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2016 (5) TMI 983 - CALCUTTA HIGH COURT

2016 (5) TMI 983 - CALCUTTA HIGH COURT - TMI - Application for grant of probate - Application filed by the predecessor-in-interest of the present plaintiffs who, as executor and/or propounder applied for grant of probate of the Will published by one Priyamvada Devi Birla in short P.D.B on 18th April, 1999 along with the codicil dated 15th April, 2003 to the said Will - Held that:- Board of Directors of a company is authorized to exercise its power on behalf of the company by means of resolution .....

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n filed by the applicants for making “APL” functional is awaiting consideration before the Appeal court. In our view the parties should approach the Appeal Court for making the “APL” functional immediately, so that “APL” can exercise its power of control over the management of the B.C.L by following the provisions prescribed under the Companies Act and in case the “APL” fails to discharge its duty, Probate Court can pass necessary direction upon “APL” for taking steps in accordance with law, whe .....

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he probate proceeding is impossible as Probate Court cannot decide any foreign issue unconnected with the probate proceeding.

Respectfully agree with the submission of Mr. Mitra, learned Senior Counsel appearing for the plaintiffs/ Lodhas that Probate Court cannot pass any injunction order against any person who is not a party to the proceeding. However, without discussing the other contention of Mr. Chidambaram cannot arrive at this ultimate conclusion.

If the averment mad .....

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n is not entertainable by the Court even by accepting all the statements made in the said application as true and correct.

Thus, cannot agree with the submission of Mr. Mitra, learned Senior Counsel, that the applications are devoided of any cause of action. To conclude, hold that since the decision of the Board of Directors in taking over four cement manufacturing units of Reliance Infrastructure is not subject to the control of the promoters’ controlling power over the management of .....

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e observation that the estate of the deceased cannot be left uncontrolled and since the “APL” has now become defunct, the parties may approach before the appropriate forum for making such “APL” functional so that whenever the Probate Court feels necessary, the probate Court can pass appropriate direction upon the “APL” for safeguarding and/or protecting the estate of the deceased.

All the applications filed by the defendants and the demurrer applications filed by the plaintiffs are, t .....

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harya, Adv. For the Respondent : Mr. P. Chidambaram, Sr. Adv., Mr. Bimal Kumar Chatterjee, Sr. Adv., Mr. Hirak Kumar Mitra, Sr. Adv., Mr. Sanjiv Sen, Adv., Mr. Swarnendu Ghosh, Adv.,Mr. Debdutta Sen, Adv. Ms. Suchismita Ghosh, Adv., Mr. M.K. Seal, Adv., Mr. Shaunak Mitra, Adv., Mr. Samaraditya Pal, Sr. Adv., Mr. S.P. Sarkar, Sr. Adv., Ms. Vineeta Meharia, Adv., Mr. D.N. Sharma, Adv., Mr. N. G. Khaitan, Adv., Mr. Pratik Mukhopadhyay, Adv., Mr. K. N. Mukherjee, Adv. JDUGEMENT Jyotirmay Bhattachary .....

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s were substituted in the place of the said deceased executor and the said proceeding was converted into a proceeding for grant of letters of administration at the instance of the Present plaintiffs being the legatees under the said Will. In an appeal arising out of an order passed by the Probate Court, a three member committee of administrators pendente lite (hereinafter referred to as APL ) was appointed over the estate of the late Priyamvada Devi Birla. Out of these three members of the APL, .....

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oked after by any independent officer of the Court. When in these set of facts, the defendants/applicants came to know from various newspapers reportings that Birla Corporation Limited in which Priyamvada Devi Birla had some share was negotiating with Reliance Infrastructure Limited for acquiring four of its cement manufacturing units by purchasing its shares in Uttar Pradesh, Madhya Pradesh, Maharashtra and West Bengal involving a huge investment of about 4,000-4200 crores, two applications wer .....

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ent manufacturing company Viz., Lafarge India. However, the proposal for taking over two units of Lafarge India was subsequently abandoned by B.C.L. It is alleged in the said application that since the estate of Priyamvada Devi Birla is the promoter of Birla Corporation Limited and its control vests with the estate of Priyamvada Devi Birla directly or indirectly through the interlinking, chain and cross-holding of shares, whenever any policy decision which has material impact on the fortunes of .....

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es in the success or failure of the said company. It was further alleged therein that even this Hon ble Court while appointing a committee of APL on 23rd August, 2012 made it clear irresistibly, expressly or impliedly that any major policy decision affecting the interest can be taken by this Hon ble Court through the Committee of APL as constituted by this Court. In this background two applications being G.A 508 of 2016 & GA 189 of 2016 were filed by two sets of defendants seeking leave of t .....

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of Reliance Infrastructure. Injunction is also sought for restraining the Harsh Vardhan Lodha from causing Birla Corporation Limited from acquiring some of the business of Reliance Infrastructure limited and two cement units of Lafarge India, so that status quo in respect of such proposed transaction is maintained until the Hon ble Court arrives at a decision as to whether such acquisition is in the interest of the estate of Priyamvada Devi Birla or not. Injunction has also been sought for rest .....

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g to the said transaction with Lafarge India and the other incidental reliefs claimed in these applications relating to the said transaction with Lafarge India. Since both these applications were filed for identical reliefs on similar set of facts, both these applications were heard analogously and for avoiding conflict of decision, I propose to dispose of both these applications by this common judgment. The plaintiffs herein has taken out two applications in the form of demurrer application cha .....

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set, Mr. Mitra, learned Senior Counsel appearing for the plaintiffs, made it clear that while demonstrating his objection regarding maintainability of those applications filed by the defendants, he will confine himself to the averments made by the defendants/applicants in their said applications and will support his conclusion by accepting the statements made in the application, as true and correct, this Court permitted Mr. Mitra to argue the maintainability point only on the basis of the averme .....

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applications, Mr. Mitra pointed out that the entire reliefs claimed in the said applications are based on certain information collected by the applicants from various newspapers reporting which they claimed in their affidavits to be the information derived by them from records. Mr. Mitra referred to various judicial pronouncements of the Hon ble Apex Court to support his contention that newspaper reportings per se are not admissible in evidence and, as such, the Court should not take note of suc .....

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5 paragraph 26. Relying upon the aforesaid decisions of the Hon ble Supreme Court, Mr. Mitra submitted that if the newspaper reportings are not taken into consideration as these are inadmissible in evidence, it will necessarily follow that the relief claimed in these applications have no foundation at all inasmuch as apart from these newspaper reportings, the applicants have not disclosed any other source of information based on which they expressed their apprehension that if the four units of R .....

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e ignored at this stage and the application cannot be dismissed at this stage for want of evidence still then according to Mr. Mitra, these applications are liable to be dismissed on the ground of its maintainability as the Court while dealing with the testamentary suit has no jurisdiction to grant the relief which are claimed by the applicants in these applications. According to him, the Probate Court while dealing with a testamentary suit only acts as a Court of conscience to find out as to wh .....

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that the will is the last Will of the testator and the said will was duly executed by the testator and execution of the will by the testator was properly attested by the attesting witnesses and the testator was physically fit and mentally alert at the time of execution of the Will and there was no suspicions circumstance which might have influenced the testator to execute the Will then the testamentary Court will have to grant probate to the said Will. He further contended that while dealing wi .....

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mination of various issues relating to the business management of a company registered under the Companies Act which authorizes the Company Law Board only to resolve such dispute. He elaborated his aforesaid submission by contending that under the Companies Act a company cannot be the asset of the estate belonging to deceased and the shareholders of a company has no interest in the asset of the company even though the shareholders have interest in the shares of the company. According to him shar .....

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itra submitted that the probate Court has already taken care of these shares and had already appointed APL which has already got these shares registered in its name and these shares are well-managed by the APL . According to him, since company is not the assets of the estates of Priyamvada Devi Birla, the testamentary court cannot pass any direction regarding management of the company and/or concerning any matter relating to its business policy. In support of his submissions that the company can .....

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e the asset of the shareholder, the shareholder cannot make any provision relating to the assets of the company in her Will. Thus, he submitted that since the assets of the company is not a part of the estate of the deceased, the Probate Court has no jurisdiction to pass any order regulating the business of the company, even if the Board of directors of a company takes any decision adverse to the interest of the shareholder or acts in violation of the provisions of the Companies Act. According t .....

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shareholders of the said company to interfere with the decisions of the Board of Directors in this regard. He thus, contended that if the shareholders of the company has no say in the matter of taking any decision by the Board of Directors of a company in taking over another company or acquiring or controlling the substantial stake in another company then this court sitting in this jurisdiction, also cannot interfere with the jurisdiction of the Board of Directors of the company in taking over .....

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the Board of directors, no action as contemplated under the said provision against the Board of Directors can be taken in the instant case. Mr. Mitra however, submitted that even if the Board of Directors violates any of the provision of Section 180 of the said Act in the process of management of the assets of the company still then this Court sitting in this jurisdiction has no jurisdiction to grant any relief to a party as jurisdiction to grant any relief to a deserving party is given to the .....

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In support of his aforesaid contention he has relied upon the following decisions of this Hon ble Court:- 1. In the case of Murarka Paint & Varnish Works (Private) Ltd. Vs. Mohanlal Murarka & Ors. reported in 65 CWN 32 at page 14. 2. In the case of Jagdish Prasad & Anr. Vs. Pt. Paras Ram & ors. reported in AIR 1941 Allahabad 360 at page 363 and 3. In the case of Suburban Bank Private Ltd. Trichur Vs. Thariath & Anr. reported in AIR 1968 Kerala 206 paragraph 5. He further con .....

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t manufacturing company nor could the APL initiate the process of removal of the Directors for not taking steps in conformity with the provisions of the Companies Act. He further contended that interim order is always granted in aid of the ultimate relief. If this age old established principle of law is followed then it goes without saying that no relief by way of interim measure as prayed by the defendant in this application can be granted to the applicant in this proceeding even if ultimately .....

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Vs. Hardyal Singh Dhillon & Ors. reported in (2007)11 SCC 357 paragraph 5. He also contended that it is well settled principle of law that Court has no jurisdiction to pass any order against any third party. He elaborated his submission by contending that in this probate proceeding Birla Corporation Limited has no caveatable interest. He argued that since Birla Corporation Limited has no caveatable interest in the suit, it cannot be impleaded as a party in this testamentary suit and if it ca .....

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.M Aboobucker Vs. K, Kunhamoo & Ors. reported in 1958 Madras Page 287. 3. In the case of Varghese Vs. Fast Line Builders and Developers Kerala Pvt. reported in 2013(2) Kerala Law Journal page 695 and 4. In the case of West Bengal Housing Board Vs. Pramila Sanfui & Ors. reported in 2016(1) SCC 743. Relying upon the aforesaid decision of different High Courts as well as the Hon ble Supreme Court, Mr. Mitra submitted before this Court that since this Court sitting in this jurisdiction has n .....

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ded that the instant application is also not maintainable for want of cause of action as the applications do not disclose any averment to the effect that in case the four cement manufacturing units of Reliance Infrastructure are acquired, the value of the shares of Birla Corporation Limited will go down affecting the interest of the defendants. According to Mr. Mitra, in the absence of such assertion in the application itself no Court can grant any relief to the defendant on the basis of their a .....

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dants in this application cannot be granted against the Birla Corporation Limited, they have sought for certain directions against Harsh Vardhan Lodha one of the plaintiffs in the said suit, in addition to the reliefs claimed against the Birla Corporation Limited. Mr. Mitra submitted that Harsh Vardhan Lodha is the Chairman of the Board of Directors of the said company. He has dual capacity; one, as one of the plaintiffs i.e., as legatee under the Will and other is as Chairman of the Board of Di .....

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any order interfering with the internal management of the said company, this Court is incompetent to pass any direction upon any of the Directors of the said company including Harsh Vardhan Lodha, the Chairman of the Board of Directors, concerning any decision taken and/or to be taken by the Board Directors of the said company. Mr. Mitra further contended that since the testatrix had nominal shares in Birla Corporation Limited; the APL represents the minority share holder in the said company. He .....

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was found to have been the owner of the entire shares of the company, he cited a decision of the Hon ble Supreme Court in the case of Western Coalfileds Limited Vs. Special Area Development Authority Korba & Anr. reported in (1982) 1 SCC 125 wherein it was held that even the land and building vested in and owned by a Government company, are not exempt from payment of property tax to the Municipality, as a Government Company registered under the companies Act is a legal person, separate and .....

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an participate in the decision making process relating to the management of this assets of the company by the Board of Directors. Mr. Mitra further contended that the reliefs which the applicants have claimed in this application cannot be granted by the probate Court because of its limited jurisdiction conferred on it by the Indian Succession Act. He argued that even the company Court could not have entertained this application as it was held by the Hon ble Kerala High Court in the case of Cochi .....

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o endless litigations and pin down the company within the four walls of the company Court. The High Court further held that the company Court should shut its doors to them and deny entry. Mr. Mitra further contended that the allegation made by the applicants that the directors of the said company are under the control of the Harsh Vardhan Lodha, the Chairman of the Board of Directors and in fact, all the decisions were taken by the said Harsh Vardhan Lodha, are baseless as it appears from the do .....

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Justice Ravindran was accepted. He thus, argued that since APL did not object to the selection of these independent Directors, it can safely be presumed that they were selected in due observance of the provisions of the Companies Act and the APL had no grievance against the selection of the Directors and/or in their functioning at least till the date when it became non-functional. By referring to the profile of these independent Directors, he submitted that all of them are very responsible pers .....

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The apprehension of mismanagement of the business of the said company is baseless and without any foundation. According to him, even if such apprehension is genuine still then this is not the appropriate forum for ventilating the applicant s grievances. Mr. Mitra also referred to the affidavit of assets to show that even the said company was not shown as the assets of the estate of the deceased. He thus, contended that even if the APL was functional, the APL could not have interfered with and/or .....

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s. Sachindra reported AIR 1969 SC 823 wherein the Hon ble Supreme Court while discussing the issue relating to the jurisdiction of the Court to decide an issue approved the full Bench decision of this Court in Hirday Nath Roy Vs. Ramchandra Barua Sharma reported in ILR 48 CAL 138. The Full Bench of this Hon ble Court dealt with the question as to what is meant by jurisdiction? It was held therein that before a court can be held to have jurisdiction to decide a particular matter it must not only .....

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e parties or in other words what is relevant is whether the Court had the power to grant the relief asked for in the application filed by the applicant. If it is held that the learned judge had competence to pronounce a judgment on an issue presented before him for his decision then the fact that he decided that issue illegally or incorrectly is wholly besides the point. Relying upon the said decision of the Full Bench of this Court which was approved by the Hon ble Supreme Court, Mr. Mitra subm .....

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cation for want of jurisdiction of this Court to grant the reliefs prayed for herein with this rider that in the event it is held that the Court has jurisdiction to entertain their application, then he will make submission on the merit of this application with reference to the application filed by his clients in the nature of demurer application. Mr. Pratap Chatterjee, learned Senior Counsel, who is assisting his leader, Mr. Mitra, also made some additional submissions in support of the demurrer .....

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estate of the testatrix inasmuch as controlling power over M.P Biral Group of Companies is incapable of passing to her successor either by way of testamentary or by non-testamentary succession, after the death of the testatrix. He contended that though this Hon ble Court at various stages of the earlier interlocutory proceedings held that control over the management of the M.P Birla Group of Companies is a part of the estate of the testatrix, but such findings which were arrived at either by th .....

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ther Directors repose confidence in the said Director either for his strong personality or for his expertised knowledge and/or skill in management of the business of the company. Though, such controlling power is allowed to be exercised by a particular Director for having his strong personality and/or skill and/or ability to manage the business affairs of the company, such controlling power is not capable of passing to the successor by way of inheritance either by the testamentary succession or .....

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heritable estate which can be inherited by her successor either by testamentary or by intestate successor. He argued that as a shareholder of the company, the testatrix could have exercised various rights under the Companies Act. The testatrix had the right to vote in selecting the Directors also. The right to vote in selecting the Director of the company and/or exercise of the other rights recognized under the Companies Act are all heritable rights which her successor will inherit on her death .....

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Hon ble Supreme Court in the case of Girnar Traders (3) Vs. State of Maharashtra & Ors. reported in 2011(3) SCC 1 can be protected by the Probate Court during the pendency of the probate proceeding. He further contended that, in fact, such protection has already been given by the Probate Court by way of appointment of the APL which has already got its name registered in respect of the shares left by the testatrix. He pointed out that when the present Board of Directors was constituted in the .....

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in other words, if the company is mismanaged by the present Board of Directors, the shareholders has the right to initiate action for removal of the Board of Directors by convening Extraordinary General Meeting, and if the shareholders intend to complain against the mismanagement of the company by the Board of directors, the shareholder may initiate a proceeding under Section 397 of the companies Act, before the competent authority in accordance with the provision of the Companies Act. He, thus, .....

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According to him when an Act creates a right or obligation and/or enforces the performance thereof in a specified manner, that performance cannot be enforced in any other manner. Enforcement of a right/obligation under a statute can only be achieved by a person aggrieved by invoking the provisions of the said Act. In conclusion he submitted that it is well-settled that what cannot be done, directly cannot be permitted to be done indirectly. He, thus, contended that if the applicants have any gr .....

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ction to grant such relief is vested exclusively upon the Company Law Board under the Companies Act and not upon the Testamentary Court, he has relied upon the following decisions of the Hon ble Supreme Court:- 1. In the case of Dayal Singh & Ors. Vs. Union of India reported in (2003) 2 SCC 593 Paragraph 33 2. In the case of Laxmidas Morarji (dead) by LRS. Vs. Behrose Darab Madan reported in (2009)10 SCC 425 paragraph 25 . and 3. In the case of Kanwar Singh Saini Vs. High Court of Delhi (201 .....

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, that the newspaper reporting cannot be admitted into evidence unless the reporter who publishes such report is examined and/or files affidavit supporting the correctness of such reporting. He further, submits that evidence is different from pleadings. According to him the pleadings are required to be proved by evidence and evidence need not be disclosed in the pleadings. How far a party is able to substantiate his pleading by evidence will be considered by the Court at the final hearing of the .....

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cepting each and every statement made in the application as true and correct and if even after accepting the statements made in the application as correct, the Court comes to the conclusion that the application is barred by limitation and/or is otherwise not maintainable due to bar of law then the Court may reject the said application by holding it as not maintainable. In support of his submission he has referred to a decision of the Hon ble Supreme Court in the case of Ramesh B. Desai & Ors .....

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a plea in the nature of demurrer is raised by the opposite party, the question of jurisdiction has to be determined with advertent to the allegation contained in the statement of claim by accepting the allegations made in the application as true and correct. He, thus, contended that if this principle is applied in the present case then the Court will have to examine the maintainability point by accepting that all the statements made in the application by the applicants as true and correct. By re .....

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y of this application by accepting these statements made by the applicants as true and correct. Though he contended that the newspaper reporting is not admissible per se but to support the statements a supplementary affidavit has been filed by the applicants enclosing statutory notifications issued by the company regarding the said transaction and thus he contended that the Court while deciding the maintainability issue will have to accept the allegations that the Birla Corporation Limited is go .....

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cturing units by Birla Corporation Limited is beneficial for the said company or such proposal is detrimental to the interest of the company. According to him such determination is to be done by the Probate Court itself as it is the duty of the Probate Court under Section 247 of the Indian Succession Act to preserve and/or protect the estate of the deceased during the pendency of the probate proceeding. He, thus, contended that if ultimately it is held that acquisition of these cement manufactur .....

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he shareholders vis-à-vis the Directors. He however, contended that here is the case where the enforcement of the rights of the shareholders against the Director is not an issue before this Court presently. According to him, presently the Court will have to examine as to how the Control over the management of the M.P Birla Group of Company which Mrs. Priyamvada Devi Birla used to exercise as promoter of the M.P Birla Group of Companies, has to be exercised by the representative of the Pro .....

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ll as upon the Court at the interlocutory stage. He thus, contended that while considering the issue regarding maintainability of this application, the Court should proceed by accepting the said findings that the control over the Birla Group of Company which is a part of the estate of Priyamvada Devi Birla, is binding upon the Court. By referring to the Will of Priyamvada Devi Birla he pointed out that the control over the management of the M.P Birla Group of Company which was also transferred b .....

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him, since the control over the management of the Birla Group of Company was an intangible asset of Priyamvada Devi Birla and further since such intangible asset was alleged to have been bequeathed by the said Priyamvada Devi Birla under her Will which is the subject matter of consideration in this testamentary Court, the Testamentary Court should make some arrangement to protect such controlling power which is a part of the estate belonging to the deceased during the pendency of the probate pro .....

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to resignation tendered by one of its member and accepted by the Court, it is the duty of the testamentary Court to pass suitable direction so that even in the absence of the APL , estate of the deceased is not burdened and/or jeopardized in any way. He thus, contended that the probate Court has to make effective provision so that the control as defined in Section 2(27) of the Companies Act which could have been exercised by the promoter of the company can be exercised by the representative of t .....

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-holding of shares of the companies over which she had control. Apart from the shares she had in the said company she bequeathed her controlling power over the M.P. Birla Group of companies in favour of Rajendra Singh Lodha by her alleged will and, in fact, Rajendra Singh Lodha assumed his power to exercise control over the M.P Birla Group of companies by virtue of the provision made by the testatrix in her alleged Will and after the death of Rajendra Singh Lodha, his son Harsh Vardhan Lodha has .....

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to the letter written by the APL to the Chairman and the Board of Directors of the said company, Mr. Chidambaram pointed out that the APL intimated the Chairman and the Board of Directors of the said company about the vesting of the controlling block of shares of Priyamvada Devi Birla in the said company with the APL and some information relating to ownership, control and management of the said companies were sought for from the said company and the said company in its letter written to the APL .....

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cement manufacturing units of Reliance Infrastructure. He, thus, contended that since the APL is presently non-functional such exercise should be made by the Probate Court. Mr. Chidambaram has referred to the following decisions of the House of Lords as well as the Hon ble Supreme Court to demonstrate as to what is the meaning of such controlling power and how this controlling power can be exercised in all decision making process relating to the business management of a company:- 1. In the case .....

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ns he contended that the phrase controlling interest is a concept which is capable of controlling only a proprietary right i.e., an interest in the nature of ownership. He pointed out that the House of Lords interpreted the conception of controlling interest in a way which may well cover the relationship of one company towards another, the requisite majority of whose share are, as regards their voting power, subject, whether directly or indirectly, to the will and ordering of the first mentioned .....

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her they represent controlling or minority interest. It was further held that control, of course, confers value but the question as to whether one will pay a premium for controlling interest depends upon whether the potential buyer believes that one can enhance the value of the company. He thus, contended that since the testatrix had 62.9% shares in the said company through directly or indirectly through the interlinking, chain and crossholding of shares of the companies, she during her life tim .....

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rol and Promoter have been defined in Section 2(27) and Section 2(69) of the companies Act, 2013 respectively, and how the promoter will exercise his control over the management of the company has also been defined in various provisions of the said Act viz., Section 167(3), Section 168(3), Section 289(1) etc. of the said Act. He also contended that since exercise of the control over the M.P. Birla Group of companies was an asset belonging to the estate of Priyamvada Devi Birla and the estate rep .....

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onal due to resignation of one of its members. Taking advantage of such situation, the Chairman of the Board of Directors Viz., H.B.L. has again assumed his control over the Board of Directors. By referring to the supplementary affidavit filed by the appellants, Mr. Chitambaram pointed out that the B.C.L has proposed to acquire the four cement manufacturing company of Reliance Infrastructure Ltd. partly by utilizing its own fund and mostly by borrowing money. He thus, contended that when B.C.L n .....

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of this application upon B.C.L so that after hearing the B.C.L and after considering the papers relating to such transaction, the Court can ultimately decide the viability of the said proposed business expansion. Since Harsh Vardhan Lodha is the Chairman of the Board of directors, direction was sought for upon the said Harsh Vardhan Lodha and the BCL for production of the relevant papers relating to such consideration before the Court and injunction was sought for against them so that such tran .....

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g these four units of the cement manufacturing company until the Court takes a decision on the viability of such proposed business expansion. According to him Probate Court s jurisdiction to grant such injunction in exercise of its inherent power, is recognized by this Court as well as by the other High Courts in the following decisions:- 1. In the case of Neodebarni Devi Vs. Chamatkarini Devi reported in 27 Indian Cases 617. 2. In the case of Atula Bala Dasi Vs. Nirupama Devi reported in A.I.R .....

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80(2011) DLT 15. He thus, submitted that since a vacuum has been created due to APL become non-functional, the Probate Court is the only forum where necessary orders can be passed for proper preservation of estate of the deceased so that no part of the estate of the deceased is dissipated during the pendency of the probate proceeding. According to him, other remedies such as initiation of the process for removal of the Board of Directors, moving the Company Law Board for enforcement of the promo .....

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r 7 Rule 14(3) of the Civil Procedure Code is also recognized by this Court in the case of Kejriwal Enterprises Vs. General Manager, Ordnance Factory & Ors. reported in AIR 2004 Cal 225. As such according to him leave was rightly granted by this Court to the applicant to file supplementary affidavit. Mr. Pal, learned Senior Counsel, appearing for the other group of defendants in support of their application being G.A No. 189 of 2006 adopted the submission of Mr. P. Chidambaram. He however, t .....

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are not admissible evidence and as such no reliance can be placed upon this newspaper reporting, is not applicable to the present proceeding being an interlocutory proceeding which is tried on affidavit and no evidence is required to be produced at the stage of hearing the interlocutory application. He submitted that though the principle laid down in those decisions are well-accepted but when a demurer challenges the maintainability of an application, according to Mr. Pal he must accept all the .....

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ven accepting all the statements of facts made in the petition as true and correct, the application is not maintainable. He further submitted that the decision in the case Barium Chemicals Ltd. & Anr. Vs. Company Law Board & Ors. reported in AIR (1967) SC 295 which was cited by Mr. Mitra to show that the evidence must be produced in support of the allegation made in the pleadings, has no application in the present case, as at this stage when the Court is considering the maintainability o .....

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r of Income Tax, Bombay reported AIR 1955 SCC page 74 (supra), in the case of Rustom Cavasjee Cooper Vs. Union of India (supra), reported in (1970) 1 SCC 248, in the case of Western Coalfileds Limited Vs. Special Area Development Authority, Korba and Ors. reported in (1982)1 SCC 125 and in the case of Din Chemicals & Coatings Pvt. Ltd. Vs. State of W.B reported in 2012 SCC Online Cal 10950, to support his contention that the shareholders do not have any interest in the assets of the company .....

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disposal of the probate proceeding, is necessary under Section 247 of the Indian Succession Act. He further contended that the decisions cited by Mr. Mitra in the case of Cochin Malabar Estates & Industries Ltd. & Anr. Vs. P.V. Abdul Khader & Anr. and N.K Mohammad Ali & Ors. reported in (2003) 114 Comp Case 777 and decision reported in (2014) 3 SCC page 1 to support of his contention that the grievance of a shareholder regarding the affairs of a company can only be agitated befo .....

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jurisdiction to resolve the dispute between the parties relating to the estate of Priyamvada Devi Birla i.e., controlling Block of the shareholders of M.P Birla Group of Companies. He further contended that the decisions cited by Mr. Mitra in the case of General Secretary Vs. Zonal Manager reported in 65 C.W.N 32, in the case of Jagdish Prasad & Anr. Vs. Pt. Paras Ram & Ors. reported in AIR 1941 Allahabad 360 and in the case of Subarban Bank Private Ltd. Trichur Vs. Thariath & Anr. .....

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APL is made functional. He further contended that under the provision of Section 247 of the Indian Succession Act, the Probate Court can pass effective order and for implementing the said order the probate Court can issue notice to the person in management (Board of Directors) in order to give him an opportunity to explain before the probate Court that value of controlling of block of share holding is not being jeopardized, if the proposed transaction is ultimately implemented. Mr. Pal, further .....

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Vs. K. Kunhamoo & Ors. reported in AIR 1958 Madras 287, in support of his contention that the Probate Court cannot pass any injunction order against a person who is not a party to the proceeding has no application in the instant case as this is a case where leave was sought for from the Court for serving a copy of the notice upon Birla Corporation Limited so that the merit of the said application can be decided by the Court after giving a reasonable opportunity of being heard to the said com .....

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ted by Mr. Mitra in the case of Official Trustee, West Bengal and Ors. Vs. Sachindra Nath Chatterjee & Anr. (supra) to support of his submission that an application should be rejected on the ground of its maintainability if the Court trying such application is found to have no jurisdiction to decide the issues in the suit and to grant the reliefs prayed for therein, has no application in the instant case, as the present application has been filed for preservation and protection of the assets .....

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AIR 1958 Madras page 287 to demonstrate that the Court has no jurisdiction to entertain any application when the reliefs claimed in the application cannot be granted by the Court, has no application in the present case as the Probate Court has jurisdiction to pass necessary order under Section 247 of the Indian Successions Act to preserve the controlling block of share holding which is an asset belonging to the estate of deceased. He further contended that the decisions cited by Mr. Chatterjee .....

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ion over the subject matter is nullity is of no relevance in the facts of the present case as the Testamentary Court dealing with a probate matter has jurisdiction pass necessary interim order under Section 247 of the Indian Successions Act to protect and/or preserve the property belonging to the estate of the deceased, pending disposal of the probate Suit. Mr. Pal thus, ultimately concluded by submitting that presently the Court will have to decide the only basic question i.e., as to whether th .....

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the estate to a risk without due diligence with reasonable care and caution need not be decided by the Court presently as all these issues relating to the merit of the petition can only be decided after exchange of affidavits between the parties. Mr. Pal thus concluded by submitting that the application which is now under consideration before this Court is well maintainable and thus, he invites the Court to consider the said application on merit and to pass some interim protection, pending dispo .....

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aid Section is not applicable to the present case, as the deceased was Hindu and thus, in view of sub-Section 2 of Section 269 of the said Act, the Probate Court cannot pass any order under Section 269 of sub-Section 1 of the said Act. He contended that Section 247 of the Indian Successions Act is the only provision under which the Probate Court can appoint an administrator pendente lite for proper protection and preservation of the estate of the deceased and in the present case this has already .....

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ercise the controlling power over the Board of Directors of the company on which exclusive jurisdiction was vested by Section 179(3) of the Companies Act, 2013 to decide in its Board Meeting to take over a company or acquire a controlling or substantial stake in another company. By relying upon the provision contained in 179(3)(d) of the Companies Act, he reiterated that the said provision vests power with the Board of Directors of the company exclusively to pass a resolution in a Board meeting .....

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the Board of Directors are uncontrolled by the decision of this shareholders and/or the promoters, the shareholders and/or the promoters cannot complain against the decision of the Board of Directors in acquiring four units of another cement manufacturing company. He thus, ultimately concluded that had the APL been operative still then the APL in exercise of its controlling power could not impose its decision over the decision of the Board of Directors in acquiring four units of another cement .....

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in the case of Neodebarni Devi Vs. Chamatkarini Devi reported in 27 Indian Cases page 617, in the case of Atula Bala Dasi Vs. Nirupama Devi reported reported in AIR 1951 Cal page 561, in the case of Amarendra Dhwaj Singh & Anr. Vs. Prem Kumar Sing & Sons reported in 2013(1) PLJ page 1853 and in the case of Shri Karamjit Jaiswal Vs. Investec Trust (Jersey) Limited & Ors. reported in 2011 of 180 DLT page 15, Mr. Mitra pointed out that in none of the aforesaid decision it was held by th .....

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Indian Successions Act can appoint administrator pendente lite and until such appointment is made, the Probate Court in exercise of its inherent jurisdiction, can pass appropriate injunction order restraining the parties to the proceeding from selling and/or dealing with the property belonging to the estate of the deceased. The other decisions cited by Mr. P. Chidambaram; one of Patna High Court and another of Delhi High Court were placed before this Court by Mr. Mitra to show that in those cas .....

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ay take various steps including, removal of the Directors by applying the provisions contained in Companies Act. He thus, contended that the Probate Court while dealing with a probate proceeding cannot preempt the proceeding either of the Company Law Board or of the Regular Civil Court, to decide the disputes which are triable by the Company Law Board and/or the Company Court and/or the other Civil Court. He thus, contended that even if any step is required to be taken for preservation and/or ma .....

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the companies Act and without approaching the appropriate authorities under the Companies Act for seeking appropriate reliefs. According to him even the APL cannot encroach upon the jurisdiction of the Board of Directors in the matters where exclusive jurisdiction is vested with the Board of Directors by the Companies Act, 2013. He ultimately concluded by submitting that since the Companies Act, 2013 has not given any power to the promoter to exercise his/her power of control over the decision .....

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with the submission of Mr. Chidambaram, learned Senior Counsel appearing for the applicants that while considering the maintainability of such application, the Court is required to consider the maintainability of such application by applying the principles underlying the provisions contained in Order 7 Rule 11 of the Code of Civil Procedure. The decision which was cited by Mr. Chidambaram in support of his aforesaid contention is worth mentioning here. It was decided by the Hon ble Supreme Court .....

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eld therein that in order to examine as to whether the plaint is barred by any law as contemplated by Order 7 Rule 11 (d) of the Civil Procedure Code the Court while considering the maintainability of the plaint, is permitted to see the averments made in the plaint only and no other document. Thus, while considering the maintainability of the plaint the Court is required to consider the plaint, and assume each statement made in the plaint to be correct and then come to the conclusion as to the m .....

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resaid decision, I will have to examine the maintainability of this application by examining the averments made in this application and the supporting documents annexed thereto which do form part of it. Excepting the averments made in the application and the statements appearing from the documents annexed to the said application, no other pleading and/or document will be considered by this Court while deciding the maintainability of this application. I have already mentioned above the nature of .....

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res involving huge investment of about 4000-4200 crores partly by utilizing the company s liquid resources of around ₹ 1700/- crores and remaining by borrowing. When they came to know about the decision of the BCL for acquiring the four cement manufacturing units of Reliance Infrastructure partly by utilizing its available liquid resources and partly by borrowing, from various newspaper reports, the applicants became apprehensive about future business prospect of the said company as the de .....

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timately bring disastrous consequences in the said company. The applicants thus, filed the said applications inviting this Court to examine the viability of the business prospect arising out of acquisition of those four cement manufacturing units of Reliance Infrastructure, before allowing the BCL to complete the said deal. They thus, claimed that until such decision is taken by this Court, the Birla Corporation Limited and/or Harsh Vardhan Lodha one of the plaintiffs in this suit should be rest .....

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eciding a contentious cause relating to a probate Proceeding 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 (i) as to whether the will was duly executed by the testator and/or testatrix consciously or not; (ii) Whether the execution of the Will by the testator and/or testatrix was duly attested by two witnesses or not; (iii) Whether there was any suspicious circumstanc .....

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was attested by two attesting witnesses and this was the last Will of the testator and/or testatrix and there was no suspicious circumstances under which such will was executed by the testator/testatrix, then the testamentary Court will grant probate to the said last Will of the testator/testatrix. On the contrary, if the Court finds that the Will was not duly and consciously executed by the testator/testatrix or the Will was not properly attested or this is not the last Will of the testator or .....

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ns Act i.e, to see as to whether by any act and/or omission on the part of any of the parties, the value of the properties belonging to the estate of the deceased is dissipated or not and in the event it is found that by any action and/or omission on the part of any of the parties, the value of any movable or immovable property belonging to the estate of the deceased is likely to be dissipated then the Probate Court will appoint an administrator pendente lite who will have all the rights and pow .....

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panies are the most important and precise asset belonging to the estate of the deceased, the instant applications have been taken out by the applicants so that the above mentioned precious assets belonging to the estate of the company is not dissipated during the pendency of the probate proceeding. To ensure that the proposed deal does not bring about disastrous consequences in the business of BCL, an enquiry is sought for as to what will be the business prospect of the BCL, if the proposed deal .....

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before enquiry into the business prospects of the company out of such deal is completed by the Court. Since for taking a decision on the aforesaid subject, the Court is required to consider the due diligence report connected with the said transaction and the other relevant papers and documents referred to in the said application and further since production of such documents cannot be ensured without BCL being made a party to the proceeding and injunction cannot be passed against the Birla Corp .....

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urt. I think that no elaboration is necessary on the point of law, viz., that none excepting those who have caveatable interest in the probate proceeding, can be allowed to be joined as a party defendant in the suit. Keeping this principle in mind, this court has no hesitation to hold that since Birla Corporation Limited has no caveatable interest in the probate Proceeding, it cannot be added as a party in the probate proceeding. Thus, if I consider the applicants prayer for allowing them to ser .....

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e present proceeding only for the limited purpose of ascertaining the business prospect of the said company arising out of the said deal with Reliance Infrastructure in the context of the settled position that shares held by Mrs. Birla in BCL and her controlling Power over the M.P Birla Group of Companies are the most important assets belonging to the estate of Mrs. Birla and the probate Court has a duty to protect and preserve the estate of the deceased, during pendency of the Probate Proceedin .....

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sal of the probate proceeding. For finding out answer to the said question it will be beneficial for this Court to refer to the decisions of the Hon ble Supreme Court in the case of Bacha F. Guzdar Vs. Commissioner of Income Tax, Bombay reported in AIR 1955 SCC 74 and in the case of Rustom Cvasjee Cooper and Ors. Vs. Union of India reported in 1970(1) SC 248. In both the aforesaid decisions the Hon ble Supreme Court unanimously held that a company registered under the Companies Act is, a juristi .....

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ent and the holder of a deposit account in a company is its creditor he is not the owner of any specific fund lying with the company. It was also held therein that a shareholder, a depositor or a Director may not therefore be entitled to move a petition for infringement of the rights of the company, unless by the action impugned by him, his rights are also infringed. Thus, since the shareholder has no interest in the assets of the company, I hold that the assets of the company cannot be an asset .....

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ultimately matured then is there any chance of the assets of BCL being dissipated. Mr. Chidambaram, learned Senior Counsel appearing for the applicants tried to impress upon this Court that apart from the shares which Mrs. Birla had in B.C.L, Mrs. Birla as a promoter of the said company used to exercise her power of control over the management of the said M.P Birla Group of Companies and on her death the said power of control being a part of the estate of the said deceased used to be exercised b .....

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Mrs. Birla. According to him, if the answer is without consulting Mrs. Birla such proposed deal could not have matured; then by following the same analogy it should be held that even without consulting the APL the Board of Directors of B.C.L could not have taken the ultimate decision for implementation of the said deal. He thus, contended that, since the APL has now become non-functional, it will not be fair on the part of the Board of Directors of B.C.L to execute such deal without obtaining le .....

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it is found that disastrous consequences may occur in the business of the B.C.L resulting fall in price of the share of the company, then certainly the estate of the deceased will be affected. He, thus, submitted that for taking a decision on the aforesaid issue as to the business prospect of B.C.L arising out of the said proposed deal, the relevant documents relating to the said deal are required to be considered by the Court and such enquiry must be held in the presence of B.C.L, so that in it .....

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ies Act, 2013 in the following manner. Section 2(27) control shall include the right to appoint majority of the Directors or to control the management or policy decision exercisable by a person or persons acting individually or not concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner; Mr. P. Chidambaram drew my attention to the following decision i.e., some English decisions as well .....

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Tax Report (Estate Duty) page 88. 3. In the case of Commissioner of Income Tax Bombay City-I Vs. Jubilee Mills Ltd. reported in Volume XLVIII Income Tax Report (SCC) 9 and 4. In the case of Vodafone International Holdings BV Vs. Union of India and Anr. reported in (2012)6 SCC 613. It was held therein that control is a mixed question of law and facts. Ownership of shares may, in certain situations, result in the assumption of an interest which has the character of a controlling interest in the m .....

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was also held therein that the right of a shareholder may assume the character of a controlling interest where the extent of the shareholdings enables the shareholder to control the management. Shares, and the rights which emanate from contract then flow together and cannot be dissected. In fact, shares in a company consist of a congeries of rights and liabilities which are a creature of the Companies Act and the Memorandum and Articles of Associations of the Company. Thus control and managemen .....

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te of the deceased, but in view of several decisions of this Court at various interlocutory stages in this probate proceeding, it has now been settled that exercise of the controlling power over the M.P Birla Group of companies is a valuable asset of the estate of Mrs. Birla. Such findings of this Hon ble Court arrived at different stages of the interlocutory proceedings, is not only binding upon the parties but also is binding upon this Court and as such, I have no hesitation to hold that such .....

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Articles of Associations. The Companies Act, 2013 has defined the expressions Control and the promoter in Section 2(27) and Section 2(69) of the said Act respectively. How the promoters can exercise their power of control over the management of the company has also been enumerated in different provisions of the Companies Act viz., in Section 167(3), Section 168(3), Section 289(1) etc. Thus, I hold that exercise of controlling power by the promoter is controlled and/or regulated by the provision .....

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of the board is defined in Section 179 of Companies Act. Sub- Section (3) of Section 179 of the companies Act provides that the Board of Directors of a company shall exercise the powers enumerated therein on behalf of the company by means of resolution passed at a meeting of the Board. Several powers which can be exercised by the Board of Directors exclusively are enumerated in Section 179(3) of the said Act. Some of such powers which are relevant for the present purpose are mentioned herein. S .....

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re money to be borrowed together with the money already borrowed by the company, will not exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company s bankers in the ordinary course of business. The expression temporary loans has also been defined in the explanation added to the said Section which means loan repayable on demand or within six months from the date the loans such as short-term, cash credit arrangements, the discounting of b .....

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by borrowing money subject to the restriction imposed under Section 180(1)(C) of the Companies Act. There is no allegation in the petition that even the decision for implementation of the said project by borrowing money was taken by the Board of Directors contravening the provision of Section 180(I)(C) of the Companies Act, 2013. No other provision from the Companies Act could be pointed out by the learned Senior Counsel appearing for the applicants to demonstrate that the authority which was g .....

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ed with the Board of Directors is not controlled by the decision of the promoters, even though the promoter and/or the group of promoters hold controlling power over the management of the said company. It may be mentioned herein that in the present case such decision for taking over four cement manufacturing units of Reliance Infrastructure was taken unanimously by the Board of Directors where out of nine Directors six are independent Directors elected in the Annual General Meeting held on 2014 .....

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m the prompters can do to enforce his decision over the decision of the Board of Directors. If the promoters hold majority shares then certainly they are not remediless as several remedies are prescribed under the Companies Act, 2013 for exercising their right of control over the Board of Directors before different forum such as Company Law Board, other Civil Court etc. They may also initiate the process of removal of the Directors and appointment of Directors of their choice in the place of the .....

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ants may ultimately destroy the business of the B.C.L resulting disastrous consequences being brought in the assets of the company. Thus, when on the contrary, I find that by virtue of the power enjoyed by the Board of Directors of B.C.L, decision for expanding its business by taking over four cement manufacturing units of Reliance Infrastructure has been taken and further since such power of taking such decision of the Board of Directors is not controlled by the power of control to be exercised .....

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rawn by this court as I hold that for implementation of such decision of the Board of Directors approval of the promoters having control over the management of the business of the said company, is not necessary. In the aforesaid set of facts this court holds that B.C.L need not be served with any notice relating to this application for examining its business prospect arising out of the proposed taking over of the four cement manufacturing units of Reliance Infrastructure by purchasing its shares .....

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part of her estate and further since APL has already got its name registered in respect of those shares, the right which Mrs. Birla could have exercised by virtue of her shareholding in the said company during her lifetime, could have been exercised by APL , had it remained functional till date. Since the APL has now became non-functional, no such step can be taken by APL either for protecting the shareholding interest belonging to the estate of the deceased or for exercising the power of contro .....

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ed under the Companies Act and in case the APL fails to discharge its duty, Probate Court can pass necessary direction upon APL for taking steps in accordance with law, whenever such direction needs to be passed for preserving the estate of the deceased. Think about the practical difficulty which the Probate Court may face in case the APL is allowed to remain non-functional, as even in cases where the Probate Court will feel necessary to pass any direction for preservation of the estate of the d .....

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eased, can the Probate Court itself initiate such proceeding? Then again, if it found that somebody has trespassed in any of the properties belonging to the estate of the deceased, can the Probate Court pass a decree for eviction against such trespassers by adjudicating the rival claims of the parties over title in the said property? Many other instances can be given where the Probate Court will feel helpless in passing appropriate order and in implementation thereof by itself, even if the Proba .....

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the M.P Groups of Companies which are most precious assets of the estate of the deceased are concerned. In my view, in case any circumstance as aforesaid arises where intervention of the Court is necessary for preserving the estate of the deceased, the Probate Court at best can pass necessary direction upon APL to initiate appropriate proceeding before appropriate forum for seeking appropriate reliefs in accordance with law and it is only that appropriate forum which in my view, can pass appropr .....

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iction to entertain the application. In fact, this is a very important question which is raised by Mr. Mitra before this Court. To elaborate this contention Mr. Mitra, learned Senior counsel argued that can any court pass any injunction order against any person who is not a party to the proceeding. To substantiate his aforesaid contention Mr. Mitra has cited the following decision of different High Courts in the case of K.P.M Aboobucker Vs. V.K. Kunhamoo & Ors. reported in 1958 Madras 287, i .....

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, no relief can be granted in the suit itself. Mr. P Chidambaram, learned Counsel appearing for the applicants, however, refuted such submission of Mr. Mitra by contending that the Probate Court s jurisdiction to pass appropriate injunction order to protect the estate of the deceased is well-recognized by this Court as well as by the other High Courts. To substantiate his aforesaid submission he has relied upon the following decisions:- (i) In the case of Nerodebarani Debi Vs. Chamatkarin Devya .....

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risdiction to pass interim order of injunction though such power cannot be exercised under Order 39 rules 1 and 2 of the Code of Civil Procedure but such power can be exercised by the Court under its inherent jurisdiction under Section 151 of the Code of Civil Procedure. By referring to the judgment of the Delhi High Court in the case of Sri Karmajit Jaiswal Vs. Investec Trust (Jersey) Limited & Ors. (supra) Mr. Chidambaram submitted even the Court s power to grant injunction against third p .....

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Court has jurisdiction to pass interim order of injunction in exercise of its inherent jurisdiction in appropriate cases where the Probate Court finds that pending appointment of an administrator pendente lite there is any chance of the asset of the deceased being dissipated. In all these decisions, I find injunction was granted by the Probate Court against parties to the proceeding. Even the Delhi High Court decision which was relied upon by Mr. Chidambaram to demonstrate that injunction can al .....

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orrowing the principles of law laid down in the decisions cited by Mr. Mitra, this Court has no hesitation to hold that the Probate Court cannot pass any injunction order against a third party as third party who has no caveatable interest in the probate proceeding cannot be allowed to be added as party in the probate proceeding and also for the reason that no order can be passed effecting the right of the stranger without adjudicating his right and adjudication of his rights in the probate proce .....

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only been prayed for in this application against the Birla Corporation Limited but injunction has also been prayed for against one of the plaintiffs, namely, Harsh Vardhan Lodha who is a party to the said proceeding before the Probate Court. According to the applicants, Probate Court can pass interim order of injunction against Harsh Vardhan Lodha who is a party to the proceeding, if passing of such injunction is deem fit and proper in the present case. Let me now consider this part of the submi .....

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er the Will. In this connection a question will crop up as to whether the direction which was sought for by way of injunction against Harsh Vardhan Lodha, can be passed against Harsh Vardhan Lodha as a legatee under the Will. Answer is no. Since Harsh Vardhan Lodha is not a party in his capacity as a Chairman of the Board of Director of B.C.L, no direction can be passed against Harsh Vardhan Lodha in the capacity of he being a Chairman of the Board of Directors of the said company. As such I hol .....

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of Board of Directors of the said company cannot be linked up with his position as a legatee under the said Will. The decision taken by the Board of Directors, as I have already held, cannot be a subject matter of scrutiny by the Probate Court. I agree with the decision of Kerala High Court in the case of Cochin Malabar Estate and Industries Ltd. & Anr. Vs. P.V. Abdul Khader & Anr. (supra) wherein it was held that even the Company Court cannot interfere with the dayto- day business mana .....

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R 1969 SC 823 wherein wherein the Hon ble Supreme Court while discussing the issue relating to the jurisdiction of the Court to decide an issue approved the full Bench decision of this Court in Hirday Nath Roy Vs. Ramchandra Barua Sharma reported in ILR 48 CAL 138. The Full Bench of this Hon ble Court dealt with the question as to what is meant by jurisdiction? It was held therein that before a court can be held to have jurisdiction to decide a particular matter it must not only have jurisdictio .....

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ther words what is relevant is whether the Court had the power to grant the relief asked for in the application filed by the applicant. If it is held that the learned judge had competence to pronounce a judgment on an issue presented before him for his decision then the fact that he decided that issue illegally or incorrectly is wholly besides the point. Before parting with, this Court also likes to consider the submission of the learned Counsel of the respective parties with regard to the admis .....

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very clear. It has been decided by the Hon ble Supreme Court in the decision cited by Mr. Mitra that the newspaper reportings are not admissible as such, reportings are published on the basis of hear say evidence. It was held by the Hon ble Supreme Court that the newspaper reporting per se is not admissible. However, such newspaper reportings can be admitted into evidence if such reportings are supported by an affidavit by the reporter. If the application is considered in the light of the afore .....

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ing over its four cement manufacturing units partly by utilizing its own fund and partly by borrowing money, is apparent. Though an application was taken out by the plaintiffs i.e., Lodhas for recall of the leave granted to the applicants for filing the said supplementary affidavit, but subsequently in course of hearing of this application they did not press their said application and, in fact, they also relied upon certain documents annexed to the said supplementary affidavit. As such, if the a .....

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