant further pointed out that after lapse of a long time, the Respondents through KNT (Kashi Nath Tapuriah) filed the application for appointment of Administrator Pendente Lite on December16, 2004. He further pointed out that all the allegations which have been made a....
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....d upon the allegations that there is a criminal proceeding is pending against the Executor and he is one of the accused persons and he challenged the said criminal proceeding at the initial stage fought right upto the Hon'ble Supreme Court. Mr. Mitra has specifically pointed out that the application which has been filed before the Hon'ble Supreme Court was not filed by RSL. 268. It further appears that His Lordship held that RSL is facing trials and proceedings which were initiated for search and seizure in connection with these proceedings, therefore, it is difficult for the Court to allow such person to control and manage huge and vast Estate of the deceased. When he is facing criminal breach of trust, not qua-executor, whereas is has been pointed out before us by Mr. Mitra which we have to take note of that the criminal case referred to in the Petition (paragraph 44 appearing at page 130 vol. I of the Paper Book) have not been stated as a ground for appointment of Administrator Pendente Lite. His Lordship came to the conclusion that a tainted person should not be allowed to manage or handle the Estate and it is one of the instances of necessity. 269. Mr. Mitra alon....
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....ble movable assets such as Jewellery, ornaments, gold coins, shares and mutual funds held by PDB personally and allowed the Executor to remain in control and management of the same. The Respondents argued that RSL had suppressed Jewellery, ornaments, gold coins and other valuable assets but even then no order was passed against him. 275. Therefor, it was the contention of Mr. Mitra and Mr. Mukherjee that the Hon'ble First Court had confidence in RSL and after perusing the order so passed by the Hon'ble First Court we have been able to find our that His Lordship also came to the conclusion that there was no mismanagement of the Estate of the deceased in the hands of RSL excepting the fact that His Lordship appointed the Administrators over the controlling block of shares held by PDB and further directed that the said shares should be transferred in their own names and be rectified in respect of the share registers of the companies for recording their names. 276. To get themselves nominated on the Board of Directors and to dissolve the existing Boards, His Lordship further directed that RSL shall not act as a Chairman and Director in any of the Companies on the strength....
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....assed at the ad interim stage was enough to preserve the Estate. The Court can also direct the Appellant, RSL to furnish the accounts in respect of the dividends received on such shares to the parties and furthermore, injunction can also be passed by the Court directing RSL to open an account of dividends and to keep the dividend intact except for the purpose of maintenance of the assets of the deceased and he shall have no right to use the said money. 282. We have also considered the materials which were placed before us by the parties and from the pleadings, we have also been able to find out that the Respondent did not make out such case before the Court with regard to the dividends so received from the said shares. We have also perused the order so passed by the Hon'ble First Court and after scrutinizing the said judgment/ order, it appears to us that the implication of taking over all the voting rights and right of control of the said thirty eight Companies mentioned in Annexure 'J' is nothing but to take over control of the Companies, in other words, to take over the management of the said Companies. 283. Hence, with utmost respect to His Lordship, we hold t....
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....ase of necessity has to be established. After perusing and analyzing the decisions cited before us and relevant provisions of the said Act and the facts and circumstances of the present case we hold that there is no necessity to appoint the Administrator Pendente Lite. 289. In the instant case, after examining the materials on record placed before us, we have not been able to find out that a case of necessity has been made out by the petitioners. We have considered the decision of AIR 1956 Madras 409 (supra) and AIR 1995 KANT 258 (supra) wherefrom we found that there is no authority for the proposition that the Estate of the large part of the movable property, cash, jewellery etc. and the person in possession is a limited owner, a Receiver or an Administrator should be appointed. This is not the settled law. 290. The question that the conduct of the limited owner has been such that has to raise a reasonable apprehension. In the decision reported in 13 CLJ 34 (supra) the Court held that before appointment of Administrator Pendente Lite, the Court must satisfy that the appointment is necessary and proper. The appointment cannot be claimed as a matter of course before the procee....
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.... Respondent, nor was even argued before us in course of their argument. Therefore, in our opinion, if any allegation is made against a person, the person must get a chance to answer the same. 296. Hence, in this case, we have not been able to find out any such chance which was given to the Appellant and, therefore, we cannot treat it as a ground which can be stated to be a necessity for appointment of Administrator Pendente Lite. The other grounds which have been stated by the Hon'ble Judge, have not been taken in the pleadings or argument ever put forward on behalf of the Respondents before the Hon'ble First Court. 297. We also must keep it on record that whenever a person is appointed as an Executor, unless he relinquishes his right to such an Executor, his duty and obligation remains as Executor to take all necessary steps and we find from the facts that RSL took the control over the shares and transmissions of the said shares as Executor to the Estate. Therefore, it cannot be treated as a ground of necessity nor the Executor can be declared as unfit or that there can be an apprehension of mismanagement of the Estate. 298. We also find from the impugned judgment....
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.... circumstances of the case, it does not call for an appointment of Administrator Pendente Lite when it is a settled law that the Administrator/ Receiver should not be appointed over running businesses and in the decision reported in AIR 1987 Cal 194 (State Bank of India v. Jayashree Ceramics Pvt. Ltd.) the Court held as follows: ...It has also been shown that the petition does not disclose any material to show that the securities are in imminent danger of being wasted or disposed of or are likely to be attached before judgment at the instance of any other third party creditor or the company is likely to be would up. If there is any apprehension of such threat to the securities, the Plaintiff can get the relief by way of injunction but the appointment of Receiver whose main function will be to take possession of the securities, is likely to stop the running of the business of the Defendant No. I company, which may not be at all just and convenient in the present facts and circumstances when the Defendant No. 1 is still running the business. It can not be expected that the learned Advocate who has already been appointed the Receiver by the Court's order dated 4.8.8....