TaxTMI 
TaxTMI 
2026 (3) TMI 665
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....y Law Tribunal, New Delhi in CP No. 49/241-242/PB/2023, whereby it is held that Respondent Nos. 1 and 2 (i.e. Petitioner Nos. 1 and 2 before the NCLT) are "entitled to transmission" of 55,97,768 equity shares standing in the name of Late Shri KJS Ahluwalia. 2. The impugned order arises out of a Company Petition filed under Sections 241-242 of the Companies Act, 2013 alleging oppression and mismanagement in M/s KJS Cement (I) Limited. The Petitioners before the Ld. NCLT, Delhi sought to invoke jurisdiction under Section 244 by claiming eligibility on the footing of an asserted 31.84% shareholding, including (i) 21% shares admittedly standing in the name of Late Shri KJS Ahluwalia, and (ii) additional shares allegedly routed through Respondent Nos. 3-10 companies. It is argued the claim of eligibility itself was fundamentally flawed, in as much as on the date of filing of the Petition, Petitioner Nos. 1 and 2 were not reflected as members in the Register of Members or in the records of the Depository in respect of the said 21% shareholding, nor had any valid transmission been effected in their favour. Further, no waiver application under the proviso to Section 244 was moved or all....
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....er completion of pleadings, the Ld NCLT proceeded to hold the Respondents Nos. 1 and 2 are "entitled to transmission" of 55,97,768 shares and directed adherence to statutory procedure. It was argued such a direction is not merely preservative; it carries immediate and irreversible consequences and makes the remaining proceedings largely illusory; thereby supplying the very foundation of locus under Section 244. It was argued the Ld. NCLT has thus granted the principal relief sought in the Petition at a preliminary stage, rendering the maintainability issue illusory and creating irreversible consequences. 7. It was argued the Ld. NCLT has, in effect, used an interlocutory transmission direction to (i) prejudge disputed title instruments, and (ii) manufacture or fortify Section 244 eligibility post-filing. Such an approach defeats the legislative scheme of Section 244, renders the statutory threshold otiose, and permits assumption of jurisdiction where none existed at inception. It was argued the issues relating to the genuineness of the Gift Deed and the scope of the Power of Attorney involve serious and disputed questions of title which are civil in nature and require adjudicati....
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.... He referred to the additional documents filed by him to show in June, 2017 Mr KJS Ahluwalia as well as his another brother Mr. Prashant had resigned as director from this company and intimations to this effect were sent to ROC. Further, it was argued the issue of inheritance of shares etc. cannot be looked into by the Ld. NCLT per settled law by the Hon'ble Supreme Court. 9. However, the learned senior counsel for Respondent submitted if one peruses the written submissions filed by the appellant herein, filed before the Ld. NCLT one would find such written submissions were not only on the question of maintainability but also on merit. Further he referred to the terms of the Power of Attorney dated 9th August, 2000 which never authorized the power of attorney holder viz the appellant herein to execute a gift deed of shares of the deceased. We have also examined the said Power of Attorney. The Power of Attorney was primarily in respect of movables and immovable properties of Mr KJS Ahluwalia situated at Satna, MP and as he was not able to look after his properties at Satna, MP, he appointed his younger brother-the appellant herein to look after those properties and to even sell, ....
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....In Shailja Krishna Vs Satori Global Limited and Ors (2025) SCC Online SC 1889, the Hon'ble Supreme Court held: 31. In the instant case, it is an admitted fact that the determination of whether the gift deed is valid or not is central to the decision herein and, therefore, the NCLT did have full jurisdiction to decide whether the gift deed is valid or not, or whether it is against the provisions of the 1956 Act and/or internal regulations of the COMPANY, including but not limited to the AoA and the Memorandum of Association. 42. Applying the tests laid down in the aforesaid authorities, we have come to the conclusion that the Appellant was the victim of oppression and mismanagement in the instant case for two reasons: first, that the circumstances surrounding the gift deed and the subsequent transfer of shares are seriously questionable and must be declared invalid and secondly, the board meetings have been conducted in a mala fide manner and against both the statutory requirements of the 1956 Act and the internal regulations of the COMPANY. Both of these instances show that the affairs of the COMPANY were being conducted in a manner prejudicially affecting the App....
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....y the Hon'ble Supreme Court in the matter of M/s. World-Wide Agencies Ltd. vs Margarat T. Desor 1990 (1) SCC 536 wherein it was categorically held that legal heirs of deceased members whose name is still in register of members, are entitled to maintain a petition for oppression and mismanagement. Relevant portion of the judgement is extracted below: 24. We do not agree for the reason mentioned before. It further appears to us the Australian judgment does not reconcile to logic in accepting that legal representative can petition for winding-up, which is called the "sledgehammer remedy", but would refuse the lesser and alternative remedy of seeking relief against oppression and mismanagement though the later remedy requires establishment of winding up on just and equitable grounds as a precondition for its invocation. It would be rather incongruous to hold that the case for winding-up on just and equitable ground can be made out by the legal representatives u/s. 439(4)(b) of the Act but not the other. This does not appear to be logical. It appears to us that to hold that the legal representatives of a deceased shareholder could not be given the same right of a member under S....
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....s of the company i.e. more than 1/10th of total number of members. The annual return of the company for the financial year 2021-22 particularly the list of shareholders as on 31.03.2022, confirm this position that 10 shareholders hold an aggregate of 31.84% shareholding, had instituted the petition and the issue of validity of the gift deed as also the respondents No.1 and 2 being entitled to transmission of 20% shares, was dealt with by the Ld. NCLT below as under:- 33. As regards the second issue with respect to summary jurisdiction of the NCLT, the position has been settled by the Hon'ble Supreme Court in the matter of Shailja Krishna vs Satori Global Limited, Civil Appeal No. 6377-6378 of 2023, held as follows: 30. The aforesaid decisions confirm the view that the NCLT/CLB possess a wide jurisdiction to decide all such matters that are incidental and/or integral to the complaint alleging oppression and mismanagement. Such power is, however, subject to any other legislative enactment specifically debarring the NCLT/CLB from exercising its powers in this respect. 31. In the instant case, it is an admitted fact that the determination of whether the gift ....
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....ve observed earlier, the gift of shares by Respondent no. 2 in favor of his spouse i.e., Respondent no. 8 that has not been effected in the books of records of the Respondent no 1 Company in the manner prescribed by law. Admittedly, the shares in the demat form are still in the name of late Sh. KJS Ahluwalia. The Petitioners no. 1 and 2 are the class-1 legal heirs and as such would be entitled to transmission of shares in their name, by law. There is no impediment in law for them to inherit the shares on the demise of Late Sh. KJS Ahluwalia. The Respondent No. 2 or his spouse (Respondent No. 8) have not even made an attempt to transmit the shares except giving various reasons as above, for long number of years which also brings a doubt as to why no action was taken even though the alleged gift deed was purportedly executed on 27.09.2017. Further, late Sh. KJS Ahluwalia died only on 15.10.2021 and the gift deed was executed on 27.09.2017 during the lifetime of late Mr. KJS Ahluwalia and that too using a POA dated 08.08.2000 when admittedly Respondent No.1 company was not even acquired by late Mr. KJS Ahluwalia and his brothers. This prima facie shows that the Petitioners have made o....