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2024 (1) TMI 833 - AT - Companies LawTransmission of shares - transmission of the shares ordered without such necessary documentation - HELD THAT:- It is seen from Section 44 of the Companies Act, 2013 that shares are construed as movable property governed by the Articles of Association of the Company and Article 8.15 mandates that a Succession Certificate is required for the transmission of the shares. When Section 44 of the Act provides that shares of any member in a Company are required to be transferred in the mode and manner provided for under the Articles of Association of the Company, the sole Respondent is bound to meet the requirements of the said article 8.15. This Tribunal in the matter of ‘M/s. Nalini Hari Vs. M/s. Mysore Stoneware Pipes and Potteries Limited’ in Company Appeal (AT) (CH) No. 55/2021 dated 05.12.2022 [2022 (12) TMI 367 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] has recognised the importance of a valid Succession Certificate in a matter where the Applicant was seeking transmission of shares under Section 58 of the Act. In this matter this Tribunal upheld the refusal to direct transmission of shares even though a Succession certificate was issued, the same was under challenge. There are force in the contention of the Learned Counsel for the Appellant that considering the same ratio, the prayer of the first Respondent herein seeking transmission of Shares without even obtaining a Succession Certificate, cannot be sustained. A Company cannot refuse `Transmission of Shares’, once the `legal heirs’ proves his/her entitlement to them, through a `Probate’, a `Succession Certificate’. It is to be pointed out that `transfer’ is an act of parties or law by which the title to the party is conveyed from one person to another. This would lapse by `Operation of Law’ or `Succession’. `Transmission of Shares’ on the basis of `will’ can raise complicated issues which require an `evidence’, to be read by the parties and need to be determined by a Court of Law. The Succession Certificate, specifies the debts and securities entitles a legal heirs not only to receive the Interest or Dividends’ but also to negotiate or transfer them, as per decision in Themappa Chettiar Vs. Indian Oversees Bank [1943 (3) TMI 11 - HIGH COURT OF MADRAS]. In regard to disputes pertaining to `Will’, parties are expected to get that dispute settled from a `Competent Court of Law’ as per decision in `C. Rajesh Kapoor’ Vs. `Tirupati Balaji Hotels P. Ltd.’. If the `Probate Proceedings’ are pending in `Civil Court’ then the `Petitioner’ under the `Companies Act’ for `rectification of register’ will not be `maintainable’. In the facts of the attendant matter on hand, the Company can effect `transfer of shares’, on the basis of `Succession Certificate’, as per Section 370 of the `Indian Succession Act, 1925’. The impugned order set aside - appeal allowed.
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