FINOLEX INDUSTRIES LIMITED Vs. ANIL RAMCHAND CHHABRIA

JUDGEMENT

(1.) SINCE the order impugned in both these appeals viz. Company Appeal Lodg. Nos. 10 and 11 of 1999 is common they are being heard together and disposed of by this common order.

(2.) THE appellants are Public Limited Companies registered under the Companies Act, 1956. Shares of the appellants are listed on the various Stock Exchange and the National Stock Exchange. One Mr. Ramchand Parsaram Chhabria was a shareholder of the Appellant Companies. He died intestate at Pune on 11th August, 1987 (hereinafter for brevity sake referred to as "the deceased") leaving behind him his mother (i) Smt. Parvatibai Parsaram Chhabria, his widow (ii) Smt. Leela Ramchand Chhabria, his son (iii) Shri Anil R. Chhabria, the respondent herein, and his Daughter (iv) Smt. Rita Prakash Makhija, as his heirs and legal representatives. Thus the legal heirs are entitled to 25% share each of the estate of the deceased. On 22-9-1987 the respondent made a written request to the Appellant Company for transmission of the shares of the deceased to the joint names of the widow, son and the daughter. This application was signed by the three legal heirs. In this application it was not mentioned that the fourth legal heir is the mother of the deceased who was still living. Application was made for the transmission of all (100 per cent) the shares of the deceased whereas they were entitled only to transmission of 75% of the shares. On the necessary application being made the respondent was granted the succession certificate on 31-1-1989 which was issued on 24-2-1989. In the application before the Civil Judge, Senior Division, Pune, the interest of the mother was not disclosed. The mother filed Misc. Application No. 526 of 1989 for revocation of the succession certificate. She, however, died during the pendency of the application on 2nd September, 1989. She left behind a Will under which she appointed Shri Prahlad P. Chhabria, Shri Kisan P. Chhabria, Shri Bhagwandas P. Chhabria and Shri Narayan P. Chhabria as executors and trustees. These executors were brought on the record of the proceedings, on 31st October 1992. Thereafter the appeal was admitted on 9th October, 1995. However, the ad-interim order dated 18th August, 1992 was vacated. The appeal was ultimately numbered as First Appeal No. 762 of 1995. Application for condonation of delay was also allowed on the same date. On the stay having been vacated, Civil Judge, Pune, granted a fresh succession certificate on 20th March, 1997. In the meantime various requests made by the respondent for transmission of the shares were rejected by the appellants on the ground that he was not the sole legal heir and that the succession certificate had been obtained by suppressing material facts from the Court. However, the respondent by letter dated 14th April, 1997 again forwarded a notarised copy of the fresh succession certificate to the appellants and made the request for transfer of the shares. In answer to this request, the appellants on 18th June, 1997 requested the respondent to confirm that there are no legal proceedings pending with regard to the succession certificate or in relation to the estate of the deceased. By letter dated 30th June, 1997 the respondent informed the appellants that there are no Court order restraining transmission of the shares as mentioned in the fresh succession certificate dated 20th March, 1997 belonging to the deceased in his favour. Again on 22nd July, 1997 the company reiterated that the respondent is silent on the confirmation as to whether any legal proceedings are pending in any Court in relation to the issue of succession certificate in relation to the assets of the deceased. Taking this uncalled delay in transmission of the shares to be a deemed refusal, the respondent filed two company petitions. By its order dated 14th September, 1999, the Company Law Board (hereinafter referred to as "the CLB") has allowed the petitions and directed the appellants to transmit the shares held by the deceased in the name of the respondent as per his entitlement in terms of the succession dated 20th March, 1997. It is against this common order that the two appeals have been filed.

(3.) THE submissions made before the C. L. B. have been reiterated by the learned Counsel in these two appeals. Mr. Dhond, learned Counsel appearing for the appellants, submitted that the petitions as framed were not maintainable under section 111-A of the Companies Act. The petition would not be maintainable under section 111-A (2) as it deals only with refusal to register "transfer of shares. " Sub-section does not deal with refusal to register the "transmission of shares" by operation of law. This right of appeal would have been available under section 111 (2) of the Act. However, by virtue of sub-section (14) of section 111, it applies now only to Private Limited Companies and deemed Public Companies under section 43-A of the Act. The remedy under section 111 (2) would not be available to the respondent as the appellants are Public Limited Companies governed by provisions of section 111-A of the Act. Learned Counsel submits that only remedy open to the respondent is by way of a civil suit. In support of this argument, reliance is placed on the judgment of the C. L. B. in the case of (Shashi Prakash Khemka v. NEPC Micon Ltd.), 90 Comp. Cas. 228. In this case it is held by the C. L. B. as follows.