TMI Blog2016 (5) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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, whenever such direction needs to be passed for preserving the estate of the deceased. 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hatterjee, Sr. Adv., Mr. Malay Kumar Ghosh, Sr. Adv., Mr. Abhrajit Mitra, Sr. Adv., Mr. Jishnu Chowdhury, Adv., Mr. Debanjan Mandal, Adv., Mr. Sanjiv Kumar Trivedi, Adv., Mr. Soumya Ray Chowdhury, Adv., Mr. Sarvapriya Mukherjee, Adv., Mr. Satadeep Bhattacharya, 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 Bhattacharya, J. This testamentary suit springs out of an application for grant of probate 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. During the pendency of the probate proceeding the executor, name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 the company is required to be taken, the promoter group of the said company should be consulted even though under the provisions of the Companies Act formal control vests with the Board of Directors. It is further alleged therein that the fiduciary position held by the Director of the company also demands that before making such huge commitment, the Directors of the company should consult the promoters and the promoter group which includes the estate of Priyamvada Devi Birla which has large stakes 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 this Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were registered as GA 654 of 2016 and GA 354 of 2016 respectively. However, since at the very outset, 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 averments made by the defendants in their said applications. Accordingly, Mr. Mitra developed his submission by restricting his argument purely on the point of law regarding maintainability of the defendants said application with reference to the averments made in the defendants said applications. He contended that the instant application filed by the defendants is not maintainable as it does not disclose any cause of action for filing such applications. By referring to various paragraphs of the said applications, Mr. Mitra pointed out that the entire reliefs claimed in the said applications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find out as to whether the Will was the last Will of the testator or not and further as to whether the Will was duly executed by him and properly attested by the attesting witness or not and further as to whether at the time of execution, the testator was physically fit and mentally alert or not and further as to whether the testator consciously executed the Will or not and further as to whether there was any suspicious circumstances under which such Will was executed and if it is found by the Testamentary Court 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 with a testamentary suit, the Court has no jurisdiction to decide any dispute relating to the title of the testator in the property, bequeathed under the Will. Thus the business of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to him, Section 179(3) of the said Act, vests jurisdiction upon the Board of Directors of the company to exercise various powers as enumerated under Clause (a) to (k) thereunder on behalf of the company. By referring to Section 179(3) (j) of the said Act, he submitted that jurisdiction to take over a company or acquire the controlling or substantial stake in another company is vested exclusively with the Board of Director of the company and the company Act has not vested any jurisdiction upon the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d deceased also represents nominal shareholder. According to him, such a nominal shareholder cannot even initiate the process for removal of the Directors and if that be so then even if the APL remained functional still then the APL could not have interfered with decision of Board of Directors of the company in taking over the other cement 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 letter of administration is granted by this Court in favour of the plaintiffs. He also submitted that the interim relief which is claimed in this application mostly concerns with the internal management of the company which the Probate Court cannot regulate sitting in this jurisdiction. In support of his contention that the Probate Court cannot interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 apprehension that in case the said four cement manufacturing units of the said company are taken over by Birla Corporation Limited, the shares of Birla Corporation Limited will go down affecting the interest of the defendants and thus, for protecting the interest of the defendants any interim protection is required to be given by the Court. By referring to the reliefs claimed by the defendant in this application Mr. Mitra contended that apprehending that the reliefs which are claimed by the defendants 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributed profit. He thus, contended that since the shareholders have no interest in the assets of the company, neither the shareholder, nor the APL can 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 Cochin Malabar Estate and industries Ltd. Anr. Vs. P.V. Abdul Khader Anr. reported in 114 company cases 777 that the company Court would not as a general rule interfere with internal management of a company as the Court determines the question of law and not the question of business management which is the job of the Board of Directors. It was further held therein that if the shareholder could procure the aid of the Court in each and every action of the Board of Directors, it would lead to endless litigations and pin down the company wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unctional, the APL could not have interfered with and/or objected to the decision of the Board of Directors in the management of its business. As per Section 179(3) of the Companies Act, the Board of Directors is competent to take the decision regarding acquiring of the other company for expanding its business. Such being the position, this Probate Court has also no jurisdiction to entertain such application. He ultimately concluded his submission by referring to the decision of the Hon ble Supreme Court in the case of Official Trustee, West Bengal Vs. 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 have jurisdiction to try the suit brought but must also have the authority to pass the order sought for. It was also held therein that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much 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 the learned Single Judge or by the Hon ble Division Benches of this Court are all tentative findings arrived at interlocutory stages and as such the said findings arrived at either by the learned Single Judge of this Court or by the Hon ble Division Benches of this Court are not binding upon this Court, as these findings are not conclusive findings arrived at by this Court at the final hearing. He further contended that the controlling power is allowed to be exercised by a Director only when the other 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the Directors of the said company in the last Annual General Meeting. He further contended that during the period when the APL was very much functional, the APL also never expressed its dissatisfaction in the way in which the company was managed by the present Board of Directors. He further argued that if the company is not properly managed by the present Board of Directors or, 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, contended that in case of the mismanagement of the company, the shareholders and/or their legal representatives cannot approach the Testamentary Court to redress their grievances as the testamentary Court cannot play the role of either the Company Law Board or the company Court to implement and/enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting. 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 suit. But at this stage when the maintainability of this application is questioned by the opposite parties by filing an application in the form of demurrer, the Court according to him, is required to consider the maintainability of such application by applying principles underlying Order 7 Rule 11 of the Code of Civil Procedure. According to him when the maintainability of the application is an issue before the Court, the Court will have to consider the maintainability of this application by accepting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said application as true and correct. Mr. Chidambaram also submitted that the instant application has been filed only for the purpose of ascertaining as to whether the proposal of acquiring those cement manufacturing 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 manufacturing units by the Birla Corporation Limited is detrimental to the interest of the said company and, as a result, thereof the shareholders will ultimately be affected then certainly the probate Court can pass suitable direction on this application to protect the estate of the deceased which consists of shares held by the testatrix in Birla Corporation Limited. Mr. Chidambaram further contended that he also does not want to join an issue with Mr. Mitra on the question of ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rotect such controlling power which is a part of the estate belonging to the deceased during the pendency of the probate proceeding so that the control over the M.P Birla Group of companies can be exercised by the representative of the Court to be appointed under the provisions of Section 247 of the Indian Succession Act. Mr. Chidambaram, however, contended that, in fact, an APL was appointed by this Court for the purpose of administering the estate of the deceased which is inclusive of exercising the power of control over the M.P Birla Group of Companies. However, since the said APL has now become nonfunctional due 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 the Court or by the Court itself during the pendency of the probate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said company relating to the proposed taking over of four 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 of British American Tobacco Company Ltd. Vs. Inland Revenue Commissioners reported in 1943(1) All England Law Reports 13. 2. In the case of Barlays Bank Ltd. Vs. Inland Revenue Commissioners Volume XXXVIII Income Tax reports (Estate Duty) 88. 3. In the case of Commissioner of Income Tax Bombay City-1 Vs. Jubilee Mills Ltd. reported in Volume XLVIII 19 4. In the case of Vodafone International Holdings BV Vs. Union of India Anr. reported in (2012) 6 SCC 613. By referring to aforesaid decisions he contended that the phrase controlling interest is a concept which is capable of controlling only a proprietary right i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.9% share in the said company directly or indirectly through the interlinking, chain and cross-holding of shares of the companies, the estate retains the power of removal of Directors in case they refuse to accept its proposal. Exercise of such power to control the said M.P Birla Groups of Companies was assumed by the executor immediately after the death of the testatrix. However, since the appointment of A.P.L such power to control was exercised by the APL until it become non-functional 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 now proposes to acquire these four cement manufacturing units mostly by borrowing money, the Probate Court before allowing the B.C.L to implement the said project should consider the prospect of such busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 promoter s power of control or filing a civil suit which were available to the promoter for redressal of the promoter s grievances, cannot now be availed of by the Applicants even though they have caveatable interest as the APL is now the registered shareholders of BCL. As such he invited this Court to entertain this application and decide the same on merit. Before concluding he also submitted that the Court s power to grant leave to file supplementary affidavits for production of evidence under Order 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 suppleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are true and correct. According to him, the Court cannot at this stage proceed on the assumption that the party making such pleading may not be ultimately successful in proving the same. He further contended that the decisions which were cited by Mr. Mitra in the case of Bacha F. Guzdar Vs. Commissioner 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 have no application in the facts of the instant case as this is a case where the applicants have not come forward to exert their right in respect of the assets of the company rather they claimed that the controlling block of share holding which is an asset of the estate of the deceased is properly protected, preserved and is not dissipated during the pendency of the probate proceeding as preser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 pointed out that the decisions cited by Mr. Mitra in the case of Kishorsing Ratansinh Jadeja Vs. Maruti Corporation Ors. reported in (2009) 11 SCC 229, in the case of Smt. Ram Rakhi Vs. Union of India Ors. reported in AIR 2002 Delhi 458, in the case of Varghese Vs. Fast Line Builders and Developers Kerala Pvt. Ltd. reported in 2013 (2) KLJ 695, in the case of West Bengal Housing Board Vs. Pramila Sanfui Ors. reported in 2016 (1) SCC Page 743 and in the case of K.P.M Aboobucker 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 company. He further contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt that an order passed by a Court having no jurisdiction 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 the petition being G.A No.189 of 2006 is demurrable or not. He thus, contended that the other question which is raised by Mr. Mitra and/or Mr. Chatterjee in course of their submission i.e., as to whether the value of the estate comprising of the controlling block of shares runs the risk of devaluation since the value of the estate, has an intimate relationship with the assets of the company and further as to whether the Court of conscience must be satisfied that nothing is done which would expose 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 rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd if borrowing of such money does not contravene the provision of Section 180(1)(c) of the companies Act then no complain can be made against the decision of the Board of Directors for borrowing money for running the business of the company. He thus, contended that when the jurisdiction to take over the business of another company and to borrow money have been vested exclusively with the Board of Directors under those provisions of the Companies Act and when such powers of 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 manufacturing company partly with its own capital and partly by borrowing money from the market. He distinguished the decisions cited by Mr. P. Chidambaram in support of his contention that the Probate Court can pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, 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 maintenance of the estate of the deceased i.e., shares belonging to the deceased in the Birla Corporation Limited and/or controlling the power which Mrs. Birla used to exercise during her life-time, still then such steps should be taken by following the provisions of the Companies Act and by approaching forum prescribed under the Companies Act. He ultimately concluded that even the APL remained operative, still then the APL could not have taken any step without taking recourse to the provisions of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nability of the plaint. In my view the same principle is applicable, while considering the demurrer of an application in view of the provision contained in Section 141 of the Civil Procedure Code. Keeping in mind the aforesaid principles of law laid down by the Hon ble Supreme Court in the aforesaid 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 the application and the reliefs claimed therein in a great details. As such for avoiding repetition, I need not narrate the contents of the said application and/or reliefs claimed therein in details. Suffice it to mention herein that such an application was filed by some of the defendants who have caveatable interest in this probate proceeding complaining that Birla Corporation Limited is going to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 circumstances under which the Will was executed by the testator or the testatrix unconsciously and (iv) whether the Will is the last Will of the testator or not. 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/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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said deal. An interim order has also been sought for almost in identical manner so that the ultimate deal is not completed 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 Corporation Limited, in its absence, the applicants prayed for leave to serve a copy of the instant applications upon Birla Corporation Limited so that such adjudication is made in the presence of the Birla Corporation Limited. Let me now first of all consider as to how far such prayer for allowing the applicants to serve a copy of the application upon BCL can be allowed by this Court. I have already mentioned above that such applications were filed in a probate proceeding before the Testamentary Court. I think that no elaboration is necessary on the point of law, vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Companies Act is, a juristic person separate and is distinct from its individual members and the property of the company is not the property of the shareholders. It was held by the Hon ble Supreme Court in these decision that shareholder has merely an interest in the company arising out of its Articles of association measured by a sum of money for the purpose of fixing liability and by a share in the distributed profit. It was further held therein that a Director of a company is merely its agent for the purpose of management 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 belonging to the estate of the deceased. Thus, I hold that on the strength of share holding interest in the company, the shareholder did not acquire any inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 its presence the ultimate decision can be taken by the Court and whatever decision will be taken by the Court, such decision can be enforced upon B.C.L. To consider the substance of such contention of Mr. Chidambaram this Court is required to consider as to what power can exactly be exercised by the promoters, having controlling power over the management of the company. The expression control was not defined in the Companies Act, 1956. However, the expression control has been defined in the Companies 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of the expression control and the controlling power the Probate Court will have to pass necessary order so that the chance of loss of control over the management of BCL which is a valuable asset of the estate of the deceased, is prevented. Though Mr. Chatterjee, learned Senior Counsel contended that controlling power is not an heritable right and such right cannot be passed to the estate 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 controlling power is an important and valuable asset belonging to the estate of Mrs. Birla. Now question is as to how such controlling power can be exercised by the promoter. Can it be exercised by the promoters of the company without following the provisions of law? In my considered view, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 bills and issue of other short-term loans of a seasonal character, but does not include loans raised for the purpose of financial expenditure of a capital nature. On consideration of those two provisions of the Companies Act, I have no hesitation to hold that Board of Directors of a company is authorized to exercise its power on behalf of the company by means of resolution passed in a meeting of the Board to take over a company or acquire a controlling or substantial stake in another company even 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated any proceeding challenging the decision of the Board of Directors which is under the scrutiny of this Court in the present proceeding and/or for removal of the Board of Directors for taking step which according to the applicants 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 by the promoters and further since no complaint is forthcoming for any quarter that the business of B.C.L will be ruined if the decision of the Board of Directors is implemented resulting fall in its share price, I hold that the testamentary Court, while in seisin of the probate proceeding, cannot pass any direction encroaching upon the jurisdiction of the Board of Directors for taking over four cement manufacturing units of Reliance Infrastructure by purchasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deceased, can the Probate Court pass any direction and/or implement its decision without APL being made functional? Say for example, if the Court finds that steps are required to be taken for removal of the Directors, can the Probate Court itself representing the shareholder, take such steps by calling a extraordinary General Meeting for the said purpose? Then again, if initiation of any proceeding before the Company Law Board or Court is found to be necessary for protecting the estate of the deceased, 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 Probate Court finds that such order should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... injunction order is sought for is not a party to the suit, 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 reported in AIR 1915 Calcutta 565, (ii) In the case of Atula Bala Dasi Vs. Nirupama Devi reported in AIR 1951 Calcutta 561, (iii) In the case of Amarendra Dhwaj Sing Anr. Vs. Prem Kumar Singh and Ors. Reported in 2013(1) PLJR 853, (iv) In the case of Sri Karmajit Jaiswal Vs. Investec Trust (Jersey) Limited Ors. Reported in 180 (2011) DLT 15. Relying upon the aforesaid decision of different High Courts Mr. Chidambaram, Learned Senior Counsel submitted that the Probate Court has the jurisdiction 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 bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide any foreign issue unconnected with the probate proceeding. I 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 I cannot arrive at this ultimate conclusion. It was also argued before me that injunction has not 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 submission of Mr. P. Chidambaram, learned Senior Counsel. In the present case we find that Harsh Vardhan Lodha has dual capacity. He is a party to the probate proceeding as he is one of the plaintiffs in the Probate Suit. He is an applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 jurisdiction to try the suit brought but must also have the authority to pass the order sought for. It was also held therein that it is not sufficient that it has some jurisdiction in relation to subject matter of the suit. The Full Bench further held that in order to hold that the Court has jurisdiction to decide an issue its jurisdiction must include the power to hear and decide the questions at issue. The authority to hear and decide the particular controversy that has arisen between the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat apart I find much substance in the contention of Mr. P. Chidambaram, learned Senior Counsel that at the stage of considering the demurrer of this application, the party objecting to the maintainability of such application should demonstrate before the Court that the application is not entertainable by the Court even by accepting all the statements made in the said application as true and correct. Thus, I cannot agree with the submission of Mr. Mitra, learned Senior Counsel, that the applications are devoided of any cause of action. To conclude, I 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 the said company and further since the Probate Court cannot pass any direction and/or injunction order against any person who is not a party to the probate proceeding 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 proceeding, this Court holds that the reliefs claimed by the applicants in these applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
