NIRAV JHAVERI Vs. MIT-N-MIR P. LTD.

JUDGEMENT

(1.) THE present petition is filed under section 111 of the Companies Act, 1956 seeking directions to the respondent -company to transmit the 150 equity shares held by late Mrs. Asha Ben Jhaveri, mother of the petitioner, in favour of the petitioner and to rectify the register of members accordingly. Mr. Shaikh, learned practising company secretary, appeared on behalf of the petitioner submitted that the petitioner is the legal heir of late Mrs. Asha Jhaveri wife of Shri Dhanraj Jhaveri who held 150 fully paid equity shares of Rs. 100 each in the company under folio No. 7. The petitioner wrote a letter dated February 17, 2010 addressed to respondent No. 2 requesting for transmission of shares held by his late mother in his favour. But he did not receive any reply. The petitioner again sent another letter dated July 12, 2010, addressed to respondent No. 1 at its registered office by registered post. This letter was returned undelivered. Hence petitioner sent another letter to respondent No. 1 at its correspondence address at 8/1278 Mali Falia, Gopipura, Surat -395 001. Respondent No. 1 by its letter dated September 24, 2010 addressed to the petitioner replied that application for transmission of shares sent by the petitioner was perused and the same was found to be unacceptable as it was not supported by required documents. Apprehending such vague reply, the petitioner obtained the succession certificate under the provisions of section 29 of the Administrators General Act, 1963 (45 of 1963) from the Deputy Administrator General, Surat Region and submitted the same along with the request for transmission of the said 150 equity shares held in the name of his mother Asha Jhaveri. The petitioner is kept completely in the dark as to the status of the company, position of fixed assets, present valuation of the assets etc. Section 109A of the Companies Act is clear as to transmission of shares to the legal heirs in case of members who have appointed a nominee. In case of transmission of shares of the member who died intestate without a nomination, his or her shares may be transmitted in accordance with article 23 of Articles of Association of the company which reads as follows :

(2.) SECRETARIAL standards issued by the Institute of Company Secretaries of India SS6 also prescribes that a company may transmit the equity shares to the legal heirs of a deceased member upon receipt of intimation along with the death certificate of the member, will or letter of administration and request from the legal heir.

(3.) RESPONDENT No. 2 filed reply to the petition. It is stated that the petitioner has no locus standi to file the petition. The petitioner has claimed to be the legal representative of the deceased shareholder of the company and the petition is filed in that capacity. The Deputy Administrator General, Surat has restrained the certificate issued by him earlier to the petitioner vide its order bearing No. 30 of 2010 and hence the petition filed by the petitioner based on such non -existent authority is void ab initio. From the said order it is clear that the petitioner did not have any authority to mention this petition on November 11, 2010 as he was already served with the said order. The matter was mentioned by the petitioner's authorised representative on November 11, 2010 when the petitioner was very much aware about the said order of the Deputy Administrator General, Surat restraining the issuance of the certificate and asking him to return the original certificate to the said authority. The petitioner has intentionally, deceptively and mischievously used the said certificate to play fraud on this Hon'ble Bench. When the matter again came up for hearing before this Bench on November 22, 2010, also the petitioner had a chance to rectify his mistake. But on that date also he did not withdraw the petition. It is a contempt of this Bench. When the petitioner does not have locus standi, there is no valid petition in the eyes of law. By continuing with the petition without any locus standi, the petitioner has abused the process of law. As admitted by the petitioner himself in his rejoinder dated March 19, 2011, the Deputy Administrator General, Surat has been empowered to grant certificate, is the designated authority under the Act to decide the legal heir for the property of the deceased below specified value of Rs. 2 lakhs. When the said authority has cancelled the certificate, the issue of deciding the legal heir is still pending and hence respondent No. 1 cannot effect any transmission of shares. Respondent No. 1 being a separate legal entity has to follow certain procedures and is bound by the law of the land. Respondent No. 1 is not empowered to decide the issue of the legal heir under the law. In support of his submissions he relied upon the decision in the matter of Haryana Electro Steel Ltd. v. Haryana Financial Corporation, (1995) 2 Comp. LJ 483 (P&H);, (2001) 103 Comp Cas 1017, wherein it was held that : "if a person has no locus standi, he does not have the authority to challenge an action". It is further stated that the affidavit accompanying the petition is not a proper affidavit as stipulated under the Company Law Board Regulations, 1991. There is no endorsement from the notary that the deponent is known to him. Also in the affidavit the name of the company is shown as the petitioner which is a false statement. Further, it is falsely declared in paragraph 7 of the petition that no application is pending before any authority. In fact the matter as to the decision of legal representative of the deceased shareholder of the company is still pending before the Deputy Administrator General, Surat and the petitioner is a party to the said proceedings. But soil the petitioner has not bothered to withdraw the petition. It is the case of the petitioner that he is the only surviving heir of his mother and hence he is entitled to the shares held by his mother. But respondent No. 1 is not empowered to decide this issue of succession under the law and is bound to rely upon the succession certificate issued by a competent authority designated for this purpose. Since in the present case no such certificate is in existence, respondent No. 1 is fully justified in refusing the transmission. The present petition is filed only to harass the respondents and to circumvent the legal procedure. Therefore, this petition should be dismissed with costs.