Calcutta High Court
Universal Cables Limited vs Arvind Kumar Newar And Ors on 14 December, 2023
Author: T.S.Sivagnanam
Bench: T.S. Sivagnanam
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
TESTAMENTARY AND INTESTATE JURISDICTION
ORIGINAL SIDE
RESERVED ON:10.08.2023
DELIVERED ON:14.12.2023
CORAM:
THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SABYASACHI BHATTACHARYYA
APO/89/2020
IA NO: GA/1/2020
(ARISING OUT OF TS/6/2004)
UNIVERSAL CABLES LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/11/2020
UNIVERSAL CABLES LIMITED
Page 1 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
VERSUS
ARVIND KUMAR NEWAR AND ANR.
WITH
OCO/20/2020
UNIVERSAL CABLES LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/3/2020
UNIVERSAL CABLES LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
AND
APO/90/2020
IA NO: GA/1/2020
(ARISING OUT OF TS/6/2004)
BIRLA CABLE LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
Page 2 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
OCO/12/2020
BIRLA CABLE LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
OCO/21/2020
BIRLA CABLE LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/4/2020
BIRLA CABLE LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
AND
APO/91/2020
IA NO: GA/1/2020,
IA NO. GA/2/2021
(ARISING OUT OF TS/6/2004)
VINDHYA TELELINKS LTD.
Page 3 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/13/2020
VINDHYA TELELINKS LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/22/2020
VINDHYA TELELINKS LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/5/2020
VINDHYA TELELINKS LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
AND
APO/92/2020
IA NO: GA/1/2020,
IA NO: GA/2/2020,
Page 4 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
IA NO: GA/3/2020,
IA NO: GA/4/2021,
IA NO: GA/5/2021
(ARISING OUT OF TS/6/2004)
HARSH VARDHAN LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/14/2020
HARSH VARDHAN LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/23/2020
HARSH VARDHAN LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/6/2020
HARSH VARDHAN LODHA
VERSUS
Page 5 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
ARVIND KUMAR NEWAR AND ORS.
AND
APO/94/2020
IA NO: GA/1/2020
(ARISING OUT OF TS/6/2004)
MEENAKSHI PERIWAL
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/15/2020
MEENAKSHI PERIWAL
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/24/2020
MEENAKSHI PERIWAL
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/7/2020
MEENAKSHI PERIWAL
Page 6 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
VERSUS
ARVIND KUMAR NEWAR AND ORS.
AND
APO/95/2020
IA NO: GA/1/2020
(ARISING OUT OF TS/6/2004)
BIRLA CORPORATION LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/16/2020
BIRLA CORPORATION LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/25/2020
BIRLA CORPORATION LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/8/2020
BIRLA CORPORATION LIMITED
VERSUS
ARVIND KUMAR NEWAR AND ORS.
AND
APO/96/2020
Page 7 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
IA NO: GA/1/2020, GA/2/2020
(ARISING OUT OF TS/6/2004)
SHREYAS MEDICAL SOCIETY
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/17/2020
SHREYAS MEDICAL SOCIETY
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/27/2020
SHREYAS MEDICAL SOCIETY
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/9/2020
SHREYAS MEDICAL SOCIETY
VERSUS
ARVIND KUMAR NEWAR AND ORS.
APO/98/2020
Page 8 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
IA NO: GA/1/2020
(ARISING OUT OF TS/6/2004)
ADITYA VIKRAM LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/10/2020
ADITYA VIKRAM LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/18/2020
ADITYA VIKRAM LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
WITH
OCO/26/2020
ADITYA VIKRAM LODHA
VERSUS
ARVIND KUMAR NEWAR AND ORS.
Page 9 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Appearance :
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 Appellant (in APO No. 92 of 2020, 94
of 2020 and 98 of 2020)
Page 10 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 Appellant (in APO No. 89 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 Appellant (in APO No. 90 of 2020)
Mr. Shyam Divan, Sr. Adv.
Mr. Ranjan Bachawat, Adv.
Mr. Shaunak Mitra, Adv.
Ms. Sanam Tripathi, Adv.
Ms. Anshula Laroiya, Adv.
Mr. Paritosh Sinha, Adv.
Mr. Sayan Roy Chowdhury, Adv.
Mr. Satyaki Mukherjee, Adv.
Mr. Saubhik Chowdhury, Adv.
Page 11 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Ms. Ayushmita Sinha, Adv.
Mr. Tirthankar Das, Adv.
Ms. Tapasika Bose, Adv.
...for Appellant (in APO No. 91 of 2020)
Mr. Ranjan Bachawat, Sr. Adv.
Mr. Sayan Roy Chowdhury, Adv.
Mr. Satyaki Mukherjee, Adv.
Mr. Jasojeet Mukherjee, Adv.
...for Appellant (in APO No. 96 of 2020)
Mr. S.K. Kapur, Sr. Adv.
Mr. Ajay Bhargva, Adv.
Mr. Anuj Singh, Adv.
Mr. Akash Bajaj, Adv.
Mr. Pratik Mukhopadhyay, Adv.
...for Respondent No. 1
Mr. S.N. Mookerjee, Ld. Advocate General
Ms. Vineeta Meharia, Adv.
Mr. Pratik Mukhopadhyay, Adv.
Mr. Ajay Bhargava, Adv.
Ms. Vanita Bhargava, Adv.
Mr. Trishal Trivedi, Adv.
...for Respondent No. 2
Page 12 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Mr. Ratnanko Banerjee, Sr. Adv.
Mr. Debdatta Sen, Adv.
Mr. Swarnendu Ghosh, Adv.
Ms. Suchismita Chatterejee Ghosh, Adv.
Mr. Malay Kumar Seal, Adv.
Mr. Prasun Ghosh, Adv.
...for Respondent Nos. 3 & 4
Mr. Surojit Nath Mitra, Sr. Adv.
Mr. D.N. Sharma, Adv.
Mr. Kaushik Chowdhury, Adv.
Ms. Vaibhavi Pandey, Adv.
...for respondent No. 5
Mr. C.A. Sundaram, Sr. Adv.
Mr. Joy Saha, Sr. Adv.
Mr. Sourav Soparkar, Adv.
Mr. Abhishek Guha, Adv.
Ms. Rohini Musa, Adv.
Mr. Rajat Gupta, Adv.
Mr. Yash Vardhan Deora, Adv.
Mr. Ishaann Saha, Adv.
Ms. Akansha Chopra, Adv.
...for APL Committee (Majority Members)
Page 13 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Mr. Kishore Dutta, Sr. Adv.
Mr. Rajesh Upadhyay, Adv.
PAR
Mr. Mahendra Kr. Sharma, T1
...For Joint Administrator pendente lite
Mr. Anirban Ray, Ld Government Pleader
Mr. Rajarshi Dutta, Adv.
Mr. Sankarsan Sarkar, Adv.
Mr. Shwetaank Nigam, Adv.
...Intervenors
1. APO/89/2020
ARISING OUT OF TS 6/2004
Appellant - Universal Cable Limited
Present appellant is a third party notice company in the suit.
Filed this appeal as Harsha Vardhan Lodha, the plaintiff no. 1 vide order dated
18th September, 2020 in G.A. 1735/2019 has been restrained from holding any
office in M.P.Birla Group.
GA/1/2020 (APO/89/2020)
Prayer
Page 14 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
a. Leave be granted to the appellant/petitioner to file the present appeal ;
b. Leave be granted to the petitioner to file the instant appeal from the order
dated 18th September, 2020 passed by Hon'ble Justice Sahidullah Munshi in
T.S. No. 6 of 2004 without certified copy and with the copy of the order
downloaded from the website of this Hon'ble Court on the petitioner's following
undertakings :-
i. To have the judgment and order under appeal be drawn up and completed
and to have the same included in the paper book ;
ii. To have the order admitting the appeal drawn up and completed to have
the same included in the paper book ;
c. Stay of the order dated 18th September, 2020 to the extent the said order
contains the following directions :-
(a) that Harsh Vardhan Lodha is restrained from holding any office in any of the
entities of the M.P.Birla Group ;
Page 15 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
(b) that the petitioner should be guided by the majority decisions of the APL
Committee in the exercise of voting rights flowing from investments "in the
companies controlled by PDB"; and
(c) that the plaintiffs are directed to implement the 19th July, 2029 and 30th
July, 2019 majority decisions of the APLs,
(d) Ad interim order in terms of the prayer above ;
(e) Such further or other order or orders as to this Hon'ble Court may deem fit
and proper.
OCO/11/2020 - Cross Objection in A.P.O. No. 89 of 2020 filed by Pradip
Kumar Khaitan, the respondent No. 5
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 & 4
respectively.
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 & 2 respectively.
Page 16 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
2. APO/90/2020
ARISING OUT OF TS 6/ 2004
Appellant - Birla Cable Limited
Present appellant is a third party notice company in the suit.
Filed this appeal as Harsha Vardhan Lodha, the plaintiff no. 1 vide order dated
18th September, 2020 has been restrained from holding and office in appellants
company.
GA/1/2020 (APO/90/2020)
Prayer
a. Leave be granted to the appellant to file the present appeal from the judgment
and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G G.A. No. 1735 of 2019 in T.S. No. 6 of 2004 along with
other connected applications (Harsh Vardhan Lodha & Ors. vs. Arvind Kumar
Newar & Ors.)
b. Leave be granted to the appellants to file a Memorandum of Appeal from the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
c. Sahidullah Munshi in G.A. No. 1735 of 2019 in T.S. No. 6 of 2004 along with
other connected applications (Harsh Vardhan Lodha & Ors. vs. Arvind Kumar
Page 17 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Newar & Ors.), without a certified copy thereof on the appellants' following
undertakings :
i. to have the order admitting the appeal drawn up, completed and to include
a copy thereof in the paper book to be filed herein ;
ii. to have the order impugned drawn up, completed and to include a certified
copy in the paper book to be filed herein ;
iii. to prepare and include a List of Dates pertaining to the question of
limitation in the paper book to be filed herein ;
d. Stay of the judgment and order dated 18th September, 2020 passed by the
Hon'ble Justice Sahidullah Munshi in G.A. No. 1735 of 2019 in T.S. No. 6 of
2004 along with other connected applications (Harsh Vardhan Lodha & Ors.
vs. Arvind Kumar Newar & Ors.), to the following extent as set out in paragraph
29 hereof ;
e. Leave be granted to the appellant to file Memorandum of Appeal with copy of
the judgment and order dated 18th September, 2020 downloaded from the
website of the Hon'ble Court.
Page 18 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
f. Ad interim orders in term of prayers above ;
g. Such further and/or other order or orders be passed, direction or directions be
given as Your Lordships may deem fit and proper.
OCO/12/2020 - Cross Objection in A.P.O. No. 90 of 2020 filed by Pradip
Kumar Khaitan, the respondent No. 5
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 & 4
respectively.
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 & 2 respectively.
3. APO/91/2020
ARISING OUT OF TS 6/2004
Appellant - Vindhya Telelink Ltd.
Appellant third party notice company in the suit, filed this appeal as Harsha
Vardhan Lodha the plaintiff no. 1 has been restrained from holding any office
in its company.
Page 19 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
GA/1/2020 (APO/91/2020)
Prayer
a. Leave be granted to the appellant to file the present appeal from the judgment
and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019 in T.S. No. 6 of 2004 along with
other connected applications [Harsh Vardhan Lodha & Ors. vs. Arvind Kumar
Newar & Ors.]
b. Leave be granted to the appellants to file a Memorandum of Appeal from the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019 in T.S. No. 6 of 2004 along with
other connected applications [Harsh Vardhan Lodha & Ors. vs. Arvind Kumar
Newar & Ors.] without a certified copy thereof on the appellants' following
undertakings :
i. to have the order admitting the appeal drawn up, completed and to include
a copy thereof in the paper book to be filed herein ;
ii. to have the order impugned drawn up, completed and to include a certified
copy in the paper book to be filed herein ;
Page 20 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
iii. to prepare and include a List of Dates pertaining to the question of
limitation in the paper book to be filed herein ;
c. Stay of the judgment and order dated 18th September, 2020 passed by the
Hon'ble Justice Sahidullah Munshi in G.A. No. 1735 of 2019 in T.S. No. 6 of
2004 along with other connected applications [Harsh Vardhan Lodha & Ors.
vs. Arvind Kumar Newar & Ors.), to the following extent as set out in paragraph
29 hereof ;
d. Leave be granted to the appellant to file the instant appeal with the judgment
and order dated 18th September, 2020 downloaded from the website of the
Hon'ble Court ;
e. Ad Interim orders in terms of prayers above ;
f. Such further and/or other order or order be passed, direction or directions be
given as Your Lordships may deem fit and proper.
GA/2/2020 (APO/91/2020)
Prayer
Page 21 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
a. Injunction restraining the said two joint Administrators pendent lite of the
Estate of Priyamvada Devi Birla from interfering with the assets and properties
of the petitioner and more particularly its 100% shareholding in its three
wholly owned subsidiaries, August Agents Limited, Insilco Agents Limited and
Laneseda Agents Limited.
b. Injunction restraining the said two joint Administrators pendent lite from
interfering with the management and affairs of the petitioner and its wholly
owned subsidiaries ;
c. Direction upon the Administrators pendent lite to forthwith withdraw the
letters written by them being Annexures "N" and "O" hereto to the Registrar of
Companies and Reserve Bank of India respectively.
d. Injunction restraining the Administrators pendent lite from letters dated 22nd
April, 2021 and 21st May, 2021 or holding out threats to the petitioner or
otherwise claiming any right other than which flows from the shares held by
the Administrators pendent lite in the petitioner company ;
Page 22 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
e. Direction upon the Administrators pendent lite to forthwith withdraw the
letters dated 20th May, 2021 and 21st May, 2021 being Annexures "S" and "T"
respectively hereto as well as any other similar letter.
f. Ad-interim orders in terms of prayers above ;
g. Such further orders or directions be passed as this Hon'ble Court may deem fit
and proper.
OCO/13/2020 - Cross Objection in A.P.O. No. 91 of 2020 filed by Pradip
Kumar Khaitan, the respondent No. 5
OCO/22/2020 - Cross Objection in A.P.O. No. 91 of 2020 filed by Devendra
Kumar Mantri and Radha Devi Mohatta being the respondent Nos. 3 & 4
respectively.
OCO/5/2020 - Cross Objection in A.P.O. No. 91 of 2020 filed by Arvind Kumar
Newar and Nand Gopal Khaitan being the respondent Nos. 1 & 2 respectively.
4. APO/92/2020
ARISING OUT OF TS 6/2004
Page 23 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Appeal filed by Harsh Vardhan Lodha
GA/1/2020 (APO/92/2020)
Prayer
a. Leave be granted to the petitioner to file a Memorandum of Appeal from the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of 2019, G.A. No.
1786 of 2019, G.A. No. 1845 of 2019, G.A. No. 1005 of 2020, G. A. No. 1009 of
2020 and G.A. No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha &
Ors. vs. Arvind Kumar Newar & Ors.], without a certified copy thereof on the
petitioner's following undertakings :
i. to have the order admitting the appeal drawn up, completed and to include
a copy thereof in the paper book to be filed herein ;
ii. to have the order impugned drawn up, completed and to include a certified
copy in the paper book to be filed herein ;
iii. to prepare and include a List of Dates pertaining to the question of
limitation in the paper book to be filed herein ;
b. Stay of the judgment and order dated 18th September, 2020 passed by the
Hon'ble Justice Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of
Page 24 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
2019, G.A. No. 1786 of 2019, G.A. No. 1845 of 2019, G.A. No. 1005 of 2020, G.
A. No. 1009 of 2020 and G.A. No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh
Vardhan Lodha & Ors. vs. Arvind Kumar Newar & Ors.], save and except to the
extent mentioned in paragraph 59 hereof ;
c. Leave be given to the petitioner to add, vary and/or amend the Memorandum of
Appeal upon judgment and order dated 18th September, 2020 being made
available to the petitioners.
d. Leave be granted to the petitioner to file the instant appeal with a copy of the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of 2019, G.A. No.
1786 of 2019, G.A. No. 1845 of 2019, G.A. No. 1005 of 2020, G. A. No. 1009 of
2020 and G.A. No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha &
Ors. vs. Arvind Kumar Newar & Ors.] downloaded from the website of the
Hon'ble Court.
e. Ad interim orders in terms of prayers above ;
f. Such further and/or other order or orders be passed, direction or directions be
given as Your Lordships may deem fit and proper.
GA/2/2020 (APO/92/2020)
Page 25 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Prayer
a. Decisions of the APL Committee dated 23rd October, 2020 and 9th November,
2020 and any other similar decision be set aside ;
b. Injunction restraining the APL Committee from giving any effect or further
effect to the decisions of the 2 of the APL Committee members dated 23rd
October, 2020 and 9th November, 2020 or any other similar decision ;
c. Injunction restraining the Administrators pendent lite from exercising any
power qua director or shareholder of any company where the Estate of Late
Priyamvada Devi Birla has majority shareholding as per the affidavit of assets
(Annexure "A") and the unanimous inventory report of the APL Committee
dated 15th October, 2013 (Annexure "D") beyond or inconsistent with that laid
down in the Companies Act, 2013, Articles of Association of the respective
companies as well as other applicable laws ;
d. Ad interim order in terms of prayers above ;
e. Such further and/or other order or orders be passed and/or direction or
directions be made as to this Hon'ble Court may deem fit and proper.
Page 26 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
GA/3/2020 (APO/92/2020)
Prayer
a. Decision of the 2 members of the APL Committee dated 8th October, 2020 and
any other similar decision be set aside ;
b. Injunction restraining the APL Committee from giving any effect or further
effect to the decisions of the 2 of the APL Committee members dated 8 th
October, 2020 or any other similar decision ;
c. If necessary, the decisions and directions by way of communications/orders of
the said 2 members of the APL Committee more fully stated in paragraph 66 be
declared illegal and set aside ;
d. Injunction restraining the Administrators pendent lite from issuing/direction
similar to those summarized in paragraph 66 ;
e. Injunction restraining the defendants, their agents, servants and assigns from
issuing/direction similar to those summarized in paragraph 68 ;
f. Ad interim order in terms of prayers above ;
Page 27 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
g. Such further and/or other order or orders be passed and/or direction or
directions be made as to this Hon'ble Court may deem fit and proper.
GA/4/2021 (APO/92/2020)
Prayer
a. Injunction restraining the joint APLs from in any manner interfering with the
discharging of petitioner's functions and duties as Trustee and/or Managing
Committee member of Societies and Trusts, particulars whereof are given in
Annexure "TT", which have no share capital, and the Estate of Priyamvada Devi
Birla, (as per the Affidavit of Assets, being Annexure "F" and unanimous Report
of the Administrators pendent lite being Annexure "H" and even otherwise), has
no right in respect of such entities ;
b. Stay of the order dated 18th September, 2020 and especially the direction
therein which restrains the petitioner from holding any office in any of the
entities of the M.P.Birla Group during the pendency of the suit ;
c. Injunction restraining the joint APLs from taking any decision or action in
respect of any asset that does not form part of the Estate of Priyamvada Devi
Birla as per the Affidavit of Assets being Annexure "F" and the unanimous
inventory report of the joint APLs dated 15th October, 2013, being Annexure
"H" ;
Page 28 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
d. The decisions of the two of the joint APLs taken at the meetings of the joint
APLs held on 8th October, 2020, 23rd October, 2020, to the extent more fully
stated herein, be set aside ;
e. Any decision similar to those taken at the joint APLs meetings held on 8th
October, 2020, 23rd October, 2020, 9th November, 2020, 25th November, 2020,
29th/30th November, 2020 and 24th December, 2020 be set aside ;
f. Injunction restraining the joint APLs and each of them from giving any effect or
further effect to any of the impugned majority decisions taken at the meeting of
the joint APL held on 8th October, 2020, 23rd October, 2020, 9th November,
2020, 25th November, 2020, 29th/30th November, 2020 and 24th December,
2020 or any other similar decision and more particularly, the decisions to alter
the composition of Trustees and Managing Committee members of Societies
and Trusts, which have no share capital, where the Estate of Priyamvada Devi
Birla (as per the Affidavit of Assets being Annexure "F" as well as the
unanimous inventory report of the joint APLs dated 15th October, 2013, being
Annexure "H") has no legally enforceable right ;
g. Injunction restraining the joint APLs and/or or any of them from giving any
effect or further effect to any of the impugned decisions taken at the joint APLs
meetings held on 8th October, 2020, 23rd October, 2020, 9th November, 2020,
Page 29 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
25th November, 2020, 29th/30th November, 2020 and 24th December, 2020 or
any other similar decision taken at the said meetings of the joint APLs by two
of the joint APLs ;
h. Injunction restraining the joint APLS and/or or any of them from exercising
any right other than those which legally arise out of the Estate of Priyamvada
Devi Birla more fully stated in the affidavit of assets (Annexure "F") as well as
in the Inventory Report dated 15th October, 2013 (Annexure - "H")
i. Injunction restraining the joint APLs and/or any of them from interfering with
the management and affairs of companies, namely East India Investment
Company Private Limited, Gwalior Webbing Company Private Limited, Baroda
Agents & Trading Company Private Limited, The Punjab Produce & Trading
Company Private Limited and Punjab Produce holdings Limited prevailing as
on the date of constitution of the present APL Committee i.e. 10th April, 2019 ;
j. Injunction restraining the joint APLs and/or or any of them from taking any
decision to remove any director of any company without the leave of this
Hon'ble Court by virtue of the shares of the Estate of late Priyamvada Devi
Birla ;
Page 30 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
k. Injunction restraining the joint APLs and/or or any of them from appointing
any new director in any company, save and except with the leave of this
Hon'ble Court, by virtue of shares belonging to the Estate of late Priyamvada
Devi Birla ;
l. Injunction restraining the Administrators pendent lite from exercising any
power qua director or shareholder of any company where the Estate of Late
Priyamvada Devi Birla has majority shareholding as per the affidavit of assets
(Annexure "F") and the unanimous inventory report of the joint APLs dated 15th
October, 2013 (Annexure "H") beyond or inconsistent with that laid down in the
Companies Act, 2013, Articles of Association of the respective companies as
well as other applicable laws ;
m. All appointments nominations of directors, trustees and managing committee
members at the behest of the two joint APLs, more fully stated in paragraph 61
above be declared illegal, null and void ;
n. If necessary, a direction upon the joint APLs to immediately exercise voting
rights arising out of the shares of the Estate of late Priyamvada Devi Birla such
that the Board of Directors of East India Investment Company Private Limited,
Gwalior Webbing Company Private Limited, Baroda Agents & Trading Company
Page 31 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Private Limited. The Punjab Produce & Trading Company Private Limited and
Punjab Produce Holdings Limited as on 10th April, 2019 is restored ;
o. Early hearing of G.A. No. 1 of 2020 arising out of A.P.O. 92 of 2020 for grant of
stay of the order dated 18th September, 2020 (to the extent challenged appeal).
p. Ad interim order in terms of prayers above ;
q. Such further and/or other order or orders be passed and/or direction or
directions be made as this Hon'ble Court may deem fit and proper.
GA/5/2021 (APO/92/2020)
Prayer
a. The directions dated 22nd April, 2021 and 14th May, 2021 passed by two of the
three APLs in the form of minutes of meeting dated 22nd April, 2021 and 14th
May, 2021 being Annexure "I" and Annexure "R" respectively hereto and/or any
other similar decision of the two joint APLs be set aside and declared illegal,
null and void ;
b. Stay of the order dated 18th September, 2020 and especially the direction
therein which restrains the petitioner from holding any office in any of the
entities of the M.P. Birla Group during the pendency of the suit ;
Page 32 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
c. Injunction restraining the joint APLs from issuing any directions or
communications and/or exercising any right in respect of shares not recorded
in their names and/or included in the affidavit of assets being Annexure "L"
and the unanimous inventory report dated 15th October, 2013 being Annexure
"M" ;
d. Direction upon the said two joint APLs to immediately withdraw all letters
written by them to the Registrar of Companies, Reserve Bank of India,
Societies, Trusts and the like where purporting to exercise rights not arising
out of shares recorded in their names and/or included in the affidavit of assets
being Annexure "L" or the unanimous inventory report dated 15th October,
2013 being Annexure "M" ;
e. Injunction restraining the joint APLs and/or any of the parties to the present
suit, their agents, servants or assigns from giving any effect or further effect to
or taking any step on the basis of the purported decisions of the said two APLs
dated 22nd April, 2021 and 14th May, 2021 ;
f. Injunction restraining the joint APLs, their agents, servants, assigns from in
any manner interfering with the management and affairs of companies,
Societies, Trusts and/or any entity not party to T.S. No. 6 of 2004 ;
Page 33 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
g. Ad-interim orders in terms of prayers above ;
h. Such further orders or directions be passed as this Hon'ble Court may deem fit
and proper.
OCO/14/2020 - Cross Objection in APO No. 92 of 2020 filed by Pradip Kumar
Khaitan, being the respondent No. 5
OCO/23/2020 - Cross Objection in APO No. 92 of 2020 filed by Devendra
Kumar Mantri and Radha Devi Mohatta being the respondent Nos. 3 & 4
respectively.
OCO/6/2020 - Cross Objection in APO No. 92 of 2020 filed by Arvind Kumar
Newar and Nand Gopal Khaitan being the respondent Nos. 1 & 2 respectively.
5. APO/94/2020
ARISING OUT OF TS 6/2004
Appellant - Priyamvada Devi Birla (deceased)
Appeal filed by Meenakshi Periwal was plaintiff no. 4 of TS/6/2004 in favour of
Harsha Vardhan Lodha
Page 34 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
GA/1/2020 (APO/94/2020)
Prayer
a. Leave be granted to the petitioner to file a Memorandum of Appeal from the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of 2019, G.A. No.
1786 of 2019, G. A. No. 1845 of 2019, G. A No. 1005 of 2020, G. A. No. 1009 of
2020 and G. A No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha &
Ors. vs. Arvind Kumar Newar & Ors.] without a certified copy thereof on the
petitioner's following undertakings] :
i. to have the order admitting the appeal drawn up, completed and to include a
copy thereof in the paper book to be filed herein;
ii. to have the order impugned drawn up, completed and to include a certified
copy in the paper book to be filed herein;
iii. to prepare and include a List of Dates pertaining to the question of
limitation in the paper book to be filed herein ;
b. Stay of the judgment and order dated 18th September, 2020 passed by the
Hon'ble Justice Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of
2019, G. A. No. 1786 of 2019, G. A. No. 1845 of 2019, G. A. No. 1005 of 2020,
G.A. No. 1009 of 2020 and G. A. No. 1121 of 2020 in T. S. No. 6 of 2004 [Harsh
Page 35 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Vardhan Lodha & Ors. vs. Arvind Kumar Newar & Ors.], save and except to the
extent mentioned in paragraph 59 hereof ;
c. Leave be given to the petitioner to add, vary and/or amend the Memorandum of
Appeal upon judgment and order dated 18th September, 2020 being made
available to the petitioners.
d. Leave be granted to the petitioner to file the instant appeal with a copy of the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G. A. No. 1761 of 2019, G. A. No.
1786 of 2019, G. A. No. 1845 of 2019, G. A. No. 1005 of 2020, G. A. No. 1009
of 2020 and G. A. No. 1121 of 2020 in T. S. No. 6 of 2004 [Harsh Vardhan
Lodha & Ors. vs. Arvind Kumar Newar & Ors.] downloaded from the website of
the Hon'ble Court.
e. Ad interim orders in terms of prayers above ;
f. Such further and/or other order or orders be passed, direction or directions be
given as Your Lordships may deem fit and proper.
OCO/15/2020 - Cross Objection in APO No. 94 of 2020 filed by Pradip Kumar
Khaitan, being the respondent No. 5
Page 36 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
OCO/24/2020 - Cross Objection in APO No. 94 of 2020 filed by Devendra
Kumar Mantri and Radha Devi Mohatta being the respondent Nos. 3 & 4
respectively.
OCO/7/2020 - Cross Objection in APO No. 94 of 2020 filed by Arvind Kumar
Newar and Nand Gopal Khaitan being the respondent Nos. 1 & 2 respectively.
6. APO/95/2020
ARISING OUT OF TS 6/2004
Appellant - Birla Corporation Ltd. third party notice company in the suit in
favour of Harsha Vardhan Lodha
GA/1/2020 (APO/95/2020)
Prayer
a. Leave be granted to the appellant to file the present appeal from the judgment
and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1845 of 2019, G.A. No.
831 of 2020, G.A. No. 832 of 2020, G.A. No. 842 of 2020 and G.A. No. 1005 of
2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha & Ors. vs. Arvind Kumar
Newar & Ors.]
Page 37 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
b. Leave be granted to the appellants to file a Memorandum of Appeal from the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1845 of 2019, G.A. No.
831 of 2020, G.A. No. 832 of 2020, G.A. No. 842 of 2020 and G.A. No. 1005 of
2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha & Ors. vs. Arvind Kumar
Newar & Ors.], without a certified copy thereof on the appellants' following
undertakings :
i. to have the order admitting the appeal drawn up, completed and to
include a copy thereof in the paper book to be filed herein ;
ii. to have the order impugned drawn up, completed and to include a
certified copy in the paper book to be filed herein ;
iii. to prepare and include a List of Dates pertaining to the question of
limitation in the paper book to be filed herein ;
c. Stay of the judgment and order dated 18th September, 2020 passed by the
Hon'ble Justice Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1845 of
2019, G.A. No. 831 of 2020, G.A. No. 832 of 2020, G.A. No. 842 of 2020 and
G.A. No. 1005 of 2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha & Ors. vs.
Arvind Kumar Newar & Ors.], to the extent as set out in paragraph 29 hereof ;
Page 38 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
d. Leave be given to file the instant appeal with the copy of the said judgment and
order dated 18th September, 2020 downloaded from the website of the Hon'ble
Court ;
e. Leave be granted to the appellant to add, vary and/or amend the Memorandum
of Appeal upon judgment and order dated 18th September, 2020 being made
available to the appellant ;
f. Ad interim orders in terms of prayers above ;
g. Such further and/or other order or orders be passed, direction or directions be
given as Your Lordships may deem fit and proper.
OCO/16/2020 - Cross Objection in APO No. 95 of 2020 filed by Pradip Kumar
Khaitan, being the respondent No. 5
OCO/25/2020 - Cross Objection in APO No. 95 of 2020 filed by Devendra
Kumar Mantri and Radha Devi Mohatta being the respondent Nos. 3 & 4
respectively.
OCO/8/2020 - Cross Objection in APO No. 95 of 2020 filed by Arvind Kumar
Newar and Nand Gopal Khaitan being the respondent Nos. 1 & 2 respectively.
Page 39 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
7. APO/96/2020
ARISING OUT OF TS 6/2004
Appeal filed by Shreyas Medical Society
GA/1/2020 (APO/96/2020)
Prayer
a. Leave be granted to the appellant/petitioner to file the present appeal ;
b. Leave be granted to the petitioner to file the instant appeal from the order
dated 18thSeptember, 2020 passed by Hon'ble Justice Sahidullah Munshi in
T.S. No. 6 of 2004 without certified copy and with the copy of the order
downloaded from the website of this Hon'ble Court on the petitioner's following
undertakings :-
i. to have the judgment and order under appeal be drawn up and completed
and to have the same included in the paper book ;
ii. to have the order admitting the appeal drawn up and completed to have the
same included in the paper book ;
c. Stay of the order dated 18th September, 2020 to the extent the said order
contains the following directions :-
Page 40 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
i. That the petitioner [if it has been held that the petitioner is a M.P. Birla
Group concern and that the Learned Judge intended the direction to apply
against the appellant] is to be guided by the APL Committee with regard to
exercise of voting rights from their investments in companies controlled by Late
Priyamvada Devi Birla [in case it has been held that the companies referred to
in paragraph 6 of the stay petition];
ii. That the plaintiffs in the suit are required to implement the majority
decisions of the APL Committee dated 19th July, 2019 to the extent these
decisions, concerns the petitioner.
d. Ad interim order in terms of the prayer above ;
e. Such further or other order or orders as to this Hon'ble Court may deem fit and
proper.
GA/2/2022 (APO/96/2020)
Prayer
a. Leave may be granted to Shri Umesh Varma, the applicant to be impleaded as
a respondent in the proceeding being APO No. 96 of 2020 ;
Page 41 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
b. Leave be granted to the applicant to intervene in the present proceeding and/or
be examined pro interesse suo.
c. The appeal being A.P.O. No. 96 of 2020 [Shreyas Medical Society -vs- Arvind
Kumar Newar & Ors.] be dismissed as withdrawn unconditionally ;
d. The authorization and vakalatnama executed by Mr. Pradip Tondon, acting as
the Member of the Managing Committee of the petitioner be revoked, cancelled
and declared invalid, null and void ;
e. Appropriate orders and directions be given so that any document or affidavit
that has been filed by or may be filed by Mr. Jasojeet Mukherjee, Advocate on
the instructions of Mr. Pradip Tondon are not taken on record ;
f. Interim orders and/or orders passed in the instant appeal be vacated ;
g. Stay of hearing of the appeal being A.P.O. No. 96 of 2020 [Shreyas Medical
Society vs. Arvind Kumar Newar & Ors.] till disposal of the present application;
h. Ad-interim orders in terms of prayers above ;
Page 42 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
i. Such further order(s) and/or directions(s) be passed as may be deemed fit and
appropriate by this Hon'ble Court.
OCO/17/2020 - Cross Objection in APO No. 96 of 2020 filed by Pradip Kumar
Khaitan, being the respondent No. 5
OCO/27/2020 - Cross Objection in APO No. 96 of 2020 filed by Devendra
Kumar Mantri and Radha Devi Mohatta being the respondent Nos. 3 & 4
respectively.
OCO/9/2020 - Cross Objection in APO No. 96 of 2020 filed by Arvind Kumar
Newar and Nand Gopal Khaitan being the respondent Nos. 1 & 2 respectively.
8. APO/98/2020
ARISING OUT OF TS 6/2004
Appeal filed by Aditya Vikram Lodha
GA/1/2020 (APO/98/2020)
Prayer
Page 43 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
a. Leave be granted to the petitioner to file a Memorandum of Appeal from the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of 2019, G.A. No.
1786 of 2019, G.A. No.1845 of 2019, G.A. No. 1005 of 2020, G.A. No. 1009 of
2020 and G. A. No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha
& Ors. vs. Arvind Kumar Newar & Ors.], without a certified copy of thereof on
the petitioner's following undertakings :
i. to have the order admitting the appeal drawn up, completed and to include a
copy thereof in the paper book to be filed herein ;
ii. to have the order impugned drawn up, completed and to include a certified
copy in the paper book to be filed herein ;
iii. to prepare and include a List of Dates pertaining to the question of
limitation in the paper book to be filed herein ;
b. Stay of the judgment and order dated 18th September, 2020 passed by the
Hon'ble Justice Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of
2019, G. A. No. 1786 of 2019, G. A. No. 1845 of 2019, G. A. No. 1005 of 2020,
G.A. No. 1009 of 2020 and G.A. No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh
Vardhan Lodha & Ors. vs. Arvind Kumar Newar & Ors.], save and except to the
extent mentioned in paragraph 59 hereof ;
Page 44 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
c. Leave be given to the petitioner to add, vary and/or amend the Memorandum of
Appeal upon judgment and order dated 18th September, 2020 being made
available to the petitioners.
d. Leave be granted to the petitioner to file the instant appeal with a copy of the
judgment and order dated 18th September, 2020 passed by the Hon'ble Justice
Sahidullah Munshi in G.A. No. 1735 of 2019, G.A. No. 1761 of 2019, G. A. No.
1786 of 2019, G. A. No. 1845 of 2019, G. A. No. 1005 of 2020, G.A. No. 1009 of
2020 and G.A. No. 1121 of 2020 in T.S. No. 6 of 2004 [Harsh Vardhan Lodha &
Ors. vs. Arvind Kumar Newar & Ors.] downloaded from the website of the
Hon'ble Court.
e. Ad interim orders in terms of prayers above ;
f. Such further and/or other order or orders be passed, direction or directions be
given as Your Lordships may deem fit and proper.
OCO/10/2020 - Cross Objection in APO No. 98 of 2020 filed by Arvind Kumar
Newar and Nand Gopal Khaitan being the respondent Nos. 1 & 2 respectively.
Page 45 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
OCO/18/2020 - Cross Objection in APO No. 98 of 2020 filed by Pradip Kumar
Khaitan, being the respondent No. 5.
OCO/26/2020 - Cross Objection in APO No. 98 of 2020 filed by Devendra
Kumar Mantri and Radha Devi Mohatta being the respondent Nos. 3 & 4
respectively.
Page 46 of 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
JUDGMENT
(Judgment of the Court was delivered by T.S.Sivagnanam, CJ. and
Sabyasachi Bhattacharyya, J.)
1. All these intra court appeals are directed against the order dated
18.09.2020 in G.A No. 43 of 2016 etc. APO Nos. 89, 90, 91 and 95 of 2020
which have been filed by four companies namely Universal Cables Limited
(UCL), Birla Cables Limited (BCL) and Vindya Telelinks Limited (VTL) and Birla
Corporation Limited (BCRL). All these companies were not parties to the
original proceedings before the Learned Single Bench and leave has been
granted for them to prefer these appeals.
SL NO. CASE NUMBER PARTIES
1. APO NO. 89 OF 2020 Appeal filed by
Universal Cables
Limited
1.1 OCO/11/2020 Cross Objection in
filed by Pradip Kumar
Khaitan, the respondent
1.2 OCO/20/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Radha Devi Mohatta,
being the respondent
respectively.
1.3 OCO/3/2020 Cross Objection in
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
filed by Pradip Kumar
Khaitan, the respondent
2.2 OCO/21/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
Radha Devi Mohatta,
being the respondent
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
respectively.
2.3 OCO/4/2020 Cross Objection in
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
filed by Pradip Kumar
Khaitan, the respondent
3.2 OCO/22/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
Radha Devi Mohatta,
being the respondent
respectively.
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
3.3 OCO/5/2020 Cross Objection in
filed by Arvind Kumar
Newar and Nand Gopal
Khaitan, being the
respondent Nos. 1 and
2 respectively.
4. APO NO. 95 OF 2020 Appeal filed by Birla
Corporation Limited
4.1 OCO/16/2020 Cross Objection in
filed by Pradip Kumar
Khaitan, being the
4.2 OCO/25/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
Radha Devi Mohatta,
being the respondent
respectively.
4.3 OCO/8/2020 Cross Objection in
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
filed by Arvind Kumar
Newar and Nand Gopal
Khaitan, being the
respondent Nos. 1 and
2 respectively.
2. APO No. 92 of 2020 has been filed by Mr. Harsh Vardhan Lodha (HVL), the
plaintiff No. 1. APO No. 94 of 2020 has been filed by the plaintiff No. 3. APO
No. 96 of 2020 has been filed by Shri Shreyas Medical Society, who is not a
party to the proceedings before the learned Single Bench. APO No. 98 of 2020
has been filed by Mr. Aditya Vikram Lodha, the second plaintiff. In all these
appeals, cross objections have been filed the details of which are furnished in a
tabulated form for convenience.
SL NO. CASE NUMBER PARTIES
1. APO NO. 92 OF 2020 Appeal filed by Harsh
Vardhan Lodha
1.1 OCO/14/2020 Cross Objection in
filed by Pradip Kumar
Khaitan, being the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
1.2 OCO/23/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
Radha Devi Mohatta,
being the respondent
respectively.
1.3 OCO/6/2020 Cross Objection in
filed by Arvind Kumar
Newar and Nand Gopal
Khaitan, being the
respondent Nos. 1 and
2 respectively.
2. APO NO. 94 OF 2020 Appeal filed by
Meenakshi Periwal
2.1 OCO/15/2020 Cross Objection in
filed by Pradip Kumar
Khaitan, being the
2.2 OCO/24/2020 Cross Objection in
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
filed by Devendra
Kumar Mantri and
Radha Devi Mohatta,
being the respondent
respectively.
2.3 OCO/7/2020 Cross Objection in
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
filed by Pradip Kumar
Khaitan, being the
3.2 OCO/27/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Radha Devi Mohatta,
being the respondent
respectively.
3.3 OCO/9/2020 Cross Objection in
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
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
filed by Pradip Kumar
Khaitan, being the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
4.3 OCO/26/2020 Cross Objection in
filed by Devendra
Kumar Mantri and
Radha Devi Mohatta,
being the respondent
respectively.
3. The matter concerns the estate of late Smt. Priyamvada Devi Birla (PDB),
wife of late Shri Madhav Prasad Birla (MPB). Madhav Prasad Birla passed away
on 30.07.1990 leaving behind Priyamvada Devi Birla as his sole legal heir. The
defendants being sisters of Madhav Prasad Birla contended that Priyamvada
Devi Birla had executed a will on 13.07.1982.
4. Shri Madhav Prasad Birla (MPB) and Smt. Priyamvada Devi Birla (PDB) as
a couple executed mutual wills in 1981. In 1982, they executed mutual will
revoking earlier mutual wills. Shri Madhav Prasad Birla passed away on
30.07.1990. Smt. Priyamvada Devi Birla executed her last will testament dated
19.04.1999 in which Mr. Rajendra Singh Lodha (RSL) was named as executor.
This will was registered on 21.04.1999. PDB passed away on 03.07.2004. RSL
as executor of PDB's will dated 18.04.1999 filed PLA No. 204 of 2004 seeking
grant of probate of the will and the letter dated 15.04.2003 if held to be a
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codicil. The defendants, sisters of MPB as executors of the earlier will of PDB
dated 13.07.1982 resisted such a prayer. Thus, the core of the dispute is the
will executed by PDB which has given rise to a spate of litigation before this
court and even after the lapse of more than 18 years after the demise of PDB,
the litigation has not seen the end of the day.
5. In the probate proceedings, four applications were filed two by the
defendants and two by the plaintiffs who shall be referred to the Lodha's. GA
No. 1735 of 2019 was filed by the defendants 1(b), Mr. Arvind Kumar Mewar to
implement the decision of the Administrator Pendente Lite (APL) dated
19.07.1999; to direct APL to exercise voting rights in terms of its decision; if
necessary adjourn the Annual General Meeting (AGM) of four manufacturing
companies and if necessary to issue notice to the concerned companies, trust
and societies of MPB group to ensure compliance of the APL decision dated
19.07.1999. Additionally direction was sought for to direct HVL to implement
the decision of the APL dated 30.07.2019; to restrain HVL from offering himself
for reappointment as Director in VTL, BCrL in their AGM; to restrain HVL from
seeking position in the Board of VTL and BCL; to direct HVL to withdraw his
consent for re-appointment as Director of VTL, BCL or holding any position; 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.
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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 any orders on those
applications; majority decision of APL cannot be accepted to be a valid decision
as it is a single body and called as the joint administrators.
9. The petitioners/defendants not being aggrieved by the decision of the APL,
cannot move the Probate Court as per the earlier order dated 23rd August,
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2012. That estate of PDB must be read according to the affidavit of assets in
PLA 242 of 2004. PDB's share holding in any company was never included in
the estate of PDB, the majority decision of APL dated 19.07.2019 is not valid.
10. The learned Single Bench by the impugned order rejected the prayer
sought for in GA No. 1761 of 2019 by observing that the application is without
any merit as the Division Bench never intended that the decision which was to
be taken by the APL, should not be moved by majority but by unanimity. For
the same reason, GA No. 1786 of 2019 was also dismissed. After considering
the facts and circumstances, the learned Single Bench held that
(i) Section 247 of the Indian Succession Act (Succession Act)
demonstrates the largest scope for the Court to exercise its
jurisdiction to protect and preserve the estate of the deceased through
such machineries it deems fit and in the present case through APL
without the right of distributing the assets;
(ii) Section 247 of the Succession Act enjoins the duty upon the Court as
guardian of the estate of the deceased to not only appoint an
administrator, but to render all protection to the administrator during
pendency of the suit or proceeding touching the validity of the will left
behind by the deceased;
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(iii) the parties having subjected themselves to the jurisdiction of the APL,
it is not permissible to anyone of them to argue that the Court has no
jurisdiction to look into the complaint against the APL or to seek order
to ensure smooth functioning of the APL; (iv) the APL possesses all
powers, rights and duties of an ordinary administrator and is
subjected to the control of the Court.
(iv) So long as the lis is touching the will or codicil Court of
administration has not only jurisdiction over the estate of the
deceased being in custodia legis,
(v) The Court appointing APL shall always have authority to oversee,
supervise the APL and in the event any apprehension expressed by
either of the parties having interest over the estate of the 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
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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 CPC many not be
attracted for protecting interest of the parties in the pending
administration suit but the Court can appropriately deal with the
situation wherever it relates to protection and preservation of the
estate of the deceased in the pending proceedings. Thus, the Court
held that it has jurisdiction to pass appropriate orders in favour of
protection and preservation of the estate of the deceased subject to
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entertainability of the prayers made in the application filed by the
defendants.
(xi) It was further held that since, the APL is under the immediate control
of the Court and its decision has not been implemented or could not
be implemented by reason of objection by the nominee member of the
plaintiff on the ground that it is not a unanimous decision of the APL
and therefore, the defendants have come forward with a prayer to
direct implementation of the decision of the APL and considering the
facts and the other circumstances, (which we will deal in the later
part of this judgment and order), the learned Single Bench directed
implementation of the decision of the APL dated 19.07.2019 and
30.07.2019 taken by majority and also all consequential decisions of
the APL in furtherance to the decision and by also restraining from
drawing any benefit personally out of the assets of the estate of the
deceased during the pendency of the testamentary suit.
(xii) The plaintiffs were restrained from interfering with the decisions of
the APL and any decision which will be taken by it in future by
majority if the same directly or indirectly relates to the estate of the
deceased and HVL is restrained from holding any office in any of the
entities of MP Birla Group during the pendency of the suit. As
mentioned above, both the parties being not satisfied with the order
and direction issued by the learned single Bench, have preferred the
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present appeals and in all the appeals, cross-appeals have been also
filed by the other side.
11. Mr. Darius Khambatta, learned senior advocate appearing for the
appellants categorizes his submissions under various heads numbering about
30. We shall refer to the submissions in seriatim. It is submitted that the
Section 34 of the Letters Patent confers testamentary jurisdiction on the High
Court, a probate court exercises special and limited jurisdiction as it is not an
ordinary Civil Court, nor a company court. 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 1, 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
(2008) 4 SCC 300
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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 domain of the probate
court. It is further submitted that it is settled law that only a person who has
caveatable interest can be added as a party to a testamentary proceeding. It is
an admitted fact that none of the third party companies namely BCL, VTL, UCL
or any other third party companies, trust or societies have any caveatable
interest in the testamentary suit in TS No. 06 of 2004 and therefore they
cannot be made or added as parties to the testamentary suit and they have not
been added as parties and consequently no order can be passed by the
testamentary court against third parties, even if it is necessary to protect the
estate. It is submitted that in the impugned order, the learned single bench has
accepted this proposition and in this regard, the learned senior counsel
referred to various paragraphs of the impugned order. It is submitted that in
the intra party judgment reported in 2016 SCC Online Calcutta 1541 it has
been held that a 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 a party in the probate
proceedings and also for the reason that no order can be passed affecting the
right of the stranger without adjudicating his right and adjudication of his
rights in the probate proceedings is impossible as probate court cannot decide
any foreign issue unconnected with the probate proceedings.
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12. With the above reasoning, the learned single bench of this court refused
to grant injunction against BCL as being the third party to the testamentary
suit. It is submitted that the same principle would apply in the instant case
and no interim order can be passed affecting BCL and other companies, trusts
and societies by a coordinate bench in the same suit. It is further submitted in
terms of Section 247 an administrator pendente lite (APL) is the legal
representative in respect of estate only. Explaining the scope and meaning of
"property" that is bequeathable, it is submitted that Section 2(h) of the Indian
Succession Act, 1925 defines a "will" to mean the declaration of the intention of
testator with respect to his property which he desires to be carried into effect
after his death. This principle is embodied in Section 30 of the Hindu
Succession Act, 1956. Further Section 5 of the Indian Succession Act speaks of
succession to 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 2 held that the estate mainly comprises of
the controlling block of shares held by PDB at the time of her death which has
ILR 2007 (2) Calcutta 377
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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 Kumar Newar dated 04.05.2020 held
that even on convenience, the estate of PDB is the owner of the shares in the
company\ies as mentioned in the schedule of asset filed in the testamentary
proceedings and the unanimous report of the APL to which there is no dispute.
It is further submitted that only one of the assets forming part of the estate of
PDB had been inadvertently not included in the affidavit of assets filed on
behalf of RSL in TS No. 06 of 2004. RSL applied for amendment of the affidavit
of assets to include this asset in Uttaranchal/Himachal Pradesh and the
affidavit of assets was amended on the basis of a consent order dated
16.12.2004 in GA No. 4345 of 2004. It is submitted that when the amendment
application was moved it was not the case of the Birla's that certain other
assets such as any alleged right to control certain trust and societies have been
left out on the other hand, the order allowing the amendment was not opposed
by Birla's. It is further submitted that the APL represents the estate of the
deceased and thus is required to carry out and file proceedings only with the
permission/directions of the probate court before competent courts to protect
and preserve the assets forming part of the estate. After referring to the Section
211, 305 and Section 306 of the Indian Succession Act, it is submitted that in
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terms of the said provision the Joint APLs stepped into the shoes of
estate/deceased. Further in view of Section 247 of the Hindu Succession Act
an administrator acts as a general administrator (barring the power of
distribution of estate) and thus the provisions of Section 211 and 305 of the
Succession Act would apply to the APL as well. It is submitted that the APL is
analogous to a receiver. Receiver must take all steps for the purpose of
preservation of the property invoking the jurisdiction of the competent court or
authority depending on the nature of transgression of the estate and protection
required. The learned senior advocate referred to the inter party decision in the
case of Rajendra Singh Lodha Versus Ajoy Kumar Newar 3 wherein it was
held that the appointment of administrator is analogous to that of an
appointment of receiver and after perusing and analysing the cases cited by
both parties, it has been concluded that the matter of appointment of
administrator pendente lite under Section 247 of 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 4. 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
ILR 2007 (II) Calcutta 377
2016 SCC Online Calcutta 1541
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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 estate. It is
submitted that control or controlling interest is only an incidence of
ownership/voting powers of shares; personal influence is not a legal right and
thus not enforceable in law. It is further submitted that only a person/entity
whose name is registered on the Register of Members of a company or recorded
as beneficial owners in the records of the depository is entitled to exercise the
rights of a shareholder and no person can claim to be legally entitled to this
right. To explain the meaning and scope of "control", reference was made to
Section 2(27) of the Companies Act 2013 and Section 2(1)(e) of the Securities
and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations. It is further submitted that as per Section 152(2) of the
Companies Act, 2013, directors are appointed by the company in the General
Meeting of its shareholders. As per Section 101(3) the notice of every meeting is
given to every member, legal representative of the deceased member or the
assignees of the member (apart from auditors and directors) of the company.
Thus, the right to appoint a Director only vest in a member as defined under
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Section 2(55) of the said Act that is a person whose name is entered in the
Register of Members or the beneficial owner in the records of the depository. It
is submitted that in the instant case even by the respondent's own showing
since the estate does not hold or even control directly by strength of shares of
the estate or along with the companies in Tier 1 and Tier 2, majority shares in
the four listed companies in the MP Birla Group the estate cannot be
considered to exercise control over the said companies. Thus, it is submitted
that PDB's estate does not hold a margin of the extent of share to individually
assert control over the four listed companies. Control as defined in Section
2(27) of the Companies Act 2013 has to be a "right", "exercisable", by virtue of
"shareholding or management right or shareholders agreement or voting
agreements or any other manner". It is submitted that the expression "any
other manner" contains general words since they follow specific and particular
words of the same genus, it is presumed that the legislature has used the
general words in a limited sense to convey the meaning implied by specific and
particular words. In the definition of "control" the expression "any other
manner" 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
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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 entities and their goals to act to her directions nor did it take away the
independent rights of ownership of shareholding of these other entities. PDB
would not have approached any court to enforce any alleged legal right against
these group entities to act according to her directions nor could a third party
have gone to any court to cause such group entities to act to the directions of
PDB and not independently. Therefore, in the absence of any right, the estate
and its administrator cannot be legally entitled to do what even PDB could not
have herself enforced. It is further submitted the estate by itself does not
exercise control as alleged over the entire promoter group shareholding in the
companies of the MP Birla group. The only other way in which the estate along
with the other members of the promoter would exercise de facto control over
the entire promoter group shareholding in the companies of MP Birla Group
"assuming" (while denying that they could) would be by acting in concert with
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other members of the promoter group. Regulations 2(1)(q) of the Takeover
regulations defines "person acting in concert". The definition indicates that
persons acting in concert require two or more persons to act with a common
objective or purpose. This, itself predicates the exercise of control by at least
two or more distinct persons. Thus, estate of PDB alone does not exercise even
de facto control over the listed companies of the MP Birla Group. Further it is
submitted that an analysis of the break-up of shareholding in the relevant
companies demonstrates that the estate of PDB along with five private
companies had the following shareholding in the four listed companies of the
group: (a) 25.10% in Universal Cables Limited (UCL) (b) 12.16% in Vindya Tele
Links Limited (VTL), (c) 10.33% in Birla Cables Limited (BCL) and (d) 14.23% in
Birla Corporation Limited (BCrL). Further the shareholding of PDB in respect of
two tier1 and three tier 2 companies was explained in detail. It is submitted
that in the dissenting note of Mr. M.K. Sharma, member of the APL, he has
explained what percentage of shareholding of the estate in the manufacturing
companies and its direct and indirect control would be. This dissenting view
what has been explained by the appellant corroborates as to the extent of the
estate and the control of the estate along with tier 1 and tier 2 companies and
this 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
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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 group, does not ipso facto lead to or vest any legal right to control the
company or the rights exercisable by any other share holder, also shown as a
promoter or part of the promoter group. A "promoter" is not vested with any
specific/ special rights under the Companies Act, 2013 and/or the SEBI
Regulations, but is in fact required to comply with additional obligations
imposed thereunder, namely, (i) a right to control does not flow from the
position of promoter as per Section 2(27) of the Companies Act and Section
2(69) clarifies that a person who already has control over the affairs of the
company can be termed as a "promoter", (ii) the Companies Act as well as SEBI
Regulations provide various obligations for the promoters and in this regard,
reference was made to Sections 7(6), 35(1), 42(10) and 120(4) of the Companies
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Act which deal with liabilities of promoters. Sections 168(3), 257(3), 284(10,
300(1) and 340 of the Companies Act and Regulations 7 and 9 of the SEBI
(Prohibition of Insider Tradings) Regulations, 2015 were also referred to for the
obligations of the promoters, (iii) the Companies Act and the SEBI Regulations
do not provide any right to the promoters, except certain limited exemption as
contained in Section 3(4) of the Takeover Regulations, (iv) promoters do not
have any right to control other Members of the promoter group by virtue of
their status as "promoter", (v) the doctrine of identification does not apply to
large listed companies and (vi) this has been so and so held in the inter-party
decision of this Court in Harsh Vardhan Lodha Versus Ajay Kumar Newar
5.
16. It is submitted that the learned Single Bench has erroneously observed
that since PDB was the "single individual promoter", she was the single
directing hand of the promoter group of shares in MP Birla Group. The mere
fact that a person is a promoter or even allegedly the single individual
promoter, cannot ipso facto make PDB the single directing hand or mind of the
MP Birla Group. Even assuming without admitting that PDB was the single
directing mind of a promoter belonging to the promoter group, does not have
the legal right to direct the manner of voting of other group entities and the
same not being property heritably in law, cannot be exercised by the
administrators. The concepts of single directing mind and will are inapplicable
and irrelevant in determining the aspect of "control" within the meaning of the
2016 SCC Online Cal 1541
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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 nomination of any Member of the managing committees to the societies or
any trust. This Court did not vest the joint APLs with power which PDB during
her lifetime did not have in respect of any of the trusts or societies as
themselves and this is also beyond the scope of testamentary proceedings.
Further, none of the parties in the past considered the trusts or the societies as
part of the estate of PDB in respect of the affidavits of assets. In this regard, the
affidavit of assets filed by the defendants in PLA No. 242 of 2004 was referred
to and it was submitted that it does not disclose the share holding of trusts
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and societies as part of the estate of PDB. Further, unanimous inventory report
filed by the Joint APLs on 15th October, 2013 does not include share holding of
trusts and societies as part of the estate. The trusts and societies are controlled
and managed by their respective trustees/ managing committee members as
per the deeds of the trusts and rules and regulations of the societies. After
referring to various clauses of the deed of trust of MP Birla Foundation, it is
submitted that the analysis of the deed of trust and the rules and regulations
of the society would show that the societies/ trusts are not controlled by the
estate. Further, the Joint APLs did not come to any finding that there is any
clause in any of the documents furnished by the defendants which gave the
estate of PDB a right to control the affairs of the trusts and societies and the
respondents have not pointed out any clause in any trust deed or rules and
regulations which gives such a power. Further, it is submitted that persons
who settle trusts and provide seed money and appoint the individual trustees,
may have been in a position to exercise personal influence over the trustees/
managing committee members during their lifetime. However, such influence is
not a legal right that the settlors have vis-a-vis the concerned trustees or
societies unless the constitution of the trust or society gives such power.
Therefore, it is not property which can be legally bequeathed by the settlor.
Further, the fact that a trust/ society is shown as part of the promoter group in
any company does not make it part of the estate of PDB. The entities/ persons
shown in a promoter group nevertheless have distinct and independent share
holdings in the company. It is submitted that Regulation 2(pp) of SEBI (Issue of
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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 indicate that their
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 provision to the said effect to
the constitution of the trust or society. Further, the prayer sought for in GA No.
3714 of 2008 and GA No. 3718 of 2008 on which order dated 23.08.2012 was
passed, the prayers did not include any reference directly or indirectly against
any of the trusts or societies.
18. It is submitted that share holders and directors are distinct and
independent organs in a company. Share holders have no right to direct how
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REPORTABLE
directors should act or how a company should be managed. They can control
management of a company only by electing or removing the directors at a
general meeting of the company.
19. In the inter-party decision in Harsh Vardhan Lodha Versus Ajay
Kumar Newar 6, it has been held that Probate Court has no jurisdiction to
pass orders against individuals or entities acting in different capacities.
Further, it is submitted that the Probate Court had no jurisdiction to pass
orders in respect of the management and affairs of corporate/ contractual
rights of other entities holding shares in MP Birla Group namely, trusts/
societies and other share holding companies. The Court only in exceptional
circumstances appoints receiver to run businesses or partnership firms and
the Court will never appoint a receiver for the purpose of running a business.
The Court only in exceptional circumstances pierces the corporate veil and this
power is beyond the scope of testamentary jurisdiction. It is submitted that
without piercing the corporate veil of either corporate companies, trusts and
societies, it could not have been held that PDB would have had any legal right
of ownership or control over the share holding of these independent companies
or over the trusts/ societies. The Probate/ Testamentary Court does not have
jurisdiction to pierce the corporate veil of any entity and such piercing of the
corporate veil can only be done in exceptional circumstances. It is further
submitted that the words "acting in concert" respects the corporate veil of the
2016 SCC Online Cal 1541
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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various entities acting in concerts. In fact, the Joint APLs' position is that the
entities of MP Birla Group are acting in concert as recorded in the decision
dated 19th July, 2019. The impugned order passed by the learned Single Bench
does not pierce the veil of any of the group entities of the MP Birla Group much
less of any trusts or societies and in fact, it represents 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 cannot be done in a Testamentary proceedings.
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REPORTABLE
20. With regard to the reliefs claimed in GA No. 1735 of 2019 and GA No.
1845 of 2019 it is submitted that the prayer that the Joint APLs should be
empowered to exercise voting rights in respect of shares which do not stand
recorded in their names, is totally prohibited by law and is illegal. This is not
only contrary to Section 47 read with Section 2(55) of the Companies Act, if
accepted, would amount to rectification of the share register of the company.
That apart the joint APLs have not sought rectification and the share register.
Grievances regarding rectification of the share registers are entrusted to the
National Company Law Tribunal (NCLT), and the jurisdiction of the Court to
grant rectification of share register has been ousted by Section 430 of the
Companies Act, 2013. Therefore, it is submitted that the questions to be
decided in GA No. 1735 of 2019 and GA No. 1845 of 2019 are whether the
prayers or reliefs as claimed in those applications are contrary to law and
whether any Civil Court would have jurisdiction to grant such relief; whether
the Probate Court has jurisdiction to entertain the two applications which
contained prayers which are not relevant for deciding the genuineness of the
will which is the subject matter of TS No. 6 of 2004; can any group of share
holders, even if they have more than 62% shares in the companies, direct the
directors of the company to appoint directors nominated by them or can cast
votes on shares not registered in their names and registered in the names of
other persons/ entities; whether the Testamentary Court would have
jurisdiction to decide title of the estate to the shares in various companies
besides those admitted by the parties in their respective affidavit of assets and
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REPORTABLE
the unanimous inventory report of the Joint APLs and whether the
Testamentary Court can pass orders against third party companies. Further, it
is submitted that the petitions are not under Section 247 of the Indian
Succession Act and those petitions are not for preservation or protection of the
estate of PDB which is well-protected and preserved as held by the Hon'ble
Division Bench in the judgment dated 4th May, 2020.
21. It is submitted that the impugned order directs the plaintiff to implement
the majority decision of APL to directly appoint Directors to the company which
is illegal and 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
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REPORTABLE
provisions of the Companies Act, 2013 regarding appointment of Directors. It is
further submitted that it is not within the power of HVL to implement any of
the decisions of the two Joint APLs dated 19th July, 2019. HVL has requisite
qualified shares which constitute nominal and very insignificant percentage of
share capital of the companies. Only share holders at the general meeting of a
company by majority votes can appoint Directors of a company or allow
continuation of the Directors already appointed. Therefore, the direction as
prayed for in prayer (a) in GA No. 1735 of 2019 is clearly contrary and
repugnant to the Company Law and wholly illegal. It is submitted that HVL,
the appellant is a party to TS No. 6 of 2004 as a legatee under the will sought
to be propounded and not as a share holder or Director of any of the
companies within MP Birla Group. This aspect has been clarified by the
judgment of the Single Bench of this Court dated 19th May, 2016. It is
submitted that the Probate Court cannot give any direction to HVL by treating
him as Director of any company. Furthermore, the Probate Court has no
jurisdiction to give any direction to any Director of any company even within
MP Birla Group. Companies are separate juristic entities. Furthermore,
direction sought for by the other Birlas are not relevant for considering the
question of genuineness of PDB's will. It is submitted that the Joint APLs
cannot act by majority. The learned Single Judge in the order dated 27th
August 2010 appointing the Joint APLs directed that the Joint Administrators
will act ordinarily, jointly but in the case of non-availability of any of the Joint
Administrators, remaining Administrators or Administrators will act, however,
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REPORTABLE
ratification of the Court is to be obtained later at the earliest. Hence, this order
clearly provides that the Joint APLs will act jointly that is not by majority,
where all the Members are available. In this regard, the learned Senior
Advocate referred to the order of the Division Bench dated 22nd December,
2011 and the order dated 19th January, 2012. Thus, it is submitted that the
Joint Administrator's will act jointly had been accepted by the parties.
Referring to Section 48 of the Indian Trust Act, 1882, it is submitted that the
said provision provides that when there are more trustees than one, all must
join in the execution of the trust, except where the instrument of trust
otherwise provides. Therefore, wherever the law seeks to give power to a body
to decide 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
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REPORTABLE
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 and no Member of APL
would act as an umpire which is also emphasized by the use of the phrase
"Joint Administrators" in various parts of the judgment and order dated 23rd
August, 2012. Further, the respondent in GA No. 1964 of 2018 made such
prayer for direction of the Hon'ble Court authorizing the Joint APLs to act as
per majority decision since, they are well aware that unless specific direction to
act by majority was given by the Hon'ble Court, the Joint APLs had no such
power, like Joint Receivers would have to act unanimously. Further, referring
to the order dated 10th April, 2019 by which the Joint APLs were reconstituted,
it is submitted that in the said order it had been observed that for effective
functioning of the APL committee which shall consist of a retired Judge of the
Court and two nominees of the respective parties, it was directed that the two
nominees will render fullest to cooperation with the Hon'ble Judge in order to
enable His Lordship to effectively discharge his duties for the purpose of
smooth administration of the estate and also to prevent any stalemate in the
process of such smooth administration.
22. It is submitted that the impugned order cannot alter the order dated
27th August, 2010 by which the Joint APLs were appointed and therefore, the
directions were issued in Sub-Para (a), (b) and (c) in the impugned order
enforcing the APLs' decision by majority and recognizing the power of the Joint
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REPORTABLE
APLs to act by majority is contrary to law and to the order of appointment of
the APLs.
23. It is submitted that the decision of two of the APLs to re-investigate into
the extent of the estate and percentage of share holding is beyond their
authority and contrary to the unanimous inventory report of 2013. It is
submitted that the extent of the estate of PDB had already gone into and
inventorized on 15th October, 2013 unanimously by the 3 Joint APLs and such
inventory was made pursuant to the order of the Hon'ble Division Bench dated
23rd August, 2012. Further, the Hon'ble Division Bench in the order dated 4th
May, 2020 held that the unanimous report of Joint ALPs has not been
disputed. Further, the inventory of assets records the share holding held by the
estate as per the affidavit of assets filed by both parties and since, neither the
appellants nor the respondents have sought to amend their affidavit of assets
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
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REPORTABLE
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 contrary to the provisions of Company Law.
Similarly, the decision of the APLs dated 30th July, 2019 was challenged by the
plaintiffs in GA No. 1786 of 2019 on several grounds which were not dealt with
in the impugned order.
25. It is submitted that the two Joint ALPs have made observation that HVL
has been acting against the interest of PDB's estate is incorrect and in this
regard, the learned Senior Counsel referred to the affidavit-in-opposition filed
by RSL dated 10th May, 2005 to state that the consistent stand from the very
beginning was that the estate of the testatrix does not directly or indirectly hold
majority block of shares in UCL, BCrL and VTL. Charitable societies and trusts
are not part of the estate of the testatrix which are managed by the respective
managing committees and trustees of the societies or trusts. The companies
are separate legal entities controlled by their Board of Directors and the affairs
of the estate of the testatrix do not include the right to control the affairs of
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
BCrL and/or its assets or properties as alleged. It is submitted that similar
submissions were made by HVL before the Joint APLs which is evidenced by
the Minutes of the meeting dated 21st July, 2017, similar stand was taken in
his affidavit-in-opposition to the administrator's proceedings filed by the
respondents in 2008 which culminated in judgment of the Division Bench
dated 23rd August, 2012, apart from similar stand being taken in all the
matters which were filed before the Joint APLs.
26. It is submitted that the non-cooperation of HVL complained of is the
refusal of the learned Senior Counsel appearing on behalf of HVL to make a
concession that HVL shall cause a recommendee of the Joint APLs to be
appointed as a Director of the 3 subsidiary companies of a listed company. It is
submitted that appointment of Directors of certain companies have to be made
on basis of resolution of the Nomination and Remuneration Committee of the
representative to the listed companies in terms of Section 178 of the
Companies Act, 2013. Therefore, the Chairman of the company, HVL cannot
arrogate unto himself the power to cause such appointment when such power
ultimately rests with the Board of Directors. The observation of the two Joint
APLs that the evident performance of BCrL, the flagship company of MP Birla
Group is deteriorating ever since, HVL became the Chairman 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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. After his demise on 3rd October,
2008 and pursuant to the order of the Hon'ble Division Bench dated 23rd
August, 2012, the Joint APLs took over their share certificates from appellant
and all the shares had since been recorded in the names of the Joint APLs
pursuant to their application made to the respective companies. Hence, there is
no scope for any apprehension that any share of the estate of PDB would be
transferred or disposed of by HVL or any party to the suit. In fact the Hon'ble
Division Bench in the judgment dated 4th May 2020 has held that the shares
are protected in all respects as APL has been appointed and as such interfering
with such shares is difficult at that stage. Further, it is contended that the ad
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
interim order has been misconstrued to be a direction against third party
companies. A direction was given to RSL who was then the executor of the
estate and the sole plaintiff in TS No. 6 of 2004. In this regard, the order
passed by the learned Single Bench dated 23rd March, 2005 in GA No. 4374/
4376 of 2007 was referred to.
28. With regard to the reliance placed by the respondents to the order passed
by the CLB, it is submitted that incomplete reliance of the said order is devoid
of merit in view of the judgment of this court dated 24.08.2005. It is further
submitted that the CLB is not the competent forum to adjudicate upon the
extent of PDBs estate; the observations made in the orders dated 25.04.2005
and 24.08.2005 do not even purport to take away the voting right of any of the
promoter group shareholders or in any way cast upon any of them the duty to
obey any directions of the Joint APL; observations in both orders do not require
the company to change its Register of Members; the observations are irrelevant
since the order was prior to the inventory report of the assets of the estate in
respect of the shares held by the deceased; the issue has been finally settled by
the Hon'ble Division Bench by a judgment and order dated 04.05.2002 in this
probate proceedings that the asset of the estate are as per the schedule of
assets; the mere fact that submissions of counsel is recorded that PDB
controlled the first respondent and the 28th respondent in her lifetime does not
take away legal title of those respondents over their own assets deemed the
share held by them in VCL nor does it confer upon the estate of PDB the legal
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
right/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 RSL as executor of her estate and was not a
proceeding for determining title to the shares held by the different promoter
group entities in the operating companies. Further the CLB is not the
competent forum to adjudicate upon the extent of the PDBs estate and thus
the observation cannot operate as res judicata. Further such alleged
statements of counsel on question of law or at most, a mixed question of law
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
BIRLA PART 2
REPORTABLE
and fact does not amount to an admission made by a party. In any event no
title can be created/extinguished by admission. Further there can be no
estoppel against the statute. The statutory right to vote on shares held by the
promoter group entities in BCL cannot be taken away by applying the doctrine
of estoppel and these issues had been finally settled by the Hon'ble Division
Bench in its judgment dated 04.05.2020 holding that the assets of the estate
are as per schedule of assets. The Learned Senior Counsel referred to the
written submission which were made on behalf of the RSL during 2005 and
2007 before the learned Single Bench as well as the Hon'ble Division Bench
and submitted that these submissions were relied upon by the respondent as
an admission of RSL of their case of control and controlling interest and such
submission is mis-conceived. These are the written submissions and not
affidavit of RSL as in the affidavit in opposition of RSL dated 10.05.2005 to the
petition in GA No. 4375 of 2004, it has been categorically stated that PDB did
not own majority block of shares in the operating companies. Both sets of the
written submissions on behalf of the RSL reiterated the contents of the
schedule of assets and the value thereof as stated by the Birla's in the affidavit
of assets filed by them in PLA No. 242 of 2004 and the valuation made thereof
by the Birla's, that submissions would have to be seen in that context. The
submissions do not in any manner state/admit that PDB exercised voting right
of the entire promoter group of shareholdings as manufacturing companies
through any alleged mechanism of interlocking of cross shareholding of shares
registered in the names of the manufacturing companies or societies.
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REPORTABLE
Therefore, the net effect of the statements in the written notes is whatever is
disclosed in the affidavit is referred to as the "controlling block". In any event it
is submitted that written submission of RSL was prior to the joint APLs
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 16 of the judgment
wherein it was observed that an inconsistent case is being run by the
appellants therein as it has been pleaded in the main petition that late MP
Birla and as also PDB transferred their properties including shares to five
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REPORTABLE
charitable trusts. Thus, the respondents are running contrary cases and
should not be allowed to approbate and reprobate. Thus, it is submitted that
the impugned order is beyond the jurisdiction of the court and also beyond the
scope of the GA No. 1735 of 2019 and GA No. 1845 of 2019. It is submitted
that the decision of the majority APL dated 19.07.2019 is beyond their
jurisdiction and competence and was erroneously made without even having
conclusively determined the extent of the estate. The decision of the majority
APLs dated 30.07.2019 is beyond the relief claimed in the master summons
taken out in GA No. 1735 of 2019 or GA No. 1845 of 2019 and therefore the
court had no jurisdiction to pass any order of implementation of the decision
dated 30.07.2019. Without prejudice, it is contended that even if such prayer
was contained in the master summon's, the said relief would have been beyond
the jurisdiction of the testamentary court to grant. In any event, the direction
contained in the impugned order runs contrary to the findings of the learned
single bench which accepted the decision of the coordinate bench that probate
court at best can pass necessary directions upon APL to initiate appropriate
proceedings before appropriate forum for seeking appropriate reliefs in
accordance with law. It is further submitted that the directions issued in the
impugned order to the plaintiffs to implement all consequential decisions of
APLs is beyond the prayers sought for in the application and hence without
jurisdiction. The direction is uncertain and vague and grants blanket
enforceability to all subsequent decisions of APLs thus negating the order of
the Hon'ble Division Bench dated 23.08.2012. It is further submitted that the
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REPORTABLE
third direction restraining the plaintiff from drawing any benefit personally
from out of the assets of the estate of the deceased is beyond the scope of the
prayers in those two petitions. There is no allegation made that the plaintiff are
taking any benefit personally from and out of the funds of the estate. So far as
the directions contained in sub para (b), learned single bench restrained the
plaintiffs from 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 to restrain
HVL from offering or proposing himself as a candidate for director of VTL and
BCL at the meetings to be held on 5th and 6th of August 2019, by way of a
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REPORTABLE
supplementary affidavit filed in GA No. 1735 of 2019 no such order was passed
and HVL contested and was reappointed as a director. Similarly in August
2020, the respondents file an application in GA No. 1005 of 2020 seeking an
order restraining reappointment of HVL as director of BCRL and UCL at the
annual general meeting proposed on 25.08.2020 and 18.08.2020 respectively
and no order of interim injunction was passed and HVL contested and was
reappointed as a director. More importantly, none of these resolutions
reappointing HVL as director have been set aside. It is submitted that despite
the aforementioned facts as well as the fact that the learned single bench
accepted that probate court has no jurisdiction to pass any order against third
parties and without prejudice to the fact that a supplementary affidavit does
not serve to amend a notice of motion or enable a party to seek new relief
therein. It is submitted that the impugned order erroneously and indirectly
restrains HVL from holding any part in any of the entities of the MP Birla
Group during the pendency of the suit. Thus, the directions contained in the
sub para (b) (ii)of the impugned order exceeds the jurisdiction of a probate
court and erroneously curtails the tenure of office of a director in contravention
of Section 152 of the Companies Act, 2013 which fixes the tenure of a director
appointed or reappointed at the annual general meeting and in the case on
hand it is three years. Lastly, it was submitted that the impugned order is in
violation of the principles of natural justice. It is submitted that the defendants
1(b) and 1(c) were the applicants in GA No. 1735 of 2019 and GA No. 1845 of
2019 and they made their submissions at the first instance and thereafter the
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REPORTABLE
plaintiffs being respondents in those applications made submissions and it was
concluded. At that juncture, the defendant no. 3(a) did not make any
submissions. Thereafter, the learned single bench permitted defendants no.
1(b), 1(c), 1(d) and 2 to advance new arguments and rely on new judgments in
reply for the first time. Thereafter the three noticee companies made their
submissions. After conclusion of the submissions of the three notices
companies, learned single bench 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 clarification
application in GA No. 78 of 2020 wherein the learned single bench by order
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dated 16.09.2020 directed that all other applications which appeared in the list
of 04.09.2020 except GA No. 2007 of 2019 will be considered for adjudication.
This procedure is contrary to the establish practice and is also in violation of
the principles of natural justice.
31. Mr. Khambatta, learned senior advocate appearing for the appellants
elaborated his submissions in the following manner. It is reiterated that the
will sought to be probated by the Birla's contained identical list of properties
and in this regard referred to the probate petitions of Shri Ganga Prasad Birla
in PLA No. 242 of 2004 and in particular the affidavit of executors Shri G.P.
Birla and Shri S.N Tapuriah which contains the list of assets and its valuation.
In Annexure-A therein, the valuation of the movable and immovable properties
of PDB as on 03.07.2004 and in column 5 therein, the properties in public
companies have been given as the number of shares in each of those
companies. The learned senior advocate wanted us to compare the same with
the affidavit of Shri G.P. Birla and another along with Annexure A of the
affidavit filed by the RSL to show that both the annexures contained the
identical list of properties. It is further submitted that in the affidavit filed in
support of GA No. 4375 of 2004 for the first time the word "control" comes up
and a prayer is sought for to appoint an independent person as administrator
to exercise control and management over and in respect of the shares standing
in the name of PDB in various companies and indirect control in other
companies by virtue of such shareholding. Further it has been stated that in
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view of interlocking pattern of shareholding in various Birla companies, if the
control and management of the deceased's estate is improperly handled or
manipulated by the alleged executor even for a short while, it would have far
reaching consequences not only in regard to the value of the immediate assets
of the deceased but also in regard to the various other companies, institutions
and charitable organizations with which, she was associated. In the prayer
sought for in the said application, appointment of an administrator was prayed
for to take over all movable and immovable assets and properties of PDB
including the voting right and the right to control of 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 7 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
2005 4 CHN 544
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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 8 wherein the court held that going by the
prayer portions of the application made by the caveatrix, the prayer for
appointment of an administrator cannot be considered for if considered, 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. Further by referring to the paragraph 75 of the said
decision, it is submitted that the court held that the APL (Joint Administrators,
Pendente lite) should function strictly in accordance with the Companies Act.
Reference was made to the decision of the Hon'ble Division Bench reported in
2007 Calcutta Law Series page 377 and in particular the
findings/observations made by the court in paragraph 253 to 262 and
ultimately the court held that the respondents therein has not been able to
make out a case of necessity for appointment of APL on the ground of waste,
mismanagement, misconduct of the executor. Further paragraphs 275 to 287
of the judgment were referred to and it was submitted that the court held that
the Board of Management of the companies cannot be dislodged and the court
has no jurisdiction to appoint APL and in paragraph 287, the court specifically
dealt with Section 247 of the Succession Act and in paragraph 294, the court
8 AIR 2006 Calcutta 259
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rendered a finding that there is no finding of waste and mismanagement or
siphoning out of money, dilution of properties by the named executor and there
is no reason to appoint APL for a part of the estate i.e. the controlling block of
shares and allow the executor to manage the remaining part of the estate
except valuable movable assets, jewellery, gold coins etc. Further it is
submitted in paragraph 301 of the said judgment, the Division Bench pointed
out that it has considered the nature of the estate, mostly the controlling block
of shares held by PDB at the time of her death which has been disclosed in the
affidavit of assets and there is no dispute in respect of such shares of PDB by
the respondents therein nor any allegations has 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 allegation that he has failed to
collect the assets. Thus, it is submitted that the Hon'ble Division Bench has
rendered a finding on the extent of the estate and the said judgment has
attained 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 9. 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
2008 4 SCC 300
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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 genuineness of the will. If
it is found to be valid any further question as to why did she do so would be
completely out of its domain. A will may be executed even for the benefit of
others including animals. It is submitted that on 03.10.2008, RSL passed
away. On 19.11.2008 the purported executors filed application for appointment
of APL in GA No. 3714 of 2008 in PLA 242 of 2004. It is submitted that the in
terms of the prayer (c) in paragraph 42 of said application/petition what was
sought for was appointment of APL with a direction to take all decisions and
exercise all his rights in regard to the shareholdings of PDB in the companies
referred to in annexure C. It is submitted that from the averments made in the
said petition, more particularly in paragraph 33, it is submitted that when it
suits the Birla's, they seek to take shelter under the provisions of the
Companies Act. It is stated that "what is sauce for the goose is sauce for the
grandeur". The appellant had filed an affidavit in the said application
specifically denying that PDB was in control of the management or business of
the companies mentioned in annexure B with the petition. It was stated that all
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the companies are managed by their respective Board of Directors and the
question of either PDB or RSL or HVL controlling or attempting to take over all
these companies does not arise. Further it was denied that the estate of PDB is
in medio or that there is no person to manage and administer or oversee the
estate as alleged.
33. Nextly, the learned senior counsel referred to the judgment of dated
27.08.2010 in applications GA No. 3732 of 2008, GA No. 3714 of 2008, GA No.
3718 of 2008 in PLA No. 242 of 2004 and GA No. 3731 of 2008 in T.S. No. 06
of 2004. In the said decision, the court pointed out that the law is well settled
by the Supreme Court by a large number of decisions that voting rights is
essentially impartible adjunct to the shares. It was further held that the right of
voting and incidental rights in connection with the shareholding automatically
passes to the successor holder of the share, whether by way of transfer or by
transmission therefore it is impossible to accept the contention that APL while
taking custody of shares will have the limited role and obligations to receive the
dividend only and will not be entitled to participate in the voting at any meeting
of the companies 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
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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 counsels for
the parties have principally agreed on the issue that an independent APL has to
be appointed over the estate and the court should consider the constitution of
APL as the three persons who have been nominated to constitute the APL by
the first court are not acceptable to the appellants. Further the court has
recorded the submissions of the learned counsels for the parties that only point
which will be left for decision of the court is the power of APL vis-a-vis, the
exercise of nature of rights relating to the shares which form the major part of
the estate. Reference was made to the decision of the first court dated
23.08.2012 which was a decision rendered in the appeals arising out of the
common judgment and order dated 27.08.2010 whereby the applications were
disposed of putting the estate in the custody of three independent persons who
would Act as a Joint Administrators pendente lite in and over all the estates
left by the deceased. The learned senior counsel elaborately referred to the said
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decision and submitted that the Division Bench has pointed out that the
possession of an APL is similar to that of receiver with the distinction that the
APL represents the estate for all purpose (except distribution) whereas the
receiver does not represent the estate nor the parties but simply holds the
estate for the benefit of the successful litigant. The Learned senior counsel laid
much emphasis on the last three pages of the judgment and submitted that in
seven places in the said judgment the court has used the words "ownership of
shares and stocks". Thus, it is submitted that controlling block of shares is
where one has the majority ownership of shares. It is submitted that the in the
last but one page of the judgment the first paragraph should not be read in
isolation but should be read in conjunction with the earlier paragraphs which
holds that the controlling block of shares is directly relatable to the ownership
of those shares. It is submitted that at the relevant time Hon'ble Justice C.K.
Thakkar, Former Judge of the Supreme Court was the administrator and after
his resignation, the Hon'ble First Court by order dated 04.10.2012 appointed
Hon'ble Justice R.V. Raveendran, Former Judge of the Supreme Court as the
administrator. The letter sent by the APL to BCrL dated 27.12.2012,
08.07.2013 and 02.02.2014 were referred to and the reply given by 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
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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. Thereafter
the details of the five suits which were filed were placed before this Court and
the prayer sought for in those suits. It is also submitted that BCrL has also
filed a company petition in C.P No. 01 of 2010 before the CLB, Principal Bench
in Delhi. Learned Senior Counsel nextly referred to the decision in the case of
Priyamvada Devi Birla Versus Ajay Kumar Newar 10 (Hon'ble Justice
Jyotirmay Bhattacharya). After referring to the several paragraphs of the
decision commencing from paragraph 111 it is submitted that control and
management has a facet of holding shares and nothing can be done in
derogation of the provisions of the Companies Act. It is submitted appeal has
been filed against the said judgment. However, the learned senior counsel
2016 SCC Online Cal 1541
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seeks to rely upon certain findings rendered in the judgment as his arguments.
It is further submitted that the probate court cannot issue an order of
injunction against the third party and the jurisdiction is available only against
a party to the proceedings who has caveatable interest. It is submitted that the
Hon'ble Justice R.V. Raveendran resigned and Hon'ble Justice A.P. Shah was
appointed by order dated 28.11.2016. Reference was made to the minutes of
the 31st APL Committee meeting held on 21.07.2017 with particular reference
to the decision of the APL on the objections raised for re-nomination of
Directors. Subsequently, GA No. 1964 of 2018 was filed to constitute a new
APL over the estate of PDB and for other reliefs in which the Hon'ble Division
Bench passed the order on 10.04.2019 recording that Hon'ble Justice AP Shahi
is not willing to continue and in his place Hon'ble Justice Mohit Shantilal
Shah, Former Hon'ble Chief Justice of this Court was appointed to the APL
Committee. The APL recorded its decision in the meetings held on 15th and 16th
June, 2019 holding that the APL Committee having control over majority
shareholdings in the companies in MP Birla Group of Companies including VTL
and BCL, it does not support the resolution for reappointment of HVL as
director of VTL and BCL; APL Committee supports in principle the resolution
for payment of profit-based remuneration/commission to non-executive
directors of UCL, VTL, BCL, and BCrL and certain other directions. It is
submitted that this decision was rendered by two of the members of the APL
and the third member puts up a dissent note. It is submitted that GA No. 1735
of 2019 has been filed to implement the decision of the majority APL and GA
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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 11. For the same proposition, reliance
was placed on the decision in Tata Memorial Hospital Workers Union
Versus Tata Memorial Centre and Another 12. Reliance was placed on the
decision of the Hon'ble Supreme Court in Howrah Trading Company Limited
Versus Commissioner of Income Tax, Central, Calcutta 13 to explain the
position of a shareholder. This decision was referred to in J.P. Srivastava &
Sons Private Limited and Others Versus Gwalior Sugar Company Limited
and Others 14.
AIR 1970 SC 564
(2010) 8 scc 480
AIR 1959 SC 775
(2005) 1 SCC 172
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36. To explain what is the right of a shareholder in a company, reliance was
placed on the decision of the Hon'ble Supreme Court in Life Insurance
Corporation Versus Escorts Ltd. & Ors. 15 . Reliance was placed on the
decision of this Court in Murarka Paint & Varnish Works (Private) Ltd.
Versus Mohanlal Murarka & Ors. 16 and in the said decision among other
things it was held that the law is that directors can be denuded of their powers
of control and management either by alteration of the articles or by their
removal. To further explain the rights of a shareholder in a company, reliance
was placed on the decision in Shanti Prasad Jan Versus Union of India 17.
The next aspect dealt with by the learned Senior Counsel is to explain as to
what would mean by the word "control". It is submitted that "control" means
ownership of shares. Reference was made to Sections 2 (27), 2(69) which
defines "promoter", 2(69) (c) which deals with the separate category as defined
in Section 2(27) which speaks of a right which is not found in section 2 (69) of
the Companies Act, 2013. Reliance was placed on the decision of the Hon'ble
Supreme Court in Vodafone International Holdings BV Versus Union of
India 18 and in particular from Paragraph 99 of the said judgment. This
decision is pressed into service in support of the proposition that controlling
interest is inextricably linked to ownership / voting powers of the shares held
in the company and personal influence is not a legal right and thus, not
15(1986) 1 SCC 264
1960 SCC Online Cal 181
17 1973 SCC Online Bom 71
(2012) 6 SCC 613
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enforceable in law. For the same preposition reliance was placed on the
decision of the Hon'ble Supreme Court in Chintalapati Srinivasa Raju
Versus SEBI 19 . Further, it is submitted that "control" is a "right". "In any
manner" in the definition of "control" must be "legally enforceable right". In
support of such preposition reliance was placed on decisions in Arcelormittal
India P. Ltd. Versus Satish Kumar Gupta & Ors.20, Technip SA Versus
SMS Holding (P) Ltd. & Ors. 21 , State of Karnataka & Ors. Versus
Kempaiah 22 , Vania Silk Mills (P) Ltd. Versus Commissioner of Income
Tax, Ahmedabad 23 and Priyamvada Devi Birla, Rajendra Singh Lodha
Versus Lakmi Devi Newar & Anr. 24. 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
19 (2018) 7 SCC 443
20 (2019) 2 SCC 1
21 (2005) 5 SCC 465
22 (1998) 6 SCC 103
23 (1991) 4 SCC 22
24 AIR 1973 Cal 450
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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 25 and Reliance Natural Resources Ltd.
Versus Reliance Industries Ltd. 26. Further, it is submitted merely being a
promoter one cannot automatically control since the promoters do not have
any such rights and being a promoter does not ipso facto means controlling
himself by the person. In this regard, reliance was placed on the decision of the
High Court of Bombay in K.K. Modi Versus Securities Appellate Tribunal &
Ors.27. To explain the same proposition, reference was made to Sections 2(69),
7(6), 35, 42(10), 120(4), 168(3), 284(1), 300(1) and 340 of the Companies Act,
2013. Nextly, the learned Senior Advocate referred to Regulation 2(1)(q) of the
Takeover Regulations which defines persons acting in concert and submitted
that the definition clearly indicates that persons acting in concert requires two
or more persons to act with the common objective or purpose. This itself
predicates the exercise of control by at least two or more distinct persons.
Thus, the estate of PDB alone does not exercise even de facto control over the
listed companies of MP Birla Group. To explain "control" further once again the
Learned Senior Advocate has drawn our attention to Paragraphs 48, 49 and 56
of the judgment in Arcelormittal and Paragraphs 45 to 47 of Technip SA
(Supra). The next limb of arguments of the learned Senior Counsel is by
referring to what has been titled as "appellant's key". It is submitted that
25 (2015) 4 SCC 609
26 (2010) 7 SCC 1
27 2001 SCC Online Bom. 969
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though the learned Single Bench has held that Probate Court has no
jurisdiction to issue any directions against third parties it has rendered/issued
directions which is a fundamental flaw. The appellant had approached the
Court as a propounder of the will and in the same proceedings an order is
issued against him in third party entities. It is further submitted that none of
the concepts allow them to vote as it should be based on a right that is share
holding and there is no other way. In this regard, it is pointed out that in 13
places the learned Single Bench has pointed out the lack of jurisdiction of the
Probate Court and inability to pass orders against third parties, however, in the
impugned order a contra finding has been given which purports to pass drastic
injunctions of a mandatory nature on third party companies / charitable
societies. Further, the learned Single Bench in the impugned order directs the
appellant / 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
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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 legally enforceable. It is
submitted that the learned Single Bench has misconstrued the concept of "de
facto control" as defined in Section 2 (27) of the Companies Act, 2013 which
has been interpreted by the Hon'ble Supreme Court. The learned Single Bench
had relied on one sentence in Paragraph 50 of the Arcelormittal's case
without considering the paragraph in its entirety and the sentence which
followed the line which had been corrected in the impugned order. The learned
Single Bench has rejected the reliance placed on Vodafone's case despite the
fact that the Hon'ble Supreme Court has categorically held in Vodafone that
"control" is inextricably linked to ownership of shares or a "right" which is
legally enforceable. The impugned order does not show how deep PDB in de
facto albeit which comes to a finding at page 151 which is neither on evidence
or reasoning, the learned Single Bench relies on the Paragraph 304 of the inter
partes judgment dated 11.10.2007 without noticing the findings at Paragraph
301. Further, after referring to the decision in Technip SA it is submitted that
even acting in concert it should be shown there is a right. Furthermore, the
decision in Hindustan Motors Ltd. Versus MRTP Commission 28 under the
MRTP Act where the definition of control is different from that of the definition
28 1973 SCC Online Cal 56
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in the Companies Act. It is further submitted that the APL committee never
attempted to pierce the corporate veil and the learned Single Bench has also
not done so. In the decision of the Company Law Board reported in (2005) 128
Company Cases 145 it has been held that as to who controls the estate of
PDB is a matter in the High Court and CLB cannot go into the said aspect
hence, the petition seeking for an investigation was dismissed. The said
decision was affirmed by this Court as reported in (2006) 133 Company Cases
515 (Calcutta). There is no actual evaluation of the reasons of the decision
sought to be approved and implemented by the impugned order. In fact the
joint APLs' decision did not themselves come to any definite finding nor did
they consider the evidence. In the impugned order de-linking control of
ownership of shares and the findings in that regard, are fundamentally and
patently misconceived, erroneous and bad in law. With regard to the alleged
admission it is submitted that the so called admission of fact can at 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 29
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
29 AIR 1965 SC 338
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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. 30 Further, the learned Senior Advocate once
again referred to the judgment of Justice Kalyan Jyoti Sengupta and the
affidavit filed by RS Lodha. Further, it is submitted that to the written
submissions of the Counsel of RSL he has filed an affidavit denying of such
allegations. It is further reiterated that APL was appointed only for 1260 shares
and this prayer was granted and now at this juncture, they cannot expand the
scope. On the decision of the two joint APLs it is submitted that it is not known
as to why the two joint APLs should take sides. After the decision taken by the
two APLs was taken by a Court receiver, the court would have struck it down.
The finding of the learned Single Bench that the voting right should be guided
by the APL committee, is erroneous. The directions issued in the penultimate
paragraph of the impugned judgment in Paragraphs (a) to (c) would mean to
state that the provisions of the Companies Act have to be ignored and HVL
restrained from holding any office when there was no prayer sought for in that
regard. In this regard reliance was placed on the decision of the Court of
30 (2015) 7 SCC 373
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Appeal of California in the case of Estate of AH Winder 31 . It is further
submitted that whatever was the direction issued earlier which was set aside
by the Hon'ble Division Bench headed by Hon'ble Justice Pinaki Ghose has
now been passed as a decision of the two APLs. The APL committee being
officer of Court can act pursuant to the directions of the Court and cannot act
outside the probate jurisdiction, it must be independent, it cannot take sides
and they should have filed a report before this Court and sought for orders
from the Court. Further, once again referring to the decision of the Hon'ble
Justice Kalyan Jyoti Sengupta and the decision of the Hon'ble Division Bench
headed by Hon'ble Justice C.K. Thakkar it is submitted that there is nothing
about the term "controlling the block of shares". It is further submitted that
APLs committee is a joint APL and cannot act by majority. To support such
proposition, reliance was placed on the decision of the Hon'ble Supreme Court
in K. Leelavathy Bai & Ors. Versus P.V. Gangadharan & Ors.32 As noted
above the various statutory provisions were referred to, to contend that the
joint APLs could not have acted by majority and ought to have acted
unanimously. Further it is reiterated 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
31 99 Cal.App. 2d 83
32 (1999) 3 SCC 548
33 2008 SCC Online Bom 1210
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Trivedi 34. 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.35. 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 36 and P.R.
Ramakrishna & Ors. Versus A. Mounaguruswami 37 . Further, it is
submitted that the controlling and management of trust property or property of
a society vests with the trustees or governing bodies of the property. After
referring to the provisions of the Indian Trust Act and the Societies Registration
Act, reliance was placed on the decision in Satyavart Sidhantalankar
Versus The Arya Samaj 38. To support the argument that probate Court has
no jurisdiction to pass orders against individuals or entities acting in different
capacity, reliance was placed on the decision of the Hon'ble Supreme Court in
Chandrabhai K Bhoir Versus Krishna Arjun Bhoir 39 . With the above
34 AIR 1987 Guj 30
35 (1985) 2 SCC 167
36 (2019) 13 SCC 259
37 1985 (57) Comp. Cases 477
38 AIR 1946 Bom 516
39 (2009) 2 SCC 315
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
submissions, the learned Senior Counsel concluded by submitting that joint
APLs should be directed to act by unanimity and in case of dis-agreement to
report to the Court for directions. All decisions taken by the majority of Joint
APLs dated 19.07.2019 and 30.07.2019 and those which were sought to be
implemented by the impugned order, are to be set aside. All decisions taken by
the majority of the two APLs on the basis of the impugned order and
consequential thereto are to be set aside. Joint APLs may take such actions as
are necessary to preserve and protect the estate of PDB including in action as a
shareholder in respect of the shares held in the name of the estate.
38. Mr. Mitra, learned senior advocate appearing for the second plaintiff, the
appellant in APL No. 98 of 2020 categorized his submissions under seven
topics which we will set out in seriatim. It is submitted that Section 247 of the
Act has to be read harmoniously with Section 290 of the Succession Act, 1925.
The Joint APLs have purported to exercise powers which PDB was to perceive
to have and which did not flow from the legal ownership of PDB of any asset
(more particularly the shares in joint companies and societies). On that
premise, the joint APLs have been issuing several directions such as directing
the companies and societies of the MP Birla Group to exercise voting rights in
respect of shares owned by such companies in the manner decided by the
APLs; giving directions to the companies to appoint and remove directors and
to the trusts and societies to appoint persons named by them as trustees and
members of the managing committee etc. The exercise of such
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
powers/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 Legacy would include these assets.
Thus, it is submitted that the result of the above would be that whatever power
the APL exercises will be the same power which ultimately be successors to the
estate of PDB to exercise the consequences which would follow the report that
the companies, societies and trust would have to follow the dictates of the
representative of the estate of PDB presently the Joint APLs and thereafter
either one of the groups. For all times to give that the directors could be
appointed in companies as per the dictates of the representative of the estate of
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
PDB in utter disregard to the provisions of Section 151, 152, 161, 162, and 169
of the Companies Act, 2013. Similarly the trustees and members of the
managing committee of the trust and societies would be appointed as per
dictates of the representatives of the estate of PDB disregarding the provisions
of the Constitution of the trust and societies. It is further submitted that the
directions contained in sub para (a) at page 155 of the impugned judgment is
that the plaintiffs No. 1, 2 and 4 and their family members would have to vote
against the reappointment of HVL in respect of their personal shareholding in
UCL, BRCL and VTL. Furthermore during the tenure of the Joint APLs the
plaintiffs No. 1, 2 and 4 would have to always exercise voting rights in respect
of their personal shareholding as per the dictates of Joint APLs and thereafter
exercise voting rights as per the dictates of whoever ultimately represents the
estate, their transferee, assignees etc.
39. The next topic dealt with by Mr. Mitra is regarding the extent of the
estate of PDB. It is submitted that the extent of the estate of PDB is what is
stated in the "affidavit of assets", as amended, filed in T.S. No. 06 of 2004 and
there is no scope for the court even to prima facie adjudicate the extent of the
estate because the affidavit of assets except the valuation is the same in T.S.
No. 06 of 2004 and PLA No. 242 of 2004. None of the defendants in their
written statement filed in T.S. No. 06 of 2004 have raised any issue with regard
to the affidavit of assets alleging that it is incomplete as it does not include
PDB's power in respect of shares not standing in her name. It is submitted that
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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the power which the testator/testatrix had even if legally cannot be part of the
estate. In this regard, reliance was placed on the decision in Maurice Saleh
Manasseh 40 and the decision in Commissioner of Wealth Tax, Bombay
Versus Mrs Nirmala D. Mehta 41 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 42.
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 estoppel/issue estoppel. In this regard, it is submitted that the plaintiff no. 2
AIR 1933 Calcutta 924
1990 Mah LJ 1225
MANU/WB/0841/2004
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
was not a party to any of the proceedings where the alleged admissions were
made that is either before the CLB or in the appeal arising out of the said order
under Section 10F of the Act. In any event, it is submitted that the admission
cannot confer or divest the title. To support such contention, reliance was
placed on the decision of the Hon'ble Supreme Court in Canbank Financial
Services Limited Versus Custodian and Others 43. The next topic addressed
by the learned senior advocate is with regard to the violation of principles of
natural justice. In this regard, elaborate reference was made to the minutes of
the meeting of the Joint APL held on 16.06.2019 and various events which took
place during the course of the meeting etc. It is submitted that the plaintiff
counsel had pointed out that the issue as to whether the Joint APL can take
the decision by majority need not be decided before the Joint APLs and the
meeting concluded on the said date and no submissions on the issue were
either invited or made by either side nor the said issue was on the agenda of
the meeting. However to the surprise of the plaintiff in the majority decision of
the Joint APL dated 19.07.2019 several paragraphs were devoted to the aspect
of majority decision making power of the Joint APLs with regard to the Joint
APLs Mr. M.K. Sharma (MKS) one of the Joint APLs, in a part of his dissenting
note has also expressly pointed out this factum.
42. Referring to the judgment of the Hon'ble Division Bench dated
23.08.2012 it is submitted that the said judgment does not contemplate the
(2004) 8 SCC 355
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Joint APLs who are in the position of receivers, to take over and run any of the
companies which are going concerns and such would be against the accepted
legal principles, especially after coming into force of the Companies Act 2013.
To support such proposition, reliance was placed on the decision in Kailash
Chandra Datta Versus Sadar Munsiff, Silchar 44. It is submitted that only
where a receiver can take over the running company is by having new directors
appointed in place of the existing directors, in this regard reference was made
to Section 179 of the Companies Act, 2013. Nextly, learned senior advocate
referred to names of the new directors appointed by the Joint APLs and pointed
out that 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
AIR 1925 Cal 817
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 decision of the Joint APLs or to direct the plaintiffs to implement
the majority decisions of the two Joint APLs and the learned single bench
ought to have restricted the functions of APLs vis-a-vis as said to ensure
whatever assets are mentioned in the affidavit of asset are not
dissipated/transferred and to exercise powers legally flowing from ownership of
shares only in case of established exigency.
44. It is submitted that the learned single bench had pre decided all the
issues and the reasoning later given therefore was mere formality. In this
regard, the learned Senior Advocate referred to the various paragraphs of the
impugned order and submitted that all the paragraphs would indicate are only
narration of events and there is no indication in the impugned order as to why
the arguments of the plaintiffs appears to be self-contradictory and mutually
destructive and therefore such findings rendered by the learned single bench in
the impugned order are liable to be set aside.
45. Mr. Abhratosh Majumdar, learned senior advocate appearing for the
appellant in APO No. 94 of 2020 elaborately took us through the findings of the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
learned single bench and submitted that the findings have blurred the settled
position of law with regard to the jurisdiction of the probate court. By placing
reliance on the decision of the Hon'ble Supreme Court in Ghulam Qadir
Versus Special Tribunal and Others 45, it is submitted that the probate court
will go into the genuineness of the will and would not adjudicate on the title to
the property. To explain the jurisdiction of the probate court, reliance was also
placed on the decision of the Hon'ble Supreme Court in Krishna Kumar Birla
Versus Rajendra Singh Lodha and Others 46 . Next, the learned senior
advocate referred to the minutes of the APL in the meetings held on 15th and
16th June, 2019. It is submitted that though the APL Committee in paragraph
34 of the minutes recorded that the committee has not attempted to take over
the management and control of any of the listed companies and in fact, in the
minutes of the meeting of the committee held on 21.07.2017 it was specifically
observed that it is not possible for the APL Committee to virtually take over or
take charge of the management of the listed companies which was also a view
of the erstwhile Chairman of the APL Committee, the directions issued by 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
(2002) 1 SCC 33
(2008) 4 SCC 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 filing a report, but parties are also at liberty to
approach the High Court for seeking appropriate directions and/or
clarifications, so that as far as possible, the estate of late Mrs. PDB is not
burdened with avoidable costs. It is submitted that the said decision clearly
shows that the APL Committee was conscious of its limitations, but however
had not approached this court for any directions but chose to unilaterally issue
directions which is contrary to the provisions of the Companies Act.
46. Nextly, the learned senior advocate referred to the judgment of the
Division Bench dated 23.08.2012 wherein the Hon'ble Division Bench held that
the rights and powers of the general administrators over the estate of the
deceased depends on the nature of the property both movable and immovable
and the respective statutes which governs acquisition and enjoyment of such
property. Further in so far as the stock and shares of the companies are
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
governed by the companies Act and in the light of the rules and regulations
under the Companies Act there are two modes by which the shares of the
companies can be obtained i.e. by transfer and/or transmission as provided
under Section 108 of the Companies Act to be entered into the Registrar of
Members. Further the Hon'ble Division Bench noted that the
appellant/petitioners have specifically sought in their application for being
appointed as APL to enable him to collect dividends paid against the shares
and all other incomes of the estate which is one of the trait and characteristics
of the different kinds of rights emanating from ownership of shares, stocks of a
company as provided under the Companies Act, 1956. Further the Hon'ble
Division Bench referred to the various provisions of the Companies Act
pertaining to the propriety rights of ownership of stocks and shares like Section
87, 169, 172, 176, 187 and 188. The learned senior advocate submitted that if
the judgment is read as a whole, it clearly shows that several provisions of the
Companies Act had been taken note of and the legal aspect has been clearly
brought out in the judgment however all the directions issued by the two Joint
APLs are far beyond the provisions of the Companies Act. It is further
submitted that while considering the present dispute, one has to keep in mind
Section 247 of the Succession Act and the legal fiction is sought to be created
but whatever 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Others 47 . 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 the learned single
bench has issued various directions/orders. It is submitted that several of the
reliefs granted were without notice to the appellant and the appellant have
been denied the right of fair hearing. It is submitted that the rule of fair hearing
would equally apply in an administrative decision and to support such
contention, reliance was placed on the decision of the Hon'ble Supreme court
in Kanachur Islamic Education Trust (R) Versus Union of India (UOI) and
Others 48.
(2020) 9 SCC 1
(2017) 15 SCC 702
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
47. Mr. Shyam Divan, learned Senior Advocate appearing for the appellant in
APO No. 95 of 2020, Birla Corporation Limited submitted that the company is a
public limited company, it is listed in BSE and NSE and is described by the
respondents as the flagship company of the MP Birla Group. It is submitted
that BCL is one of the India's leading cement manufacturers with an annual
turnover of over Rs. 6,915 crores as at 31.03.2020 and its turnover has
increased from 1343 crores in the year 2004-2005 to approximately Rs. 6915
crores (consolidated) in the year 2019-2020. The net worth of the company
increased from Rs. 312.79 crores in the year 2004-2005 to Rs. 4806.3 crores in
the year 2019-2020. Further BCL has an uninterrupted record of declaring
dividend for the last 18 years and in the financial year 2019-2020 it had
declared a total dividend of 75%. During 2004, the company had 29,825
shareholders/members holding 7,70,05,347 shares and Smt. PDB held 1260
shares of BCL during her life time. As of 31.03.2004, the shareholding of the
promoters of the company comprising 26 companies, trusts, societies and
individuals total 4,95,02,519 shares which is equivalent of 64.28% of the share
capital of the company. As on 31.03.2020, BCL continues to have a total of
7,70,05,347 shares. The promoters comprises at present 23 companies and
societies and one individual i.e. the estate of PDB holding a total of 4,84,34,191
shares equivalent to 62.90% of the total share capital. After elaborately
referring to the genesis of the present dispute, it is submitted that the company
is not a party to the suit, it was not a party before the learned Single Bench,
however, the company appeared before the learned Single Bench through the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
counsel in response to a notice issued pursuant to order dated 08.06.2020
which was issued pursuant to the observations of the Hon'ble Division Bench.
It is 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 issued in the impugned judgment are
contrary to the findings recorded. In this regard, the learned Senior Advocate
referred to the pages 151, 152 and 155 of the impugned judgment. Therefore, it
is submitted that once the court holds it lacks jurisdiction to pass the order
against the entity, it could not have made any observations in regard to such
entity after specifically holding that it would not go into those applications any
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
more. Therefore, the observation in this regard is a nullity as it has been made
by the court which lacks jurisdiction. To support such contention, reliance was
placed on the decision in Shri Athmanathaswami Devasthanam Versus K.
Gopalaswami Ayyangar 49 and Hindustan Zinc Limited Versus Gujarat
NRE Coke Limited 50.
48. Nextly, the learned senior counsel referred to the prior background and
submitted that in September 2004 six shareholders of BCL collectively holding
about 0.0016% shares had filed proceedings against the company under
Section 247/250 of the Companies Act, 1956 before the Company Law Board,
Principal Bench, New Delhi in CP No. 58 of 2004 in which proceedings the
promoter group shareholders constituting 63.7% (presently 62.9%) were
arrayed as respondents. The petitioners therein sought for an investigation into
the membership of the company in terms of Section 247 (1A) of the Companies
Act, 1956, for determining the true persons who are financial interested in the
success or failure of the company or who have been able to control or
materially influence the policy of the company. In such proceedings, in CP No.
258 of 2004 none of the plaintiff or defendants in testamentary suits were
impleaded as the parties. Ultimately by order dated 25.04.2005, the said
petition was dismissed. Therefore, it is submitted that reliance placed by the
defendants on the alleged admission of counsel for respondent qua the control
of BCL is totally mis-conceived because the respondents before CLB in their
(1964) 3 SCR 763
AIR 1999 Cal 179
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
replies, had denied any such control. An appeal preferred before this Court
under Section 10A of the Act was dismissed by the judgment dated
24.08.2005. It is further submitted that in another proceedings under Section
10F of the Companies Act, 1956 arising out of the order dated 09.02.2011
passed by the Company Law Board, Principle Bench, New Delhi under Section
397/398 of the Act initiated by the Birla Education 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. Reliance placed by the defendant on the correspondence
between the APL and BCL during 2012, 2013 and 2014 to support their
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
contention regarding alleged controlling interest is mis-placed. BCL in its reply
dated 17.01.2013 to the APL has not accepted the assertion of the alleged
controlling interest and that they have taken a clear stand who were the
shareholders of BCL are matters of record and nothing further or to the
contrary was admitted. Therefore, replying or not replying to any further letter
of APLs such as their letter dated 08.07.2013 is of no consequence. Further it
is submitted that the unanimous inventory report of APL filed on 15.10.2013
was prepared on the basis of list of assets furnished by both sides and the said
report till date is unchallenged and is conclusive.
49. Nextly, the learned senior counsel proceeded to explain about the
position held by RSL and HVL in BCL. It is submitted that RSL was appointed
as an Additional Director of BCL on 12.06.1991, the minutes thereof was
signed by PDB and he continued to be the Director of the company until1996
when he resigned on account of his appointment as the Director of State Bank
of India. RSL continued to be a special invitee to various Board meetings of
BCL. RSL was advisor to the Chairman, Smt. PDB from 1996 until 15.09.2001.
RSL was reappointed as the Director and Co-Chairman of BCL at the meeting
of the Board of Directors held on 15.09.2001 chaired by Smt. PDB. HVL
became a Director of the company on 23.04.1996 and he was elected as the
Chairman of the Company in 2009. HVL was reappointed after retiring by
rotation in the Annual General Meeting of the company held on various dates.
With regard to the performance of BCL, the learned Senior Advocate referred to
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
various figures and statistics to show that the performance of BCL has
substantially improved and grown by the years. This submission is made to
support the contention that 1206 shares in the company are safe and sound.
Further it is submitted that the Board of Directors of the company consists of
eminent persons who have achieved success and distinction in their respective
professional career and the names of the directors and their credentials were
placed before the court.
50. The learned senior counsel next proceeded to set out the broad heads of
challenges to the impugned order in the following terms: (i) the court having
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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 dated 23.08.2012
rendered by the Hon'ble Division Bench presided over by Hon'ble Chief Justice
J.N. Patel wherein it was categorically held that APL would have to apply to the
company to get their names registered and the companies would consider such
applications in terms of the provisions of law and its memorandum and Articles
of Associations. It is submitted that the BCL is greatly prejudiced by the
operation of the impugned findings as the APL Committee by majority decisions
are seeking to exercise the voting right of BCL shares in other companies and
to otherwise interfere with the affairs of the BCL. In this regard, various
instances were referred to. It is submitted that the learned Single Bench
refused to decide the issue raised by the BCL and in particular whether the two
Joint APLs decision taken by majority should be implemented or whether the
said two Joint APLs have rightly taken such decision. Having not decided the
said issue, the learned Single Bench could not have made the impugned
observations or issue in the impugned direction. After referring to the decisions
in 2008 4 SCC 300, ILR 2007 (2) Cal 377 and 2016 SCC Online Cal 1541,
it is submitted that the observations in the impugned judgment are contrary to
the findings which were rendered in the aforementioned decisions. Essentially
in those decisions, it was held that the probate court cannot pass orders
against the third parties; the probate courts jurisdiction is limited to examining
the genuineness of the will and other consequential issues with regard to the
testamentary capacity of the testator, due attestation of the will etc; the estate
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
of PDB is the owner of share of BCL only to the extent mentioned in the
scheduled of assets of filed in T.S. No. 6 of 2004 and in the unanimous report
of Joint APLs dated 15.10.2013 which is not in dispute; that the shareholder of
a company is not the owner of the any of the assets of the company and the
probate court cannot decide any question of title or ownership of property. In
this regard, the learned senior counsel referred to the relevant provisions of the
Companies Act, 2013, Rule 19 of the Companies (Management and
Administration) Rules, 2014 and Section 2(a) and Section 247 of the Indian
Succession Act, 1925.
51. Referring to Section 2(h) of the Indian Succession Act, it is submitted
that a will means the declaration of intention of a testator 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 51 . 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
1970 3 SCR 530
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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. 52 , Krishna Kumar Birla Versus Rajendra Singh Lodha 53 and
Ramchandra Ganpatrao Hande alias Handege Versus Vithalrao Hande
54. With regard to the position of an APL it is submitted that it is similar to that
of a receiver with the distinction that the APL represents the estate of the
deceased for all purposes except distribution. Reliance was placed on the
decision in Pandurang Shamrao Luad and Ors. Versus Dwarkadas
Kallindas and Ors.55 It is submitted that the APL represents the estate of the
deceased and in terms of Section 211 of the said Act the executor or
administrator of a deceased person is his legal representative for all purposes
and all the property of the deceased person vests in him as such and the
meaning of "legal representatives" will have the same meaning as given in
Section 2(11) of CPC. It is submitted that APL is appointed for a limited
purpose of preservation and protection of estate. APLs being officers of Court
are required to be impartial and should not enter into the arena and conflict
between the parties. It is also well settled that the APLs are not appointed for
the benefit of any of the parties and they should not interfere in the litigation
between the parties and should not enter into the arena of conflict between the
parties. In this regard, reliance was placed on the decision in Lilavati Kirtilal
(2007) 11 SCC 357
(2008) 4 SCC 300
AIR 2011 Bom 136= 2011(4) Mh.L.J. 50
AIR 1933 Bom 342
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Mehta Medical Trust and Ors. Versus Charu K. Mehta and Ors. 56 ,
Shivram Antaiah Shetty Versus Chimanlal Ambalal Trivedi and Ors. 57
and Woodroffe-Law Relating to Receivers, 8th edition at page 236 and 237.
It is submitted that contrary to the above position of law APL has actively
contested the applications. Apart from filing proceedings, such as a petition
under Section 241/242 of the Companies Act alleging operation and
mismanagement in respect of 3 subsidiaries VTL before the NCLT, Kolkata
Bench more so when, the joint APLs do not hold a single share in the said
subsidiaries of VTL. It is submitted that there has been a split verdict by the
Bench, the Judicial member holding that the petitions are not maintainable
and the technical member holding that the petitions are prima facie
maintainable and the matter has been referred to the third member for
decision (who affirmed the decision of the Judicial member). Further it is
submitted that the special leave petition civil Dairy No. 27064 of 2021 before
the Hon'ble Supreme Court challenging the judgment dated 22.04.2021
dismissing 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
2008 SCC Online Bom 1210
AIR 1987 Gujarat 30
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 requires
adherence and cannot be deviated from on account of a testamentary dispute.
In this regard, the observations made in Gower and Davies, Principles of
Mordern Company Law (8th Edition), Palmer's Company Law (24th Edition)
were referred. Reliance was placed on the decision of the Hon'ble Supreme
Court in Naresh Chandra Sanyal Versus Calcutta Stock Exchange
Association Limited with regard to the importance of articles for the
regulation and governance of the company's internal affairs. The definition of
Member as defined under Section 2(15) of the Companies Act, 2013 was
referred to and it is submitted that apart from the Board of Directors and the
Members of the company, the Company Act does not recognize any entity
which has a say in the company's affairs. Reliance was placed on the decision
of the Hon'ble Supreme Court in LIC Versus Escorts Ltd. 58 and Vodafone
(1986) 1 SCC 264
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
International Holdings Versus Union of India59. The definition of "control"
as defined under Section 2(27) of the 2013 Act, it is submitted that none of the
ingredients of control is made out in favour of the estate of PDB. It is submitted
that control is usually a consequence of the member's share holding in the
company; control is not an asset; it is their right emanating from certain
factual conditions namely shareholding or management rights or share holders
agreements or voting agreements or in any other manner. PDB's estate on
account of holding only 1260 shares of BCL accounting for a mere 0.06% of the
total shareholding, cannot be said to be in "control" of the company. In this
regard, paragraph 159 of the decision in Vodafone International Holdings
BV was referred. Thus, it is submitted that control is inseparable from their
share-holding of management rights or share holders agreements or voting
agreements or in any other manner in terms of the definition of control in
Section 2(27) of the 2013 Act. In the present case, the alleged control of PDB in
her lifetime was on account of personal influence without any underlying
majority share holding. The powers of the APL are limited to the estate of PDB
which does not include his control in interest over the company. Further it is
submitted that the lack of control in interest of the estate of PDB in BCL is
evidenced, inter alia, by the reappointment of HVL to the Board and
chairmanship of BCL on 25.08.2020, despite 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
(2012) 6 SCC 613
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 CIT60; Balkrishan Gupta Versus Polytex Ltd.61 and Killick Nixon
Ltd. Versus Bank of India 62. 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, trusts and societies of the MP Birla
Group. To do so share holder should exercise powers beyond the scope of the
estate and in flagrant violation of law. It is submitted that inclusion of an
individual, company, trust, society in the promoter group does not mean that
such entity is legally owned and controlled by anyone promoter as it only
means that such individuals, companies, trusts, societies are associated with
each other as stipulated in the SEBI Takeover Regulations and SEBI Disclosure
Regulations. Further it is submitted that merely because there are cross
holdings and chain holdings between the companies, trusts and societies
1959 Supp (2) SCR 448
(1985) 2 SCC 167
(1985) 57 Comp Cas 831
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
forming part of the promoter group, cannot in law affect any member's
statutory rights to exercise voting rights qua it share holding or permit/ enable
the APL committee to exercise voting rights qua such member's share. The joint
APLs are entitled to exercise rights as legal share holders only in respect of the
shares recorded in their names in the company and not for anybody else. The
shares held by BCL in other companies are the absolute property of the
company, a decision in respect of which taken by BCL alone. It is submitted
that even assuming if the estate of PDB held majority shares of the BCL, yet it
cannot direct a company to act in a particular manner. This is so because a
share holder does not have any interest in the assets of the company. This
issue is fully covered by the judgment dated 19.05.2016 reported in 2016 SCC
Online Calcutta 1541. In this regard reliance is also placed on the decision in
Murarka Pain & Varnish works Pvt Ltd. Versus Mohanlal Murarka 63;
Jagadish Prasad and Anr. Versus P. T. Paras Ram and Ors. 64 and
Subarban Bank Private Limited Versus Thariath and Anr. 65 After
referring to the decisions in Vodafone International and in the case of
Balkrishna Gupta it is submitted that BCL can permit exercise of voting
rights only to the persons whose names appear in the register of members. The
company cannot deny voting rights to a recorded share holder/ member. After
referring to the decision in JP Srivastava Versus Gwalior Sugar Co Ltd.66
and Bal Krishnan Gupta & Ors. (Supra), it is submitted that the estate of
AIR 1961 Cal 251
AIR 1941 All 360
AIR 1968 Ker 206
(2005) 1 SCC 172
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
PDB is not a beneficial owner of the shares of the company. There is no record
of significant beneficial ownership of the shares of the 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
Insurance67 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 no acquisition of wrong doing/ criminality/ fraud. To support
such contention reliance was placed on the decision in Sunil Mittal Versus
CBI68 . Therefore, this concept of single directing mind has no application to
testamentary proceedings. With the above submissions the learned Senior
Advocate contended that the adverse directions and observations contained in
(2019) 13 SCC 259
(2015) 4 SCC 609
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
the impugned order qua BCL and its affairs despite the Court holding that the
probate Court has no jurisdiction or liable to be set aside.
52. Mr. Ranjan Bachawat, learned Senior Advocate appearing for the Birla
Corporation Ltd. after elaborately submitting about the genesis of the entire
dispute contended that the probate Court itself could not have taken the
decisions which were taken by the APL, the order appointing APL did not give
them such powers and the prayer in the application to execute such orders is
not maintainable. Further, the learned Single Bench accepts in 13 places in the
impugned judgment that orders cannot be passed against companies yet the
directions issued in the impugned order are clearly inconsistent with the
findings recorded by the Court. It is further submitted that the APLs have
joined hands with the Birlas and approached the NCLT. Referring to the orders
passed by the Learned Single Bench more particularly in page 98 it is
submitted that the correctness of the decision of APL was not looked into.
Having rendered several findings in favour of the companies in the penultimate
portion of the impugned judgment several observations have been made and
directions have been issued which is hurting the company and the
consequences are numerous and they are against the interest of the company.
It is submitted that BCL is not an asset of the estate of PDB, the share holding
of PDB was limited to 1260 shares, and as such the scope of joint APLs is also
limited to 1260 shares which were recorded in their names pursuant to an
application made by joint APLs to BCL in terms of judgment and order dated
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
23rd August, 2012. The extent of share holding is admitted and acknowledged
by both parties to the probate proceedings in the respective affidavit of assets
filed by them. Under the articles and the provisions of the companies Act, 2013
BCL can only recognize the recorded holder of the shares and permit it to
exercise voting rights in relation thereto. In this regard, Sections 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 are seeking to exercise voting rights in relation to share holders
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
not recorded in the name of PDB or her estate or the joint APLs on directing
BCL to exercise its voting rights in other independent companies under the
guidance of the APLs. The effect of such observations is that the defendants
and two of three joint APLs have sought to nominate Directors in BCL to
exercise voting rights in shares of other share holders of BCL including
companies, charitable trusts and societies which are independent bodies
governed by the respective documents and respective laws applicable to them.
The two of the three joint APLs by majority decision are also seeking to exercise
voting rights of BCL's shares in other companies and also otherwise interfere
and intermeddle with the affairs of BCL. The manner in which such
interference is caused was submitted before the Court. Further it is submitted
that the defendants and two of the three joint APLs are seeking to enforce the
stray observation mentioned in the impugned order by filing diverse
proceedings and the details of those proceedings were also set out. The actions
of the joint APLs acting by majority is not permissible either under the articles
of association of company or the Companies Act, 2013 as the same would
compel the company to prevent the recorded share holder from exercising their
voting rights in relation to shares recorded in their names. Similarly, the
company would be compelled to permit the persons who are not recorded share
holders to exercise or control the exercise of voting rights in relation to shares
standing in the name of others. Further, it is submitted that nomination of
Directors by the two joint APLs is not permissible. As in terms of the provisions
of the Companies Act, 2013 appointment of Directors could be made by
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
resolutions passed by the majority of share holder's voting at the AGM of the
company.
54. It is further submitted that the share holders have no right over the
assets and properties of the company. The estate of PDB holds only 1260
shares which is less than 0.002% of the shares of the company. However, even
on the basis that the estate of 100 % shares of BCL, it has not legal right to the
ownership and to exercise voting rights or shares held by BCL in other
companies. This would be contrary to the well settled position that even a
100% share holder of a company cannot claim 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 person is continued as a Director of BCL. Similarly, the
interpretation of the majority decision of the said two joint APLs would interfere
with the resolutions already taken in the AGM of the company and
communicated to the public and statutory authorities. The observations made
by the learned Single Bench would create a situation where the company would
be compelled to act in violation of Sections 47, 88 read with Section 2(55) of the
Companies Act, 2013 and the articles of association by preventing the recorded
share holders from exercising their voting rights over the shares and permitting
a person who is not recorded share holder to exercise their rights. In terms of
the said provision only a person whose name has been recorded as a member
in the register of members of a company can exercise voting rights at the
general meeting of the company. Similarly, appointment of Board of Directors
is required to be made by resolutions passed by majority of shares at a general
meeting of the company under Section 152 read with Section 162 of the
Companies Act, 2013 and neither the Act nor the articles of association permit
nomination of directors by any other person. It is reiterated that the
observations made by the learned Single Bench are contrary to the findings
which were rendered in the earlier stage of the present proceedings which are
to be in effect (i) the probate Court cannot pass orders against third parties; (ii)
probate Court's jurisdiction is limited to examine the genuineness of a will and
other consequential issues with regard to testamentary capacity of the testator,
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
due attestation of the will etc.; (iii) the estate of PDB is one of the shares of BCL
only to the extent as mentioned in the schedule of assets and the unanimous
report of the joint APL dated 15.10.2013; (iv) that the share holder of a
company is not the owner of any assets of the company and (v) the probate
Court cannot decide any question of title or ownership of property. In this
regard reference was made to the decision reported in 2008 4 SCC 300 (Para
57) and 2016 SCC Online Calcutta 1541 (Para 109, 110, 148, 154 and 159).
It is further submitted that similar issues are involved in three other appeals
preferred by UCL, BCL and BTL where there are minor differences in facts of
those companies. It is further submitted that though PDB did not hold a single
share in wholly owned subsidiaries, 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.
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 is further submitted that APL not only appointed but also
removed the directors. It proceeded to act in a strange manner and all letters
have been signed by Mr. ACC and all proposals emanated from Mr. ACC and
the two APLs continues to say that their actions are authorised by Court. It is
submitted that when the probate Court cannot appoint directors and trustees,
no such rights will enure in favour of the joint APLs. The learned Senior
Counsel referred to the decision of the Hon'ble Supreme Court in Official
Trustee, WB & Ors. Versus Sachindra Nath Chatterjee & Anr.69. For the
proposition that probate Court does not have jurisdiction to pass order as
prayed for or granted before / by the learned Single Bench. For the proposition
that the Court cannot delegate its judicial function to any other authority,
reliance was placed on the decision in Jute Corporation of India Ltd. Versus
Sudera Enterprises Pvt. Ltd.70 For the same proposition reliance was placed
on the decision of the Hon'ble Supreme Court in P. Surendran Versus State
by Inspector of Police 71.
55. Further it is submitted that stray observations are contrary to well
settled principles of corporate jurisprudence/ provisions of the Companies Act.
AIR 1969 SC 823
AIR 2000 Cal 152
(2019) 9 SCC 154
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Numerous attempts made over the last 19 years to interfere with the AGMs of
the companies have been rejected earlier. It is submitted that in the impugned
order direction has been issued to implement the decision of the two joint APL
dated 19.07.2019 and 30.07.2019 without deciding the objections with regard
to the jurisdiction and the powers of the joint APLs to pass such directions and
without deciding the correctness thereof. It is further submitted that the cross-
objections of the respondents are directed against the clear, unequivocal
finding in the impugned order that the probate Court cannot extend its
jurisdiction over a person or entity who is not a party to the proceedings. The
appellant's appeal must succeed if the cross-objection fails. It is reiterated that
third parties cannot intervene in probate proceedings unless they have
caveatable interest and that is why no orders/ ought to be passed against non
parties, especially when no final order can be passed against them or when no
final orders can be passed reversing the effect of an interim order passed
against third parties. Further it is submitted 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 72 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
(2016) 1 SCC 743
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 Advocate. It
is thus submitted that the admission must be clear and unequivocal and they
cannot override the statute. However, in the case on hand no such clear and
unequivocal admission has been demonstrated. It is further submitted that in
the applications filed by the respondents there is no pleading regarding the
alleged significant beneficial ownership (SBO) of Smt. PDB in the share holding
companies. Further, the claim of SBO raised by the two of the three joint APLs
was rejected by the judicial member of the NCLT and due to different in opinion
of the technical member the matter was referred to the third member and the
judgment dated 07.02.2023 the learned third member approved the judgment
of the judicial member and the claim of the two joint APLs of beneficial
ownership was held to be misconceived. Further there was no declaration made
during the lifetime of Smt. PDB or the erstwhile Joint APLs. In this regard,
reference was made to Section 90 of the Act. Elaborate submissions were made
on the conduct of the APLs (majority) and it is submitted that the two joint
APLs have no power to adjudicate or take control of the companies and there is
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
no order of any court permitting them to act by majority. Further it is
submitted that even the testamentary Court cannot direct public listed
companies to appoint directors of its choice, give directions on the conduct of
the AGM or permit an APL to exercise the voting rights of shares not recorded
in the name or act in a manner contrary to the Companies Act or the articles of
association of the company. It is submitted that the decision on 19.07.2019
including the directions to appoint directors, changing the status quo which
has existed since 2005 is contrary to the previous decisions of the Joint APLs
which held that it is not interested in taking over the management of public
listed companies. In this regard, the minutes of the APL dated 21.07.2017 was
referred to. It is further submitted that in tune with the unanimous inventory
report joint APL's vote to the appellants seeking transmission of shares in the
name of the Joint APLs for only 500 shares which was the consistent practice
till the present proceedings. Therefore, the reversal of stance without any
change in underlying facts is unjustified. Thus, it is submitted that some of the
jurisdictional points which were urged by the companies before the learned
Single 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 Division Bench dated 04.05.2020 there is no order or direction against
companies/ third parties. Referring to the decision of the Hon'ble Supreme
court in 1996 3SCC 587 (Para 4) it is submitted that when a party is not
impleaded to a proceedings it is a grave error. It is submitted that the
established principle of probate jurisprudence are that the subject matter of
the proceedings is the will; the defendants are who opposed the will and all
other are third parties who have no scope for impleading themselves; the estate
which belonged to the deceased must be mentioned in the affidavit of assets;
and if the dispute regarding an estate or regarding title the probate court will
not go into it as suit is the only remedy. To explain the duty of the probate
Court reliance was placed on the decision reported in 1987 2 CHN 63 (Para
26). It is further submitted that control of the companies not forming part of
the affidavit of assets, the learned Single Bench would not have issued
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
directions as contained in the impugned order. The two joint APLs cannot
abrogate or override the basic tenets of Company Law. It is submitted that the
Birla share holders tried all methods for 15 years and were unsuccessful and
they have now come to the probate Court. If the order and direction issued by
the learned Single Bench is to be allowed to be sustained, majority share
holders will lose all their rights. The direction was issued by the learned Single
Bench after recording that no order can be passed against the companies.
However, contrary to such finding directions were issued. The APLs cannot
adopt a partisan attitude and should be fair and the learned Single Bench
appears to have been impressed by this partisan stand or submissions made
by the two joint APLs. The learned Counsel in support of his submission
referred to the decision in the InRe: Abha Rani Sinha73.
57. Mr. S.K. Kapoor, learned Senior Advocate appearing for the first
respondent in APO No. 92 of 2020 prefaced his submission by contending that
the subject matter of the instant appeal are two decisions of the APL dated
19.07.2019 and 30.07.2019. The decision dated 19.07.2019 revolves on two
issues, the first being the extent of estate of PDB and the second being the role
of APL. On the first issue, the APL concluded that major part of the estate of
PDB consisted of controlling interest in MP Birla Group 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
(2017) 4 CHN 114
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 appointed as Director in BCRL and he would be
appointed as the Director in Hindustan upon vacancies arises.
58. It is submitted that the APL's decision dated 30.07.2019 revolves around
exercise of voting rights with regard to the two resolutions proposed at the
ensuing AGM of VTL, BCRL, UCL and BCL. The APL decided to object to
reappointment of HVL and the payment of profit based remuneration to HVL
and accordingly gave directions regarding the manner of exercise of voting
rights to the constituents of controlling block of shares held by the estate in
VTL, BRCL, UCL and BCL. The learned Single Bench by judgment dated
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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18.09.2020 upheld the decisions of the APL dated 19.07.2019 and 30.07.2019.
It directed the plaintiff to implement those decisions and restrain the plaintiffs
from drawing any benefits personally from out of the assets of the estate;
restrained the plaintiffs from interfering with the future decisions of APL (even
if by majority) and restrained HVL from holding any office in any of the entities
of MP Birla Group. By interim order dated 01.10.2010 passed in this appeal
prayer for stay was refused but was clarified that the directions contained in
the judgment dated 18.09.2020 by observing that the word implement in para
(a) thereof means to abide by and directions contained in para (b) thereof would
operate as restriction on HVL from holding any office in any of the entities of
MP Birla Group on the strength of shares referable to the estate of PDB. It is
submitted that contempt proceedings were initiated for violation of the order
dated 01.10.2020 which was dismissed by the appeal court by order dated
24.04.2021. In the SLP therefrom, the Hon'ble Supreme Court by order dated
12.07.2021 has observed that the instant appeals should be decided without
being bound by the observations in the order passed by the contempt petitions
by the appeal court dated 22.04.2021. Further the order of the Hon'ble
Supreme Court dated 04.02.2022 reiterates the order dated 12.07.2021. Thus,
it is submitted that the order dated 22.04.2021 passed in the contempt
proceedings is not a hurdle in deciding the present appeal. With this preface,
the learned Senior Advocate proceeded to give a background of the charitable
disposition of MPB and PDB. It is submitted that the father of MPB Shri
Rameswar Das Birla had a charitable of mind and he executed a will
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
bequeathing his estate 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 03.07.2004, PDB died. On 19.07.2004, RSL filed an application for
grant of probate of the will dated 18.04.1999 and the Codicil dated 15.04.2003.
It is submitted that all the above facts have been referred to in the judgment
reported in 2006 2 SCC 757. On 03.10.2008, RSL died and upon his death
HVL and other heirs of RSL were substituted and the application for grant of
probate was converted into Application for Grant of Letters of Administration
with copy of the will annexed. It is submitted that in the amended application
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
HVL expressed willingness to abide by the directions contained in the
impugned will of 1999. In this regard, the learned Senior Counsel elaborately
referred to the various dates and events relating to the trusts which have also
been furnished as annexure "A" in the written notes submitted on behalf of the
first respondent.
59. It is submitted that the execution and the attestation of the impugned
will of 1999 is shrouded by suspicious circumstances and the Birla's had
challenged the will on several grounds including its due execution and
attestation. Referring to Section 63(c) of the Indian Succession Act read with
Section 68 of the Evidence Act. It is submitted that a will has to be attested
strictly in the manner provided under the said provisions. Reliance was placed
on the decision in Janki Narayan Bhoir Versus Narayan Namdeo Kadam 74
and Babu Singh and Others Versus Ram Sahai alias Ram Singh 75 for
explaining the legal principle as to a valid attestation. It is submitted that the
impugned will of 1999 has not been executed and attested in accordance with
the aforementioned statutory provisions. Various other factual details were
referred to as well as the affidavits filed by attesting witnesses. It is further
submitted that even though the impugned will of 1999 is registered, the mere
fact of the registration does not do away with the requirements of the
attestation. For such proposition reliance was placed on the decision in
(2003) 2 SCC 91
(2008) 14 SCC 757
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Bhagat Ram & Anr. Versus Suresh & Ors.76 and Benga Behera & Anr.
Versus Braja Kishore Nanda & Ors.77. It is submitted that there is a serious
challenge as to the will of 1999 and the Codicil of 2003. It has been over 18
years since the death of PDB and HVL has not made any attempt to prove the
impugned will and codicil. HVL has only attempted to delay the hearing 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 78 ,
(2003) 12 SCC 35
(2007) 9 SCC 728
AIR 1965 SC 241
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Lyla Darius Versus Bakhtawar Lentin79, Mirzban Versus Cedric Vaz80 and
Bhagwat Sharan Versus Purushottam & Ors.81
61. It is further submitted that in the amended application for grant of
letters of administration the copy of the 1999 will annexed, HVL has agreed to
abide by the direction contained in the sub clauses (i) to (iv) of Clause 4 of the
1999 will. In this regard, the averments in the application set out in paragraph
19(C) was referred to. It is further submitted that with regard to the contention
of the 1999 will, the appellants have contended that it is permissible to sever
the portion of the will which is illegal and as such the portion of PDB's will
which bequeaths her controlling interest in MP Birla Group can be severed and
probate can be granted to the balance portion of the will. For the doctrine on
severability, the appellant relied upon the decisions in Bajrang Factory
Limited Versus UOC & Ors.82 and Anil Kak Versus Kumari Sharada Raje
& Ors.83 It is submitted that this argument is an argument in desperation. The
said judgments are of no assistance to the appellants. If severed, nothing will
be left in the will of 1999 as at a threshold and at any stage proceeds on the
basis that estate has right to control manage and administer the MP Birla
Group of companies, trusts and societies. Further such contention of the
appellant is absolutely contrary to the undertakings of HVL as contained in
(2007) 1 Maj LJ 545
(2015) 2 Mah LJ 184
(2020) 6 SCC 387
(2007) 7 SCC 183
(2008) 7 SCC 695
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
paragraph 19C of the amended application for grant of letter of administration.
With regard to the extent of estate it is emphatically submitted that this issue
is an admitted issue and concluded issue and cannot be reopened. It is
submitted that it has already been concluded by series of judgments passed by
the Company Law Board by Division Bench of the High Court by the Single
Bench of the High Court and the Hon'ble Supreme Court that the estate of PDB
holds majority controlling shareholding in MP Birla Group. HVL and RSL and
the companies/trusts/societies forming part of MP Birla Group were parties to
such judgment. HVL/RSL and companies/ trusts/ societies have also made
admissions to the same before in the said proceedings. As such reopening of
this issue by HVL or other heirs of RSL and company/trusts/societies is barred
by principles of res judicata and estoppel. Thereafter the learned Senior
Advocate proceeded to elaborately refer to the details of the judgments and
orders and notes containing the admissions of
HVL/RSL/Companies/Trusts/Societies on this issue and also referred to the
judgment/orders/notes which in 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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:
Dwijendra Narain Roy Versus Joges Chandra De & Ors.84
Mumbai International Airport Pvt. Ltd. Versus Golden Chariot
Airport & Anr.85
Hope Plantations Ltd. Versus Taluk Lank Board86
Bhanu Kumar Jain Versus Archana Kumar87
Ishwar Dutt Versus Collector Land Acquisition Collector & Anr.88
62. The next submission of the learned Senior Counsel was on the scope of
Section 247 of the Indian Succession Act, 1925. It is submitted that APL
appointed under Section 247 is a limited "grant" in as much as it is limited in
duration; no right to dispute the estate and it is subject to immediate control of
the court and acts under its directions. APL appointed under Section 247 has
all the rights and powers of a general administrator. APL is legal representative
of the deceased and the estate vests with them as such. In this regard,
AIR 1924 Cal 600
(2010) 10 SCC 422
(1999) 5 SCC 590
(2005) 1 SCC 787
(2005) 7 SCC 190
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
reference was made to Section 211 of the Indian Succession Act. The following
decisions were referred to support such contention:
Nirod Barani Debi Versus Chamatkarini Debi89
Pandurang Shamrao Laud & Ors. Versus Dwarkadas kalliandas &
Ors.90
William Harold Gibbs Versus Deva Prosad Roy91
Atula Bala Dasi Versus Nirupama Devi92
Sushanta Kumar Nandy Versus Prasanta Kumar Nandy93
Shernaz Faroukh Lawyer Versus Manek Dara Sukhadwalla94
63. To explain the implied powers of the court, the following decisions were
referred to:
Chaturbhai M. Patel Versus Union of India & Ors.95
Income Tax Officer, Cannanore Versus MK Mohammed Kunhi96
Savitri w/o Govind Singh Rawat Versus Govind Singh Rawat97
64. For the contention that proceedings under Section 247 are in the nature
of administrative proceedings, the following decisions were referred to:
Benode Bihari Bose & Ors. Versus Srimati Nistarini Dassi & Ors.98
Balkishan D. Sanghvi Versus Kiron D. Sanghvi & Ors.99
Babulal Khandelwal & Ors. Versus Balkishan D. Sanghvi & Ors.100
AIR 1915 Cal 565
AIR 1933 Bom 342
(1950) 85 CLJ 280 at 282
AIR 1951 Cal 561
(2001) 2 Cal LT 307
2018 SCC Online Bom 6830
AIR 1960 SC 420
AIR 1969 SC 430
(1985) 4 SCC 337
32 IA 193
(2006) 4 Mh. LJ 273
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
65. With regard to the right and power 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
paragraphs of the decision of the APL dated 19.07.2019 were referred to.
66. The next aspect which was dealt with by the learned Senior Counsel is
with regard to the initial stand of the appellants before the APL. It is submitted
that HVL/RSL and the companies/trusts and societies forming part of MP Birla
(2008) 10 SCC 485
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Group understood the scope and effect of the judgment dated 23.08.2012 and
initially acted in terms thereof but subsequently created hurdles in the way of
administration of estate by APL. The companies responded to the letters of the
APL wherein they were directed to comply with the directions issued in the
judgment. The appointments of the directors to the various companies during
the tenure of the Former Hon'ble Judges were referred to. It is submitted that
all the appointments as the Directors were made in due compliance of
judgment dated 23.08.2012 and the provisions of the Companies Act, 2013
having due regard to the fact that the estate holds the controlling block of
shares in MP Birla Group and all such appointments were made without any
objections and in fact with consent of HVL and the concerned companies.
Further, APL also supported reappointment of the HVL as the director in
various companies as the HVL and concerned companies were complying with
the directions of the APL for the protection and observation of the estate.
However, after being reappointed as the Director with the support of APL, HVL
started creating hurdles in the administration of the estate. In this regard,
various dates and events were referred to stating that those were the hurdles
created by HVL. It is submitted that in the background of such facts APL took
impugned decisions dated 19.07.2019 and 30.07.2019 in order to protect and
preserve the estate in accordance with the judgment dated 23.08.2012 and the
provisions of the Companies Act, 2013. With regard to the submission made by
the appellant, it is contended that there is no dispute regarding the title of PDB
for the reasons that it is an admitted fact and concluded issue that the estate
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
of PDB has majority controlling block of shares in MP Birla Group. Secondly,
the testamentary court while exercising its jurisdiction to preserve and protect
the estate under Section 247 can prima facie even decide the questions of title.
It is submitted that the appellants placed reliance on the decision in Ram
Chandra Ganapathrao Henda (supra) 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 the conduct of HVL which was termed to be mala fide. HVL
tried to delay the testamentary proceedings by raising frivolous allegations and
in this context, the Hon'ble Supreme Court was compelled to observe that HVL
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
was trying to get a second bite on the cherry. In this regard, various dates and
events were referred to by the learned Senior Counsel and also to the orders
passed by the court and in particular the orders passed by the Division Bench
dated 28.04.2017 wherein the court observed that the appeals which were filed
were frivolous only with a view to delay and protract the testamentary
proceedings. They have filed with the aim of delaying and proceeding with the
rights of the contesting defendants of the testamentary suit. The appellants
(therein) have raised the bogey regarding the right of the defendants to contest
the testamentary suit only with a view to defeat and delay the proceedings.
Thus, it is submitted that PDB was admittedly in the control of the entire
estate. RSL after death of Smt. PDB was in control of the entire estate. HVL
said that he will do that all that his father would do and now he has made a
somersault by contending that the estate is in dispute. The estate which is
62.92% has to be protected absolutely. The controlling block is within the said
62.90%.There has been no violation of the provisions of the company law
including the procedures for nominating of directors. In this regard, Section
2(27) of the Companies Act, 2013 was referred to and submitted that it is an
inclusive definition. With the above submission, Mr. S.K. Kapoor concluded his
arguments.
67. Mr. S. N. Mookherjee, learned Senior Advocate appearing on behalf of the
Respondent No. 2 in APO No. 92 of 2020 after elaborately referring to the
subject matter of the appeal, proposed to categorize his submissions under
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
primarily 5 heads namely, extent of estate; the correctness of the directions
issued by the APL dated 19.07.2019 and 30.07.2019 that directions issued by
the APL dated 19.07.2019 and 30.07.2019 are in accordance with the
provisions of the Companies Act and regarding the judgment and order passed
by the learned Single Bench. On the first aspect with regard to extent of the
estate, it is submitted that it is an admitted fact and a concluded issue that the
estate of PDB holds the majority controlling block of shares in MPB Group.
However, some of the materials 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
admitted that the estate of PDB was in control. In this regard, the relevant
paragraphs of the order dated 25.04.2005 in CP 58 of 2004 were referred to. It
is submitted that the said order dated 25.04.2005 was challenged in an appeal
filed under Section 10F of the 1956 Act which was dismissed by order dated
24.08.2005 and as against the said order no appeal has been filed. Thus, it is
submitted that those orders have not attained finality, the companies/ trusts/
societies forming part of MPB Group cannot reopen the same by reason of
principles of res judicata and estoppel and are bound by such findings.
Further, the orders dated 25.04.2005 and 24.08.2005 is an adjudication as to
who was in control and this adjudication was relied upon in the subsequent
company proceedings. With regard to the contention raised by the appellant
that RSL/ HVL were not parties to CP 58 of 2004 and therefore, the orders are
not binding on them, it is submitted that the said contention that of the
appellant is misconceived and baseless for the reasons that the companies,
trusts and societies were parties in CP 58 of 2004 and admittedly RSL/ HVL
were in control of such companies, trusts and societies; during final hearing of
CP 57 of 2004 RSL had relied upon the orders dated 25.04.2005 and
24.08.2005 passed in CP No. 58 of 2004 and appeal therefrom. The relevant
portions of the final order dated 19.10.2009 passed in CP No. 57 of 2004 were
referred to. Therefore, it is submitted that the submissions of the appellant that
admissions binds the maker only and admissions made by companies are not
binding on HVL is misplaced. It is further submitted that the statutory
disclosures regarding share holding pattern made by the companies forming
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
part of MPB Group contained complete knowledge of the testamentary
proceedings and admission that the estate of PDB holds majority controlling
block of shares in MPB Group. Regulations 3, 10, 11, 12, 15, 16 and 27 of the
SEBI Takeover Regulations, 1997 mandates that acquisition of shares
amounting to 15% or more but less than 75% in a target company cannot
happen unless there is a public announcement to acquire shares. It also
recognizes acquisition of control of a target company other than through
acquisition of shares or voting rights. However, it provides that if acquisition is
by reason of succession, the acquisition of such shares is exempted from
application of the Takeover Regulations. 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 the breakup of promoter's share holding of 66.35% and
there is a note in the disclosure regarding such fact. After the death of RSL the
share holding pattern disclosed by BCRL and BCL as on 31.12.2008 gave the
breakup of the promoter's share holding of 66.35% and 62.90% respectively
and there is a note in the disclosure recording the facts. After the appointment
of APL on 23.08.2012 the share holding pattern disclosed by BCRL and BCL as
on 30.09.2012 gave the breakup of the promoter's share holding of 66.35% and
62.90% respectively and there is a note in the disclosure recording the facts.
After the dismissal of the special leave petitions on 26.11.2012 the share
holding pattern disclosed by BCRL and BCL as on 31.12.2012 gave breakup of
the promoter's share holding of 66.35% and 62.90% respectively. Suddenly
there is no note in the disclosure. Thus, it is submitted if the shares held/
controlled by the estate of PDB was restricted to only those shares which were
directly held in the name of PDB and not majority share holding (example 1260
shares as opposed to 62.90% in BCL), then there was no question of taking
benefit of exemption or for giving the note in the statutory disclosures. In this
regard, the learned Senior Advocate referred to Regulations 10, 11 and 12 of
the SEBI Takeover Regulations, 1997. It is submitted that companies would
not have claimed exemption from the application of Regulation 10 if what was
being acquired was only 1260 shares. This is because Regulation 10 applies
only to acquisition of shares of voting rights which entitled the acquirer to 15%
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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or more of the voting rights of the company. Similarly, the companies would
not have claimed exemption from application of Regulation 11 if what was
acquired was only 1260 shares. This is because Regulation 11 only applies
when a person has acquired 15% or more but less than 75% of shares or voting
rights in a company and has acquired additional shares or voting rights
entitling the person to exercise more than 5% of the voting rights in the
company. Further Regulation 11 applies when a person had acquired 75% of
the shares or voting rights in a company and has acquired additional shares or
voting rights in the company. The acquisition under Regulation 9 and 10 may
be direct and indirect acquisition. The companies would also not have claimed
exemption from application of Regulation 12 if what 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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 as "non-independent non-executive director".
On the basis of the admitted fact and concluded issue that estate of PDB holds
majority controlling block of shares in MPB Group, RSL/ HVL and the
companies have derived several benefits such as avoided investigation under
Section 247/250; avoided application of Takeover Regulations; avoided
appointment in the APL in the first round and insulated themselves from all
allegations of wrongful usurpations of control of BCL made in CP No. 1 of 2010
on the basis of the stand that all matters relating to the estate had to be
decided by the testamentary Court. Nextly the learned Senior Advocate referred
to the contention of the appellant regarding the extent of the estate. By
referring to the affidavit of assets and the unanimous inventory report prepared
by the APL and the judgment of the Division Bench dated 04.05. 2020 and also
the earlier Division Bench judgment passed in the first round dated
11.10.2007. The contention of the second respondent with regard to the extent
of estate is that the controlling block of shares in MPB Group is reflected in the
affidavit or assets filed by the Birlas which has been valued at Rs. 2400 crores
approximately opposed to the affidavit of assets filed by Lodhas which has been
valued at Rs. 4 crores approximately. The document dated 15.10.2013 is not
an inventory of assets of the estate. It is only an interim report of the APL. This
will be evident from the fact that even after 2018 grievance of HVL was that
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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inventory was not completed by APL and this will be evident from the judgment
of the Division Bench dated 23.08.2012 and that the document dated
15.10.2013 says it is an interim report and not an inventory report. Even after
2013 HVL has complained that inventory had not been completed by APL in
different proceedings, letters etc. It is further submitted that the affidavit of
assets is not conclusive as to the extent of the estate. It is filed in specific
format for the purpose of revenue (Court fees). This was also the argument of
RSL at a prior stage of the proceedings. In this regard, the written notes filed by
RSL before Hon'ble Justice Sengupta in the first round for appointment of APL
was referred to and also that the same was the stand taken before the Division
Bench in the first round for appointment of APL. In this regard reliance was
placed on the decision in Chanan Devi Versus Des Raj 101 , In Re: Anita
Rewal 102 and In the Goods of: Manindra Nath Dutt 103 . 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
AIR 1965 P&H 138
AIR 1980 Del 57
2003 SCC Online Cal 531
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 impugned
will of 1999. It has been admitted by RSL, HSL and the companies forming part
of the estate of PDB that the entry of RSL and HVL and into a subsequent
control over MPB Group was the reason of PDB and the impugned will of 1999.
This will be evident from the pleadings of HVL and the companies and written
notes of RSL in the proceedings before the High Court in an appeal filed from
the interim order dated 15.10.2008. The next aspect dealt with by the learned
Senior Counsel is with regard to judicial estoppel. It is submitted that in
several judgments it has been admitted and concluded that the estate held
majority controlling block of shares in MPB Group. Having taken advantage of
such admissions and findings and having accepted the decisions of this Court
and those of CLB regarding their shares being part of the estate, the appellant
is estopped from taking an alternative or contrary stand by alleging that the
estate owns and controls only 1260 shares in BCL. To explain the concept of
judicial estoppel qua the facts of the case the learned Senior Advocate referred
to the decisions in Helfand Versus Gerson 104 , New Hampshire Versus
105 F.3d 530 9th Cir. 1997
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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Maine 105 , Surendra Nayak Versus AM Mohammad Shafi 106 and The
Director General of Police Tamil Nadu, Chennai Versus R. Manikandan
107.
68. Nextly, the learned Senior Advocate proceeded to distinguish the
judgment cited by the appellants on admission and estoppel. It is submitted
that the ratio of the judgments in Ambika Prasad Thakur, Canbank
Financial Services and Prem Nath Chopra are not applicable to the facts of
the case on hand as in the present case the extent of the estate has already
been decided by orders passed in competent proceedings. Such adjudications
have been accepted and acted upon by the parties including the appellants.
These statutory disclosures made by the companies forming part of MPB Group
also contain complete knowledge of the testamentary proceedings and the
admission that the estate of PDB holds majority controlling block of shares in
MPB Group. It is further submitted that the judgment dated 19.05.2016
reported in 2016 SCC Online Calcutta 1541 also holds that it has been
settled by several decisions of the High Court that the controlling power over
the MPB Group and companies is a valuable asset of the estate of the PDB. 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
2001 SCC Online US SC 50
ILR 2016 Kar 4162
2017 SCC Online Mad 27091
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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.108 relied on by the appellant will have no application to the
facts of the present case as the question involved in the said case was whether
a deity was mere family/ private deity or whether there was a religious and
charitable endowment of a public character in favour of the deity. The Court in
the said case in fact decided the question of title on the basis of admission.
Therefore, it is submitted that this case is in favour of the respondents as it
recognizes that admissions can be relied upon as evidence.
69. It is submitted that the appellants have tried to indicate the distinction
between admission and estoppel and to support their contention that
AIR 1960 SC 100
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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admission do not ipso facto give rise to estoppel they relied upon the decision
in Chhaganlal Keshavlal Mehra (supra). In this decision the case recognizes
that admissions are good evidence unless withdrawn or are proved to be
mistaken. In the case on hand, there is no withdrawal of any admission nor
have such admissions been proved to be mistaken. Furthermore, the doctrine
of estoppel will apply in the present case as admissions as to the extent of the
estate and adjudications have been accepted and acted on by the appellants
and the appellants have derived benefit on that basis. It is further submitted
that the appellants have also contended that there cannot be an estoppel on a
mixed question of fact and law and as such there cannot be an estoppel on the
question of control and relied upon the decision in State of Rajasthan Versus
Bundi Electric Supply Co. 109 The said case is of no assistance to the
appellants since in the case on hand there has been an adjudication as to the
estate of PDB having control over the MPB Group. In any event, the control is a
question of fact. Furthermore, the appellants in the case on hand have derived
benefits on the basis of the representation and admissions as well as
adjudications that the estate of PDB is in control of the MPB Group of
companies and thus, they are estopped from claiming otherwise. The
appellants have contended that there is no estoppel against law and relied on
several decisions. Such contention has no relevance in the present proceedings
as it has already been indicated that control is a question of fact and in the
present case, it has already been adjudicated the control over the MPB Group
AIR 1970 Raj 36
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
and companies vest in the estate of PDB. The appellants contended that the
issue of estoppel applies only to criminal proceedings and relied on the
judgment in Masud Khan Versus State of Uttar Pradesh 110 . 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 Devi111
Shoilesh Chandra Mustafi Versus Amal Chandra Mustafi112
In the Goods of: Om Prakash Maniyar113
71. The appellant placed reliance on the decision in Ramchandra
Ganpatrao Hande for the proposition that probate court does not go into the
(1974) 3 SCC 649
AIR 1951 Cal 561
AIR 1958 Cal 701
2021 SC Online Cal 3066
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
issue of title and this judgment has no application to the facts of the case on
hand as in the said case the court was not dealing with the proceedings under
Section 247 but was dealing with proceedings under Section 269. The court
therein did not deal with the powers of the court to protect and preserve the
estate under Section 247 and admittedly no prayer was made for appointing
APL. It is further submitted that even during the pendency of the instant
appeal some of the appellants have admitted before the NCLT that issue
regarding scope, title and extent of estate can be decided and in fact, the
pending adjudication before the APL Committee and the High Court in
proceedings under Section 247 of the 1925 Act. The contention of the appellant
that the direction of APL is without jurisdiction, is barred by Section 430 of the
Companies Act, 2013 is wholly mis-conceived, baseless and also contrary to
the earlier stand of the appellant before the CLB as well as the High Court. As
could be seen from the judgment dated 10.05.2013 in ACO No. 42 of 2011
(Birla Education Trusts Versus Birla Corporation Limited)Furthermore it is
submitted that the Hon'ble Supreme Court in Aruna Oswal Versus Pankaj
Oswal 114 held that the disputes relating to inheritance can only be decided by
the Civil Court. It is submitted that the probate court can pass the orders of
injunction/directions in exercise of its inherent powers of protection and
preservation of the estate. To support such contention, the following decisions
were referred to and relied on:-
(2020) 8 SCC 79
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Unreported Judgment of Single Judge of Bombay High Court
- Davinder Kaur Amardeep Singh Chadha Versus
Inderjeet Singh Amardeep Singh Chadha;
Inderjeet Singh Amardeep Singh Chadha Versus
Davinder Kaur Amardeep Singh Chadha115
Vasant Narayan Sardal Versus Ashita Tham &
Others.116;
Radhika Bhargava & Others Versus Arjun Sahagal &
Others117
Kulbir Singh Versus State & Others118;
Amarendra Dhwaj Singh Versus Prem Kumar Singh119;
Kusheshwar Purbey Versus Shri Shri 108 Ram Janaki
Jee and Others120;
In Re: Goods of Stanley Austin Cardigan Martin121;
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
2019 SCC Online Bom 702
2018 (5) Mh.LJ. 142
AIR 2019 Bom 68
(1993) 27 DRJ 267
2012 SC Online Pat 1215
2011 SCC Online Pat 862
AIR 1939 Cal 642
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 other hand, the respondents have preferred appeal on
other grounds and the same is pending. Thus, the appellants having accepted
jurisdiction are therefore bound by the findings rendered therein.
The next aspect dealt with by the learned Senior Advocate is with regard to
whether the directions issued by the APL are in accordance with the provisions
of the Companies Law. The contention that APL can exercise voting rights only
in respect of shares which are registered in the name of PDB for example 1260
shares and not 62.90% in BCL is incorrect as it ignores the fact that the name
entered in share register is not only the manner there can be ownership of the
shares. There is a concept of true ownership of shares that is real and
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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beneficial ownership. Law also provides for investigation to determine who is
the true ownership of the shares. In support of such contention, reliance was
place on the:-
Taylor Versus The Midland Railway Company122
Affirmed by House of Lords in The Directors & Others of the Midland
Railway Company Versus Robert John Taylor123
Binney Versus The Ince Hall Coal and Cannel Company124
Bank of NT Butterfiled & Son Limited Versus Golinsky125
73. The Cohen Committee in the year 1945 gave its report observing that big
businesses seldom disclose their true owners and to ensure transparency, the
Committee recommended voluntary disclosure by the company as to its true
owner and investigation proceedings for determination of true ownership. The
suggestions of the Committee were adopted in the UK Companies Act, 1948. In
the Indian scenario initially, there was no concept of true/real/beneficial owner
of shares and the name registered in the members register of a company was
only considered to be the owner of a share. Sections 29, 30 and 33 of the
Companies Act 1930 were referred to. It is submitted that in spite of such
restrictions the courts recognized equitable/beneficial interest in shares in the
decisions reported in AIR 1931 Bombay 269. It is further submitted that in
the year 1952 the Bhabha Committee gave its report suggesting in roads as to
the ownership of shares beyond register of members by providing for
[1860] 8 WLR 401
[1862] 11 ER 624
[1866] 35 L.J. Ch. 363
[1926] A.C. 733
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
investigation into real ownership of shares. The Companies Act, 1956 also
made inroads into ownership of shares 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 126. 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 recognized as provisions of constructive trusts contained in
Section 94 of the Trusts Act 1882 as it has been repealed by the provision of
Benami Property Transaction Act, 1988 is wholly mis-placed as repealed of
Section 94 does not put in pressure on the court in recognizing the trusts. The
contention of the appellant that controlling interests can arise only out of
(2007) 137 Comp Cas 288
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
actual ownership of shares and there is no concept of controlling interests is
the contention which is mis-placed as true/beneficial/real ownership of shares
can lie beyond the share register, it is not necessary to have shares registered
in the name of such owner in order to exercise control in respect thereof and
this will be evident beyond the definition of "control" as defined under Section
2(27) of the 2013 Act and the SEBI Takeover Regulations, Regulation 2(e)
which also defines "control". It is submitted that the above definition of control
is inclusive and not exhaustive. To explain the general rule of statutory
interpretation, reliance was placed on the following decisions:-
CIT, Andhra Pradesh Versus Taj Mahal Hotel,
Secuderabad127
Mamta Surgical Cotton Industries, Rajasthan Versus
Assistant Commissioner, (Anti-Evasion), Bhilwara,
Rajasthan128
Board of Trustees of the Port of Mumbai Versus
Byramjee Jeejeebhoy Private Limited & Another129
Rachapudi Subba Rao Versus Advocate General,
Andhra Pradesh130
74. It is submitted that the appellants relied upon the decision in Vodafone
for the proposition that control linked to shareholding and the controlling
[1971] 3 SCC 550
(2014) 4 SCC 87
(2011) 5 SCC 128
(1981) 2 SCC 577
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
interests is an incident of majority shareholding. The judgment in Vodafone is
not applicable to the present case because the definition of control was not
considered and it was the matter of revenue law as to whether the capital gains
tax would be applicable in India in case of transfer of ownership of an Indian
entity by virtue of purchase of shares in Cayman Island by a Dutch company.
Even the judgment relied on by the appellant in Arcelor Mittal holds that
control defined in Section 2(27) of the 2013 Act can be acquired de juri as well
as de facto and this shows that control of ownership can be ascertained by
looking beyond the share register. In this regard, reliance was also placed on
the decision in Hindustan Motors Versus MRTP Commission 131 . 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
AIR 1973 Cal 450
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 heritable right and no appeal has been filed
against the said findings. The judgment relied on by the appellant in Canbank
Financial Services Limited also holds that the beneficial interest can be
transferred. The contention of the appellants PDB exercises control over MP
Birla Group as a matter of personal influence, has been raised for the first time
while contempt proceedings were being heard in the instant appeal. This has
not been case in any of the pleadings filed by RSL or HVL.
75. The contention of the appellant that the APL decision dated 19.07.2019
and 30.07.2019 are contrary to the provisions of the Companies Act, 2013 is
untenable. It is submitted that in the past requests were made by APL to
appoint nominees of APL as Directors in the MPB Group of companies and the
same was duly complied with by the appellants without any objection. The
details of such appointments were referred to. The APL decision dated
30.07.2019 is a direction on the shareholders being Tier 1, 2, 3 and 4
companies, trusts and societies of the four manufacturing companies as to the
manner of voting in the general meeting of the four manufacturing companies.
The shareholders have already been identified as part of the controlling block of
shares which forms part of the estate. Out of these shareholders only the four
manufacturing companies and one society (Shreyas Medical Society whose
locus to file the appeal disputed) and none of the other shareholders have
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
challenged the APL decision of 19.07.2019 and 30.07.2019. The APL decision
dated 30.07.2019 is a direction upon the shareholders of four manufacturing
companies and not upon the manufacturing companies themselves. The
provisions and/or the cases relied on by the appellant shows that the "cestui
qui trusts" (beneficial owner) can give directions upon the register
owners/shareholders (trustee) to exercise voting rights in a particular manner.
In this regard, the learned Senior Advocate referred to the following decisions
which would support the case of the respondent:-
Mathalone Versus Bombay Life Assurance Company
Limited132
Howrah Trading Company Limited Versus Commissioner of
Income Tax, Central Calcutta133
J.P. Srivastava and Sons (P) Limited and Others Versus
Gwalior Sugar Company Limited and Others134
Killick Nixon Limited Versus Bank of India135
Bal Krishnan Gupta and Others Versus Swadeshi Polytex
Limited and Others136
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
AIR 1953 SC 385
AIR 1959 SC 775
(2005) 1 SCC 172
(1985) 57 Comp Cas 831
AIR 1985 SC 520
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 present case. Furthermore
there is no straight jacket formula to apply the doctrine of lifting of corporate
veil. In Balwant Rai Saluja case the decision in estoppel was noted.
Therefore, it is submitted that it depends on the facts of the case whether the
corporate veil will be lifted or not. Further it is submitted that even the
testamentary court have passed order directing lifting of corporate veil and to
support such contention the decision in In the Goods of: Kamal Kumar
Mitra 137 and Niranjan Lal Todi and Anothers Versus Nandlal Todi and
(2008) 3 CHN 384
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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Others 138 referred. Thus it is submitted that the order and directions issued
by the learned Single Bench cannot be interfered.
78. Mr. Ratnanko Banerjee, learned Senior Advocate appearing for the
respondent No. 3 submitted that in addition to what has been stated in the
written notes submitted on behalf of the third respondent, in order of avoid
overlap the third respondent is adopting the written notes filed on behalf of the
respondent Nos. 1 and 2. It is submitted that the cross objections filed by the
respondent against the judgment of the learned Single Bench should be
allowed for the reason to protect and preserve the estate for the ultimate
beneficiaries which is the paramount duty of the testamentary court and the
testamentary court can pass orders against the third parties in exercise of
power under Section 247 of the Act. It is further submitted that as contended
by the second respondent, the decision in 2016 SCC Online Calcutta 1541
has no application. Further it is submitted that the company/trusts and
societies forming part of the estate of PDB and MPB Group cannot be regarded
as third parties. This is more so because of the controlling block of shares
mechanism scenario. It is submitted that in the first round for appointment of
APL, RSL had given undertakings regarding MPB Group companies in order to
avoid the appointment of the APL and at subsequent stage HVL agreed to abide
by such undertakings. Therefore, they should not be permitted now to the
contrary or for the company to take a contrary stand. It is further submitted
2010 SCC Online Cal 2120
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
that the objection of the appellants regarding directions on third parties was
raised by the appellant in the second round for appointment of APL before the
Division Bench presided over by Hon'ble Chief Justice J.N. Patel but was not
accepted by 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
Swamy139
State of Madhya Pradesh Versus Mahendra Gupta140
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 is not a single
member body. In a Joint APL all members of the APL have to act jointly that is
each of them has to apply his minds on all issues but the decision ultimately
(1996) 4 SCC 104
(2018) 3 SCC 635
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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reached by Joint APL may be unanimous or by majority and Joint APL cannot
mean operating necessarily by unanimity. It was contended by the appellant
that the respondents have made an application in the GA No. 1964 of 2018
praying for permission for APL to act by majority which was not granted and
hence deemed to have been rejected. This contention is wholly misplaced in the
light of the prayer made in para (c) of the said application and the relief which
was granted by the order dated 10.04.2019 which was much beyond the
prayer. Therefore, it is submitted that unanimity in decision for working of APL
is not possible is also proved from the fact that after the decision dated
19.07.2019, Mr. MKS, the nominee of HVL has not agreed to any of the
decision of APL. The court ordered is for administration, preservation and
protection by the Joint Administrators but not unanimous decision by Joint
Administrators. The contentions of the appellant that the reliance on the C.S.
No. 73 to 77 of 2010 by APL in his decision dated 19.07.2019 is an extraneous
consideration is an incorrect submission and in this regard the relevant facts
in the civil suits were referred to and it was submitted that in any event CS No.
73 to 77 of 2010 are not adverse to the interest of the estate or the title of the
testator. Further the defendants in the testamentary suit are not parties in CS
No. 73 to 77 of 2010. It is submitted that HVL is in a position of conflict of
interest realising that he will not be able to prove the will because of difficulty
in proving the attestation and reached the estate via the will reach, he is
creating a ditto to the estate. HVL is not a contrary to the will but denying
extent of estate. HVL is a legal and wrongful control of all the manufacturing
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companies and in the Board of Company that to in the position of Chairman.
HVL is acting detrimental to the interest of the estate as is recorded in the APL
decision dated 30.07.2019. Therefore, it was submitted that the cross objection
against the impugned judgment to the extent it holds that the testamentary
court has no jurisdiction to pass order over persons or entities who are not
parties should be allowed and judgment should not otherwise 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 acting as lead
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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promoter on behalf of the promoter/promoter's group of all the four listed
companies of MP Birla Group in terms of the provisions of the SEBI Takeover
Regulations. Accordingly, PPT has been making annual disclosures about the
names shareholdings details of the entities in MP Birla Group holding shares in
all the four listed companies of the group from 1997 onwards, till 2021. These
disclosures are made with a National Stock Exchange and Bombay Stock
Exchange where the shares of BCL, UCL, VTL and BCRL are listed. It is
submitted that the listed companies themselves have also been acknowledging
in their annual accounts being published every year by the respective Boards of
Directors under the de facto control of RSL/HVL that the respective companies
are part of the MP Birla Group. Annual accounts of BCL is a flagship company,
published year after year also expressly states that 62.90% shareholding is
with the promoters. It is submitted that after considering the shareholdings,
this court has held in two cases that PDB estate has control over the flagship
company of the group of the BCL. In various methods from 2005 onwards, the
CLB and this court have held that PDB was exercising control over the flagship
company of the group, BCL, by exercising control over group entities, holding
62.90% of shares even though PDB's direct shareholding in the company was
misniscue. It is submitted that all major companies and charitable societies
were party respondents in the company petition filed by the Gouri Shankar
Kayan. The entities at respondent no. 1 to 28 themselves during the time when
RSL was in control through their common learned Senior Counsel made an
admission which was recorded by the CLB in the order dated 25.04.2005. The
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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said decision of the CLB was affirmed by this court by judgment dated
24.08.2005 reported in (2006) 133 Company Cases 515 (Cal). Further similar
view was taken in the judgment dated 10.05.2013 (Birla Education Trusts
Versus Birla Corporation Limited).
81. Nextly, learned Senior Advocate referred to the list of charitable societies
in MP Birla Group having shares in BCL and having their registered office in
Birla Building, Kolkata where the registered offices of BCL and many other
companies in MP Birla Group are situated. It is submitted that when the
appointment of APL was under consideration, HVL contended that the court
should 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
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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 Companies (Significant Beneficial Owners) Rules, 2018 contained a
scheme to deduct the ultimate holder of the shares whose name does not
appear in the shares of the PDB for the shares in the reporting company but
who is the ultimate beneficiary owner of such shares through a web of
companies by chain holding or by cross holding in a series of companies. In
this regard, the report of the Company's Law Committee of February, 2016 was
referred. It is further submitted that the first meeting of the present APL
Committee was held on 28.04.2019 where Mr. ACC brought the attention of the
Committee on the issue of significant beneficial ownership of the PDB estate in
the MP Birla Group and new rules framed in the year 2018. The APL
Committee after hearing the learned advocates for the parties and after
considering the details of shareholdings in all companies took a decision on
09.12.2019 holding that during the pendency of the probate suit,
administrators pendente lite representing the PDB estate are significant
beneficial owners of the majority shares in all the companies in MP Birla
Group, in their capacity as administrators and not in their personal capacity.
In the said process, the APL Committee considered the scope and ambit of the
estate of PDB. It was held that the majority part of the estate of PDB consisted
of all controlling interest as in the MP Birla Group through shareholding both
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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directly and indirectly. The APL Committee categorically, quantified and
determined the percentage of shareholdings in all 33 companies of MP Birla
Group over which PDB exercises control and after her demise estate of PDB is
the significant beneficial owner. In conformity with the majority decision of the
APL dated 09.12.2019 forms of significant beneficial owners. It is submitted
that not only the five investment companies but all the companies except those
under the de facto control of HVL have accepted such forms and upheld
corresponding forms on the portal of the Ministry of Corporate Affairs within
the extended time limited on the 31.12.2020.The register of companies has
accepted such forms and the same are reflected on the official website.
Therefore, it is submitted that it is a matter of the part that the APL
representing the estate of PDB are significant beneficial owners of the majority
shares in the company in MP Birla Group in their capacity as administrators
and not in 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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. It is submitted that HVL and the
listed companies contended that during the lifetime of PDB, who was the
Chairman of the listed companies, had not filed any declaration under Section
187C of the 1956 Act read with the 1975 Rules and therefore, the APL
Committee cannot have a better right or interest than what PDB had. This
contention was raised by HVL before the APL Committee and by majority
decision dated 09.12.2019 the same was rejected. By explaining the distinction
between Section 187 C of the 1956 Act read with 1975 Rules on the one had
and Sections 89 and 90 of the 2013 Act read with SBO Rules, 2018 on the
other hand. It is submitted that the provisions under the old Act required
disclosure of beneficial interest where a registered holder of shares was a
benamidar of the real owner. The holder's shares in the entities in MP Birla
Group were benamidar and therefore, PDB was not required to file any
declaration under the provisions of the old Act. On the other hand, the object
underlying the scheme of the new Act could be culled out from the report of the
Companies Law Committee of February, 2016. The learned Senior Advocate
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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then proceeded to elaborately discuss about the various decisions taken by the
APL Committee and challenged such decisions by the Lodhas before the
probate Court and the applications which were filed by the defendants seeking
implementation of the majority decision of the APL. With regard to the
impugned judgment the Court rightly held that the APL Committee can decide
by majority. In this regard, reference was made to the judgment of the Hon'ble
Supreme Court in State of MP Versus Mahendra Gupta141. It has held that
the APL Committee has the power to exercise the control which PDB was
exercising during her lifetime over the companies in the MP Birla Group,
Namely all such powers and perform of such acts as PDB would have exercised
had she been alive. Thus, it is submitted that reasoning given by the learned
Single Bench are perfectly valued and more particularly, the probate Court has
injuncted HVL from holding any office in any of the entities in MPB Group
during the pendency of the suit. With regard to the interim order passed by the
Division Bench on 1st October, 2020 it is submitted that the Hon'ble Division
Bench declined granting any interim stay of the judgment by assigning reasons
and the subsequent clarifications 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 1stOctober, 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
(2018) 3 SCC 635
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 ingredients of Section 247 are
broadly three in number namely (i) there should be pending proceedings (ii) it
should be for administration of the estate of the deceased and (iii) subject to
the immediate control and the word "immediate control" means direct control
of the court. It is submitted that the APL Committee is a multi-member body
and there is every possibility of a dissent occurring and if such dissent occurs
or any difference of opinion arises then the APL Committee had to approach the
court for appropriate directions. The learned senior advocate referred to the
minutes of the meeting of the APL held on 07.12.2012 wherein it has been
recorded that two administrators viewed the matter from different perspective
and therefore it was agreed that they should give further thought to the matter
and give their respective views and suggestions in writing so that the
committee of administrators can together examine such views/suggestions and
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
arrive at a consensus. Referring to the meeting of the APL held on 20th and 21st
April, 2013, it is pointed out that in regard to second tier holding companies
and operating companies in MP Birla Group, also the trusts/institutions in MP
Birla Group, different and divergent views and suggestions were made by the
two members of the APL and unanimity could not be achieved. The minutes of
the meeting of the APL held on 09.08.2013 was referred wherein it has been
recorded that the two members of the APL made various suggestions and in
view of the different views, the third member of the Committee stated that an
application will be filed before the High Court for clarification and directions.
Similarly, the minutes of the meeting held on 16.11.2013 was referred wherein
on one of the issues, the two members of the APL had divergent views and it
was decided to discuss the matter further to arrive at a consensus. Thus, it is
submitted that the APL Committee members have to act in unanimity and in
the event of the divergent view, the committee has to approach the court
seeking for appropriate directions and cannot issue unilateral directions
stating that those directions are by majority of the APL Committee members. In
this regard, reference was made to the directions issued by the Hon'ble Division
Bench in the judgment dated 23.08.2012 wherein the court has recorded that
the parties for the purpose of administration of the estate 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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 words "immediate control" assumes significance and that would mean that
it is the direct control over the estate and the administrators are under the
direct control of the court. Further it is submitted that majority view cannot
always be the correct view and the decisions as to whether the estate can
exercise rights over the Tier 1 and 2 companies or the other companies in the
other tiers cannot be left to the decision of the APLs. The learned senior
advocate referred to the submissions made by him before the learned single
bench wherein it was submitted that members constituted body called
administrators cannot be segregated so as to form a majority or minority view
and law demands that this body must give one decision jointly and if they
cannot act together and fail to rule in unanimity, they should come before the
court for necessary directions and/or clarifications. In support of such
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
contentions, reliance was placed on the decision in Lilavati Kirtilal Mehta
Trust and Others Versus Charu K. Mehta and Others 142, K. Leelavathy
Bai and Others Versus P.V. Gangadharan and Others 143 and Mohinder
Singh Gill and Others Versus The Chief Election Commissioner, New
Delhi and Others 144 . Further the learned senior advocate referred to that
portion of the impugned judgment wherein the learned single bench has taken
note of the notes of arguments submitted by him wherein he had pointed out
that Mr. MKS was appointed by a Division Bench of this court upon being
nominated on behalf of the plaintiff by order dated 19.01.2012. Mr. MKS, as an
officer of the court had confined himself to bring to the notice of the court the
factual matters relating to the administration of the estate of the
deceased/PDB whose last registered will is the subject matter of the
testamentary proceedings. It was pointed out that one of the trusts on receiving
letter from the APL raised their objections stating that APL have no manner of
control or say in respect of its affairs, assets and properties and it is guided by
its own trustees and Board of Trustees. It is submitted that the APL Committee
had requested the plaintiff to hand over the share certificates in respect of
shares held by the estate which ought to have been with Mr. RSL as the
executor. The request was complied with and thereafter the APL Committee
applied for recording 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
(2009) 2 Maharashtra Law Journal 340
(1999) 3 SCC 548
(1978) 1 SCC 405
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 passed any
direction to any of the listed companies to appoint any person as the director.
The APL Committee does not have the right to nominate any director on the
board of the companies by a reason of any law or agreement and any contrary
assertion is not correct. Further the shareholders of companies or
administrators must act jointly unless law gives them the power to decide by
majority. The Joint administrators are not allowed by the Succession Act to
decide by majority. The learned senior counsel referred to the various
provisions of the Act which provides the manner of decision to be taken under
those statutes and it is submitted that in those statutes where it provides the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
decision should be of a simple majority or of 2/3rd majority, it is always to be
presumed that the decision should be unanimous. It is submitted that the
learned single bench has accepted the legal position that the administrator
pendente lite is under the immediate control of the court. It is submitted that
the learned single bench had observed that the parties have accepted and
having subjected themselves to the jurisdiction of the APL Committee acting by
majority, they cannot agitate the same at this juncture is an incorrect
proposition as the learned single bench had failed to note that in terms of
Section 247 of the Act, the obligations is on the court and the court cannot lose
control of the matter. It is further submitted that in GA No. 1964 of 2018 filed
by the defendant clarifications of the judgment and order dated 23.08.2012
was sought for that in case of divergence of opinion amongst the members of
the newly constituted committee of administrators pendente lite, the decisions
should be taken on the basis of majority. The Hon'ble Division Bench by order
dated 10.04.2019 while disposing of the applications ordered that for effective
functioning of the APL Committee, which shall consists of Hon'ble Member and
two nominees of the respective parties, there was a direction to the two
nominees to render the fullest cooperation to the Hon'ble Member in order to
enable His Lordship to effectively discharge his duties for the purpose of
smooth administration of the estate and also to prevent any stalemate in the
process of such smooth administration. Thus, the order passed by the Hon'ble
Division Bench did not endorse as to whether the APLs can act by majority in
the event of the divergence of opinion.
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 rules and regulations of the said
society to demonstrate that the society is governed by their own rules and
regulations and the trustees who were appointed were entitled to continue for
life unless they resign or become legally incompetent to hold the office of the
trustees. Further the powers of the managing committee having been clearly
delineated in the rules and regulations, the same cannot be ignored by the
APL. Further, a combined reading of the Rules 21, 27 and 28 of the Rules and
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
Regulations of the Shreyas Medical Society, it is clear that there is no heritable
right for PDB and therefore the trusts and societies cannot be the subject
matter of control by the APL Committee. The minutes of the meeting of the APL
Committee held on 22.02.2022 was also referred to show as to how Mr. MKS
had dissented from the opinion of the two members of the APL. Further with
regard to the very same medical society, it is submitted that the like other
charitable societies which are shown as part of the promoters group and are
shareholders in Birla Corporation Limited (BCRL) and these societies altogether
hold 14% shares in BCrL and has shareholding in other manufacturing
companies namely VTL, UCL, BCL and HGCL. Shreyas Medical Society as also
other chartable society has two organs of internal management namely the
Board of Trustees and the Managing Committee and the members of the
societies are appointed by the managing committee. The properties of the
society vests in the trustees; the affairs of the societies have been entrusted
with the managing committee; the trustees are appointed by the existing
trustees and the trustees inter alia nominate the members of the managing
committee. PDB during her life time was a trustee and member of the
managing committee and in terms of the clauses 18 and 28 of the rules and
regulations of the trust upon her death, she ceases to a member of the trust.
Further even during the life time of PDB, she did not enjoy any special powers
as trustees or member of the Managing Committee and none of the trustees or
members of the managing committee will have any special power to direct the
society to act in a particular manner. Further trusteeship and the membership
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
of the managing committee are not heritable. The assets and properties of the
societies including the shares held by the society in different companies are
owned by the society and the 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 and are not
appointed on the assets and properties of the third parties or the promoter
group or MP Birla Group. Therefore, the directions issues by the two Joint
APLs to the charitable societies to appoint persons as trustees and members of
the managing committee are beyond their competence and authority. With
regard to the legal expenses incurred by the APLs, it is submitted that the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
crores of money are being spent for litigation and other legal expenses which
erode the estate and this aspect was highlighted by Mr. MKS in the meeting of
the APLs held on 30.07.2020 wherein it was pointed out that the estate should
not be required to be pay legal fee of the counsel engaged by the two members
of the committee and if the decision is being challenged, they have to remain
neutral and let the higher judicial authorities decide the matter without
seeking to justify their decision before the court by engaging counsels and
putting the appearance. Similar such objection was raised and was recorded in
the minutes of the meeting of the APLs held on 23.07.2020 and 30.07.2020
and also recorded in the minutes of the meeting held on 04.08.2021. Therefore,
it is submitted that the administrators should not come to court and canvass
the case of one of the parties and they should not be shown to championing the
case of the one of the parties. This aspect was reiterated by Mr. MKS in his
letter dated 07.12.2022 addressed to the two members of the APL.
86. The learned Senior Advocate referred to the summary of the report dated
19.02.2011 of Mr. MKS one of the joint APLs of the estate of PDB and the
relevant events. The first part of the report deals with the events during the
period 2012-2014 and the sum and substance of the events being that all
decisions of the APL were taken unanimously. The inventory of assets was
carried out and interim report was filed. The shares as per the affidavit of
assets of both the parties were as stated to be the assets of the estate. Only in
two companies the estate of PDB had majority control and as an interim
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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measure names of two of the Joint APL were proposed for appointment as the
directors only in those two companies. After following the due process under
the Companies law the said two companies appointed the two APLs as the
directors. No process under the companies act was sought to be subverted in
the manner of these appointments and 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 the minutes dated 21.07.2017 on being brought to
the notice by the plaintiff, in the next meeting of the APLs on 25.08.2017, the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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same was also once again informed and this fact was recorded in the minutes
of the meeting dated 12.03.2018. Wrong recording was with regard to the
submissions allegedly made by the counsels for the plaintiff that HVL shall
cause appointment of a nominee of the APL Committee in the subsidiary of
VTL. The learned counsel had also submitted that it is for the Nomination and
Remuneration Committee and Boards of the respective listed companies to
propose whom the companies will appoint as directors and it is ultimately for
the shareholders to vote on such resolution. In terms of the liberty granted by
the court in the order of appointment dated 23.08.2012, the plaintiffs
challenged certain recordings and decisions of the APL Committee in the
meeting held on 12.03.2018 and 05.04.2018 and in such application no relief
was sought for removal of any APL member. The third limb of the report deals
with the events from the year 2019 and it is submitted that Mr. MKS had not
signed the decision taken in the meeting of the APLs held on 19.07.2015 and
had submitted his dissent note. Apart from the statement regarding extent of
estate, it was pointed out by Mr. MKS that no hearing was given to the parties
with regard to the conduct of proceeding by the APL committee by majority. In
this regard, various pages of the compilation of annexures with a report of Shri
MKS were referred to. It is further submitted that the next decision of the two
Joint APLs by majority, if taken on 31.07.2018 regarding appointment of
directors in the public listed companies to which Mr. MKS has given a separate
dissent note. These two decisions are subject matter of GA Nos. 1735, 1845,
1761, and 1786 of 2019 which culminated in the impugned judgment. It is
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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submitted that there are more than 10 subsequent decisions from August 2019
of the two Joint APLs which have been challenged by the plaintiffs which are
pending adjudication. After passing of the impugned judgment, the two Joint
APLs have passed several directions on an from 08.10.2020 namely (a)
directing appointment of directors in Tier 1 and 2 companies (b) appointment of
director in tier 3 and 4 companies (c) removal of directors from Tier 1 and 2
companies (d) HVL has ceased to be a director in the companies and the
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
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the said order dated 27.08.2010 continues to remain valid and binding. With
this Mr. Dutta concluded his submissions.
88. Mr. Khambatta, learned Senior Advocate appearing for the appellant
classified his reply submissions broadly under eight heads. Firstly, with regard
to the alleged admissions which was sought to be heavily relied upon by the
learned Senior Advocates for the respondents, secondly, as to whether the
affidavit of assets could be brushed aside; thirdly, that the estate of Smt. PDB
was never a beneficiary of the societies and trusts; fourthly, with regard to the
piercing of the corporate will; fifthly, with regard to the control as envisaged
under the Companies Act with particular reference to Section 2(27) of the said
Act; sixthly, as to whether the APL Committee can pass directions; seventhly
with regard to the will and lastly with regard to the allegations made against
HVL.
89. It is submitted that title and property including shares cannot be passed
on by admission. If admissions are to be seen, then all admissions are to be
looked into more particularly, the admissions in pleadings in court which has
to be placed in a higher pedestal. The plaint filed in Civil Suit No. 73 of 2010 by
Birla Group was referred to. With particular reference to paragraphs 74, 75,
167 and 168 and also the prayer sought for in suit as mentioned in paragraph
201. Reference was also made to the prayer sought for in G.A No. 3714 of 2008
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in PLA No. 242 of 2004 wherein prayer "C" was for a direction to the
administrator pendente lite and/or receiver to be directed to take all decisions
and exercise all his rights in respect of shares holdings of Birla Group in the
Companies referred to in Annexure "C" to the said application. Reference was
made to the judgment of the Division Bench in PLA No. 242 of 2004 dated
23.08.2012 and it was submitted that the Division Bench held in so far as the
stocks and shares of the Companies are governed by the Companies Act and in
the light of the Rules and Regulations under the Companies Act there are two
modes by which the share of a company can be obtained that is by transfer
and/or transmission as provided under Section 108 of the Companies Act to be
entered into Registrar of Members. Noting the fact situation, it was held that
stocks and shares which forms major part of the estate left by the deceased are
subject matter of administration of the estate and the only manner which can
be administered 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 145 2007 2 Calcutta Series
377 and paragraph 301 of the judgment was referred to wherein it was
(2007) 2 Calcutta Series 377
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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
come to the conclusion that the vastness of the estate is nothing but
controlling block of shares in the MP Birla Group of Companies.
91. Once again turning back to the judgment of the Division Bench in APO
No. 244 of 2011 dated 22.12.2011 wherein the Division Bench observed that
the court failed to understand the hesitation on the part of the appellants
therein in permitting the Joint Administrators to approach the various
companies of which the deceased owns and possess shares and stocks to get
themselves recorded as representatives of the estate of the deceased appointed
by the court and to take all necessary steps to enjoy rights and privileges,
incidental to the ownership of the shares and stocks which consists of
controlling interest in MP Birla Group of Companies and safeguard the interest
of the ultimately beneficiaries. Thus, it is submitted that it is the shares and
the stocks which gives the controlling power and nothing else. It is submitted
that there is a vast difference between estoppel and admissions and even
assuming there is an admission, it cannot override the orders of the court. In
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this regard, reliance was placed on the decision of the Hon'ble Supreme Court
in Chhaganlal Keshavlal Mehta Versus Patel Narandas Haribhai 146
wherein the Hon'ble Supreme Court held that difference between an admission
and estoppel is marked one. Admissions being declarations against the
interests are good evidence but they are not conclusive and parties always had
liberty to withdraw admissions by proving that they are either mistaken or
untrue but estoppel creates an absolute bar. The scope of estoppel as defined
under Section 115 of the Evidence Act was also explained by referring to para
23 of the said judgment. Reliance was also placed on the decision of the
Hon'ble Supreme Court in Employees State Insurance Corporation Limited
Versus Union of India 147, for the proposition, that concession given by the
counsel before the court or the tribunal being a concession in law and contrary
to the statutory rules such concession is not binding on the state for the
reasons that there cannot be any estoppel against law. Reference was made to
the decision of the Hon'ble Supreme Court in Director of Elementary
Education, Odisha and Others Versus Pramod Kumar Sahoo 148 . It is
submitted that if there is a mixed question of 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 149 . It was further submitted that the alleged
(1982) 1 SCC 223
(2022) SCC Online SC 70
(2019) 10 SCC 674
1969 RLW 473
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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 rendered by the court more particularly in paragraph 45 of the
judgment would show that the judgment is purely on factual assertions and
nothing on law.
93. The learned Senior Counsel now proceeded to deal with the decisions
relied on by Mr. S.K. Kapur learned Senior Advocate appearing for the
respondent. With regard to the decision in the case of Dwijendra Narain Rai,
it is submitted that in the said decision, the plea of estoppel was on facts and
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for which purpose paragraphs 3 to 5 of the judgment were referred to. With
regard to the decision in Mumbai International after referring to the
paragraphs 41, 45, 50 and 51 of the judgment, it is submitted that in the said
case the second proceedings grew out of the earlier judgment which is not the
case in the present appeal. With regard to the decision in Hope Plantations
Limited, after referring to paragraphs 26 and 31 of the decision, it is
submitted that the issue should have been finally determined. In the facts and
circumstances of the case on hand, the CLB did not have jurisdiction to decide
the extent of the estate of PDB. With regard to the decision in Bhanu Kumar
Jain after referring to paragraphs 30 and 31 of the judgment, it is submitted
that the issue should have been decided against the party and if so, he would
be estopped from raising the same in the later proceedings. With regard to the
issue estoppel, it is submitted that the previous court of competent jurisdiction
should have taken a decision; the previous court should have finally
determined the issue; same parties cannot re-agitate the same issue and
subsequent proceedings must arise/grow out of the judgment in the former
proceedings. To support such proposition, reliance was placed on the decision
in the case of Masud Khan Versus State of Uttar Pradesh 150 wherein the
Hon'ble Supreme Court held that the issue of estoppel arises only if the earlier
as well as the subsequent were criminal proceedings and the concept of issue
estoppel would also apply in criminal proceedings. To explain the concept
(1974) 3 SCC 469
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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better, once again reference was made to the decision in Hope Plantation
Limited by referring to paragraph 26 of the said judgment.
94. The learned Senior Advocate next proceeded to deal with each of the
alleged admissions which have said to have been made by the appellant.
Reference was made to the decision of the CLB in the case of 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 would not arise. Further it is submitted that the
decision of this court reported in 133 Company cases 515 (Cal) was
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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independent decision given by the High Court and in this regard, the learned
Senior Advocate referred to the paragraphs 37, 38 and 43 of the judgment.
Further the decision was much before the judgment of the Hon'ble Division
Bench.
95. The Learned Senior Advocate referred to the decision of the Hon'ble
Division Bench in APO No. 95 of 2019 dated 04.05.2020 wherein it was pointed
out that the controlling block of shares of the deceased and/or her estate is as
disclosed in the affidavit of asset. Referring to the decision cited by the learned
Advocate General of the CLB dated 19.10.2009 in C.P No. 57 of 2004,it is
submitted that the CLB has noted that since the company as well as HVL have
now taken the stand that shares held by respondent share holding companies
are not part of the estate of PDB, the CLB noted that whatever might be the
stand of the respondents, CLB had held in 247/250 proceedings that shares
held by the respondent share holding companies forms part of the PDB estate
and on appeal the High Court upheld the decision of the CLB. That the
respondent did not file any appeal against the said order and as such in so far
as they are concerned, the said order had become final. Further the CLB
recorded the arguments of Mr. Chatterjee, who submitted that "whatever may
be my averments in para 12, the CLB has to take note of its decision in
247/250 order". It is submitted that the statement of the learned counsel is
contrary to the affidavit filed by RSL and ultimately the petition was dismissed
as not maintainable in the spirit under Section 399 of the 1956 Act.
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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96. The learned Senior Counsel referred to the shareholding pattern more
particularly note 4 in the shareholding pattern. The annual report and
accounts of Birla Group Corporation Limited 2003-2004 was referred to
wherein in clause 2 the names of the Board of Directors and the categories has
been mentioned. Reliance was also made to the annual report and accounts for
2004-2005 of Birla Corporation Limited wherein RSL who was the Co-
Chairman was shown in category of "non-executive" and HVL was also shows
as "non-executive". Therefore, it is submitted there is no admission as alleged
by the respondent. It is further submitted that in the written submissions filed
before the learned 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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 allegations that the shares owned by the
testatrix includes the affairs of the companies. Further there was a specific
denial that the affairs of the estate of the testatrix includes right to control the
affairs of Birla Corporation Limited and/or its assets or properties. Further it
has been specifically denied that the testatrix acquires or exercise control over
any of the companies subsequent to the death of MP Biral. Further it was
denied that the estate of the testatrix comprises of control over other alleged
Birla companies as sought to be alleged. Therefore, it is submitted that the
stand taken by RSL has been taken by HVL and there is no inconsistency. The
Hon'ble Division Bench in the judgment rendered during 2007 considered all
these aspects and held that the controlling block of shares is as disclosed in
the affidavit of assets. However, in the first interim report of the APL Committee
reference has been made to the judgment of the Division Bench dated
23.08.2012 wherein direction was issued to the Joint Administrator to prepare
and file an inventory of assets of the estate and appraisal of the value of such
asset and to take over possession of the assets of the estate in the manner
provided under law considering the nature of the property. Further it has been
stated that the list of assets of the deceased PDB that the value thereof as
furnished by the pro-pounders of the will and by their opponent was produced
along with the report as Annexure 14. Further in the report it has been stated
that the APL applied for and correspond with various companies in which the
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
deceased held shares for according change in representation of the estate and
in pursuance of shares enumerated in Annexure 15 therein have been recorded
in the names of the members of the APL Committee representing the estate of
the deceased. Reference was made to the decision in the case of Birla
Education Trust and other Versus Birla Corporation Limited APO No. 154
of 2011 dated 10.05.2013 wherein the court held that the jurisdiction to decide
the issue largely shifted from the domain of the CLB to the Probate Court and
the courts for trial of suits. Further the court held that it will not be proper for
it to pass any order or express opinion pertaining to the estate of PDB. This
decision was commented upon by the Division Bench in its judgment dated
04.05.2020 and the arguments based on the 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
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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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 151. For the proposition that a probate proceeding is not a suit in which
there is property in dispute as contemplated by Rule 1 of Order 31 CPC and
the only question in controversy in such proceedings is that of representations
of the estate of the deceased and no question of title thereto i.e. the title of the
deceased or of the conflicting titles alleged by the parties to the proceedings
can be investigated by the court, reliance was placed on the decision of the
Division Bench of this Court in Nirod Barani Debi Versus Chamatkarini
Debi 152. With regard to the decision relied on by Mr. Kapur reported in 2018
SCC Online Bombay 6830, after referring to paragraphs 79, 95 and 96, it is
submitted that in the said case the deceased was a Parsi and Section 269(1) is
fully applied and the decision is in opposite. Thus, it is submitted when the
APL is appointed and they want to preserve and protect the estate they have to
approach the court. The decisions reported in 2021 SCC Online 1065, 1939
SCC Online Cal 326 (relied on by the learned Advocate General) 1957 SCC
Online Cal 179, (relied on by the learned Advocate General) decision reported
in 2001 Calcutta Law Journal 640 (DB) and the decision reported in 2019
SCC Online (Bom) 702 were also dealt with. For the proposition that the
shareholders acquire no rights in the assets of the company reliance was
(2018) 10 SCC 485
1914 SCC Online Cal 30 (DB)
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
placed in the decision of the Hon'ble Supreme Court in 63 Moons
Technologies Limited and Others Versus Union of India 153 (paragraph
106). The decisions relied on by the learned Advocate General reported in 2008
SCC Online Calcutta 208 and 2010 SCC Online Calcutta 2120 were
referred to and submitted that those were not cases relating to piercing of the
corporate will. It is further submitted that personal interest is not species of
property. After referring to the decision, reliance was placed on the decision of
the Hon'ble Supreme Court reported in 2007 7 SCC 183. To explain the
concept of control the decision of the Hon'ble Supreme Court in 2012 6 SCC
page in the case of Vodafone was also referred to. Reliance was also placed in
the decision of the Hon'ble Supreme Court in 2018 7 SCC 443 and 2019 2
SCC page 1.
98. Nextly, learned Senior Advocate referred to the definition of promoter as
defined under Section 2(69) of the Companies Act. It is submitted that
bequeathable property cannot be personal influence. Extensively various
paragraphs 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
(2019) 18 SCC 401
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
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 154. Thus, in conclusion it was submitted that all
decisions by the majority APL Members must be set aside. With the above
submissions, Mr. Khambatta learned Senior Advocate concluded his reply.
100. Mr. Bachawat, learned Senior Counsel in his reply submission reiterated
that companies are separate legal entities. So far as the allegation that there
has been admission before the CLB, it is submitted that the same is incorrect
as all the averments were in the petition and CLB decided based on petition
and cannot be stated to be an admission. Further the other side did not
attempt to show any arithmetic control which stops with tire 2 companies.
There is no order passed by any Court prior to the impugned order giving any
right over the trusts and societies. The term used in the impugned order is
"entities". It is submitted that the beneficial ownership declaration was filed on
(2008) 4 SCC 300
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
30.12.2020 when the appeal was pending. The companies must agree and then
only filing can be done and the Directors did not have any knowledge of the
same. Furthermore, there was no pleading on beneficial ownership and there is
no petition filed in that regard. The orders passed by the NCLT and NCLT,
Ahmadabad Bench were also referred to. It is submitted that interim orders in
probate proceedings operate in personem and not in rem. The various decisions
relied on were sought to be distinguished on facts. With regard to the powers
and authority of APL, it is submitted that when Hon'ble Chief Justice R.V.
Raveendran was in the committee an application was filed seeking clarification
with regard to the powers of the APL. However, subsequently His Lordship
resigned and thereafter the application was disposed of. However, the
reconstituted APL Committee did not seek for any such clarification from the
Court.
101. Mr. S. N. Mookherjee, learned Senior Counsel in his reply submissions
would contend that the question would be as to what extent title can be gone
into in a proceedings under Section 247 of the Act; whether any orders of
injunction can be passed against third parties; whether after APL can there be
an order of injunction against third parties; whether the extent of estate can be
determined in these proceedings; whether the extent of the estate was
determined anywhere else. It is submitted that these are some of the broad
issues which would arise for consideration in the present set of appeals. It is
submitted that the order passed by the CLB was upheld in an appeal filed
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
REPORTABLE
under Section 10F of the Act on the ground no question 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.
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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July 19, 2004 PLA 204 of 2004 filed by Rajendra Singh
Lodha (RSL) for probate of 2019 Will (on
contest, converted to Title Suit No. 6 of 2004).
August 17, 2004 PLA 242 of 2004 filed by executors for probate
of 1982 Will of PDB.
October 3, 2008 RSL died.
Harsh Vardhan Lodha (HVL) took over and
converted probate proceeding to Letters of
Administration Proceeding.
December, 2004 Birla heirs filed APL application.
Two fresh applications for APL by Birla heirs
(executor of 1982 Will of PDB).
August 27, 2010 Three-member APL Committee formed.
December 22, 2011 Division Bench (in HVL appeal on APL rights +
composition) - two persons from each side +
one former Judge as third members of APL
('Umpire' modified by consent).
Out of the labyrinth of arguments advanced, the following broad
issues and sub-issues emanate for adjudication in the present case.
1. Powers of Probate Court under Section 247, Succession Act -
i) Question of title;
ii) Third party injunction.
(APO NOS. 89, 90, 91, 92, 94, 95, 96 AND 98 OF 2020)
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2. Extent of PDB Estate -
i) Only shares or 'controlling interest';
ii) 'Controlling interest' meaning;
iii) Whether the issue of extent of Estate barred by res judicata
and/or barred by estoppel against HVL.
3. APL (Administrator Pendente Lite) powers -
i) How far APL can interfere in Company affairs;
ii) Whether APL decisions have to be unanimous or majority view
prevails.
Decision with reasons:-
104. Issue 1. i) - It is well-settled that a Probate Court or a Letters of
Administration Court cannot finally adjudicate issues of title. It is purely
within the domain of a competent Civil Courts to decide such issues. However,
in order to decide an application under Section 247, Succession Act, the
Probate Court may very well decide, prima facie, the extent of the Estate of the
deceased. For such purpose, the Probate Court can definitely decide, although
tentatively, as to the extent of the property of the deceased. Such adjudication
on the Estate of the deceased, however, does not tantamount to a final
adjudication of the title over the property.
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105. In Kanwarjit Singh Dhillon Versus Hardyal Singh Dhillon and
Others 155, the Hon'ble Supreme Court held that it is well settled law that the
functions of a probate court are to see that the will executed by the testator
was actually executed by him in a sound disposing state of mind without
cohersion or undue influence and the same 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 156 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 valid execution of the will. Thus, it does no more than establish
the factum of the will and the legal character of the executors. The probate
(2007) 11 SCC 357
AIR 1954 SC 280
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court does not decide any question of title or of existence of the property itself.
Further in Kanwarjit Singh Dhillon, it was held that probate of the will
granted by the competent probate court would be admitted into evidence that
may be taken into consideration by the civil court while deciding the suit for
title but grant of probate cannot be decisive for declaration of title and
injunction whether at all the testator had any title to the suit properties or not.
In Krishna Kumar Birla Versus Rajendra Singh Lodha and Others 157, 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. The question of title
arising under the Succession Act cannot be gone into in the probate
proceedings. Conception of a will relating to the right title or interest of any
other person is beyond the domain of the probate court. The Division Bench of
this court in Shri Dinendra Kumar Bose Versus Shri Tapan Kumar Bose 158
held that in an application for grant of probate, it is not open to the trial court
to go into the question relating to a title. Whether the testatrix had the title to
the property or not basically is a question to be decided by the civil court since
after proceedings relating to adjudication of a civil dispute between the two sets
of adverse parties. Further it was held that grant of probate by itself does not
confer any right or title upon any person in respect of any property since all
such questions are subject to adjudication by an appropriate civil court. In the
light of the above settled position, we cannot approve the findings rendered by
the learned Single Bench having ventured to go into the entitlement of the
(2008) 4 SCC 300
2000 SCC Online Cal 130
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estate to exercise control over tier 3 and 4 companies of the MP Birla Group. If
we examine the judgments relied on by the respondents, we find that in
Babulal Khandelwal, the Hon'ble Supreme Court has brought out the
distinction between a probate proceeding and an administration suit and it was
held that in an administration suit, the extent of the estate of a deceased can
be decided and not the right and title of the parties and the probate court does
not decide any question of title or 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 159 , 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,
1914 SCC Online Cal 13
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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 property is
in danger of being wasted, damaged or alienated. It was further held that the
question, consequently, arises whether the proceedings for the probate of a will
or for letters of administration may rightly be held to be a suit in which
property is in dispute. In the opinion of the court, the answer was in the
negative. After referring to several other decisions, it was held that the only
question in controversy in a proceeding in a probate court is that of
representation of the estate of the deceased and no question of title thereto, i.e.
the title of deceased or the conflict in title alleged by the parties to the probate
proceedings can be investigated by the court. Further the court held that they
do not lay down the proposition that the court is not competent, because it is a
probate court to grant injunction in any circumstances. It was held that the
proper procedure to follow in cases of this description is for the aggrieved party
to apply to the court for the appointment of an administrator pendente lite
(APL) under Section 34 (presently Section 247).It was further held that by
virtue of the provision by which the administrator pendente lite is appointed,
they take charge of the entire estate of the deceased. It was further held that
when it is brought to the notice of the court that a party in possession is about
to deal with the movable properties; unless an injunction is granted, the
appointment even of an administrator pendente lite may become fruitless,
under such circumstances, the court has ample authority either under the
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statutory powers or in the exercise of its inherent jurisdiction to make a
temporary order so as not to defeat the ultimately order which the court is
competent to make. In Atula Bala Dasi and Ors. Versus Nirupama Devi and
Anr.160, it was held that it is open to the probate court not only to appoint an
administrator pendente lite (APL) but also to issue an order of injunction,
temporary in character, pending the appointment of an administrator pendente
lite and if such powers are exercised in probate cases by the probate court,
there is no reasonable chance of any property being dissipated pending the
actual grant of probate or the appointment of an administrator.
108. The learned Senior Advocate appearing for the respondents had relied
upon several decisions of the Hon'ble Supreme Court as well 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
1951 SCC Online Cal 40
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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 over a person or entity who is not a party to the
proceedings. Further it was held that since the noticee company being not the
party to the proceedings no order can be passed against it. The respondents
have filed the cross objection against these findings recorded by the learned
Single Bench which needs to be rejected. In the decision reported in 2016 SCC
Online Cal 1541, Hon'ble Court observed that the court has no hesitation to
hold that probate court cannot pass any injunction order against the third
parties as third parties who has no caveatable interest in the probate
proceedings cannot be allowed to be added as a party in the probate
proceedings and also for the reason that no order can be passed affecting the
right of the stranger without adjudication of his rights in the probate
proceedings is impossible as probate court cannot decide any foreign issue
unconnected with the probate proceedings. To be noted that though appeals
are pending against the said decision, there is no order of stay. The decision
relied on by the respondent reported in AIR 1938 Calcutta 642 has been
rightly distinguished by the learned Senior Advocate for the appellant to be
inapplicable to the facts of the case on hand as in the said case, no APL had
been appointed and the facts of the said case was also that the injunction
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which was sought for against the person was not a stranger to the probate
proceedings.
109. Issue 2. i) - To decide the extent of the Estate of the deceased, the court
has to ascertain the powers which could be exercised by the deceased testatrix
herself. The powers of the probate court while appointing an administrator
pendent lite (APL) are co-extensive with the powers of the testator/testatrix. As
a necessary corollary, the powers of an APL formed by the probate court cannot
exceed such limits.
110. With regard to the shares in several companies, PDB's powers were
restricted to her ownership of the particular shares in different companies as
mentioned in the affidavit-of-assets. In such context, the expression
'controlling interest' should not be confused with 'personal influence' of the
testatrix. Whatever might have been the "personal influence" of the deceased
testatrix, the same was intangible and restricted to herself. The charisma or
personal influence of the deceased might have helped her in carrying out her
will in the affairs of the companies, 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.
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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 other
decision-making processes, such advantage would merely be inchoate.
115. As a natural corollary, the APL to be appointed by the Probate Court for
looking after and managing the Estate of the deceased, steps into the shoes of
the deceased and does not have an iota of right or power more than the
deceased herself would have.
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116. Hence, at best, the Probate Court can direct the APL, personally or
through its appointees, to register itself or its agents as members of the
companies in the capacity of owners of the shares actually owned by PDB in
such companies. Upon such registration, the APL and/or its nominees would
function as shareholders in such companies and have all the incidental rights
and controlling power which PDB would have had by virtue of such
shareholdings, including voting rights, participation rights in decision-making
processes and meetings, etc. However, the Probate Court cannot go an inch
further than that in interfering with the business of the companies.
117. It is contended by the learned Senior Advocate appearing for the
respondent that it has been concluded by a series of judgments passed by the
Company Law Board, High Court both Single Bench and Division Bench and
the Hon'ble Supreme Court that the estate of PDB holds majority controlling
shareholding in MP Birla Group. In this regard, reference was made to the
interim order dated 23.03.2005 reported in 2005 4 CHN 544. In the said
decisions, three applications were taken out by Smt. Laxmi Devi Newar and
another (defendants 1 and 2) and jointly by four persons K.K. Birla and three
others for appointment of administrator and/or a Committee headed by an
independent and impartial administrator to appoint in and over the estate left
by the PDB and also for an order of injunction restraining the pro-
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pounder/plaintiff from dealing with, disposing of any of the asset or properties
of the deceased and/or exercising any right and control of the companies. The
three other applications were taken out by the plaintiff RSL for dismissal of the
applications for the interlocutory relief as mentioned above. Emphasis was laid
on the observations/findings recorded in paragraphs 3 to 36 of the judgment.
It is submitted that the learned Single Bench in the said interim order had held
that the majority shareholding is the controlling block of shares which
constitutes undefined and unspecified right 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
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testator cannot dispose of anything or otherwise that is mentioned in the
provisions of Section 30 of the Hindu Succession Act. It was further held that
disposition of properties means an act by which property can be transferred by
executing a deed intervivos in case of immovable property or interests therein,
by a party in possession in case of movables. It was held that there is no
dispute as regards, the transferability character of the movable and immovable
properties including shareholders. The argument that shareholders stand at a
different footing from that of a company which is a separate legal entity was
accepted. However, the contention that the properties which are described in
the affidavits of assets can be said to be the properties as mentioned in Section
211 of the Act was held to be not acceptable. Further the court held that the
description in the affidavits of assets affirmed by the RSL cannot at that stage
be an exhaustive one as there may be properties of any description remaining
undiscovered or untraced. Therefore, the "estate" of the said deceased should
be the properties both movable and immovable which have been stated in the
affidavit of assets of RSL or which might be discovered by the inventory or
otherwise.
119. The next question considered by the court was whether the majority of
the shareholding held by the PDB by which she used to control either directly
or indirectly or indirectly MP Birla Group of companies or any other companies
assumes any significance in relation to the shares structure and administrative
affairs of the companies. The argument, with a single or group of shareholders
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not forming majority that is no impact on the affairs of the company as they do
not have separate or significant character or position in the companies except
the right to get dividend and on dissolution to have ratable distribution of the
surplus assets, but the majority shareholders in one hand is really something
more than holder of individual or minority shareholders was accepted. Further
it was held that the strength or impact of majority shareholding cannot be
perceived in the affairs on the fate of the companies. But if one sees the
provisions of the Companies Act regarding formation of Board of Directors who
are really responsible for control, management and affairs of the company, it is
to be found that a person holding major shares really control the affairs of the
company. After referring to Section 255 of the Companies 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
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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-pounder RSL, it appears properties are of different
character and nature namely majority shareholding of four companies of MPB
group co- ownership in the immovable properties. Thus, a cumulative reading
of the view taken by the learned Single bench in the aforementioned interim
order is that the shareholders stand on a different footing from that of the
companies which is a separate legal entity. The description in the affidavits of
assets affirmed by RSL cannot be an exhaustive one as there may be properties
of any description remaining undiscovered or untraced and therefore, the
estate of the deceased should be the properties both movable and immovable
which have been stated in the affidavits of assets of RSL or which might be
discovered by inventory or otherwise. That a single or group of shareholders
not forming majority there is no impact in the affairs of the company as they do
not have separate or significant character or position in the company except
the right to get the dividend. Formation of the Board of Directors who are really
responsible for control, management and affairs of the company, it is to be
found that a person holding major share really controls the affairs of the
company. The majority shareholding will have a decisive role in the matter of
appointment of Directors and 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, read the observations regarding the majority
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shareholdings or the controlling block of shares which was held to constitute
undefined or unspecified right or status has to be read in conjunction with the
other observations made by the court which will go to show that it is the Board
of Directors who are really responsible for control, management and the affairs
of the companies and a person holding major shares controls the affairs of the
company. Therefore, it would be incorrect to interpret a couple of sentences in
paragraph 34 and 35 of the judgment to come to a conclusion that the court
affirmed that the majority shareholdings or in other words controlling block of
shares constitutes undefined or unspecified rights or status and that RSL got
possession of majority of shares of the holding companies from PDB and by the
mechanism of interlinking shareholdings with other group of companies. In any
event this was only a prima 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
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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 paragraphs 26 onwards, we find that the observations in paragraphs 32
and 33 of the judgment appear to be the stand taken by the parties, as the
decision in the case commences from paragraph 34 of the judgment. Even
assuming the observations made in the aforementioned paragraphs are to be
taken as a finding, the court has not rendered a definite ruling on what is
"controlling interest" as the court at the very threshold had rejected one of the
prayers on the ground that if it is granted, it would amount to taking over and
control of separate juristic bodies by the probate court as it has no jurisdiction
to do so. Therefore, the observations contained in the order are to be read in
such a manner to aid and support the ultimate relief that was granted namely
the appointing of four administrators. This is further clear from the
observations made in the paragraph 75 of the order wherein the court after
appointing the four administrators directed that they shall take charge and
control of all the shareholding of PDB in all the companies and they should
function under law by virtue of the controlling shareholding of all the
companies left behind PDB and they shall take steps for rectification of all the
share registers of the companies recording their names. Further the court held
that the administrators shall immediately make an enquiry as to the dealings
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of RSL vis a vis dividends and investment of the dividends and submit a report
to the court and that the administrators shall place themselves in the Board of
Directors wherever it is possible by virtue of shareholdings. Therefore, to
interpret the word "controlling interest" de hors shareholding would fall foul of
the provisions of the Companies Act. Therefore, this decision also cannot be
pressed into service to hold that the issue relating to the extent of estate is a
concluded issue.
121. The next decision which was relied on in the case of Rajendra Singh
Lodha Versus Ajay Kumar Newar AIR 2007 2 Calcutta 377 (DB). In the
said decision while considering the order passed by the first court, the Hon'ble
Division Bench observed that it has been held that there was no
mismanagement of the estate of the deceased in the hands of RSL excepting
the fact that the learned Single Bench appointed the administrator over
controlling block of shares held by PDB and further directed that the said
shares should be transferred in their own names and be rectified in respect of
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.
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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 fact that no notice of the application was given to the public
shareholders by issuing a general notice and therefore the submissions was
made before the Bench that number of members of public will be affected by
such appointment. It was therefore held that the court does not have any
doubt in its mind that without giving notice to the shareholders in the probate
proceedings, the court has no power to appoint APL over the said controlling
block of shares. After perusing the material placed on record, the Division
Bench observed that they are not able to find out any document which will
suggest or can act in favour of such appointment on the controlling block of
shares. Further it was held that the order of the learned Single Bench had the
effect of dislodging the present board as the management without considering
the provisions of the Companies Act and therefore the order is contrary to the
provisions of the Companies Act. Further it was held that the probate court has
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no jurisdiction to pass such an order and accordingly the order of the learned
Single Bench appointing APL over the controlling block of shares was set aside.
Further it was held that the nature of the estate, mostly are the controlling
block of shares held by the PDB at the time of her death which has been
disclosed in the affidavit of assets and there is no dispute in respect of such
shares of PDB by the respondent therein nor any allegations have been made
that RSL failed to disclose the number of shares by the respondent therein, as
an executor took the possession of the said shares and there is no allegation
that he has failed to collect the assets. Further it was observed that the
vastness of the estate is nothing but the controlling block of shares in the MP
Birla Group of companies and in the fact and circumstances of the case, it does
not call for an appointment of APL when it is a settled law that
administrator/receiver should be not appointed over a running business. Thus,
a careful reading of the said decision would show that the issue regarding
"controlling interest" was not conclusively decided.
123. The next decision which was referred to was that of the Company Law
Board in Gouri Shankar Kayan, the petitioners therein contended that RSL
was in control of Respondent Nos. 1 to 28 therein and it will be a breach of
Takeover Court Regulations. In terms of the Takeover Regulations 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
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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 further observed that it is an admitted fact that before the demise
of PDB even though her direct shareholding in the company was negligible, by
virtue of her controlling respondents 1 to 28 therein which held/hold over 60%
shares in the company, PDB was not only materially interested in the company
and was also able to control the company. Thus, it could be seen that CLB took
note of the fact that the direct shareholding of PDB in the company was
negligible. However, proceeded to make an observation, that by virtue of her
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controlling respondents 1 to 28 therein which held over 60% shares in the
company, PDB was able to control the company.
125. Firstly, the decision was rendered in an application filed before the CLB
where the petitioner therein sought for an investigation into membership of the
company in terms of Section 247(1A) of the Companies Act 1956 for
determining the true persons who are financially interested in the success or
failure of the company or who have been able to control or materially influence
the policy of the company. This petition was dismissed holding that no case
has been made out to order an investigation in terms of Section 247(1A). To be
noted that the order came to be passed in an application under the Companies
Act, 1956 and does not in any manner concern a probate proceeding.
Ultimately, the petition also stood dismissed. Therefore, any observations
rendered by the Company Law Board cannot be said to be a final conclusion on
the extent of the estate of the deceased. The said decision was carried on an
appeal before this court under Section 10F of the Companies Act, 1956.The
Hon'ble Court after taking note of the essential ingredients of Sub Section 1(A)
of Section 247 held that the CLB should not direct a roving phishing
investigation at the behest of persons who have some ulterior intent in seeking
investigation for example, to stop the shareholders from exercising their rights
as shareholders, including their right to vote as admitted in the said case.
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126. The first sentence in paragraph 45 of the judgment reported in 2006
133 Company Cases 515 (Calcutta) was strongly relied upon wherein the
Hon'ble Court observed that the CLB rightly recorded the findings that the
estate of PDB was in control of the majority shares of the companies. However,
in paragraph 45 of the judgment, the Hon'ble Court has also held that it was
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 to support their contention that the extent of the
estate has been finally determined.
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127. The next decision which was relied on was in PLA No. 242 of 2004 dated
23.08.2012 of the Hon'ble Division Bench. This judgment was rendered in
appeals arising out of a common judgment and order of the learned Single
Bench dated 27.08.2010 in GA No. 3714 of 2008 and 3718 of 2008 in PLA No.
242 of 2004. The learned Senior Advocates appearing on either side placed
heavy reliance on the findings/observations of the Hon'ble Division Bench in
the four pages of the judgment which was in fact, dissected several times. We
will examine the observations/findings recorded by the court to ascertain as to
what was the impact of the findings on the aspect relating to the extent of the
estate/"controlling interest". The Hon'ble Division Bench pointed out that the
rights and power of the general administrator over estate depends on the
nature of properties both movable and immovable and the respective statute
which governs acquisition and enjoyment of such property. Therefore, the
Hon'ble Division Bench was categorical in its finding that the impact of the
respective statutes was prime as the same will govern the acquisition and
enjoyment of said property. Further the Division Bench made it amply clear
that in so far as the stocks and shares of the companies they are governed by
the Companies Act. It pointed out as to what are the modes by which the
shares of a company can be obtained and it was held that the only manner the
stocks and shares can be administered is by exercising propriety rights in the
shares except the distribution to beneficiaries till final adjudication in the
matter. There is one more observation that in respect of the stocks and shares
it can be administered in exercising propriety rights. Further the contention of
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the appellant therein was noted for appointment of an APL to enable him to
collect the dividends paid against the shares and all other income of the estate
which is one of the trade and characteristic of the different kinds of rights
emanating from the ownership of shares, stocks of the company as provided
under the Companies Act. The propriety rights of ownership of shares under
the various provisions of the Companies Act were set down. Further it was held
that considering the fact that the Joint Administrators appointed by the court
will be required 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,
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power and privileges. Much emphasis was made by the learned Senior Counsel
on the word "all" used in the judgment but the said word has to be read in
conjunction with the words following it and if read together, it shows that all
the rights powers and privileges ought to be incidental to the ownership of
shares and stocks and not otherwise. This is amply clear from the next
paragraph of the judgment wherein it was held that even though they are
appointed by the court as APL nothing prevents them in their capacity as the
representatives of the beneficiaries to exercise all such rights which flow from
the ownership of shares and so enjoyed by the deceased during her lifetime.
Further it has been held that in order to enjoy certain rights flowing from the
shares and stocks of the companies held by the deceased, the APL will have to
apply to the respective companies to obtain such benefits namely in case the
company comes out with rights issue and/or bonus shares which otherwise
can only be subscribed by the shareholder and therefore as the representative
of the shareholders, they can apply to the company to subscribe for such
shares in their capacity as the representative of the deceased in the estate and
not as owner in their own name. Further it was made clear that in order to
enjoy rights incidental to the ownership of shares an application will have to be
made to the company as required by law to record their name in the register of
members and companies will have to consider such an application in
accordance with the Articles of Association and the provisions of law which
governs the same. Further the Hon'ble Division Bench refrained from
discussing the various factors of such exercise of rights of ownership of shares
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by the Joint Administrator as it was thought it is best that it is left to the
discretion and wisdom and according to the exigency found to exists and in
such an event, it would always be open to the parties if they are aggrieved to
approach the probate court as the Joint Administrators are subject to
immediate control of the court and shall act under its directions. Further the
court observed that it is not disputed that the deceased has controlling block of
shares in MP Birla Group of companies and if the rights flowing from such
shares are kept in abeyance during the pendency of the suit it may be
detrimental to the interest of the company 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
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appointed to represent the estate of the deceased are entitled to take all steps
to enjoy the rights and privileges incidental to the ownership of the shares and
stocks which consists of the controlling power in MP Birla Group of companies
and safeguard the interests of the ultimate beneficiaries, the words "controlling
power" cannot be read in isolation but has to be read in conjunction with the
other findings recorded by the court which categorically holds that controlling
power flows from the ownership of the shares and stocks. Therefore, the
observations/findings rendered by the court would go support the case of the
appellant rather than the respondents.
128. The next decision which was referred to is the decision reported in 2016
SCC Online Calcutta 1541, the court after taking note of the definition of
control as defined under Section 2(27) of the Act held that "control" is a mixed
question of law and facts. Ownership of shares made in certain situation,
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
holding of shares. The controlling interest is therefore not an identifiable or
distinction capital asset independent of the holding of the shares. A control of a
company resides in the voting power of the shareholders and the shares
represent an interest of shareholder which is made up of various rights
contained in the contract embedded in the Articles of Association. It is that
right of a shareholder may assume the character of a controlling interest where
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the extent of shareholding enables the shareholding to control the
management. Shares and the rights which emanates from contract well flow
together and cannot be dissected. In fact, the share in the companies consists
of congeries of a right or liability which are the creation of the Companies Act
and the Memorandum and Articles of Association of the company. Thus,
control and management is a facet of holding shares. Further it was held that
in view of several decisions of the court at various interlocutory stages in the
probate proceedings, it has now been settled that the exercise of controlling
power over MP Birla Group of companies is an valuable asset of the estate of
PDB and such finding arrived at different stages of the interlocutory
proceedings is not only binding upon the parties but also binding upon the
court and therefore the court 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
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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
discharge its duties, probate court can pass necessary directions upon APL for
taking steps in accordance with law. Further the probate court at best can pass
necessary directions upon APL to initiate appropriate proceedings before the
appropriate forum for seeking appropriate reliefs and in accordance with law
and it is only that appropriate forum which can pass appropriate order after
adjudicating the rights of the parties including that of a stranger. Thus, it is
clear that it is extent of the shareholding which enables the shareholders to
control the company and any other interpretation will fall foul of the definition
of control as defined under Section 2(27) of the Act.
129. In the judgment of the Hon'ble Division bench dated 04.05.2020, arising
out of an intra court appeal, the Division Bench while considering the
jurisdiction of probate court took note of the order dated 10.05.2013 which was
heavily relied upon by the respondents contending that the probate court
should decide all issues as to the control of interest comprises in the estate and
its effect with regard to the third-party companies wherein such shares are
held. The Division Bench held that they could not gather from such judgment
any convincing findings to the said effect and accordingly the contention of the
respondent was rejected.
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130. Issue 2. ii) - Controlling interest in the present context, can only mean
the incidental rights, including voting rights, rights of participation in
shareholders' meetings and other decision-making processes which PDB would
have had by virtue of her shareholdings in the respective companies.
131. This sub-issue pertains to the meaning of "controlling interest". The
majority Joint APLs have accepted the contention of the respondents that PDB
held controlling interest in all the companies in MBP Group i.e. tire 3 and 4
companies by virtue of such share holding in tire 1 and 2 companies. The
respondents have supported the findings of the majority Joint APLs by
contending that PDB enjoyed de facto control de hors actual share holding in
the companies and such de facto control exercised by PDB is part of the estate
of PDB. To be noted that in the 1956 Act "control" was not defined, and was
introduced in 2013 Act. In Vodafone International the Hon'ble Supreme
Court held that "control" is a mixed question of law and fact. Ownership of
shares may, in 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
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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 its shares are owned by one person or by the
parent company has nothing to do with its separate legal existence. In none of
the authorities have the assets of the subsidiary have been held to be those of
the parent unless it is acting as an agent. Thus, even though a subsidiary may
normally comply with the request of a parent company it is not a puppet of the
parent company. The difference is between having power or having a
persuasive position. Further, it was held that the legal position is well settled,
namely, that even though a subsidiary may normally comply with the request
of a parent company, it is not just a puppet of the parent company. The
difference is between having the power and having the persuasive position. A
great deal depends on the facts of each case. At this juncture, it would be
relevant to take note of the definition of "control" as defined under Section
2(27) of the 2013 Act. It states that control shall include the right upon
majority of the directors or to control the management or policy decisions
exercisable by a person or persons acting individually or in concert, directly or
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indirectly, including by virtue of their share holding or management rights or
share holders' agreements or voting agreements or in any other manner. In
Chintalapati Srinivasa Raju the Hon'ble Supreme Court held that even
though definition of "control" in 1997 Regulation is an inclusive one, yet the
definition shows that control must mean a right to appoint majority of directors
as a share holder or to control management or policy decisions by persons in
any manner. Thus, to state that a person exercises control, the true meaning
and colour to be given to the words in the definition of "control" in Section
2(27) should mean that there should a right and this would be the correct way
of interpreting the meaning of the "control" as defined under Section 2(27) of
the 2013 Act. The argument of the respondents is that it is an inclusive
definition, as the definition of control states that "control shall include the
right....". In Reserve Bank of India the question which fell for consideration is
a "prize-less chit" a "prized chit". While deciding the question the Hon'ble
Supreme Court decided the significance of the word "includes" and what an
inclusive definition implies. Both the parties to the litigation placed reliance on
the decision of Dilworth Versus Commissioner of Stamps161 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
(1899) AC 99
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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 to appoint majority of
Directors or a right to control the management or policy decisions exercisable
by a person or person acting individually or in concert directly or indirectly,
including by virtue of their share holding or management rights or share
holders' agreements or voting arrangements or in any other manner. Therefore,
the word "right" as contained in Section 2(27) of the Act is of utmost
importance and the definition of the word "control" cannot be read to mean
something de hors the existence of a right.
132. On going through the order impugned in this appeal we find that the
Learned Single bench had held that no order can be passed against the
companies. It has also been held that the Court is not deciding any of the
points urged by the companies. Further, the companies would exercise voting
rights flowing from their investment in the companies controlled by PDB in the
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manner to be guided by the APL committee. Further, the learned Single Bench
was of the clear view that it is not deciding any of the points urged by the
companies and also recording a finding that no order can be passed against the
companies, in our view the observation that "the companies controlled by PDB
in the manner to be guided by the APL committee" is contrary to the other
findings recorded in the impugned order. Therefore, this finding appears to be
clearly inconsistent with the findings recorded by the learned Single Bench in
more than one place in the impugned order. When such inconsistent findings
were tested by the Hon'ble Supreme Court they have been interfered with and
the orders have been set aside and one such being in the case of Narain
Prasad Aggarwal (D) By Lrs Versus State of MP162. At this juncture, we note
that in the impugned order the learned Single Bench has accepted the
proposition that there was no dispute that a company can only recognize the
share holders whose name is in the register of members and cannot recognize
any other person. Such argument made on behalf of BCL was accepted by the
learned Single Bench. There appears to be no serious challenge to this
proportion which was accepted by the learned Single Bench in the cross-
objections which have been filed by the respondents. As pointed out earlier the
learned Single Bench has held that it is not deciding any of the points urged by
the companies. If that be so, the court without 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
(2007) 11 SCC 736
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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 do not belong to the share holder and even a 100%
share holder is not the owner of the company. The appellant companies had
contended that the directions issued against the company in the impugned
judgment may take away statutory rights of the company with regard to its
assets and it in effect permits a outsider to deal with the assets of the company
which in our opinion cannot be permitted. In the inter parties decision in
Priyamvada Devi Birla Versus Harsh Vardhan Lodha and Ors.163, the first
question which was taken up for consideration by the Court was the extent of
the jurisdiction of the probate Court and/or its duties pending consideration
2016 SCC Online Cal 1541
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for such grant. It was pointed out that while deciding a contentious cause
relating to a probate proceedings the only and/or primary duty of the probate
Court is to examine the genuineness of the will and while examining the
genuineness of the will, the Court is required to consider whether the will was
duly executed by the testator and/ or testatrix consciously or not; whether the
execution of the will by the testator and/or testatrix was duly attested by two
witnesses or not; whether there was a suspicious circumstances under which
the will was executed by the testator or the testatrix unconsciously and
whether the will is the last will of the testator or not. It was further pointed out
that if the testamentary court after examining the pleadings of the parties and
their evidence come to the conclusion that the will was duly executed by the
testator and/or testatrix consciously out of his/ her free will and at the time of
execution of the said will, the executor/ executrix was physically fit and
mentally alert and execution of such will was attested by two attesting
witnesses and this was the last will of the testator and/ testatrix and there was
no suspicious circumstances under which such will was executed, then the
testamentary court will grant probate of the said last will. On the contrary if
the court finds that the will was not duly and consciously executed or the will
was not properly attested or this was not the last will of the testator or there
was suspicious circumstances under which such will was executed and the
suspicion could not be removed from the mind of the Court, then the Court will
have no other alternative but to dismiss the suit. This was pointed out to
explain the extent of jurisdiction which the probate court exercises while
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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 held that HVL in capacity as the Chairman of the Board of Directors in
BCL cannot be mixed up with the capacity as legatty under the will. The court
posed the question to itself as to whether the directions which was sought for
by way of injunction against the HVL is legatty under the will and the answer
to the said question was "no". The court reasoned out by observing that HVL is
not a party in his capacity as the Chairman of the Board of Directors of BCL,
no directions can be passed against HVL in the capacity of being Chairman of
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the Board of Directors of the said company. Accordingly, it was held that no
directions can be passed either for production of relevant documents relating to
the proposed deal (subject matter therein) of HVL as a legatty nor any
injunction order can be passed against HVL in his capacity as the Chairman of
the Board of Directors. It was further held that though HVL became the
Chairman of the Board of Directors of the said company by virtue of his
interest flowing from the will but still the position that of a Chairman of Board
of Directors of the company cannot be linked with the position as legatty under
the will. Further the court unequivocally held the decision taken by the Board
of Directors cannot be the subject matter of scrutiny of the probate court. The
court quoted with approval the decision of the High Court of Kerala in the case
of Cochin Malabar Estate and Industries Limited and Another Versus P.V.
Abdul Khader 164 wherein it was held that even company court cannot
interfere with the day to day business management of the company. Following
the said decision, probate court held that the probate court cannot regulate as
day to day business policy of the company and it has no jurisdiction to
entertain the application for the relief as prayed for before it as the same
cannot be granted by the probate court under the provisions of the Indian
Succession Act. In support of such conclusion, the court referred to and relied
upon the decision of the Hon'ble Supreme Court in the case of Official
Trustee Versus Sachindra Nath Chatterjee 165 wherein the Hon'ble Supreme
Court approved the Full Bench decision of this Court in Hriday Nath Roy
114 Company Cases 777
AIR 1969 SC 823
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Versus Ram Chandra Barna Sarma 166. In the said decision the court has
dealt with the question as to what is meant by the jurisdiction. It was held 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 Bench after considering the materials which were placed
ILR (1921) 48 Cal 138
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before it and also the pleadings and after perusing the order passed by the
learned Single bench held that implication of taking over of the voting rights
and the right of control of 38 companies has nothing to take over the control of
the companies in other words, to take over the management of the said
companies. Therefore the Division Bench held that the effect of the order to
dislodge the Board/management without considering the provisions of the
Companies Act, is not sustainable. Further the Hon'ble Division Bench noted
the specific provisions in the Companies Act setting out the methods for
rectification of the share register and to dissolve the Board of Directors, which
has to be done as laid down under Section 397, 398 and 402 of the Companies
Act. Therefore the Court held that the learned Single Bench appointing the
administrator directing to rectify the share register and appointing them as
Directors superseding the Board of Directors are not in accordance with law.
However, the probate court has no jurisdiction to pass such order and
accordingly the order of appointment of APL over the MP Birla Group of
Companies and also directions given by the learned Single Bench were set
aside. At this juncture, we would be beneficial to refer to the decision in the
case of Goenka wherein the court held that the Succession Act is a self
contained code in so far as the question of making an application for probate,
grant or refusal of probate and appeal is carried against the decision of the
probate court. The probate proceedings shall be conducted by the probate
court in the manner prescribed in the Act and in no other ways. The issue in
probate proceedings relates to the adjudication over and due execution of the
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will and the court itself has no duty to determine title. The court of probate
with a copy of the will annexed establishes conclusively as to the appointment
of the execution and valid execution of the will. It does no more than
establishes the factum of the will and the legal character of the executor. The
probate court does not decide any question of title or the existence of itself. The
following paragraphs of the judgment would be relevant:
15. In Inswardeo Narain Singh v. Smt. Kanta
Devi and Ors. MANU/SC/0125/1953 :
AIR1954SC280 , this Court held that the court
of probate is only 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
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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 executor. Probate court does
not decide any question of title or the existence
of the property itself.
16. The grant of a Probate by Court of
competent jurisdiction is in the nature of
proceeding in rem. So long as the order remains
in force it is conclusive as to the due execution
and validity of the will unless it is duly revoked
as per law. It binds not only upon all the
parties made before the court but also upon all
other persons in all proceedings arising out of
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the will or claims under or connected therewith.
The decision of the Probate Court, therefore, is
the judgment in rem. The probate granted by
the competent court is conclusive of the validity
of the will until it is revoked hand no evidence
can be admitted to impeach it except in a
proceeding taken for revoking the probate. In
Sheoparsan Singh v. Ramnandan Prasad ILR
(l916) Cal. 694 PC Singh, the judicial committee
was to consider whether the will which had
been affirmed by a court of competent
jurisdiction, would not be impugned in a court
exercising original jurisdiction (Civil Court) in
suit to declare the grant of probate illegal etc.
The privy council held that the Civil Court has
no jurisdiction to impugned the grant of probate
by the court of competent jurisdiction. In that
case the subordinate court of Muzafarbad was
held to be had no jurisdiction to question the
validity of the probate granted by the Calcutta
High Court. In Narbheram Jivram v. Jevallabh
Harijivan MANU/MH/0198/1932 : AIR 1933
Bom 469 , probate was granted by the High
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Court exercising probate jurisdiction. A civil suit
on the Original Side was filed seeking apart
from questioning the probate, also other reliefs.
The High Court held that when a probate was
granted, it operates upon the whole estates and
establishes the will from the death of the
testator. Probate is conclusive evidence not only
of the factum, but also of the validity of the will
and after the probate has been granted, it is
incumbent on a person who wants to have the
will declared null and void, to have the probate
revoked before proceeding further. That could
be done only before the Probate Court and not
on the original side of the High Court. When a
request was made to transfer the suit to the
Probate Court, the learned Judge declined to
grant the relief and stayed the proceeding-on
the original side. Thus it is conclusive that the
court of probate 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
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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 K.J. Sengupta of this court. The order
arose out of prayers for appointment of APL, injunction and other interlocutory
reliefs. The said order was at an ad interim stage and no APL was appointed.
The findings were not binding at any stage. In any event, the court observed
that the estate comprised of the movable and immovable properties "mentioned
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in the affidavits of assets of Lodha or which might be discovered by inventory
or otherwise".
138. The next relevant order was of May 19, 2006, passed by the same
learned Single Judge of this court while taking up applications inter alia for
appointment of an independent APL. A four-member Committee was appointed.
Vide order dated October 11, 2007, however, a Division Bench of this court
modified the order and removed the committee but granted injunction. In its
discussions, the Division Bench observed inter alia that the Estate was vast
and of substantial value, but directed the Executor to keep accounts only of
the dividends of the shares owned by PDB, neither more nor less.
139. The matter reached the Supreme Court on the question of caveatable
interest regarding the estate but the Supreme Court restricted it to the issue in
its order dated March 31, 2008.
140. Thereafter, the learned Single Judge took up the matter and decided that it
had jurisdiction to take up the contentious matter, which was affirmed by a
Division Bench. None of the said orders have any bearing on the present issue.
By an order dated February 5, 2010 passed on the death of Rajendra Singh
Lodha, his son HVL was permitted to proceed with the proceeding by
converting the same from probate to letters of administration proceeding.
141. Again, vide order dated August 27, 2010, the same learned Single
Judge appointed a new set of three persons as APL. Incidentally, the learned
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Single Judge clearly proceeded on the premise that the estate comprised of the
shareholding of PDB and "voting rights and incidental rights". It would be
interesting to note that the court observed in paragraph no. 71 of the judgment
that "Apprehension of the affectation of business of running company with
appointment of Administrator during analogy of Receiver is in my opinion
misplaced here at the moment".
142. On December 22, 2011 a Division Bench of this court, sitting in
judgment over the previous order, recorded that the parties consented to an
independent 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,
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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 could not encroach upon the jurisdiction
of the Board of Directors of the concerned company to purchase shares. The
learned Single Judge opined that a promoter of a company cannot exercise
power derogatory to the provisions of Company Law. It was held that the APL at
best could take out appropriate proceedings before appropriate forums to
protect the interest of the estate.
146. Hence, no conclusive finding was reached by any of the courts which
passed orders in connection with the probate/letters of administration
proceeding which can be elevated to the status of a conclusive adjudication of
the issue. Thus, adjudication on the issue of the extent of the estate of late
PDB is not barred by res judicata.
147. Upon a thorough scrutiny of the several judgments and orders passed
by different courts/forums, it is evident that the question of the extent of the
Estate has never been finally determined, sufficient to be terms as res judicata.
Most of the proceedings in which such orders were passed were interlocutory
proceedings or proceedings arising out of interlocutory proceedings. Some of
the orders, passed by the Company Law Board, would not operate as res
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judicata in any event, since the Company Law Board is not competent to pass
reliefs which can be granted by the Probate Court or a Civil Court and, thus,
the tests of res judicata would not be satisfied at all.
148. Although there have been elaborate discussions about the concept of
'controlling interest' by virtue of the cross-holdings of shares in the companies
vertically through different Tiers, it was never conclusively determined in any
final proceeding as to the exact extent of the Estate of the PDB.
149. Thus, it cannot be said that the extent of PDB's Estate has been
finally decided by any forum.
150. As to the question of estoppel, it cannot be said that HVL is barred by
estoppel in disputing that the extent of the Estate of PDB ranges over all the
companies, including the companies in which PDB did not have majority
shareholding by virtue of her controlling interest.
151. It is found from the records that HVL, in his affidavits on oath, has
consistently maintained that the extent of the Estate was restricted to the
affidavits-of-assets filed by both sides. The written notes of argument filed on
behalf of HVL or RSL by their learned advocates, contrary to the said
statements on oath by 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.
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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 estoppel and admission. Judicial and issue estoppel have
also been addressed threadbare.
155. The Calcutta High Court in Dwijendra (supra) and the Supreme Court
in Mumbai International Airport (supra), Hope Plantations (supra), Bhanu Kumar
Jain (supra), Ishwar Dutt (supra) have expounded the law elaborately.
Judgments of the US Supreme Court (New Hampshire's Case), the Karnataka
High Court in Surendra Nayak (supra) and the Madras High Court in 2017 SCC
OnLine Mad 27091 have been cited on the operation of Judicial Estoppel.
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156. However, the said line of judgments do not alter the factual situation
in the present case in view of the dual aspects of the testamentary court's in
rem jurisdiction being unbound by parties' fetters of admission and estoppel
and HVL's specific stand as a legatee being contrary to counsel's written notes
of arguments of RSL, not as his father but in a different legal capacity of
Executor.
157. Hence, even without relying on Chhaganlal Keshavlal (supra), where the
Supreme Court observed that admission cannot override orders of court and
ESI (supra), where the Supreme Court held that concession to court in law and
contrary to statutory rules are not binding or operate as estoppel, the inevitable
conclusion in the facts of the instant case is that HVL is not bound by
admission or estoppel from debating the stand that PDB's estate is confined to
her 1260 shares, although the question still remains as to what such
shareholding would entail. However, such question is the subject-matter of
other issues formulated herein, to be discussed under the appropriate
headings.
158. One other confusion is required to be dispelled in the present context. It
has been repeatedly argued by the Birla Group that HVL was bound by the
statement made by RSL, his father, insofar as the extent of the Estate is
concerned.
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159. However, the capacities in which RSL and HVL acted are different and
distinct from each other. Whereas RSL acted as executor of the concerned Will
of 1999 executed by PDB, HVL took over upon the demise of the executor as
the legatee of the said Will. The interests of an executor and legatee are
different and distinguishable. It has to be kept in mind that HVL did not
stepped into the shoes of his father in the capacity of a son but step into the
shoes of the executor upon his demise, as a legatee to the Will.
160. Hence, it cannot 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.
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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 through the myopic lens of res
judicata between the parties. Even if an issue is decided finally between HVL
and Birla faction, the same does not operate against a Probate Court while
adjudicating issues, since the final judgment of a Probate Court would not be
restricted to the parties but would operate against the world at large.
164. Hence, the Probate Court's decisions cannot be decided from the limited
perspective of res judicata or estoppel between the parties. Thus, the
Probate/Letters of Administration Court has an additional responsibility to
independently weigh evidence and adjudicate carefully on all issues before it,
prima facie or final. Viewing from such perspective, the question of res judicata
or estoppel between the parties cannot restrain the Probate Court from
independently assessing the question of extent of Estate of the deceased
testatrix.
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165. None of the previous adjudications pertained to a final decision on the
application under Section 247 of the Succession Act. Since this Court is sitting
in appeal over a final decision by the learned Single Judge on the application
under Section 247 of the Succession Act, by operation of the principles of
Order XLI of the Code of Civil Procedure, the Appellate Court has equivalent
powers of finally deciding the said application, co-equal with the learned Single
Judge which was deciding the same. Hence, while finally deciding the
application for appointment of Administrator Pendente Lite, this Court is not
fettered by previous observations by different interlocutory courts at different
points of time.
166. Issue 3. i) - A short answer to the question as to how far APL can
interfere in the companies' affairs has to be answered in a conservative
manner. The APL stepped into the shoes of the deceased testatrix and cannot
exercise powers which the testatrix herself did not have. PDB, being the owner
of certain particular shares in certain companies, could only function as the
shareholder of such companies. The shares and incidental rights thereto such
as voting rights, etc., were definitely the 'property' of PDB, but her personal
charisma, authority and influence asserted over other shareholders and
companies definitely does not come within the purview of her 'property'.
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167. Thus, the APL can merely step into her shoes and register itself or its
nominees as owners of the said particular shares, 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.
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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 All 360
and AIR Ker 206.
171. There is also nothing to show that the estate of PDB is a beneficial owner
of the companies or that its significant beneficial ownership with a depository
was ever recorded. Hence Balakrishna' Case and J.P. Srivastava (supra) are
squarely applicable.
172. Hence, the testamentary court cannot pass orders directly in respect of the
management and affairs of corporate/contractual rights of other entities,
including companies, trusts, etc.
173. In Rustom Cawasjee Cooper (supra) and Tata Memorial Hospital's Case, the
Supreme Court has laid down what property can be bequeathed. The position
and rights of a shareholder has also been elaborately argued on the strength of
Howrah Trading Co. (supra), J.P. Srivastava's Case, Shanti P. Jain (supra) and
LIC v. Escorts, all cited by the parties.
174. Murarka Paint (supra) has been relied on for the principlethat directors of a
company can only be denuded of powers of control and management by
alteration of Articles or by their removal.
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175. The concept of 'control' vis-à-vis companies has been argued threadbare
and has already been discussed while dealing with the first few issues.
176. Vodafone's Case is a contemporary landmark and observes that 'controlling
interest' is inextricably linked to ownership/voting powers of shares.
Chintalapati S. Raju reiterates the same proposition.
177. In fact, counsel have gone so far as to argue elaborately on significant
beneficial ownership as well.
178. It cannot be in doubt that the APL's powers cannot go beyond those of the
testamentary court itself. The testamentary court's zone of operation, in turn,
is co-extensive with the estate of the testatrix.
179. Seen in proper perspective, thus, the present issue is dependent on the
first issue, that is, the extent of the estate of PDB. Thus, insofar as the
companies are concerned, the testamentary court has powers over the 1260
shares held by PDB, but also includes the control which such shares assert
over the respective companies through voting rights and other sanctioned tools
under the company jurisprudence itself. Shareholders, although not the
owners of the company's assets, definitely have a crucial role to play in the
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decision-making process through voting and ancillary membership rights.
Thus, the majority shareholders of the first-tier companies get to decide the
way 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.
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183. The Calcutta High Court held in Maurice Saleh's Case that even legal
powers of the testatrix are not a part of the estate, which principle was also
echoed in Commissioner v. Nirmala by the Bombay High Court.
184. The Supreme Court in Chandrabhan's Case held that the testamentary
court does not have jurisdiction to pass orders against individuals/entities
acting in different capacity.
185. Hence, the testamentary court can only have control over the shareholding
and ancillary rights, including voting rights in companies. Of course, the court
cannot participate in the day-to-day affairs of the companies and precisely for
such reason has appointed the APL to represent the estate of the deceased. The
testamentary court is not a company court and is not sitting in judgment over
allegations of mismanagement or fraudulent transactions of the companies
and, thus, need not lift the corporate veil in the current context.
186. The charter of the APL under Section 247 of the Indian Succession Act is to
protect and preserve the interest of the estate and can deal with the same,
short of distributing the same.
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187. By placing reliance on AIR 2000 Cal 152 and (2019) 9 SCC 154, it has been
argued that the court cannot delegate functions to any other authority.
Although true, the said theory is not applicable if the testamentary court
appoints an APL under Section 247 of the Indian Succession Act. What is
delegated is not the adjudicatory function or the supervisory powers of the
testamentary court, but only the day-to-day ground-level operation to protect
and preserve the interest of the estate of the deceased.
188. Hence, the testamentary court, in the present case, can and should clothe
the APL with the powers to enlist themselves as members of the companies
where the testatrix PDB held shares, in the capacity of shareholder, and also
exercise each and every power, including voting rights, associated with
shareholding.
189. Issue 3. ii) - One of the judgments cited is Abha Rani Sinha's Case, where
the Calcutta High Court held that the APL cannot take a partisan stand. The
said principle is indisputable and, thus, calls for a decision on the issue at
hand.
190. Decisions have been cited on the proposition that the APL should act
together as a body (not majority); if there is no unanimity, it should move court
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for directions/clarifications. Some such decisions are (2009) 2 Maha Law
Journal 340,(1999) 3 SCC 548 and (1978) 1 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 arbiter in case of dispute between the other two
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members. Obviously, the respective members chosen by the Birla Group and
the Lodha Group represent their groups' interests in the APL. Hence, there
would be a stand-still if unanimity was a pre-condition, since the respective
members of the two factions would always be at loggerheads with each other.
A resolution could only come by way of an authoritative decision taken by the
judicial member, who is supposed to be neutral.
195. Thus, on such score as well, the APL ought to be permitted to function on
majority decisions instead of waiting for unanimity. Hence, the APL decisions
have to be taken on the basis of majority and not unanimity.
196. The Bombay and Gujarat High Courts respectively, in 2008 SCC OnLine
Bom 1210 and AIR Guj 30, have held that the APL are officers of the court and
are to be impartial; they cannot enter into the arena of conflict between the
parties or the merits of the case.
197. Unfortunately, the composition of the APL and its antecedents in the
present case rule out the desired impartiality individually insofar as the
representatives of each of the factions are concerned. The only way in which
the APL can function effectively is for the third member, who is compulsorily a
retired nominated Judge, to act as an arbiter and, if impossible, to exercise
veto. Although the initial nomenclature of the third (judicial) member as
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'Umpire' has formally not been accepted by the parties previously, it has to be
kept in mind that we are not dealing with an Arbitral tribunal where a formal
straight-jacket formula as sanctioned by statute has to be mandatorily
adopted. A court-appointed APL is flexible on such count, both as to
nomenclature and interplay of authority inter se its members.
198. The theory of referring to the court each and every day-to-day decision in
the functioning of the APL as a shareholder/member of the companies is not
workable. Conflict is a foregone conclusion in the present composition of the
APL, since there has not been a single meeting of the APL in recent past where
there has been unanimity among all three members. Of course, major decisions
(to be decided by the third member) are to be referred to the testamentary court
for formal orders/decisions.
199. In any event, since the APL is not an adjudicatory authority and cannot
act so, there does not arise any question 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:-
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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
her during her lifetime in the various companies, trusts and other entities as
well as the consequential powers which such ownership carries as its
incidence. Insofar as the companies are concerned, the estate left by PDB
consists of the shares which she owned in the various companies and the
powers and legal authority she had by virtue of such shareholding, which are
heritable. Such powers include, for example, voting rights and ancillary other
rights of shareholders sanctioned by law.
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It is relevant to remind ourselves, in this context, of the rights of the
shareholder as laid down in LIC v. Escorts (supra) which are:
(i) to elect directors and thus to
participate in the management
through them; (ii) to vote on
resolutions at meetings of the
company; (iii) to enjoy the profits of
the company in the shape of
dividends; (iv) to apply to the court for
relief in the case of oppression; (v) to
apply to the court for relief in the case
of mismanagement; (vi) to apply to the
court for winding up of the company;
(vii) to share in the surplus on
winding up.
204. Issue 2 ii) 'Controlling interest' in the present context can only mean the
heritable incidental rights, including voting rights, rights to participate in
shareholders' meetings and other decision-making processes which PDB would
have by dint of her shareholdings in the respective companies. Her personal
charisma or influence among the different companies and their managements,
even if existent during her lifetime, unfortunately went with her and cannot
form a bundle of heritable rights to be part of her estate.
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205. Paragraph nos. 159 and 160 of Vodafone (supra), quoted in paragraph no.
182 above, are germane here.
"Control" is a mixed question of law
and fact. Ownership of shares may, in
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
holding of shares. A controlling interest is,
therefore, not an identifiable or distinct
capital asset independent of the holding of
shares. The control of a company resides in
the voting power of its shareholders and
shares represent an interest of a
shareholder which is made up of various
rights 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
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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
estate. It has been held time and again, that too in interlocutory orders (the
findings of which are tentative and not conclusive), that the estate pertains to
the share-holdings and the 'controlling interest' which PDB had by virtue of
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such shareholding, without specifying exactly what was meant by 'controlling
interest'.
207. Also, HVL was not estopped by the stand taken by RSL inasmuch as HVL
was substituted in a different capacity than RSL in the testamentary
proceeding. Whereas RSL was the Executor, HVL was at best a beneficiary.
HVL was not substituted under Order XXII Rule 4 as the son/heir/legal
representative of RSL (in which case he might have been bound by RSL's
admissions, if any); but entered into the fray as a legatee/beneficiary, which is
in a different capacity than RSL. Thus, in any event, RSL's statements could
not have bound HVL. Again, HVL's pleadings in court would be his legal stand,
and not the written arguments authored by his counsel, in the event there was
difference between the two, particularly in the absence of any specific proof
that HVL had given the power to his counsel to admit the extent of PDB's estate
on his behalf.
208. Seen from another perspective, the principle of Estoppel and the doctrine
of res judicata are not applicable in full vigour in judgments in rem as they
would be in judgments in personam. Judgments in rem bind the whole world at
large; thus, inter-party admissions may not deter the testamentary court (or for
that matter other 'in rem courts' like admiralty courts, matrimonial courts or
insolvency courts) from independently deciding all issues in accordance with
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law. The water-tight binding effect of res judicata and estoppel in judgments in
personam are, thus, much relaxed and diluted in proceedings in rem.
209. Hence, this issue is decided in the negative, holding that the issue of
extent of the estate of the deceased is not barred by res judicata or estoppel.
210. Issue 3 i) The answer to this issue lies embedded in the previous issues.
We cannot but be a bit conservative here. The APL steps into the shoes of the
deceased testatrix - nothing more, nothing less. Thus, it cannot exercise
powers which the testatrix herself did not have during her lifetime. PDB was
the owner of certain specific shares in some of the companies. In such capacity
of shareholder, she had all incidental rights such as 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-
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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 tier-one companies and incidentally with the rights
of those companies as shareholders of the other companies.
212. The APL, thus, cannot interfere with all internal affairs of the companies
of all the tiers with the blessings of the testamentary court. There cannot be
any universal or dynamic injunction or direction affecting the future course of
action of the companies from the testamentary court, simply because the
testatrix could not herself had taken any such action in law.
213. The steps taken by the APL in registering its nominees as members of the
companies where the deceased testatrix held shares, in consonance with and
in the ratio of the shareholding rights of PDB in each of such companies, is
perfectly justified in law. The APL, through its nominees, may very well decide
which way the votes of the testatrix's shares should go and how they would
exercise their voting rights and election of directors. The nominees, as such
shareholders, may participate in shareholders' meetings and decision-making
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processes of the tier-one companies and thus mould the course of action and
business decisions of such companies. Since the said tier-one companies are
also shareholders of other companies in the secondary and tertiary tiers, the
APL, through its nominees, may also decide how to go about asserting the
interests of the estate of PDB in the secondary and tertiary tier companies
through the tier-one companies' actions as shareholders of the latter
companies.
214. However, such process can only be done in above-board and legal manner
and in due process of law. The APL, for example, cannot jump steps to directly
take or pre-empt business decisions in respect of the tertiary-tier companies
without going through the process of first taking decisions in the first tier
companies and getting its decisions approved through the representation of the
first tier companies as shareholders in the lower tier companies.
215. As and when any major decision is required to be taken regarding
transactions/transfers of the shares themselves, the APL mandatorily has to
approach the testamentary court for necessary orders.
216. Also, the APL itself, being the repository of interest of the estate as the
representative of the testamentary court, shall have to take appropriate
directions and orders from the testamentary court prior to initiating or
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contesting any litigation. 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 and the parties to approach the testamentary
court taking up the letters of administration suit if need be and where there are
serious doubts.
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219. In view of the inordinately long pendency of the proceeding, we part with
the matter with the hope and trust that the testamentary court shall ensure
that the letters of administration suit is disposed of expeditiously, without
granting any unnecessary adjournment to either side.
220. APO/89/2020 with OCO/11/2020 with OCO/20/2020 with
OCO/3/2020, APO/90/2020 with OCO/12/2020 with OCO/21/2020 with
OCO/4/2020, APO/91/2020 with OCO/13/2020 with OCO/22/2020 with
OCO/5/2020, APO/92/2020 with OCO/14/2020 with OCO/23/2020 with
OCO/6/2020, APO/94/2020 with OCO/15/2020 with OCO/24/2020 with
OCO/7/2020, APO/95/2020 with OCO/16/2020 with OCO/25/2020 with
OCO/8/2020, APO/98/2020 with OCO/10/2020 with OCO/18/2020 with
OCO/26/2020 are thus disposed of in the light of the above observations,
modifying the impugned order to extent as indicated above.
221. GA 2 of 2021 in APO/91/2020, GA 2 of 2023, GA 3 of 2020, GA 4 of
2021, GA 5 of 2021 in APO/92/2020 are also disposed of accordingly.
(T.S. SIVAGNANAM, CJ.) (SABYASACHI BHATTACHARYYA, J.)
(P.A. PRAMITA/SACHIN/PALLAB)
