TaxTMI 
TaxTMI 
2023 (12) TMI 789
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....2020, OCO/26/2020 Appearance : For the Appellant (in APO No. 92 of 2020, 94 of 2020 and 98 of 2020) : Mr. Darius Khambata, Sr. Adv. Mr. Abhrajit Mitra, Sr. Adv. Mr. Abhratosh Majumder, Sr. Adv. Mr. Kunal Vajani, Adv. Mr. Debanjan Mandal, Adv. Mr. Sanjiv Kumar Trivedi, Adv. Mr. Jishnu Chowdhury, Adv. Mr. Subhankar Nag, Adv. Mr. Soumya Ray Chowdhury, Adv. Mr. Sarvapriya Mukherjee, Adv. Mr. Deepan Kumar Sarkar, Adv. Mr. Tushar Hathiramani, Adv. Mr. Satadeep Bhattacharyya, Adv. Mr. Kunal Mimani, Adv. Ms. Mahima Cholera, Adv. Ms. Iram Hassan, Adv. Mr. Sanket Sarawgi, Adv. Mr. Karthikey Bhatt, Adv. Mr. Rachit Lakhmani, Adv. Mr. Subhang Tandon, Adv. For the Appellant (in APO No. 89 of 2020) : Mr. Jishnu Chowdhury, Adv. Mr. Aritra Basu, Adv. Mr. Paritosh Sinha, Adv. Mr. Saubhik Chowdhury, Adv. Ms. Ayushmita Sinha, Adv. Mr. Tirthankar Das, Adv. For the Appellant (in APO No. 90 of 2020) : Mr. Ranjan Bachawat, Sr. Adv. Mr. Shaunak Mitra, Adv. Mr. Sayan Roy Chowdhury, Adv. Mr. Satyaki Mukherjee, Adv. Mr. Paritosh Sinha, Adv. Mr. Saubhik Chowdhury, Adv. Ms. Ayushmita Sinha, Adv. For the Appellant (in APO No. 91 of 2020) : Mr. Shyam Divan, Sr. Adv. Mr. Ranjan Bachawat, Adv. Mr. Sh....
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....ed by Pradip Kumar Khaitan, the respondent No. 5 1.2 OCO/20/2020 Cross Objection in A.P.O No. 89 of 2020 filed by Devendra Kumar Mantri and Radha Devi Mohatta, being the respondent Nos. 3 and 4 respectively. 1.3 OCO/3/2020 Cross Objection in A.P.O No. 89 of 2020 filed by Arvind Kumar Newar and Nand Gopal Khaitan, being the respondent Nos. 1 and 2 respectively. 2. APO NO. 90 OF 2020 Appeal filed by Birla Cable Limited 2.1 OCO/12/2020 Cross Objection in A.P.O No. 90 of 2020 filed by Pradip Kumar Khaitan, the respondent No. 5 2.2 OCO/21/2020 Cross Objection in A.P.O No. 90 of 2020 filed by Devendra Kumar Mantri and Radha Devi Mohatta, being the respondent Nos. 3 and 4 respectively. 2.3 OCO/4/2020 Cross Objection in A.P.O No. 90 of 2020 filed by Arvind Kumar Newar and Nand Gopal Khaitan, being the respondent Nos. 1 and 2 respectively. 3. APO NO. 91 OF 2020 Appeal filed by Vindya Telelinks Limited 3.1 OCO/13/2020 Cross Objection in A.P.O No. 91 of 2020 filed by Pradip Kumar Khaitan, the respondent No. 5 3.2 OCO/22/2020 Cross Objection in A.P.O No. 91 of 2020 filedby Devendra Kumar Mantri &....
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.... OCO/7/2020 Cross Objection in A.P.O No. 94 of 2020 filed by Arvind Kumar Newar and Nand Gopal Khaitan, being the respondent Nos. 1 and 2 respectively. 3. APO NO. 96 OF 2020 Appeal filed by Shreyas Medical Society 3.1 OCO/17/2020 Cross Objection in A.P.O No. 96 of 2020 filed by Pradip Kumar Khaitan, being the respondent No. 5 3.2 OCO/27/2020 Cross Objection in A.P.O No. 96 of 2020 filed by Devendra Kumar Mantri and Radha Devi Mohatta, being the respondent Nos. 3 and 4 respectively. 3.3 OCO/9/2020 Cross Objection in A.P.O No. 96 of 2020 filed by Arvind Kumar Newar and Nand Gopal Khaitan, being the respondent Nos. 1 and 2 respectively. 4. APO NO. 98 OF 2020 Appeal filed by Aditya Vikram Lodha 4.1 OCO/10/2020 Cross Objection in A.P.O No. 98 of 2020 filed by Arvind Kumar Newar and Nand Gopal Khaitan, being the respondent Nos. 1 and 2 respectively. 4.2 OCO/18/2020 Cross Objection in A.P.O No. 98 of 2020 filed by Pradip Kumar Khaitan, being the respondent No. 5 4.3 OCO/26/2020 Cross Objection in A.P.O No. 98 of 2020 filed by Devendra Kum....
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.... to restrain HVL from claiming any profit based remuneration or commission from VTL, BCL, UCL and BCrL, and to injunct HVL from acting as Chairman/Director of VTL, BCL. 6. GA 1845 of 2019 was filed by defendant 1(b) Mr. Arvind Kumar with a prayer to modify the order dated 2/5/ August, 2019 by directing voting in relation to Resolution no. 5 and 6 of Annual General Meeting notice of BCrL dated 01.07.2019 to be stayed and voting relating to Resolution no. 5 and 6 of the Annual General Meeting notice dated 01.07.2019 of BCrL to be restrained. 7. GA No. 1764 of 2019 was filed by the plaintiffs with a prayer to declare that the estate of PDB comprises only of assets described in affidavit of assets filed by the original plaintiff in the testamentary suit and for further declaration that all three members of the APL should take unanimous decision and the majority decision dated 19.07.2019 cannot be implemented. 8. GA No. 1786 of 2019 was filed by plaintiffs to set aside that the majority decision of the APL dated 30.07.2019. The plaintiffs had filed affidavit in opposition in GA No. 1735 of 2019 affirmed by HVL contending that the probate court does not have jurisdiction to pass....
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....he deceased, the Court can suitably protect and preserve status quo of the properties under the "will" and if necessary by issuing appropriate order of injunction of temporary nature during pendency of the Administration proceedings; (vi) The Succession Act is a special law and a conjoint reading of the relevant provisions in part IX of the Act indicates that exclusive jurisdiction is vested in the special form created under the Act for grant of probate and matters connected therewith. (vii) That, the Act is a self-contained code in so far as the question of making an application for probate, grant or refusal of probate or an appeal carried against a decision of the Probate Court. (viii) The probate proceedings shall be conducted by the Probate Court in the manner prescribed in the Act and in no other way. Therefore, it cannot be argued that there is any lacuna in the Act to cover any exigency concerning a probate proceedings or Administrator Proceedings. (ix) That, the Court is well-equipped under Section 247 of the Succession Act for administration during pendency of such proceedings. (x) Even if the provisions of Order 39 Rule 1 and 2....
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....In the impugned order passed by the learned single bench dated 18.09.2020, this principle of law has been accepted. It is submitted that a probate petition for letters of administration on the one hand and an administration suit on the other or the proceedings that are separate and distinct in character. In an administration suit, a civil court may be required to examine transactions involving properties of the estate in order to determine the assets of the estate as on the date of the death of the owner thereof. The testamentary court's jurisdiction is however limited to determination of the will, it does not determine the title or any question as to the existence of any property and the requirement of appointment of an administrator. In the inter-parties decision in the case of Krishna Kumar Birla Versus Rajendra Singh Lodha (2008) 4 SCC 300, in paragraph 57 it has been held that the jurisdiction of the probate court is limited being confined only to consider the genuineness of the will. The question of title arising under the act cannot be gone into in the probate proceedings, construction of a will relating to the right, title and interest of any other person is beyond the doma....
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....immovable and movable property of the deceased, only properties bequeathable. "Property" connotes an ownership or right which does not depend on the courtesy of others. It signifies a beneficial right to or a thing considered as a having money value with reference to transfer or succession. Property is the right to use or enjoinment or the beneficial right of disposal of anything that can be the subject matter of ownership. The phrase "property belonging to a person" has two ingredients namely ownership and the absolute right of the user. The Hon'ble Division Bench in the case of Rajendra Singh Lodha Versus Ajoy Kumar Newar ILR 2007 (2) Calcutta 377 held that the estate mainly comprises of the controlling block of shares held by PDB at the time of her death which has also been disclosed in the affidavit of assets. The Hon'ble Division Bench by order dated 23.08.2012 directed the Joint APLs to register their names in the Register of Members of the companies in which PDB held shares and further directed the Joint APLs to prepare and file an inventory of asset forming part of the estate. It is further submitted that the Hon'ble Division Bench in Birla Corporation Limited Versus Arvind....
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.... the Act, the main criteria is nothing but necessity, necessity to preserve the estate of the deceased. 13. It is further submitted that no shareholder has any interest in the assets of the company. This proposition was accepted by the learned single bench and has agreed with the coordinate bench judgment in Harsh Vardhan Lodha Versus Ajoy Kumar Newar and Others 2016 SCC Online Calcutta 1541. For the same proposition, reference was made to the judgment of the Hon'ble Division Bench in Birla Corporation Limited Versus Arvind Kumar Newar dated 04.05.2020 wherein it was held that there is a clear distinction between a company and a shareholder, even though that share holders may be only one and is either the Central or State Governments. In the eye of law, a company registered under the Company's Act is a distinct legal entity other than the legal entity or entities that hold its shares in the said company. It is further submitted that controlling interest is inextricably linked to ownership/voting power of the shares held in a company. Only such ownership/voting power of share is an asset and any other form of controlling interests/power perse is not an asset forming part of the e....
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....er" takes colour from the genus of the preceding words that is legally enforceable rights/agreements and thus must necessarily be read as being in any other manner enforceable in law. The same conclusion is reached by applying principle of noscitur a sociis and the rule of last antecedent. It is submitted that the words "any other manner" can never be drawn out of context to apply to a courtesy or power of influence or persuasion that were personal to PDB but which would not have been enforceable in law even by her, much less by her estate. More so, the force of personality or the powers of persuasion are not inheritable "property". 14. It is further submitted that PDB did not have the right to determine the manner of voting of the other group entities. Other group entities were legally in a position to either accept or reject her directions. These group entities had and continue to have eminent people on their board including very senior former public servants and other highly qualified individuals with independent minds of their own. The mere fact that the group entities may have accepted PDB's directions did not ipso facto confer any legal right upon her to cause the group en....
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....his dissent has not been challenged by the defendants as being incorrect. It is submitted that the learned single bench has invoked the doctrine of "persons acting in concert" and mixed up the concept and personal influence of PDB with ownership/ control of the estate over the shares of other members of the promoter group or voting right arising out of such shares of such other members. It is submitted that having invoked the doctrine of "persons acting in concert", which by its very definition requires two or more distinct persons to act with common intention or purpose, it is submitted that the order of the learned single bench as well as the contention of the respondents that the so called controlling interest over the MP Birla Group of companies form part of the PDB estate are erroneous. 15. It is submitted that the promoters do not have any special rights to control as such and hence, no such right devolve upon the administrator of the estate of the deceased promoter. It is submitted that PDB was shown either as promoter or part of the promoter's group in BCrL, BCL, UCL and VTL. However, such disclosure by a person or an entity as a co-promoter or as part of the promoter gr....
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....recting mind and will are inapplicable and irrelevant in determining the aspect of "control" within the meaning of the Companies Act. The same concept only arises if the company is accused of wrong doing in which case the single directing mind is sought to be identified in order to fix liability. It is "mens rea" which is as attributed to corporations or the principles of "alter ego" of the company. However, even in cases where "directing mind and will" is looked into in order to fix liability for the wrong doing of a company, it is only when a statute permits this enquiry to be made. In the instant case, the concept does not and cannot arise or be pressed into operation nor before the same cases where there is no accusation of wrong doing, criminality or fraud against the company. 17. It is further submitted that trusts and societies are distinct legal entities independently managed and controlled. In this regard Sections 3, 6, 36, 37, 38, 39, 40 and 42 of the Indian Trust Act, 1882 were referred to. Section 5 of the Society Registration Act, 1860 and Section 16 of the State Act were also referred to. It is submitted that PDB during her lifetime did not have any right of nomina....
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....SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 defines "promoter group" in an inclusive manner and it shows that as long as the share holding of an individual/ entity is disclosed under the heading "promoter group", even without any relationship much less ownership or control between such entities/ persons, they will be shown as part of the promoter group. Hence, the disclosure of some trusts/ societies and public listed companies as part of the promoter group of some companies does not in any manner in share holding was owned and/or controlled by PDB and much less the estate of PDB. It is submitted that the Birlas would contend that the trusts and societies are funded by the MP Birla Group and thus, the estate controls them. This contention is incorrect as the main source of funding of these trusts and societies or dividends earned from shares held by them in various companies which include companies which are admittedly not part of the MP Birla Group. Furthermore, merely because donation is made by a corporate house, a trust or society does not vest the corporate house with a right to control and manage the affairs of such trust or society unless there is p....
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....ents the corporate veil of the entities by accepting the principle laid down by the Hon'ble Supreme Court in the case of Bacha Gazdar's. Therefore, it is submitted that it was not open in law for the learned Single Bench to have passed any orders restricting the shareholding, property or management rights in respect of these entities including trusts and societies. Hence, the appellants could not have been restrained in general from holding any office in any of the entities in MP Birla Group during the pendency of the suit as that would amount to interfering with the administration and ownership rights of share holders, distinct corporate entities and distinct trusts and societies which is beyond the jurisdiction of a Testamentary Court. In this regard, reference was made to the order passed by the Hon'ble Division Bench date 1st October, 2020 by which the Hon'ble Division Bench modified part of the order passed by the learned Single Bench. It is further submitted that the Joint APLs have to initiate the substantive proceedings before the competent forum to seek relief in order to enforce rights of the estate only with the permission/ direction of the Probate Court and the same can....
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.... beyond the jurisdiction of the Testamentary Court. The majority decision of the two Members of the APL dated 19th July, 2019 is totally illegal, contrary to law, void and cannot be implemented. The Hon'ble Division Bench in its order dated 23rd August, 2012 has clearly specified and circumscribed the authority and powers of the Joint APLs and they have not been authorised by the said order or by any provision of law to direct any company or its Board to appoint them as Directors or to direct appointment or continuation of any person of their choice as Director. It is submitted that Directors of the company can be appointed only and continue in office only in the manner prescribed by the Companies Act, 2013 and, therefore, it is not within the jurisdiction or power of any of the Joint APLs to override the Companies Act. The share holders are not authorised by the Act to straight away direct the company to appoint any person as director. Therefore, it is not within the authority or power of any officer of the Court to short circuit or override the statutory provisions of the Companies Act, 2013 regarding appointment of Directors. It is further submitted that it is not within the....
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....e by majority, it specifically makes the provision. It is submitted that Courts can pass judgment by majority as it is provided for in Section 98 and Order 47 Rule 6 of the Civil Procedure Code (CPC). The Board of Directors of companies can pass resolutions by majority because Regulations 68 of Schedule 1, Table F gives them such power. The share holders can pass resolutions by majority as Section 114 of the Companies Act gives such power. In terms of Sections 29 and 31(2) of the Arbitration and Conciliation Act, 1996 Joint Arbitrators can pass awards by majority. Under Section 17(3) of the Waqf Act, 1995, Members of the Waqf Board can decide by majority. In terms of Section 12(c) of the Partnership Act, 1932, partners can act by majority in certain matters. Thus, when the law is silent, the Joint officers have to act jointly. Further, it is submitted that the fact that the Joint APLs has to act jointly was accepted by the respondents in 3 SLPs before the Hon'ble Supreme Court challenging the judgment and order dated 12th June, 2014 passed by the Hon'ble Division Bench, in the Special Leave Petitions, the respondents took a stand that the administrators had to act jointly a....
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....ts without prejudice to whatsoever submitted, there was no occasion for the APL to re-investigate the extent of the estate. Further, in re-investigation into the extent of the estate for the purpose of including assets that have been left out or to exclude wrongly included assets, could only result in a report to this Court. 24. The decision of the Joint APLs dated 19th July, 2019 was challenged on several grounds which had not been dealt with in the impugned order namely, that re-investigation to the extent of the estate was unwarranted; the decision of the Joint APLs to decide by majority instead of unanimously is contrary to the order appointing the Joint APLs and thirdly, that the decision to direct appointment of all 3 Members of the Joint APLs as Directors of Tire 1 and 2 companies and certain other individuals as Directors of 4 listed companies, 3 subsidiaries of one listed company and an unlisted company is bad in law since the Joint APLs merely represents the estate of PDB and thus, had no rights to seek appointment of Directors in companies in which PDB was not a "Member". Further, without prejudice, it is submitted that such appointment of Directors cannot be made con....
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....airman is misproved. It is a matter of record that the performances of all those 4 manufacturing companies have substantially improved after the demise of PDB in 2004. Since after 2004, the prices of shares of those companies which are authorized in the stock exchange have gone up substantially in BCrL, UCL, VTL and BCL and dividends have been consistently declared by those companies. Further, there are no ground for opposing the re-appointment of the HVL as one of the directors of the 4 listed manufacturing companies and not the case has been left out in those companies that the estate will be prejudiced if HVL has re- appointed the Directors and votes should be cast against HVL. 27. The next aspect which was dealt with by the learned Senior Counsel is with regard to the alleged admissions of RSL and judicial findings regarding "control". It is submitted that no undertaking was given by RSL who merely agreed that the share holding of the companies which were then vested with him as sole executor of the estate of PDB would not be transferred or disposed of till the disposal of the application. On the said basis directions were issued. The direction was fully complied with by RSL....
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....title over their own respective assets; the shareholders of the company is an entity distinct from the company and does not have any interest in the assets of the company; no estoppel can arise on a question of law or even on a mixed question of law and fact from the submissions by counsel, and the Hon'ble Division Bench in judgment dated 26.04.2021 has held that the said order dated 25.04.2005 is not relevant. In any event HVL is not estopped from adjudicating the same issue as neither the HVL nor the respondent in the testamentary suit were parties to the CLB proceedings and since CLB proceedings were dismissed for lack of jurisdiction, the observations made in such a case cannot operate as res judicata. 29. With regard to the orders of the CLB dated 28.06.2006, it has been submitted that the alleged statement was relied on by the respondents to support their case that PDB's estate comprises the controlling interest of the MP Birla Group. Such reliance on the alleged admission is devoid of merit as the order was passed in an application challenging transmission of shares held by the PDB in only one investment company namely the East India Investment Company Private Limited to ....
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....s unanimously inventory report dated 15.10.2013 which found the estate to be what is disclosed in the affidavit of assets. Further any submissions by RSL's counsel cannot bind HVL much less the entities of the group who were not parties to such proceedings or their statutory right to vote in respect of shares owned by them in various companies or confer control to direct voting on the administrators of the estate of a deceased shareholder. 30. It is submitted that the respondents have argued that a learned single bench of this court while hearing the appeal from the order of CLB has held that the estate of PDB held 62.90% shareholding in BCrL which is not true. In fact, the court recorded the case of both groups and did not decide this and contrary made certain other observations that the jurisdiction to decide on this issue has largely shifted from the domain of CLB to the probate court and the courts for trial of suits. Further it is submitted that these observations regarding shifting of jurisdiction in a statutory appeal which order of CLB was approved by the Hon'ble Division Bench in its judgment dated 04.05.2020. Further the respondents have omitted to refer to paragraph 1....
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....om interfering with the decision of the Joint APLs and any decision which may be taken by APL by majority in future, if the same directly and indirectly relates to the estate of the deceased. This order is beyond the jurisdiction of the learned single bench to take away the legal remedy and right given to the parties by the Hon'ble Division Bench in its order dated 23.08.2012 which expressly permits an aggrieved party to challenge a decision made by the Joint APLs before probate court. The second limb of the order in sub para (b) restrains HVL from holding any office in any of the entities of the MP Birla Group during pendency of the suit. This order has been passed despite the fact that HVL has been director of MP Birla Group of Companies even during the lift time of PDB and has continued to be elected or reappointed thereafter from time to time with a requisite majority, as per provisions of the Companies Act, 2013 and those resolutions appointing him as director have not been set aside till date. It was submitted that the HVL was reappointed in BCL on 23.09.2021, in UCL on 18.08.2020 in BCRL on 25.08.2020 and VTL on 05.08.2019. Further it is submitted when the respondent sought ....
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....ench permitted the defendant no. 3(a) to advance new arguments and file exhaustive rejoinder notes of submissions and notes on relief which though objected to by the plaintiff was allowed by the learned single bench. The defendant no. 1(d), 2 and 3(a) have not filed any pleadings in any of the seven applications decided by the learned single bench, hence submissions in this behalf was without any pleadings by them. In such circumstances, the plaintiffs were constrained to file an application in GA No. 1121 of 2020 praying for opportunity of giving hearing to the plaintiff to deal with the new arguments and the new judgments cited by the defendant for the first time in the reply after the conclusion of the submissions of the plaintiffs. However, no such opportunity was granted to the plaintiffs and orders were reserved by learned Single Bench on 04.09.2020.. However, in the cause title of the order recording the same not only GA No. 1735 of 2019 and GA No. 1845 of 2019 were included but several other GAs which were wholly unconnected with the two GAs including GA No. 1005 of 2020 of the defendants filed in August 2020 were included. This necessitated the plaintiff to file clarificat....
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.... the deceased in respect of the companies specified in the Annexure J to the said petition. It is submitted that such a prayer is a very wide prayer made for the first time before this Court whereas the prayer (b) seeks for the administrator to take over the management, affairs and control of the MP Birla Group of Companies and the shareholding of the companies specified in Annexure AA which is a very narrow prayer. It is submitted that at the first instance no prayer was made for appointment of an administrator to the charitable institutions and societies and this was included in the said application which was a very wide prayer. Reference was made to the decision reported in Priyamvada D. Birla Versus Laxmi D. Newar 2005 4 CHN 544 wherein the applications filed by the Laxmi Devi Newar and others for appointment of an administrator was considered, referring to paragraph 30 and 31 of the said decision wherein the court accepted the argument that shareholders stand on a different footing from that of the company, which is a separate legal entity. 32. Nextly, reference was made to the decision reported in Priyamvada Debi Birla Versus Ajoy Kumar Newar AIR 2006 Calcutta 259 wherein ....
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....ained finality as the special leave petition filed against the said judgment was dismissed as not pressed by order dated 16.04.2008 in view of the judgment pronounced by the Hon'ble Supreme Court reported in Krishna Kumar Birla Versus Rajendra Singh Lodha and Others 2008 4 SCC 300. Paragraph 57 of the said decision was referred to wherein the Hon'ble Supreme Court held that the jurisdiction of the probate court is limited being confined only to consider the genuineness of the will; question of title arising under the act cannot be gone into in the probate proceedings. Construction of a will relating to the right, title and interest of any person is beyond the domain of the probate court. Further in paragraph 187 of the said decision, the Hon'ble Supreme Court held that the submissions that RSL is an outsider and bequeath is unnatural did not appeal to the Hon'ble Supreme Court and such a question cannot be determined at the relevant stage. Further it was observed as to why an owner of the property executes a will in favour of the another is a matter of his/her choice; only by a will deprive his close family members including his sons and daughters. The court is concerned with the g....
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....as shareholders. Further the apprehension of the affectation of business of the running companies with appointment of administrators was held to be misplaced. Further it was submitted that in the said decision, the court clearly held as to what the APL has to do. There was a direction to the APL to make inventory of the estate and take possession of the same except which are under the possession of the Joint Special Officer. They shall submit report of inventory within four weeks from the date of assumption of charge. Further with regard to the participation in the meetings of shareholders of the companies, they were directed to take lawful steps as shareholders in accordance with law which would mean that the provisions of the Companies Act have to be followed. Further in the said decision, it was held that the Joint Administrators will act ordinarily jointly, but in case of non-availability of any Joint Administrator remaining administrators or administrators will act, however ratification of the court is to be obtained latter at the earliest. Reference was made to the interim order passed by the Hon'ble First Court dated 22.12.2011, wherein the court recorded that the Learned co....
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....BCrL to the APL dated 17.01.2013 wherein it was pointed out that BCrL is a listed company managed by Board of Directors elected with majority votes at the Annual General Meeting and the APL should resist any steps being taken to disrupt smooth functioning of the company which is the intention of the Birla Group and their nominees. Similarly, a letter was sent to the APLs by Bombay Hospital Trust dated 30.01.2013 stating that the trust has been managed in accordance with the scheme and the Board of Management does not seek nor receive any guidance from any third party. However, should a proper suggestion be forthcoming the Board of Management may be open to consider that if it be in the interest of the public that the trust serves and consistent with the objects and proper administration of the trust. 34. Nextly, the learned senior advocate referred to the first interim report of the APL dated 15.10.2013 wherein in Annexure 14 list of assets of the PDB with the value as furnished by prepounder of will were annexed. It is submitted that from the annexure 14 to the said interim report it is clear that the property in public companies is the list of shares held by the estate. Therea....
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....note. It is submitted that GA No. 1735 of 2019 has been filed to implement the decision of the majority APL and GA No. 1761 of 2019 has been filed to set aside the majority decision of the APL. The Hon'ble Division Bench had rendered judgment dated 04.05.2020. The companies which were the appellants namely the BCL, BCrL and VTL are not parties to the proceedings before the learned single bench. The Division Bench held that the shareholder is not the owner of the assets of the company and the probate court does not decide the title of the properties being subject matter of the will and it only decides the genuineness of the will. 35. Nextly, the learned senior counsel referred to Section 2 (h) and Section 5 of the Indian Succession Act and Section 30 of the Hindu Succession Act to explain as to what is the property which can be bequeathed. On this aspect, reliance was placed on the decision of the Hon'ble Supreme Court in Rustom Cavasjee Cooper Versus Union of India AIR 1970 SC 564. For the same proposition, reliance was placed on the decision in Tata Memorial Hospital Workers Union Versus Tata Memorial Centre and Another (2010) 8 SCC 480. Reliance was placed on the decision of t....
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.... (2005) 5 SCC 465, State of Karnataka & Ors. Versus Kempaiah (1998) 6 SCC 103, Vania Silk Mills (P) Ltd. Versus Commissioner of Income Tax, Ahmedabad (1991) 4 SCC 22 and Priyamvada Devi Birla, Rajendra Singh Lodha Versus Lakmi Devi Newar & Anr. AIR 1973 Cal 450. These decisions were also referred to explain the principle of ejusdum generis, noscitur and rule of last antecedent. To explain the concept of "control" further, elaborate reference was made to the decision in Arcelormittal (Supra) more particularly the findings of the Hon'ble Supreme Court in Paragraphs 48 to 56 of the said judgment. 37. It is further submitted that the concept of single directing mind and will are inapplicable to and irrelevant in determining the aspect of "control" within the meaning of Companies Act. The said concept only arises if the company is accused of wrong doing in which case the single directing mind or directing mind and will is sought to be identified in order to fix liability. The doctrine of identification does not apply to large listed companies. To explain the above preposition reliance was placed on the decision of the Hon'ble Supreme Court in Sunil Bharti Mittal Versus CBI (2015) 4 S....
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.... plaintiff No. 1 who is a party in the capacity as propounder of a will and not in the capacity such as chairman / director to do or not to do several acts affecting the management and control of third party entities. Further, it is submitted that the learned Single Bench accepted the principle in Howrah Tradings (Supra) that only Members of the register of the Members of a company can vote. However, having accepted the aforesaid principle the learned Single Bench has held that if the contentions raised by the noticee companies are to be accepted by the entire concept "control", "promoter" or "promoter group" and "beneficial interest" appears to be superfluous. Further, it is submitted that the learned Single Bench accepts the principle in Bacha Gazdar's case (supra) that shareholders have no right over the assets of the company. Having held so, the learned Single Bench proceeds to give contrary directions. Further, it is submitted on the findings rendered by the learned Single Bench on the contentions raised on behalf of the two Joint APLs, the Court has construed Arcelormittal's case to hold "control" or "de facto control" exists de hors shareholding or a "right" which is....
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....best bind the person making it not others. Finding of fact or admission of fact can be in a proceeding where there is jurisdiction. Notably none of the Lodhas were parties to the proceedings. The decision of the Hon'ble Supreme Court in Sri Athmanathaswami Devasthanam Versus K. Gopalaswami Ayyangar AIR 1965 SC 338 was referred to wherein it was held that when the Court has no jurisdiction over the subject matter, the suit cannot be decided on merits. Further, when CLB decided it has no jurisdiction, the finding that PDB controlled more than 60% of the shares is not a finding of the CLB which itself held that it had no jurisdiction. Therefore, it is submitted that the observation of the CLB cannot be elevated as if it is a finding of fact. That apart, control is a mixed questions of law and fact. In this regard, reliance was placed on the decision of the Hon'ble Supreme Court in (2012) 6 SSC 687 (my notes page 31). Further, it is submitted that a client is not bound by any admission of the Counsel when it is not authorized. In this regard Reliance was placed on the decision of the Hon'ble Supreme Court in Himalayan Corporation Group Housing Society Versus Balwan Singh & Ors. (2015) ....
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....erated that APLs being officers of Court are required to be impartial and should not enter into the arena of conflict or between the parties or wade into the merits of the case. Two substantiate such preposition reliance was placed on the decision in L.K.M. Medical Trust Versus Charu 33 and Shivram Antaiah Shetty Versus Chimanlal Ambalal Trivedi AIR 1987 Guj 30. Further, it is submitted that significant beneficial ownership does not confirm a right to vote in this regard reliance was placed on the decision of the Hon'ble Supreme Court in JP Srivastava (Supra) and Bal Krishnan Gupta & Ors. Versus Swadeshi Polytex Ltd. & Ors. (1985) 2 SCC 167. It is nextly submitted that Section 89 of Companies Act 2013 and Section 187C of the Companies Act, 1956 are para mataria. Further, a person need not make a declaration of beneficial interest under Section 187C or Section 89 he or she or his or her estate is precluded from ordinary beneficial interest. After referring to the various provisions of the Companies Act and the statutory provisions reliance was placed on the decision of the Hon'ble Supreme Court in Ahmed Abdulla Ahmed AI Ghurair Versus Star Health and Allied Insurance (2019) 13 SCC 2....
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..../directions is claimed to flow from the impugned judgment which has been relied on by the Joint APLs in their letters issued to the various companies including the letter dated 17.10.2020 issued to UCL. Thus, as per the stand taken by the Joint APL what flows from the above is that the estate of PDB pending grant of letters of administration with will annexed includes the aforesaid powers of PDB. It is submitted that the estate which the APL administers has to be the estate in respect of where all letters of administration is granted under Section 290 of the Succession Act. Prima facie findings on the scope and extent of the estate has to be after taking into consideration the fact that the expression "the estate of the administration" should be interpreted the same way in both the Sections 247 and 290 of the Succession Act which will also be relevant for the purpose of Section 273 of the said Act. Therefore, it is submitted that the court has to see whether letters of administration can be granted over the powers of PDB which usually perceived to have had as part of the estate and if it is so granted then in the Inventory and Accounts these assets would be included as Assent to Le....
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....sion in Maurice Saleh Manasseh AIR 1933 Calcutta 924 and the decision in Commissioner of Wealth Tax, Bombay Versus Mrs Nirmala D. Mehta 1990 Mah LJ 1225 It is further submitted that the testamentary court does not have jurisdiction in respect of assets not included in the affidavit of assets. For such proposition reliance was placed on the decision in Shyamal Kumar Banerjee and Others Versus Sunil Kumar Banerjee and Others MANU/WB/0841/2004. 40. It is submitted that if the Joint APLs are to exercise the powers which PDB as perceived to have i.e. not to flow from legal ownership of any asset, then by following the testator's arm chair theory they should exercise such power where PDB would have so exercised. It is submitted that in the notes filed on behalf of the plaintiff before the Joint APLs this aspect was fully explained and was elaborated with documentary evidence to the Joint APLs which was not considered by the Joint APLs and submissions in this regard made before the learned single bench was also not considered. 41. It is submitted by the respondents that there has been admission on the part of the plaintiffs on certain aspects which according to them would amount to ....
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.... such directions/appointments cannot be done contrary to the provisions of the Companies Act. Further it is submitted that non- reappointment of HVL, the director of the MP Birla Group of Companies would result in disruption in the management of such companies which was unanimously noted by the Joint APL at the meeting held on 21.07.2017. Similarly the names of the persons who are appointed by the Joint APLs to the various trusts and societies were also referred to. It is submitted that all such appointments could not have been made contrary to the provisions of the companies Act or the constitution of the trusts and societies. 43. It is submitted that in the present testamentary proceedings in the light of the earlier judgments dated 11.03.2005 and 21.12.2006 which was affirmed by the Hon'ble Supreme Court as reported in 2008 4 SCC 300 trusteeship and directorship are not heritable, that the Birla family members have separated long back and the co-share holder of a company is not right in the estate of other co-shareholders. Therefore, it is submitted that the learned judge ought not to have issued directions to the companies and societies to abide by the joint majority decisio....
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.... the Committee by appointing directors in the various companies, goes contrary to the decision taken by the committee. Further by referring to paragraph 26 of the minutes, it is submitted that the committee had decided that it is not taking any final decision regarding what forms part of the estate of late Mrs. PDB but so long as the controversy between the parties is pending before the Calcutta High Court in Civil Suit Nos. 73 to 77 of 2010 and C.P No. 01 of 2010 against the trusts, the APL Committee will have to proceed on the basis of the possibility that the estate of late Mrs. PDB has a majority share in the MP Birla Group of Companies including Tier 3 and Tier 4 companies also. It is pointed out that in the said decision the APL Committee has used the word "possibility" and the two decisions of the APL Committee are contradictory rather it is a blend of the possibility and impossibility. It is submitted that the question would be whether the APL Committee can take decisions on possibilities. It is further submitted that in paragraph 40 of the minutes, the APL Committee has decided that whenever necessary, the Committee may approach the High Court for appropriate directions by....
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....er be the legal fiction, it cannot travel beyond Section 247 of the said Act. In support of such contention, reliance was placed on the decision of the Hon'ble Supreme Court in Vineeta Sharma Versus Rakesh Sharma and Others (2020) 9 SCC 1. Further it is submitted that the APL Committee cannot travel beyond the joint inventory report dated 15.10.2013. Reverting back to the judgment of the Hon'ble Division Bench dated 23.08.2012, it is submitted that the powers exercisable by the Joint Administrators are with regard to the shares and stocks owned by the testator and it is only such rights which flow from the ownership of the shares and enjoyed by the testator during her life time is the subject matter of the estate of the deceased. The learned senior advocate would submit that the findings recorded by the learned single bench in page 151 of the judgment is contrary to the decision of the Hon'ble Division Bench dated 23.08.2012. That apart, the learned single bench has travelled far beyond the prayers sought for in the applications as well as in this supplementary affidavit, and in this regard, the learned senior advocate has referred to the page 155 of the impugned judgment wherein t....
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....s submitted that the business or concern of a probate court is broadly under three heads namely to ascertain (i) where there is dispute (ii) whether the third party can come to court and (iii) where the APL has been put in place request for directions from the court. The case on hand according to the learned senior counsel would fall in the first category. In such circumstances, the APL ought not to be heard and if it is heard in the matter, it will not be impartial and as a matter of judicial policy, the APL should not be heard in the matter. Further the Companies Act will apply with full force. It is submitted that the learned Single Bench in the impugned judgment had laid down certain correct tests namely that the probate court cannot pass orders against the third parties, neither can they join in the probate proceedings and orders cannot be passed against the companies and charitable societies. In this regard, the learned Senior Advocate referred to certain paragraphs of the impugned judgment. Though, the learned Single Bench in about 13 places in the impugned judgment holds that the court lacks jurisdiction to issue directions against the third parties, the ultimate directions....
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....cation Trusts and others, the court in its judgment dated 10.05.2013 made certain observations which do not take away voting right of the promoters group shareholders or in any way cast upon them the duty to obey any direction of the estate/APL Committee. The observations do not require the company to change its register of members; each of the entities are independently managed by their respective Boards of Directors or Managing Committee. It is further submitted that on and after the judgment of the Division Bench dated 04.05.2020 in the present probate proceedings, after noticing the order of the Company Law Board and the judgment dated 10.05.2013 of the High Court in Section 10F jurisdiction it was held that the assets of the estate are as per the schedule of assets. It is submitted that in any event, any alleged admission by a counsel/an incidental recording by the court cannot deprive the entities of the promoter group of their statutory right to vote in respect of shares owned by them and whose names are reflected in the register of members in various companies or transfer of control to direct voting on the administrators of the estate of a deceased promoter shareholder. Rel....
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....ving held that it lacks jurisdiction to pass the order against the companies, it could not have proceeded to issue the impugned findings/observations/directions. (ii) the basic tenets of Companies Act have been contravened including the primacy of the Articles of Association, independents of the Board of Directors and sanctity of the Register of members, (iii) the impugned order is contrary to the established principles of testamentary law. (iv) the probate court exercises limited jurisdiction which is confined to ascertain the genuineness of the will. In exercise of its powers under Section 247 of the Indian Succession Act to preserve and protect the estate, an administrator's power or the probate court cannot be extended to injunct individual who are otherwise qualified under respective regulatory statutes which are complete codes in themselves from holding office in third parties entities (v) the impugned findings and the conclusions are contrary to the earlier findings rendered in various decisions of this court dated 11.10.2007, 19.05.2016 and 04.05.2020 between the parties. (vi) the impugned findings are contrary to the judgment da....
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....tator with respect to this property which he desires to be carried into effect after his death. Thus, what is to be transferred/ disposed of by will is a property owned by a testator. It is submitted that this position is evident from Section 5 of the Indian Succession Act, 1925 and Section 30 of the Indian Succession Act, 1956. In support of such contention reliance was placed on the decision of the Hon'ble Supreme Court Rustom Cavasjee Cooper Versus Union of India 1970 3 SCR 530. Thus, it is submitted that anything that is not a "property" or a "property owned by the testator" cannot be bequeathed by a will. With regard to the powers of the probate Court it is submitted that the probate Court has no substantive civil or company jurisdiction and its jurisdiction is limited to determination of genuineness of will that is it does not determine title or any question as to the existence of the property. In this regard, reliance was placed on the decision in the case of Kanwarjit Singh Dhillon Versus Hardyal Singh Dhillon & Ors. (2007) 11 SCC 357, Krishna Kumar Birla Versus Rajendra Singh Lodha (2008) 4 SCC 300 and Ramchandra Ganpatrao Hande alias Handege Versus Vithalrao Hande AIR 201....
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....missing the contempt petitions filed by the group of defendants was disposed of without notice by order dated 04.02.2022. The learned Senior Advocate then proceeded to elaborately refer to the minutes of the APL committee dated 19.07.2019 and pointed out various discrepancies and decisions which are contrary to the minutes of the meeting. It is submitted that with regard to the trademark issue and logo, the said trademark and logo does not form part of the estate of PDB. Nextly, the learned Senior Advocate referred to the pleadings made on behalf of BCL. The letter of APL to BCL dated 20.07.2012, and the reply of BCL to APL dated 17.07.2013 and the reply of BCL to APL dated 18.03.2014. After referring to the letter of the APL Committee dated 04.11.2020 addressed to the Board of Directors of BCL, it was submitted that APL is arrogating to themselves the power which is not available and it is contrary to the provisions of the Companies Act. The learned Senior Advocate then proceeded to submit with regard to the fundamental tenets of Company Law which include the independence of the Board of Directors, primacy of the articles of association and sanctity of register of members which re....
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....pite the APL committee voting against their resolution for appointment of HVL after discontinuing the shares referable to PDB's estate in pursuance of the order dated 01.10.2020. Thus, by way of concluding submissions, the learned Senior Advocate submitted that no adverse directions can be issued against the company as it was not the party in the suit and therefore, the directions issued in the impugned judgment are liable to be set aside. No membership rights can be exercised by non-members and APL committee can only exercise voting and other membership rights with reference to the 1260 shares held by it and nothing beyond. In support of such contention reliance was placed on the decision in Howrah Trading Co. Ltd. Versus CIT 1959 Supp (2) SCR 448; Balkrishan Gupta Versus Polytex Ltd. (1985) 2 SCC 167 and Killick Nixon Ltd. Versus Bank of India (1985) 57 Comp Cas 831. It is submitted that during her lifetime PDB could not have exercised voting rights in respect of the shares held by any or all of the promoters as a matter of legal right. The APL acting as guardian of PDB's estate, cannot exercise the voting rights at company meetings in respect of shares held by various companies,....
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....he company with a depository in terms of Section 43 and 89 of the Companies Act, 2013. It is submitted that PDB during her lifetime had never made any declaration under Section 187 C of the Companies Act, 1956. Therefore the estate of PDB does not include any significant beneficial ownership of shares and the APL cannot go beyond the estate. In this regard, reference was made to the decision in the case of Ahmed Abdulla Ahmed Al Ghurair Versus Star Health and Allied Insurance (2019) 13 SCC 259 and Sanjeev Mahajan Versus Aries Travels Pvt. Ltd. judgment dated 04.02.2020 in CS(OS) No. 46 of 2020 in paragraphs 29 and 30. With regard to the contention that regarding "single directing mind" it is submitted that the concept of "single directing mind" and will are irrelevant in determining the aspect of control within the meaning of Companies Act. The said concept arises if a company is accused of wrong doing in which case the single directing mind is identified in order to fix liability. It is the means ria which is attributed to the corporations on the principles of "alter ego" or "single directing mind" of the company. The said concept cannot arise in civil cases where there is n....
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....ons 47, 88 read with Section 2(55) of the Companies Act, 2013 were referred to. It is further submitted that GA No. 1735 of 2019 and GA No. 1845 of 2019 were filed by the Defendant Nos. 1(b) and 1(c) and ex parte orders were passed against BCL and other companies on 02.08.2019, 05.08.2019 and 09.08.2019 which had the effect of interfering with the validly convened Annual General Meeting of BCL and declarations of the results of the AGM. On an appeal filed by BCL and other affected companies the said order was set aside by the Division Bench by order dated 04.05.2020. The Hon'ble Supreme Court refused to interfere with the said judgment. 53. It is further submitted that in disposing of GA No. 1735 of 2019 and GA No. 1845 of 2019 the learned Single Bench fully accepted the contention of BCL and other companies that the probate Court has no power and jurisdiction to pass orders against the company. In this regard, several paragraphs/ pages of the impugned judgment were referred to. It is submitted that despite such findings the learned Single Bench made observations affecting BCL and share holders by giving the Joint APLs the right to interfere with the affairs of the company who a....
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....ownership of the assets and properties of the company. It is further submitted that the learned Single Bench despite refusing to decide various issues on the basis of which alone the joint APLs could have been given the power to intermeddle with the affairs of BCL and other companies. The learned Single Bench while taking note of the submissions on merit whether or not APL's decision should be implemented or whether the APL has rightly taken decision as APL or not was not gone into. Thus, the learned Single Bench having refused to decide such issues and in particular whether two joint APLs decision taken by majority should be implemented or whether the two joint APLs have rightly taken such decisions, the learned Single Bench could not have made observations on the strength of which it is now claimed by the respondents and the two joint APLs, the validly appointed Board of Directors of BCL is compelled to exercise its voting rights in the manner to be guided by the APL committee. It is further submitted that the learned Single Bench having held that BCL/ company is not amenable to the jurisdiction of the probate Court, it upheld the joint decision of the two APLs to ensure that one....
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....bsidiaries, the APL has nominated themselves as directors. Thus, the APLs are trying to arrogate power unto themselves. It is submitted that though five complaints are made against HVL there is no allegation against the company and no letter was written to the company by the APL. After elaborately referring to the decision of the Company Law Board reported in 2005 128 Company Cases 145 (CLT), it is submitted that there is no admission of any control and the company has denied the allegation. Further there is no finding on the allegations made by the two APLs on HVL and virtually the two APL is now going on "overdrive mode". It is submitted that two of the directors namely, Mr. Daga and Mr. Damani which according to the learned Senior Advocate are to be called as rogue directors and they are addressing the APL alleging that the company is acting against the two APL decision and virtually the two APL is shaking hands with the rogue directors. The said rogue directors are wasting the money of the estate. The learned Senior Counsel then proceeded to refer to a various communications sent by APL and minutes of the meeting the views expressed by one of the members of the APL etc. It i....
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....that only the grant of probate is in rem whereas the orders passed by the Court are in personem. Merely because the grant of probate operates in rem, does not ipso facto mean that the orders can be passed against third parties. Hence, it is submitted that the principle for which the decision in the case of West Bengal Housing Development Board (2016) 1 SCC 743 was cited is fully applicable in the present case as interim orders passed by the probate Court do not operate in rem. After distinguishing the decisions which were referred to by the respondents it is submitted that it is evident from the judgments relied on by the respondents that the testamentary Court will rarely, if at all, pass orders passed against third parties, will direct APL to file appropriate proceedings before the appropriate Civil Court to protect the properties of the estate. The same is restricted to cases where an APL has not been appointed or where there is no dispute in regard to the property belonging to the estate. Further, learned Senior Counsel also elaborated upon the contention that there is no admission made or recorded in the CLB judgment which were elaborated by Sri Khambata, learned Senior Advoca....
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....ngle Bench have not been dealt with in the impugned judgment namely, that a share holder including the one who holds 100% of shares cannot claim ownership of the properties of the company; directorship and trusteeship are not hereditary posts and cannot be subject of testamentary disposition; the Court in exercise of its testamentary jurisdiction or otherwise cannot pass orders prayed for by the respondents, even assuming that the testamentary court has power to pass such orders, the joint APLs do not enjoy the power of the Court and has no power or jurisdiction to give the directions, whether by majority or otherwise; even if the testamentary court has wide powers as claimed by the defendants, the same have not been conferred on the joint APLs. With the above submission, Mr. Bachawat concludes. 56. Mr. Jishnu Chowdhury, learned Senior Advocate appearing for the appellant in APO NO. 89 of 2020, Universal Cables Limited submitted that no notice was directed by the Court to be served on the companies and this is in violation of principles of natural justice. Since, this may affect the way the companies functions the Court felt notice was not necessary. In the judgment of the Divis....
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.... through shareholding both directly and indirectly through cross and chain shareholding in various companies within the MP Birla Group. APL arrived at such findings based on admissions and in the decisions of the Company Law Board, the High Court and the Supreme Court. On the second issue, APL concluded that its role was determined by the judgment dated 23.08.2012 and that the role of APL could not be limited to being mere proxies of the estate of PDB attending AGMs of the shareholders and voting at such meeting and that the role to be played by APL did not run-counter to the provisions of the Companies Act, 2013. The APL also concluded that while taking decision, APL could act by majority. It is submitted that in the light of the conclusions arrived at by APL in its decision dated 19.07.2019, it decided that three members of APL who had already been appointed as Directors in five investment companies of MP Birla Group would continue to be the Directors therein, that Justice Karnik who had already been appointed as Director would continue to be the Director in UCL, VTL and BCL and would be appointed as the Director in three subsidiaries of VTL that Justice Devedhar would be appoint....
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....e to charity. MPB and PDB took a vow at Tirupati and Kanchipuram which was witnessed by Guru Shankaracharya to bequeath their estate to charity. MPB and PDB executed mutual wills in 1981 bequeathing their estate to charities. In 1982, MPB and PDB executed mutual wills similar to those of 1981 but only increased the number of executors from 3 to 4. The charitable disposition of the couple has been recorded in the biography on the life of the MPB title "To man, To country and To God" authored by Dr. V Gaurishankar. In 1988, MPB and PDB executed five trusts bequeathing their estate to charity. In 1990, the MPB died. Thereafter the five trusts were perfected by PDB by nominating the beneficiaries. On 15.04.1999, just three days prior to the impugned will, PDB purportedly dissolved the five trusts. However, no document regarding revocation has been disclosed till date. On 18.04.1999, PDB purportedly executed the impugned will appointing RSL as executor and bequeathing the entire estate to him. On 27.06.2000, purported letter written by PDB to the Income Tax department stating that the five trusts have been dissolved. On 15.04.2003, the purported Codicil was executed by PDB. On 03.07.200....
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....ng of the testamentary proceedings and reap the benefits of the estate. In this regard, the learned Senior Advocate has referred to various factual details which according to the learned Senior Advocate are the dilatory tactics adopted by HVL. 60. The next aspect referred to by the learned Senior Advocate was regarding the extent of estate of PDB. It is submitted that the impugned will of 1999 proceeds on the basis that the estate has the right to control, manage and administer the MP Birla Group of companies, trusts and societies. The relevant portion of the will more particularly, paragraphs 3 and 4 therein were referred to. It is submitted that as per doctrine of election a pro pounder has to stand by the whole of the will and he cannot chose to accept the part of it and rejects other part. To support such contention, reliance was placed on the decisions in C. Beepathuma Versus Velasari Shankaranrayana Kadambolithaya AIR 1965 SC 241, Lyla Darius Versus Bakhtawar Lentin (2007) 1 Maj LJ 545, Mirzban Versus Cedric Vaz (2015) 2 Mah LJ 184 and Bhagwat Sharan Versus Purushottam & Ors. (2020) 6 SCC 387. 61. It is further submitted that in the amended application for grant of lett....
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....n the submission of the learned Senior Counsel has concluded this issue. Thus, it is submitted that based on the admitted and concluded issues, the APL by its decision dated 19.07.2019 has rightly concluded that major part of the estate of PDB consists of controlling interest in MP Birla Group of companies through shareholdings both directly and indirectly through cross and chain shareholding in various companies within the MP Birla Group. Therefore, it is submitted that the learned Single Bench has rightly held that it is an admitted position that the majority controlling block of shares in the MP Birla Group is an asset of the estate of the PDB and the same should not be interfered with. It is submitted that admission is best evidence and does not require any further corroboration and in this regard referred to the Section 59 of the Evidence Act, 1872. It is submitted that the appellants have tried to come out of such admission and concluded issues by raising desperate and frivolous contentions. The contentions thereon were referred to and relied on. The learned Senior Counsel referred to the following decisions on the question of estoppel and res judicata: • Dwijend....
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....wer of APL it is submitted that the same is laid down under Section 247 of the Act and in the instant case, it has been laid down by the judgment of the Division Bench dated 23.08.2012 and the said judgment has become final. It has been held that APL has all the rights and powers of general administrators and the estate of PDB as vested in the APL. The said judgment also holds that the estate of PDB holds majority controlling block of shares in MP Birla Group and in the said judgment APL has been directed, inter alia, to do not being a mere spectator but exercise all the rights and powers and privileges incidental to vesting of estate including the controlling block of shares. The relevant paragraphs of the judgment dated 23.08.2012 were elaborately referred to. It is therefore submitted that APL by its decision dated 19.07.2010 has rightly concluded that the role of APL has already been determined by the judgment dated 23.08.2012 and it cannot be limited to being mere proxies of the estate of PDB attending AGMs of the shareholders and voting at such meetings and that the role to be played by APL did not counter to the provisions of the Companies Act. In this regard several paragra....
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....a) This case deals with the scope of Section 269 and holds that powers of court to protect the property under Section 269 is not available to HVL. This case does not deal with the power of court to protect and preserve the estate under Section 247 as admittedly no prayer was made for appointment of APL in the said case. Further it is submitted that the appellants cannot contend that the estate has only 1260 shares in the BCL directly or 16.04% shareholding in BCL through investment companies and not majority shareholdings of 62.90%. It is also very strange why a possible beneficiary wants a estate to be the smaller extent than of an admitted and concluded larger extent. The APL by the impugned decision dated 19.07.2019 has rightly concluded that major part of the estate of PDB consists of the controlling block of shares in MP Birla Group through cross and chain shareholding in various companies in the MP Group. The learned Single Bench has rightly upheld the APL decision both on the ground of role of APL as well as the extent of the estate and the decision dated 30.07.2019 and the same should not be interfered in the instant appeals. Finally the learned Senior Advocate referred to ....
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....terials and proceedings relating to testamentary proceedings containing such admissions and conclusions which had already been covered by the submissions made on behalf of Respondent No. 1 and the same were reiterated briefly. It is further submitted that details of some other materials and proceedings particularly company proceedings and statutory disclosures made under the provisions of the Companies Act and SEBI Regulations containing such admissions and conclusions are vital. It is submitted in CP No. 58 of 2004 filed by Gouri Shankar Kayan, a company proceedings, records clear and absolute admission and findings that the estate of PDB holds majority controlling share holding in MPB Group. All companies, trusts and societies forming part of MPB Group were parties to CO 58 of 2004 however, RSL and HVL were not parties. On 14.09.2004 an interim order was passed in CP 58 of 2004 which was a composite order in two company petitions. On 25.04.2005 CP 58 of 2004 was dismissed declining to investigate on the ground that the estate of PDB was in control of BCL. In the said proceedings, the companies, trusts and societies forming part of MPB Group admitted that the estate of PDB was in ....
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....tions. It is submitted that Section 21 of the Securities Contract (Regulation) Act, 1956 provides that a listed company has to comply with conditions of the listing agreement with the stock exchange and in case of non-compliance the company will be delisted. In case of delisting a company is bound to offer buy back of shares. As per Clause 35 of the listing agreement the company has to disclose its share holding pattern (being promoter, non-promoter holding, etc.) at the end of every quarter. These disclosures are statutory disclosures to keep the public informed. It is submitted that RSL/ HVL in the matter of acquisition of shares held by the estate of PDB have admitted the application of the SEBI Takeover Regulations but have sought exemption under Regulation 3(G) by alleging that the mandate of the 2004 Regulation was not application since acquisition was by way of testamentary succession. Before the death of PDB the share holding pattern disclosed by BCRL and BCL as on 30.06.2004 gave the break up of the promoter's share holding of 66.44% and 64.28% respectively. There is no note in the disclosure. After the death of PDB the share holding disclosed by BCRL as on 30.06.2006 gave....
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.... has been acquired was only 1260 shares. This is because Regulation 12 applies only when a person acquires "control" over a company. The same is irrespective of whether there has been any acquisition of shares or voting rights in a company. This would only be possible if the estate of PDB was in "control" of the MPB Group or companies or else no exemption would be sought from Regulation 12. It is further submitted that the nature of directorship (whether independent or non- independent) shows whether the director's part of the controlling share holding group/ promotional group or a mere director. In this regard, Clause 6.5 or Kumar Mangalam Birla Committee on corporate governance was referred to which defines independence in relation to independent directors. Clause 49 of the listing agreement was also referred to which defines "independent director" as a non-executive director. It is submitted that during the lifetime of PDB she was described as Chairman, promoter non-executive director while RSL was described as independent non-executive Director. After the demise of PDB from April, 2005 RSL/HVL were described as non-executive Director and the word "independent" was missing nor a....
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....i Versus Des Raj AIR 1965 P&H 138, In Re: Anita Rewal AIR 1980 Del 57 and In the Goods of: Manindra Nath Dutt 2003 SCC Online Cal 531. It is further submitted that paragraph 6(d)(1) of the judgment of the Division Bench dated 04.05.2020 relied on by the appellants for the proposition that the estate is the owner of only the shares disclosed in the affidavit of assets, does not support the appellants as has been contended. Even in paragraph 5 of the order dated 04.05.2020 it was held that the findings made in the order were only for the purpose of the said appeals and the Hon'ble Single Judge shall not be influenced by any findings made in the said order. In any event, the Hon'ble Supreme Court by order dated 11.05.2020, filed against the judgment of the Division Bench dated 04.05.2020, had directed the learned Single Bench to decide the issue of jurisdiction together with merits. It is submitted that paragraph 301 of the Division Bench judgment dated 11.10.2007 was relied upon the appellant however, this paragraph must be read along with paragraphs 259, 304, 310. It is submitted that it is an admitted fact that Lodhas have come in control of MPB Group because of PDB and the impugne....
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.... The Court further held that such adjudications are binding not only upon the parties but also upon the Court. The decision in Ambika Prasad Thakur is not applicable to the case on hand as the said case is in relation to a suit for possession of certain lands and the defendants in the said case disputed the plaintiff's title to the lands. Further, in the said case the plaintiff did not raise the claim of title on the basis of any admission. The basis on which the plaintiff's claim to have title was not proved. Further, the High Court found that the admission made was a weak admission and under suspicious circumstances. It is submitted that the decision in Canbank Financial Services is distinguishable as in the said case there was no title claimed on the basis of any admission. The order passed by the Hon'ble Supreme Court in Prem Nath Chopra was sought to be distinguished on the ground that in the said case it was held that non-questioning of inheritance would not confer as the same is governed by the relevant laws of succession. The decision in the case of Narayan Bhagwantrao Gosavi Balajiwale Versus Gopal Vinayak Gosavi & Ors. AIR 1960 SC 100 relied on by the appellant will have ....
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....s only to criminal proceedings and relied on the judgment in Masud Khan Versus State of Uttar Pradesh (1974) 3 SCC 649. The said contention is of no relevance. 70. The respondents have relied on the principles of judicial estoppel and also contended that a party cannot approbate or reprobate. There is no dispute to such contention of the respondents. The next aspect dealt by the Learned Senior Advocate is with regard to the directions of the APL dated 19.07.2019 and 30.07.2019. It is submitted that those directions are within the jurisdiction to the court under the provisions of the Indian Succession Act particularly, Section 247. It is submitted that APL or the testamentary court while exercising its jurisdiction to preserve and protect the estate under Section 247 can prima facie, even go into the issue of title. In support of such contention the decisions were relied upon:- • Atula Bala Dassi Versus Nirupama Devi AIR 1951 Cal 561 • Shoilesh Chandra Mustafi Versus Amal Chandra Mustafi AIR 1958 Cal 701 • In the Goods of: Om Prakash Maniyar 2021 SC Online Cal 3066. 71. The appellant placed reliance on the decision in Ramchandra Ganpatrao....
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....artin AIR 1939 Cal 642; • Final Order of the Calcutta High Court dated 14.03.2023 (In the Goods of: Om Prakash Maniyar) - para 129-133- holds that not only probate court is competent to prima facie determine questions of title, but is also competent to pass injunctions against third parties to protect the estate in exercise of jurisdiction under Section 247 of the Indian Succession Act, 1925. 72. The judgment reported in 2016 SCC Online Cal 1541 relied on by the appellants has no application for the reason that the judgment was delivered when APL was defunct. The subject matter of challenge was also different, no rights of shareholders were involved in the said case. It is submitted that several paragraphs of the judgment supports the case of the respondents that inter alia the majority shareholding of MP Birla Group is part of the estate, that controlling interests can direct the shareholders to vote in a particular manner, that APL can take steps of protection of the estate and exercise control in accordance with the Companies Act by removing directors. No appeal has been preferred by the appellants from the aforesaid findings of the order dated 19.05.2016. On the....
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....s beyond register by providing for investigation into real ownership of shares and in this regard referred to Sections 153, 247 and 250 of the 1956 Act. The amendments to the Companies Act made in 1960, 1963, 1974, 1998 and 2013 were also referred to. It is submitted that the court also recognizes that beneficial interest must be protected as was held in the judgment in Damien Subsidies and Kuries Limited Versus Jode Pulicken (2007) 137 Comp Cas 288. It is further submitted that the report of the Company Law Committee, February 2016, recognizes beneficial interest and ownership of shares and significant influence. This led to the amendment of the Companies Act, 2013 by amending Act 2017 by which Section 89 was amended by inserting definition of beneficial interest and Section 90 was substituted. The Companies (Significant Beneficial Owners) Amendment Rules, 2019 was thereafter introduced. Thus, it is submitted that the courts have always recognized interests in respect of shares/beneficial interests in shares. Both the Companies Act, 1956 and the 2013 Act recognized the concept of beneficial interest in shares. The contention of the appellant that beneficial interest cannot be reco....
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....n Hindustan Motors Versus MRTP Commission AIR 1973 Cal 450. The contention of the appellant that since no declaration for beneficial interest has been made under Section 187 C of the Companies Act, 1956, therefore there can be no enforcement of beneficial interest is incorrect and the proposition is of no significance in view of the fact that it is now an admitted and concluded issue that the estate of PDB holds controlling block of shares in MP Birla Group. In any event, of declaration under Section 187(C) of the 1956 Act, does not distinguish the beneficial interests. The decisions relied on by the appellant in Sanjeev Mahajan, Ahmed Abdulla and P.R. Ramakrishna were sought to be distinguished on facts. With regard to the submission of the appellant that control beyond the share register is a matter of personal influence which is not heritable property, it is submitted that this submission has lost its force in view of the fact that it is now an admitted fact and a concluded issue that the estate of PDB holds the controlling block of shares in MP Birla Group. In the decision reported in 2016 SCC Online Calcutta 1541 in paragraph 131 the court recognizes that control is a heritabl....
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....ersus Bank of India (1985) 57 Comp Cas 831 • Bal Krishnan Gupta and Others Versus Swadeshi Polytex Limited and Others AIR 1985 SC 520 76. It is further contended that the direction given by the APL are in consonance with the judgment dated 23.08.2012 of the Division Bench appointing the APL which has become final due to dismissal of the special leave petition by order dated 26.11.2012. In the special leave petitions, HVL took a specific plea that the order dated 23.08.2012 will result in taking over of management of companies of MPB Group by the APL. It is relied on by the appellant to support the contention that the directions given by the APL are not in consonance of the Companies Act were distinguished by referring to the facts of each case. 77. The appellant contended that the order of the learned Single Bench purports to lift the corporate veil. It is submitted that according to the respondents there is no need to loft the corporate veil in the instant appeal since it is admitted fact and concluded issue that the estate holds controlling block of shares in MPB Group and hence the decisions relied on by the appellant in this regard, have no application to the....
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.... the Division Bench in its order date 23.08.2012. Further it is submitted in this very testamentary proceeding, in the past at the instance of the plaintiff the court has issued directions against the third parties. It is submitted that other than four manufacturing companies namely BCL, BCRL, UCL and VTL and one society none others have challenged the direction issued by the learned Single Bench. It is submitted that the APLs can act by way of majority if they fail to achieve unanimous decision. In a multi member body the decision by majority is the role and decision by unanimity is the exception. Decision by unanimity can be mandated only when explicitly provided. In this regard, the following decisions were referred to: • Election Commissioner of India Versus Dr. Subramanium Swamy (1996) 4 SCC 104 • State of Madhya Pradesh Versus Mahendra Gupta (2018) 3 SCC 635 79. It is submitted that if decision is not permitted by majority there will be absolute stalemate in administration of the estate by APL. In the past, decision of the APL by way of majority have been accepted and implemented by the appellant. It is submitted that Joint APL means anybody which....
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....e be interfered with and should be continued. HVL should not be permitted to be in control of the estate as has been director by the learned Single Bench. 80. Mr. C. A. Sundaram, learned Senior Advocate appearing for the majority members of the APL Committee after setting out the background facts, first dealt with the shareholdings in the MP Birla Group. It is submitted that there are 33 companies in the MP Birla Group and a chart was placed before the court giving details of the companies which have relevance for the present litigation. It is submitted that the PDB estate has direct majority shareholding in only two companies, East India Investment 72.47% shares and Gwalior Webbing 50.43% shares and in all other companies PDB estate has indirect control over majority shareholdings in the companies in the MP Birla Group through chain holding, cross holding and interlocking of shares. It is submitted that by the judgment dated 28.08.2012, APL was appointed for the PDB estate having controlling block of shares in the companies in the MP Birla Group and not for merely the two companies East India and Gwalior Webbing. Punjab Produce Trading Company Private Limited (PPT) has been act....
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....d confer on the APL only the power to open bank accounts and collect dividends to be received on the shares held in PDB's name and all other income of PDB estate and to file income tax returns for the estate. HVL also submitted that there is no necessity for conferring powers on APL to get the shares of the deceased recorded in their names and to take over the responsibility of running the MP Birla Group of companies. The Hon'ble Division Bench by judgment dated 23.08.2012 rejected the contentions of HVL and held that the three member APL (two members nominated by the rival parties and one Former Judge) shall be entitled to exercise all the rights and powers of general administration over estate of the deceased. Further the Division Bench specifically observed that nothing prevents the APL in their capacity as representatives of the beneficiaries to exercise all such rights which flow from the ownership of the shares and so enjoyed by the deceased during her lifetime. Further it was held that it is not disputed that the deceased had controlling block of shares in MP Birla Group of Companies. 82. It is submitted that Section 89 and 90 of the Companies Act, 2013 read with Companie....
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....their personal capacity. It is submitted that it is only those companies under the de facto control of HVL which have, contrary to the judgments and orders of the CLB and this court not accepted the SBO declarations filed by the APL Committee through its majority members. The prayer for stay of the decision of the majority APL dated 09.12.2019 in G.A No. 93 of 2020 was not granted. 83. It is submitted that in the judgment dated 18th September, 2020 the probate Court after considering the provisions of Section 90 of the 2013 Act held that the APL Committee has the power to exercise control which PDB was exercising during her lifetime over the companies in the MP Birla Group. In the said decision it was further held that APL Committee is within its power to ask all entities which are under the control of PDB to exercise their voting rights in the group companies under the control of PDB in the manner considered by the APL Committee as beneficial to the interest of the PDB estate. The probate Court further held that now such entities would exercise their voting rights flowing from their share holding in the companies controlled by PDB in the manner be guided by the APL Committee. I....
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....ns which were issued by the Division Bench have to be read and understood in the light of the cogent reasons given for declining grant of ad interim stay. More particularly, Paragraphs 18 and 19 of the interim order dated 1^st October, 2020. Learned Senior Advocate then proceeded to refer to various developments after the Division Bench order with regard to the conflict of interest between the estate of PDB and HVL. The factual aspects have also been elaborately set out in the written submissions of the majority APL Committee. Therefore, it is submitted that HVL and the other entities in the MPB Group may be directed to act in conformity with the judgment and order dated 18.09.2020 of the probate Court. To clarify that the issues are referable to the estate of PDB is 62.90 shares in Birla Corporation Limited; to restrain HVL and listed companies from taking action to alter to the prejudice of PDB's estate the controlled structure over 62.9% in BCL which was recognized by the judgment dated 10.05.2013. With the above submissions, the learned Senior Counsel concluded. 84. Mr. Kishore Dutta, learned senior advocate appearing for the minority APL Committee member submitted that the ....
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....ate have agreed to appointment of three member Committee as the Joint Administrators, they shall be entitled to exercise of the rights and powers of general administrators over the estate of the deceased other than the right of distributing such estate and therefore there was a direction issued to the Joint Administrators (i) to prepare and file an inventory of the asset of the estate and appraisal of the value of such asset and (ii) to take over possession of the assets of the estate in the manner provided under law considering the nature of the property. Therefore, it is submitted that the APL Committee cannot act by majority but can act by consensus and in the event of their difference in opinion, they have to approach the court for necessary directions. Further by referring to the list of assets, it is submitted that there is no difference or dispute except the valuation of the shares of two of the companies namely East India Investments Company Private Limited and Gwalior Webbing Company Private Limited and in all other respects, the assets declared in the list of assets are identical. Once again, reverting back to Section 247 of the Succession Act, it is submitted that the wo....
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.... of their names as Joint members representing the estate of the deceased however this was the only in respect of the shares held in the name of the PDB and nothing else. Further it is submitted that the APL in the last eight years till the appointment of new Hon'ble third member has never sought to exercise any voting right over any shares not forming part of the estate of the deceased and whatever votes were cast by the APL committee were only in respect of the shares of PDB as would appear from the affidavit of assets. Further it is submitted that the three Joint APLs prepared and signed the unanimous inventory report dated 15.10.2013 which was supplied to the parties and ever since then, none of the parties have questioned the contents of the said inventory report nor raised any objection. Therefore, at this juncture any other interpretation being sought to be given which is contrary to the unanimous report is not sustainable. Further it is submitted that earlier the APL Committee held 23 meetings and acted without any exception only to decide to act when all three members had unanimously agreed on the manner of acting. Further it is submitted that the APL Committee had never pa....
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....ivergence of opinion. 85. Nextly the learned senior advocate has drawn our attention to the dissenting decision of Mr. MKS recorded by him in various decisions wherein Mr. MKS had specifically pointed out that the estate of the deceased cannot extend beyond the direct shareholding of PDB. Further it was specifically recorded that the APL can only administer and cannot adjudicate as to whether the Tier 3 and Tier 4 companies would form part of the estate or not. In this regard, the dissent note of Mr. MKS dated 31.07.2019 was also referred to. With regard to the appointment of the persons in trusts and charitable societies, the minutes of the APL Committee meeting held on 25.11.2020 was referred to wherein the dissent note of Mr. MKS has been recorded in paragraph 7.3 wherein Mr. MKS has stated that trusts and societies are not under the control of the PDB's estate and thus the APL Committee cannot issue any directions to the trusts and societies much less make nominations of the persons to be appointed on these trusts and societies. In this regard, the rules and regulations of one of the societies namely Shreyas Medical Society was referred to and the various clauses in the rule....
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....e decision in respect thereof can be taken only by the trustees/managing committee as the case may be, in terms of its rules and regulations and not otherwise. It is further submitted that the two of the members of the APL have given directions to the societies to appoint persons as trustees and members of the managing committee on the pretext that the estate has control over the society. It is submitted that there is no provision in the rules and regulations of the societies permitting the estate of PDB to appoint the trustees or members of the managing committee or to control or to give directions in respect of asset of the societies. There is no order of any court permitting the APLs to appoint trustees and members of the managing committee in the society and APLs cannot give directions to the trustees or members of the managing committee to appoint persons of their choice in their societies. These societies are charitable entities and cannot form part of the estate of a private individual. The societies or the assets of the societies have not been shown to be part of the estate of the PDB in the affidavit of assets. The APLs are appointed to administer the estate of PDB only....
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....these appointments were done by following the provisions of the companies act and not by by-passing them. No directions was given to any company/trusts/societies to vote in a particular manner as these entities were treated as distinct and separate from the parties to the suit. 87. The second part of the report deals with events during the period 2016- 2018. During this period, repeatedly prayers were made by the defendant and their nominee APL that the Joint APL should not support resolution for the reappointment of HVL as director whenever he comes up for voting. The Committee in its minutes dated 21.07.2017 unanimously signed by all the three APLs rejected the prayer not to support the re-election of HVL. No direction was given to any trusts or societies or companies on the manner of voting. The plaintiff before the committee as recorded in minutes dated 21.07.2017 explained the shareholding pattern to show that the estate does not have directly or indirectly majority shareholding of the Tier 3 and 4 companies and the estate only has direct majority shareholding in tier 1 companies and indirect majority shareholding in Tier 2 companies. Since there was a wrong recording in th....
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.... trustee of the trusts/member of the managing committee of societies and (e) appointment of trustees and members of managing committee. Thus, it is submitted that two APLs have assumed unto themselves a remit over all these companies, trusts and societies. The two Joint APLs have convened and held 21 board meetings of AGMs and EGMs of Tier 1 and 2 companies in some cases on short notice contrary to the provisions of the Companies Act. In some of the meetings, the Hon'ble APL member declared himself to be the Chairman without following provisions of the Companies Act and over riding the objections of the majority of the directors of such board meetings. Such actions of the two APLs have also been challenged by way of applications in the present appeals by the plaintiff. Lastly the learned senior advocate referred to the judgment of the learned single bench of this court in GA No. 3732 of 2008 dated 27.08.2010 and it is pointed out that the directions issued will clearly show that the APLs have to act by consensus and though the matter was carried on appeal before the Hon'ble Division Bench, the directions issued in the said order dated 27.08.2010 continues to remain valid and bindin....
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....red is by exercising propriety rights in the shares except distribution to the beneficiaries till the final adjudication of the matter. 90. It is further submitted that the "controlling block of shares" is a vague expression and referred to paragraphs 31 and 34 of the decision reported in 2005 4 CHN page 545 (PDB Versus Laxmi Debi Newar) On the same issue reference was made to the observations made by the Division Bench in the case of RSL Versus Ajay Kumar Mewar reported in (2007) 2 Calcutta Series 377 and paragraph 301 of the judgment was referred to wherein it was observed that the nature of the estate, mostly are the controlling block of shares held by PDB at the time of her death which has also been disclosed in the affidavit of assets and there is no dispute in respect of such shares of PDB nor any allegations have been made that RSL failed to disclose the number of shares by the respondents as an executor RSL took possession of the said shares and there is no allegations that he has failed to collect these assets. Further in paragraph 304 of the judgment, the court had pointed out that after perusing the material placed on record and the facts of the case, the court had co....
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.... fact and law there cannot be an estoppel in such a matter and to support such proposition, reliance was placed on the decision in the case of State of Rajasthan Versus Bundi Electric Supply Company Limited 1969 RLW 473. It was further submitted that the alleged admissions are much before 2013 when the Companies Act, 2013 came into force. 92. Nextly, the learned Senior Advocate proposed to deal with the decisions relied on by the learned Advocate General. Referring to the decision in Helfand (supra) after referring to the paragraphs 2 to 6 of the said judgment, it is submitted that the law is different in India and the decision can be of no assistance to the respondents. With regard to the decision in New Hampshire Versus Maine, it is submitted that the decision was purely a factual question on estoppel and there was no decision of law laid down in the said judgment. With regard to the decision in Shri Surendra Nayak, referring to paragraphs 12 and 15 of the judgment, it is submitted that the judgment purely dealt with the facts of the said case which are distinguishable. Similarly, the decision in the case of Directorate General of Police Versus R. Maninkandan, the findings ren....
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....f Gauri Shankar Kayan wherein the contention raised on behalf of the respondent therein as well as the petitioner have noted in paragraph 5 and in paragraph 8, the scope of Section 247(1A) of the 1956 Act was discussed. However, CLB had no jurisdiction to decide the extent of the estate. Furthermore, the CLB proceedings is not between the same parties, the present proceedings does not grow out of the decision of the Company Law Board, the extent of estate of PDB was not finally determined by Company Law Board and the representation which was recorded by the CLB was made on behalf of the company and not by RSL or HVL. The representation was made to the petitioner before the CLB who is Gauri Shankar Kayan and based on the representation, the parties did not alter their position adverse to their interests. Thus, it is submitted the question would be will the party believe the representations to be brought and when they themselves filed a suit saying that the trusts/societies are different will go to show that no such party believed the representation to be true. Further it is submitted that "control" being a mixed question of fact of law the question of estoppel or issue estoppel woul....
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.... Single Bench (Hon'ble Justice Kalyan Jyoti Sengupta) does not specifically mention that the controlling block of shares are those mentioned in the affidavit of assets. Similar submissions have been made in the written submissions before the Division Bench that the controlling block of shares is as disclosed in the affidavit of assets. The learned Senior Counsel referred to the averments set out in the affidavit of asset filed by the RSL in G.A No. 4375 of 2004 wherein it was stated that the estate of the testatrix does not directly or indirectly hold majority block of shares in Universal Cables Limited, from the Birla Corporation Limited or Vindya Tele Links Limited for charitable societies and trusts are not part of the estate of the testatrix which are managed by the respective Managing Committee and trustees of the societies or trusts and for these reason, the Birla's in their application for probate of the alleged wills of 1982 have filed the affidavit of assets and have not mentioned therein any of the societies or trusts. Further it has been stated that the companies are separate legal entities controlled by their Board of Directors and there were specific denial to the alle....
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....he decision in 10.05.2013 was considered and rejected. 97. It is further submitted that some of the paragraphs of the judgment reported in 2016 SCC Online Cal 1541 were referred to by the respondents. However, the findings with regard to the controlling interest has been rendered by court from paragraph 129 of the judgment wherein it was held that exercising of controlling power by the promoters is controlled and/or regulated by the provisions of the Companies Act and controlling power cannot be exercised according to the whims of the promoters. Further the court held that the testamentary court while in seisin of the probate proceedings cannot pass any direction encroaching upon the jurisdiction of the Board of Directors for taking over of the company by purchasing its shares. Therefore, it is submitted if the probate court had no power to do so, the APL Committee shall also have no power to do such things. With regard to the jurisdiction of the Probate Court, reference was made to the decision of the Hon'ble Supreme Court in Babulal Khandelwal and Others Versus Balkrishna D. Sanghvi and Others (2018) 10 SCC 485. For the proposition that a probate proceeding is not a suit in wh....
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....hs of the impugned judgment were referred to and it was pointed out that the matter still is in the testamentary jurisdiction and not a regular suit. The learned Senior Advocate referred to one of the prayers made in G.A No. 1964 of 2018 wherein an order clarifying the judgment and order dated 23.08.2012 was sought for in case of divergence of opinion among the members of the newly constituted Committee of Administrator Pendente Lite, the decision should be taken on the basis of majority. The order passed by the Division Bench dated 10.04.2019 was with a view to avoid stalemate and the court intended that the APL act in unanimity. 99. Nextly, the learned Senior Advocate referred to the decision of the APL Committee in the meeting held on 15th and 16th June, 2019. By referring to various paragraphs of the decision, it was pointed out that there is gross inconsistency in the decision taken. With regard to the plea of prejudice, reference was made to the decision of the Hon'ble Supreme Court in Keshav Kumar Birla Versus RSL (2008) 4 SCC 300. Thus, in conclusion it was submitted that all decisions by the majority APL Members must be set aside. With the above submissions, Mr. Khambat....
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....ion of law is involved and it is a question of fact. In this regard, the findings recorded by the CLB were referred to. It is submitted that after 16 years there is a new stand taken with regard to the extent of the estate. Learned Senior Advocate referred to certain decisions for the proposition that no title can be claimed based on admission. The various decisions relied on by Mr. Khambata were sought to be distinguished. 102. Mr. C.A. Sundaram, learned Senior Advocate appearing for the majority APL reiterated the submissions made earlier and in particular, submitted that Section 89 does not cover the field occupied by Section 90 of the Act. The estate was both under the direct and indirect control of Smt. PDB. Further, it is contended that the concept of indirect control is not foreign to the Companies Act. 103. Upon a scrutiny of the materials, certain dates acquire relevance. July 3, 1982 MP Birla and Priyamvada Devi Birla (PDB) executed mutual Wills. July 30, 1990 MP Birla died. April 18, 1999 Present Will executed by PDB. July 3, 2004 PDB died. July 19, 2004 PLA 204 of 2004 filed by Rajendra Singh Lodha (RSL) for probate of 2019 Will (on c....
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....was duly attested. It was therefore not competent for the probate court to determine whether the person had or had not the authority to dispose of the suit properties which he purported to have bequeathed by his will. The probate court is also not competent to determine the question of title to the suit properties nor will it go into the question whether the suit properties bequeathed by the will were joint ancestor's properties or acquired properties of the testator. In Ishwardeo Narain Singh Versus Kamta Devi and Others AIR 1954 SC 280 it was held that the only issue in a probate proceeding relates to the genuineness and due execution of the will and the court itself is at the duty to determine it and preserve the original will in its custody. The Succession Act is self-contained code in so far as the question of making an application for probate, grant of approval of probate or an appeal carried against the decision of the probate court. The probate proceedings shall be conducted by the probate court in a manner prescribed in the Act and in no other ways. The grant of probate with a copy of the will annexed establishes conclusively as to the appointment of the executors and vali....
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.... even the existence of the properties itself. In the judgment of the High Court of Bombay in Balkrishan D Sanghvi would go to support the case of the appellant on facts it is seen that the judgment arose out of an case pertaining to an administration suit and not to the probate proceedings. 106. Issue 1. ii) - Third party injunctions can be granted in exceptional cases by the Probate Court, for the limited purpose of protecting the Estate. However, the internal affairs of third party companies cannot, under normal circumstances, be interdicted by a Probate Court. 107. This sub issue relates to third party injunctions which can be further sub-divided and the power of the court to grant injunction is also required to be considered. In Nirod Barani Debi Versus Chamatkarini Debi 1914 SCC Online Cal 13, the Hon'ble Division Bench held that it is essential for application of Order 39 Rule 1 CPC that the property dispute in the suit is in danger of being wasted, damaged or alienated by a party of wrongfully suit in execution of a decree. Consequently, the application for injunction must satisfy the court that the proceedings is a suit in which there is property in dispute and the pr....
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....as other High Courts to support their contention that injunction can be granted by the probate court. On going through the facts of each of those cases, we find that in all those cases, the orders of injunction were granted pending appointment of APL which was in the light of the judgment of the Division Bench of this court in Atula Bala Dasi. Thus, having taken note of the above legal position, the next issue to be considered under this head is whether the probate court can pass orders against the third parties. We need not labour much on this issue as the learned Single Bench has rightly noted the proposition of law in this regard and held that the companies not being the parties, they are not amenable to the jurisdiction of the probate court. While considering whether the companies can be joined as the party defendant, the court held that the noticee companies can neither be joined as a party defendant nor can any order of restrain be passed against such companies who is not a party to the proceedings. Further the court held that it cannot extend its jurisdiction to a person who is not a party to the present proceedings. Further the probate court cannot extend the jurisdiction o....
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....mpanies, but do not comprise of tangible incidents of her property or Estate. 111. Thus, it cannot be said that her personal influence is, in any manner, a part of the Estate. 112. Now coming to the issue of "controlling interest", it has been argued extensively that PDB had control over the affairs of the second, third and even forth tier companies by virtue of her shareholdings in the Tier-1 companies. However at the ground level, such influence is only theoretical, as an incident of her actual shareholdings in the Tier-1 companies. 113. The mathematical advantage which PDB might have had by virtue of her majority shareholding in the Tier-1 companies, could only be translated to assertion of influence in the Tier-2, Tier-3 and Tier-4 companies of actual presence of PDB in the shareholders' meetings and other exercises for the PDB participated by virtue of her actual shareholding. 114. Definitely, it was open to PDB, as majority shareholders in Tier-1 companies to attend the shareholders' meetings and assert her influence by virtue of voting rights or otherwise, as a part of the incidental rights of a shareholder. However, without actual participation in voting and oth....
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....ght or status which has got far reaching effect in the affairs of the company and the same is nothing short of the property in real sense. That it is an admitted position that Lodha has already got possession of the majority of shares of the holding companies from the said deceased (PDB) and by the mechanism of interlocking shareholding. Ultimately it was held that at the relevant stage appointment of an administrator pendente lite is not called for and the interim order which was granted was directed to continue till the disposal of the application. 118. Firstly, we need to note that the above observations were made by the learned Single Bench in the interlocutory applications at an interim stage and it is not a final adjudication of the facts. In paragraph 30 of the judgment, the learned Single Bench has recorded that it is seriously disputed about the extent of the properties of the deceased as defined in Section 211 of the Indian Succession Act, vests in Lodha in reference to the affidavits of assets. After noting the submissions on either side, the court held that a Hindu testatrix or testator cannot dispose of anything or otherwise that is mentioned in the provisions of Se....
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....es Act, it was held that the Directors of a company are appointed in the AGMs of all the shareholders. It is quite natural the majority shareholdings will have a decisive role in the matter of appointment of Directors. All the powers of the company are exercised by the Board of Directors as conferred under the provisions of Section 291 and 292 of the Companies Act. It was therefore held that the Directors appointed by majority are the de facto controller and manager of the company. It was further held that the majority shareholdings to put differently controlling block of shares, constitutes undefined or unspecified right or status which has got far reaching effect in affairs of the company and the same is nothing short of property in real sense. After recording the above findings, the court held that it is an admitted position that the RSL has already got possession of majority of the shares of the holding companies from the PDB and by the mechanism of interlinking shareholding with other groups of companies, the entire MPB group can in fact be controlled and managed either by RSL himself or his nominee. Further it was held that from the affidavits of assets furnished by the pro-p....
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.... facie view recorded by the learned Single Bench while passing an interim order in an interlocutory application. Therefore, the observations contained therein cannot be taken to be a final finding on facts and consequently this decision cannot be pressed into service to contend that the extent of the estate is an admitted and concluded issue. 120. Nextly, the decision of the learned Single Bench reported in AIR 2006 Calcutta 259 was referred to for the same proposition. This, an interim order passed in the very same applications namely GA No. 4375 of 2004 and 4376 of 2004 in T.S. No. 06 of 2004 in PLA No. 204 of 2004. The court considered the prayer in the applications made by the caveatrix for appointment of administrator and held that the same cannot be considered for if granted, that would amount to taking over of management and control of separate juristic bodies by the probate court as it has no jurisdiction to do. However, the prayer for APL can be considered. The observations made in paragraphs 32, 33, 66, 71, 73 and 75 were referred to contend that the extent of the estate has been conclusively determined. A careful reading of the decision more particularly from paragrap....
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....heir own names and be rectified in respect of shares registered of the companies for recording their names. Further it was observed that in the order passed by the Single Bench powers as has been given to the administrators to record their names in respect of the shares left by the PDB in their own names and after rectifying the share registers, all voting rights have been given to them and further by virtue of the said order, it has been directed that they will be Directors of those companies. 122. Further the Division Bench stated that the only question is whether any material is disclosed before the court for appointment of APL over the controlling block of shares that MP Birla Group of Companies. Further the fact that there were four manufacturing companies in MP Birla Group of Companies in which the shares are held by various investment companies and other companies within the group was noted. Further it was held that all the four manufacturing companies are listed companies and the shares are held by the members of the public and none of the companies are before the probate court are party to the application for appointment of APL. Further it was held that it is also a fac....
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....any acquisition of shares by transmission or succession or inheritance is not covered by the court and therefore neither legally nor the fact is there any scope to invoke the provisions of Section 247(1A) and therefore the petition should be dismissed. 124. In the rejoinder submissions made on behalf of the petitioner therein, it was argued that since shareholders controlling 63% shares in the company has expired it is very necessary to find out as to who controls these shares and the same can be found out only by investigation. Since the company is a public limited company, public interest is involved as the shareholders have interest in knowing as to who controls majority shares in the company. The court however pointed out that even though the petitioner therein have alleged in the petition that RSL is claiming control of respondent Nos. 1 to 28, which contention was denied in the replies filed by the respondent. Further the CLB observed that in the said case, the facts sought to be found out relate to over 60% shares in the company and if the membership relating to these shares cannot be ascertained without investigation, then certainly investigation can be ordered. It is fu....
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....s not necessary for the CLB to record a finding on the true persons in control of the estate of PDB or to order an investigation for the reasons which have been set out, in view of the case made out by the parties. Further the Hon'ble Court upheld the observation of the CLB that Section 247(1A) could not be invoked to determine the person entitled to control the estate, which was an issue before this court in the testamentary jurisdiction and therefore does not call for interference in appeal. Ultimately, the Hon'ble Court held that there is no question of law which requires decision of this court in the appeal, and the appeal was accordingly dismissed. Therefore, we find that nothing flows out of the decision to support the proposition that the extent of the estate or "controlling interest" was finally adjudicated and decision rendered. Above all, the decision arose out of an appeal under Section 10F of the Companies Act and the court noted that the issue is in the testamentary jurisdiction of this court, and Section 247(1A) could not be invoked to determine the persons entitled to control the estate. Therefore, we find that the decision cannot be of assistance to the respondents ....
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....ed to administer property of the deceased including the shareholding and stocks held by the deceased in various companies with the purpose of its protection and preservation, it cannot be said that the Joint Administrators would be mere spectators, if they are expected and/or permitted to collect dividend accruing out of the shares and stocks and there is no reason why they should not be eligible and entitled to other privileges incidental to the ownership of such shares and stocks according to the exigencies found to exist as representatives of the beneficiaries till the matter is finally decided by the court, in the capacity as APL. Further the court observed that nothing prevents the APL to exercise all the rights and powers and privileges incidental to the ownership of the shares and stocks, except that of distribution. Thus, in several places, the Hon'ble Division Bench has emphasised that the rights and privileges exercisable are incidental to the ownership of the shares and stocks and therefore a different meaning cannot be given nor the decision can be understood to mean that de hors ownership rights in shares and stocks, the APL will be entitled to exercise the rights, pow....
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.... as a whole as the companies may be managed by the minority shareholders and or suffer at the hands of vested interest. Thus, a careful and cumulative reading of all the findings/observations, the correct interpretation would be that the controlling power is the propriety rights of ownership of stocks and shares. Furthermore the court also specifically held that the APL has to apply to the company as required under by law to record their names in the register of members and the companies will have to consider such an application in accordance with the Articles of Associations and the provisions of law which governs the same. Therefore, no extraordinary power was granted to the APL and they were to abide by which the dictates of the Companies Act. Therefore, it would be incorrect way of interpreting the judgment to pick up a few words and sentences to hold that the controlling block of shares would mean the rights over shares which were not standing in name of the deceased. Thus the court having in several places categorically held that the APLs who have been appointed to represent the estate of the deceased are entitled to take all steps to enjoy the rights and privileges incidenta....
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....urt held that controlling power is an important and valuable asset belonging to the estate of the PDB. Further it was held that the exercise of controlling power by the promoter is controlled and/or regulated by the provisions of the Companies Act and controlling power cannot be exercised according to the whims of the promoters. Further it was held that if the promoter hold majority shares then they are several remedies prescribed under the Companies Act to enforce the decision which by not approving the decision of the Board of Directors and they may also initiate process of removal of the Directors and appointment of the Directors of their choice in the place of the main directors. But no such step can be taken without following provisions of the Companies Act. That the court in a probate proceeding cannot pass any directions encroaching upon the jurisdiction of the Board of Directors or taking over of the manufacturing units by purchasing its shares. Further the court categorically held that the APL should be made agree so that the APL can exercise its power of control over the management of BCL by following provisions prescribed under the Companies Act and in case APL fails to ....
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....certain situations result in the assumption of an interest which has the character of a controlling interest in the management of the company. A controlling interest is an incident of ownership of shares in a company something which flows out of the holdings of such shares. A controlling interest is therefore not an identifiable or distinct capital asset independent of the holding of shares. The control of the companies resides in the voting powers of the share holders and the share represents an interest of a share holder which is made up of various rights contained in the contract embodied in the articles of association. Further, it was held that the right of a share holder may assume the character of a controlling interest where the extent of a share holding enables the share holder to control the management. Shares and rights which emanate from them, flow together and cannot be dissected. Further, it was reiterated that shares represent congeries of rights and controlling interest is an incident of holding majority shares. Control of a company vests in the voting powers of its share holders. Further, it has held that a company is a separate legal persona and the fact that all i....
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....sioner of Stamps (1899) AC 99 wherein it was held that the word "include" is very generally used in interpretation clauses in order to enlarge the meaning of the word or phrases occurring in both of the statutes and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. It was further held that the word "include" is susceptible of another construction, which may become imperative, if the context of the act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean" and "include" and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act must invariably be attached to these words or expressions. Therefore, the bone of contention is not as to whether the definition of the word "control" is an inclusive definition or an exhaustive definition but what is most important to note in the definition of the word "control" is that there must be a right....
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....t deciding on its jurisdiction over the companies and recording a specific finding, in our view could not have issued directions as to how and in what manner the companies had to function and they have to be guided by the APL committee. On a reading of the impugned order we find that the objection raised with regard to the jurisdiction of the powers of the Joint APLs to pass directions has not been decided. Further, direction has been issued to implement the directions of the two Joint APLs. The effect of the directions issued by the learned Single Bench has been demonstrated before us. If the directions of the two Joint APLs dated 19.07.12019 and 30.07.2019 are to be implemented, it would give power to the two Joint APLs to directly appoint Directors in the companies and compel the companies to implement all decisions on the two Joint APLs with regard to the manner in which the listed companies would exercise voting rights in respect of its share holder. In the earlier portion of the judgment we have noted the decision of the Hon'ble Supreme court reported in AIR 1955 SC 74 to the effect that the company and its share holders are separate and distinct and the assets of the company....
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....ent of jurisdiction which the probate court exercises while considering the plaintiff's prayer for grant of probate to the will of the testator/ testatrix. After rending the above finding with regard to the jurisdiction of the probate Court, the Court held that it has not hesitation to hold that the probate Court cannot pass any injunction order against the third party as third party who has no caveatable interest in the probate proceedings cannot be allowed to be added as party in the probate proceedings and also for the reason that no order can be passed affecting the right of the director without adjudicating the right and adjudication of the rights in the probate proceedings is impossible as the probate court cannot decide any foreign issue unconnected with the probate proceedings. 133. The other finding rendered by the court in the very same decision is with regard to the role of HVL. The court pointed out that HVL was a party to the probate proceedings as he is one of the plaintiffs in the probate suit and he is an applicant for grant of letter of the administration as legatty under the will and he is in capacity as the Chairman of the Board of Directors of BCL. The court ....
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....d that the court can be held to have jurisdiction to decide the probate matter it must not only have the jurisdiction to the suit but must also have an authority to pass the order sought for. It was further held that it is sufficient that it had some jurisdiction in relation to subject matter of the suit and in order to hold that the court has jurisdiction to decide the issue, the jurisdiction must include the power to decide the question at issue. 134. Ultimately the court concluded that the decision of the Board of Directors has no subject to the control of the promoters controlling the power over the management of the said company and since the probate court cannot pass any direction and/or injunction order against any person who is not a party to the probate proceedings and further since no adjudication of a foreign issue is possible before the probate court in the absence of any party who has no caveatable interest in the probate proceedings the relief claimed by the applicant therein was not granted. 135. At this juncture, it will be worth reiterating the finding recorded by the Hon'ble Division Bench in the decision reported in ILR 2007 2 Cal 377. The Hon'ble Division ....
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....y concerned with the question as to whether the document put forward is the last will and testament of a deceased person was duly executed and attested in accordance with law and whether at the time of such execution the testator had sound disposing mind. The question whether a particular bequest is good or bad is not within the purview of the Probate Court. Therefore the only issue in a probate proceeding relates to the genuineness and due execution of the will and the court itself is under duty to determine it and preserve the original will in its custody. The Succession Act is a self contained code in so far as the question of making an application for probate, giant or refusal of probate or an appeal carried against the decision of the probate court. This is clearly manifested in the fasecule of the provision of Act. The probate proceedings shall be conducted by the probate court in the manner prescribed in the Act and in no other ways. The grant of probate with a copy of the will annexed establishes conclusively as to the appointment of the executor and the valid execution of the will. Thus it does no more than establish the factum of the will and the legal character of the ex....
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....te alone had jurisdiction and is competent to grant probate to the will annexed to the petition in the manner prescribed Under the Succession Act. That court alone is competent to deal with the probate proceedings and to grant or refuse probate of the annexed will. It should keep the original will its custody. The probate thus granted is conclusive unless it is revoked. It is a judgment in rem. 136. Issue 2. iii) - To decide the issue as to whether the question of extent of the PDB estate is barred by res judicata, we can leave out the orders passed by the Company Law Board (CLB) or by this court sitting in appeal over the company court matters at the outset. The principle of res judicata is only applicable when the court which previously decided the issue was competent to try the subsequent suit. A company court or the CLB does not have the competence or jurisdiction to decide a probate or letters of administration proceeding. Thus, in any event, the decisions or observations of a company court or CLB are not binding on a probate or letters of administration court. 137. The first order where the issue cropped up is the order dated March 23, 2005 passed by the Hon'ble Justice....
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....ent APL. The court suggested one member each suggested by the parties and a former Judge of this court nominated by the Court as the third member as the composition of the APL. Notably, the Division Bench observed that the only question left for decision was the powers of the APL Committee vis-à-vis the exercise of nature of rights relating to the shares which forms a major part of the estate. 143. On October 4, 2012, Justice Raveendran (retired) of the Supreme Court was appointed as the third member of the APL in place of Justice C.K. Thakker who had sought to be relieved of the role. 144. On June 12, 2014, a Division Bench of this court, on the application of Justice Raveendran, delineated the role of the third member of the APL to laying out policies and resolving differences between the other two members, who represented the warring parties and not to participate in the daily affairs having financial implications. 145. On May 19, 2016, two applications seeking to pass directions regarding acquisition of shares by some of the companies where PDB held shares were decided by Justice Jyotirmoy Bhattacharya. The learned Judge observed that the testamentary court coul....
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.... HVL, cannot be construed to operate as estoppel against HVL. 152. The ratio laid down in Himalayan Corporation (supra) is germane in such context. A client is not bound by the unauthorised admission of counsel. In (2004)8 SCC 355, the Supreme Court observed that admission cannot confer or divest title. The said proposition is rather true here. Even if HVL had made an admission, the same would not automatically confer title on PDB posthumously and/or affect the extent of her estate. The testamentary court (all the more so since its adjudication culminates in a judgment in rem) has to independently ascertain the extent of the estate of the deceased testatrix, albeit on a prima facie level, before deciding the contours of the APL's functioning and cannot be bound merely by assertions or admissions by parties. 153. A testamentary court decides in rem, on a wider footing than an inter- party action; thus, the principle of estoppel, although may deter parties from agitating a point, does not deter the court to ascertain independently the extent of the estate of the testator/testatrix. 154. A plethora of judgments have been cited by parties on the subtle distinction between esto....
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....annot be said that HVL, in his capacity as a legatee, has to be bound by the stand taken by RSL, the executor. Thus, it cannot be said that HVL is bound by estoppel form disputing the submission of the Birla Group that PDB's Estate ranges not only over the shares actually owned by her but also the vague concept of controlling interest over other companies where PDB is not a majority shareholder. 161. Another aspect has to be considered in the context. The question of res judicata applies primarily in respect of judgments in personam, since a decision finally taken between parties remained binding on them. It is unheard of that the principle of res judicata binds third parties. It operates within the limited zone of the parties, their representatives and/or anybody claiming through the parties. 162. However, in case of probate proceeding, the final judgment which would be rendered operates in rem. Not only is it well-settled, but also find sanction in Section 41 of the Indian Evidence Act, which specifically mentions that a probate operates as a judgment in rem. 163. Hence, an adjudication in a probate proceeding or a letters of administration proceeding cannot be viewed th....
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....res, including the consequential registration as members of the companies. 168. However, even if one proceeds on the premise that PDB's estate regarding the companies was limited to her shareholding of 1260 shares, it is open to debate as to how far such shareholding can empower the holders thereof. Since the said shares confer on the PDB estate majority shareholding in the 'Tier 1' companies, the decision-making of such companies as shareholders in other lower-Tier companies would definitely be influenced substantially by such majority shareholding alone. 169. However, a delicate balance has to be struck with the said position and the cardinal company law doctrine that shareholders are not owners of a company and do not have any interest in its assets. The said position has been well- settled from Bacha Gazder (supra) onwards, reiterated between the present parties in Harsh Vardhan Lodha v. Ajoy Kumar Newar (supra) and Birla Corporation Limited v. A.K. Newar (supra). Also, promoters have no special right of control as such. 170. That the shareholder has no interest in the assets of the company has also been reiterated in 2016 SCC OnLine Cal 1541, AIR 1961 251, AIR 1941 Al....
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....y in which the said companies exert their voting rights as shareholders of other companies. 180. The restriction which is to be exercised by the testamentary court is to limit itself to asserting such powers associated with voting rights and other essential rights by virtue of shareholding through the democratic process of participating in the shareholders' meetings, actual voting and decision-making, and not by issuing whips from the court. This is so because the deceased testatrix herself, during her lifetime, could not have done it. 181. Here, we must be careful to distinguish the personal influence, charisma and authority PDB might have enjoyed over the companies, their directors and shareholders during her lifetime from her rights as a shareholder of the concerned companies. Personal influence, control and sway do not translate into bequeathable rights and get extinguished with the concerned person. Rights as promoters or directors also are not heritable and, thus, cannot be the subject-matter of a Will. 182. This view finds support in a line of judgments of several Constitutional courts. 183. The Calcutta High Court held in Maurice Saleh's Case that even legal pow....
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....SCC 405. 191. Again, (1996) 4 SCC 104 and (2018) 3 SCC 635 have been cited for the proposition that in a multimember body, majority is the rule and unanimity is resorted to only when it is explicitly provided. 192. The ratio laid down in the said reports have to be read in proper perspective, in the factual matrix of each case. 193. In the instant lis, for all practical purposes, unless the APL, being a three- member entity, acts as per the majority decisions, the APL will virtually become and ultimately defunct and cannot take any decision whatsoever. Since there has been perpetual disagreement between the nominees of the Birla Group and the Lodha Group all along, the APL would be permanently paralyzed if it had to function unanimously. Hence, from a practical perspective, the APL has to function on the basis of majority decisions. 194. Secondly, the very composition of the APL as intended by the courts appointing it gives a clue to the purpose behind such appointments. Although the parties on consent agreed that the judicial member in the APL shall only be a third member and not an umpire, the very structure of the APL behoves that the judicial member acts as an arbit....
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....tion of the testamentary court delegating its powers to it. The APL shall strictly act in accordance with the observations above, limited to its role as shareholder with ancillary functions including voting rights, which are to be used judiciously to protect and preserve the interest of the estate during pendency of the Letters of Administration suit. 200. Thus the issues formulated above are answered as follows:- 201. Issue 1 i) A testamentary court cannot decide issues of title conclusively; such power lies purely within the domain of civil courts. However, while deciding an application under Section 247 of the Indian Succession Act for appointment of administrator pendente lite, the testamentary court may decide the extent of the estate of the deceased testator/testatrix prima facie. 202. Issue 1 ii) Third party injunctions can be granted by testamentary courts in exceptional cases, for the limited purpose of protecting the estate of the deceased testator/testatrix. However, under normal circumstances the testamentary court cannot interfere in the internal affairs of third-party companies. 203. Issue 2 i) The estate of PDB is comprised of the actual shares owned by h....
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....s contained in the contract embedded in the articles of association. The right of a shareholder may assume the character of a controlling interest where the extent of the shareholding enables the shareholder to control the management. Shares, and the rights which emanate from them, flow together and cannot be dissected. In the felicitous phrase of Lord MacMillan in IRC v. Crossman [1937 AC 26 : (1936) 1 All ER 762 (HL)] , shares in a company consist of a "congeries of rights and liabilities" which are a creature of the Companies Acts and the memorandum and articles of association of the company. Thus, control and management is a facet of the holding of shares. 206. Issue 2 iii) The issue of the extent of PDB's estate is not barred by res judicata. The company courts and the Company Law Board did not have the jurisdiction to decide such issue conclusively; thus, they were not 'competent' courts within the meaning of 'res judicata' to bind the testamentary court, where the scope of adjudication is different and somewhat wider. The testamentary court's findings and its offshoots by way of challenges before higher forums never conclusively dealt with or finally decided the extent of....
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.... voting rights, decision- making powers, etc. Ownership of shares and rights directly incidental thereto are heritable rights which devolved upon her estate on her demise. But her personal charisma, authority and influence asserted over shareholders and management of other companies, if any, were not heritable and are not 'property' which can be the subject-matter of her estate and, consequently, under the adjudicatory authority of the testamentary court. 211. We are required to distinguish here between the rights directly flowing from and incidental to such ownership of shares and those which are remotely derivative from such ownership and not proximate. The former are subject-matters of the estate and the APL can exercise those but the latter (remotely derivative rights) cannot be thrust by the testamentary court or the APL on the respective companies, which are independent juristic entities. We are not deciding any illegality or irregularity of the said companies' affairs; thus, the concept of 'lifting the corporate veil' does not apply. The rights of the testatrix over the companies of the different 'tiers' were co-extensive with her rights as owners of the shares of the tie....
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....ion. However, day-to-day decisions at every stage of such litigation need not be sought from the court, which would be an unnecessary burden on the court and would put an unwarranted spanner in the wheels of the APL. 217. Issue 3 ii) The very composition of the APL brews conflict of interest, since two of the members represent the two warring factions and have left no stone unturned to show their true colours in that regard. Thus, in view of the discussion above, the only way in which the APL can function effectively is for the third member, who is necessarily a retired nominated Judge, to act as arbiter in case of conflict of decision between the other two members of the APL. In case there is no resolution, the third member shall exercise veto power. In case of major decisions (which decisions are 'major' for this purpose shall be decided by the third member), the APL may seek appropriate orders from the testamentary court. The APL must also keep in mind that it is not an adjudicatory authority but merely the representative of the estate of the deceased testatrix. 218. Thus, the order of the learned Single Judge is modified to the above extent. Liberty is given to the APL an....