9911796707
TMI Blog2007 (8) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... Will dated 17.09.1986. 2. The second company petition (C.P. No. 11/2005) is filed under Section 111A read with Section 111 of the Companies Act. 1956 ("the Act") - (i) to rectify the register of members of The Peninsular Plantations Limited CTPPL") in respect of 32,492 equity shares of (late) S. Sivaramakrishna Aiyer, by substituting the names of petitioners and respondents 5 to 9 in the place of the second respondent, to the extent of 3.610 equity shares each and remaining two equity shares to any of the petitioners; and (ii) to direct the second respondent to pay in favour of petitioners and respondents 5 to 9, dividends and other accretions, if any, received in relation to 32,492 equity shares of (late) S. Sivaramakrishna Aiyer. 3. The third company petition (C.P. No. 12/2005) is filed under Section 111A read with Section 111 of the Companies Act. 1956 ("the Act") - (i) to rectify the register of members of The Travancore Rubber & Tea Company Limited "TRTCL") - (a) by deleting the names of respondents 3 to 6 in relation to 65.378 equity shares of (late) S. Sivaramakrishna Aiyer, transmitted in favour of the respondents 3, 4 & 6 and further t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares held by (late) S. Sivaramakrishna Aiyer as on the date of execution of his Will, namely. 17.09.1986: and (ii) 9.081 shares held by (late) S. Parvathavardhani Ammal and acquired by (late) S. Sivaramakrishna Aiyer in terms of her Will, aggregating 11.510 shares. 5.2 At the time of execution of the Wills, while (late) S. Sivaramakrishna Aiyer held 6,896 equity shares, his wife held 32,492 equity shares in TPPL. (Late) S. Parvathavardhani Ammal bequeathed under Clause 14 of her Will all her shares in TPPL in favour of her husband and upon the demise of S. Parvathavardhani Ammal in February 1998, all her 32.492 equity shares of TPPL devolved on her husband in accordance with her Will. S. Sivaramakrishna Aiyer passed away in September 2000, when he held 39,388 equity shares in TPPL, constituted by 6,896 equity shares held by (late) S. Sivaramakrishna Aiyer as on the date of execution of his Will, namely. 1 7.09.1986 and 32.492 equity shares held by (late) S. Parvathavardhani Ammal and acquired by (late) S. Sivaramakrishna Aiyer, in terms of her Will aggregating 39,388 equity shares. 5.3 At the time of execution of the Wills, while (late) S. Sivaramakrishna Aiyer held 5,524 equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t named in Clause 11 was entitled to 6.896 equity shares only of TPPL held by (late) S. Sivaramakrishna Aiyer at the time of execution of the will; and (iii) the three sons named in Clause 10, namely, (late) S. Veerasubramonia Sarma and respondents 3 & 4 were entitled to one -third shares each only in 5.524 equity shares of TRTCL held by (late) S. Sivaramakrishna Aiyer at the time of execution of the will. Shri Ramakrishnan. learned Counsel, pointed out that the shares acquired by (late) S. Sivaramakrishna Aiyer in the Companies, subsequent to execution of his will fell within Clause 26 of the Will which reads thus; "My live daughters and daughters -in -law shall also take equally any items of properties which have been left out in this Will and also the properties I may hereafter acquire" and accordingly, each of the daughters and daughters -in -law was entitled to one -ninth share each in 9,081 shares of TWEL, 32,492 equity shares of TPPL and 28.619 equity shares of TRTCL acquired by (late) S. Sivaramakrishna Aiyer either by purchase or through inheritance subsequent to the execution of his will. Nevertheless, the second respondent, the executor of the Will and Chairman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the remedy provided in Section 111(4). The remedies of appeal and rectification are available to all kinds of shares held in a public company under the proviso to Section 111A(2) and 111A(3) read with Sub -section (7) of Section 111A of the Act, which would make applicable the provisions of Section 111(1)(2) and (4) by virtue of Section 111(5) of the Act. By virtue of Section 111A(7), the provisions of Sub -sections (5), (7), (9), (10) and (12) of Section 111 shall, so far as may be, apply to the proceedings before the Company Law Board under this section as they apply to the proceedings under Section 111. The CLB is empowered under Section 111(7) to decide any question relating to the title of any person to the shares, while deciding any application made under this sub -section. In view of this, the CLB can interpret the terms of the Will and decide the title to the shares impugned in the company petitions. It cannot, therefore, be said that by virtue of Section 111(14), the provisions of Sub -sections (1), (2) and (4) of Section 111 are not applicable to the public companies. The principles enunciated by the Bombay High Court in Finolex Industries Limited v. Anil Ramchand Chha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary for a person to invest his own funds to become an investor in the company, but it is sufficient, if one's predecessor in interest had invested the funds. Similarly, any person who succeeded to shares by way of operation of law can be treated as an investor. The petitioners, being the legal representatives of (late) S. Sivaramakrishna Aiyer, who was an investor, will be entitled to make an application under Section 111A(3) of the Act on the principle that the term "Investor" includes his legal heir. 5.8 The cause of action arose in these company petitions on account of the unlawful transmission of shares. The petition (C.P. No. 11 of 2005) has been filed after a period of three years and ten months of the transmission of impugned shares in favour of the second respondent which was fraudulently concealed from the petitioners. The respondents also fraudulently failed to file necessary returns containing the details of the shareholding with the Registrar of Companies. The petitioners were unaware of the fact and date of transmission, with reasonable diligence, until the respondents 1 & 2 disclosed the date of transmission in their counters. This Bench, by an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly affirmed by the Kerala High Court and therefore, binding on the CLB, more so when the registered office of the Companies is located in Kerala State. The petitioners have shown here above "sufficient cause" for the delay in having filed the petition (C.P. No. 11 of 2005) after a delay of ten months, which may be condoned by invoking the provisions of Section 5 of the Limitation Act. 5.9 The Indian Succession Act, 1925 does not confer executive jurisdiction on civil courts to interpret any Will, but only in respect of probate and administration of estate. A Will can be interpreted by all judicial forums. The interpretation of the terms of the Will is not a matter within the province of the District/High Court. In a number of cases the CLB has interpreted the investment agreement. Any legal document can be interpreted by the CLB. as there is no legal bar in the Indian Succession Act. The genuineness and validity of the Will are not under dispute. None of the parties has initiated any legal proceedings in any Forum challenging the Will. However, the contesting parties are claiming to the exclusion of each other, the impugned shares under the Will of (late) S. Sivaramak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gister the transmission of shares in favour of the appellant without any further requirement. The CLB in Narinder Kumar Sehgal v. Leader Valves Ltd. (1993) Vol. 77 CC 393 upheld the decision of the board of directors of the company to insist on production of succession certificate/probate of Will in view of the controversies raised by a legal heir regarding the identity of the legal heirs of the deceased member. This Bench, can, therefore, interpret the Wills under dispute, more so when there is only difference of opinion on the interpretation of the relevant clauses therein. 5.11 The Company petitions involve the interpretation of the Will of (late) S. Sivaramakrishna Aiyer and the Will of (late) Mrs. S. Parvathavardhani Ammal. The disputes are on account of the shares inherited by (late) S. Sivaramakrishna Aiyer from his wife and shares purchased by (late) S. Sivaramakrishna Aiyer after the date of his Will. The question for adjudication is whether such shares devolve on the sons under Clause 10 of the Will or whether these shares devolve equally on the daughters & daughters -in -law under Clause 26 of the Will. All parties admit the genuineness and validity of both the Wills. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the contrary intention appearing from the Will, 'my shares' stated in Clauses 10, 11 & 12 will refer only to the shares listed in the Will of (late) S. Sivaramakrishna Aiyer. A careful reading of both the Wills together will reveal that both the testators wanted their shares to devolve in a particular manner, despite the fact that at the time of execution of the Wills neither of them knew as to who would expire first. (Late) S. Sivaramakrishna Aiyer and (late) S. Parvathavardhani Ammal. therefore, carefully planned that their Wills so that the wealth of the family represented by the shares would devolve in a similar and identical faction regardless of whether S. Sivaramakrishna Aiyer died first or whether S. Parvathavardhani Ammal died first. Annexure -A forming part of the written arguments of Shri Ramakrishna, learned Counsel represents the devolvement of shares if S. Sivaramakrishna Aiyer had died first and S. Parvathavardhani Ammal died, thereafter. Annexure -B represents the devolvement of shares if S. Parvathavardhani Ammal died first and S. Sivaramakrishna Aiyer died later. Shri v. Ramakrishnan, learned Counsel, pointed out that whoever dies first, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be made by the legal heirs for the transmission of shares. The share transfer committee meeting was allegedly held at 3 p.m. on 29.03.2003, approving the transmission of shares in TRTCL. The board meeting of TRTCL, which reportedly ratified the minutes of the share transfer committee, was held on the same day at 3.30 p.m. The minutes of the share transfer committee consists of 30 pages of handwritten minutes. It would be physically impossible to write these minutes in half an hour and then place the minutes for approval before the meeting of the board of directors of TRTCL which however, without application of its mind registered the transmission of shares. Furthermore, the petitioners 2 & 3 were directors present at the board meeting, but asserted that the transmission of shares was never placed before, considered or approved at the said board meeting. The petitioners 2 & 3 never acquiesced or approved the transmission of shares. The directors favoured the second respondent and failed to act independently. The second respondent abused his powers and ensured that the impugned shares in TRTCL were transmitted exclusively to his brothers contrary to the terms of the Will. The fif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a member, the survivor or survivors where the member was a joint holder, and his legal representatives where he was a sole holder, shall be the only persons recognised by the Company as having any title to his interest in the shares. This has not been duly satisfied while transmitting the shares of (late) S. Sivaramakrishna Aiyer in TPPL. The Board of directors, while interpreting the Will failed to act fairly and therefore, the interpretation of the Company has to be set aside. The executor ought to have taken steps for transmission of the impugned shares, but in the instant cases, the legal heirs themselves had taken the steps for transmission in their favour. Thus, the Companies acted malafide and the decision in having transmitted the shares has to be set aside. The board of directors acted as per the dictates of the second respondent. In view of this, the impugned shares may be reverted back to the deceased S. Sivaramakrishna Aiyer. In the alternative, the CLB may interpret the Will and give the shares impugned in the petitions, in favour of the petitioners. There was no application by the second respondent, as the executor of the Will for transmission of the shares to the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;transmission". The words "intimation of transfer" appearing in Section 111A(2) cannot also be interpreted to mean or include "intimation of transmission", since the operative portion of Sub -section (2) deals only with the transferability of shares. At the same time Section 111A(3) uses both the expressions "instrument of transfer or the intimation of the transmission". Hence, it is only where an application is made under Section 111A(3), the CLB can exercise its power with regard to a transfer or transmission of shares, subject the restrictions laid down in Sub -section (3). It is relevant to point out that Section 111. dealing with a private company, uses the expression "instrument of transfer or the intimation of such transmission", the latter part of which is absent in Section 111A and such absence is certainly not a lacuna or omission by oversight. Furthermore, Sections 7 & 14 of the Depositories Act contemplate the registration of transfer of securities with depository on receipt of intimation, and does not cover any transmission of security and consequently, Section 111 A. which is creation of the Depositories Act, cannot enco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plexity. This decision was approved by Division Bench of the Bombay High Court in Shirish Finance & Investment (P) Ltd. v. M. Sreenivasulu Reddy (2002) 35 SCL 27 by observing inter -alia, the following: ...We find nothing in Section 111A which has the effect of taking away the common law right of a member of a company to seek rectification of register of members. At best, it can be said that after the insertion of Section 111 A. with effect from 20.9.95. a member of a Company who has no statutory right under the Companies Act to seek rectification of register of members. His common law.' right, however. remains in tact and he can assert that right by filing a suit before a court of competent jurisdiction."... (para 134) The Madras High Court while re -enforcing the principles enunciated by the Bombay High Court in Shirish Finance and Investment P. Ltd. v. M. Sreenivasulu Reddy (supra) held in NEPC Micon Ltd. and Ors. v. Sashi Prakash Khemka and Ors. (2007) 137 CC 917 that the jurisdiction of the CLB under Section 111 A recognizes a right under the provisions of the Companies Act to seek relief in summary manner for rectification. Yet, at the same time, the common law rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law. The first category found in the proviso to Section 111A(2) provides that if a company without sufficient cause refuses to register "transfer of shares", the transferee may appeal to the CLB and it shall direct such company to register "transfer of shares" on fulfilment of the requirements specified therein. This proviso does not cover a refusal to register a transmission of shares. Thus, the language in the proviso rules out the applicability of the provision to a "transmission of shares". There is no power conferred on the CLB to register a transmission of shares under Section 111 A(2), as the claim of the petitioners is based on a right of transmission by virtue of a Will. The second category of remedy contemplated is an application under Sub-section (3) which can be made only by depository, company, participant, investor or Securities and Exchange Board of India. Section 111A uses the expression "investor" and not "member". The petitioners do not come under any one of the five categories of persons mentioned therein. The decision of the learned Single Judge in M. Srinivasulu Reddy v. Kishore R. Chhabria (supra) lays down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f decisions of various High Courts and the Apex Court in Ammonia Supplies Corporation Private Limited v. Modern Plastic Containers Private Limited . Accordingly, where complicated question of facts or law is involved, the CLB cannot exercise its summary jurisdiction and must relegate the parties to civil court. This view has been adopted by this Board in (a) Byra Reddy v. Aaratli Cine Enterprises Private Ltd. (1997) 89 Co. Cases 745; and (b) D.R. Talayarkhan v. Transgene Biotek Ltd. (2006) 71 SC 319, wherein it was held that no relief under Section 111A can be granted if it is found that complicated questions of fact and law, or disputes of complicated nature or serious disputes relating to title are involved. There are serious disputes involving interpretation of the Wills of the deceased S. Sivaramakrishna Aiyar and S. Parvathavardhani Ammal, which shall be tried in a civil court, more so when complicated questions of facts and law are involved in the matter. 6.5 The Limitation Act. 1963 will apply only to a suit, appeal or application made in a court of law after the prescribed period. By virtue of Section 2(a) of the Limitation Act, 1963, "applicant" includes petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct provides that the Court having jurisdiction under the Companies Act, shall be (a) the High Court, having jurisdiction in relation to the place at which the registered office of the Company is situated; and (b) where the jurisdiction has been conferred on the District Court, the said District Court, in matters falling within the scope of the jurisdiction concerned in respect of the companies having the registered offices in the districts. The Supreme Court in the case of Canara Bank v. Nuclear Power Corporation of India (1995) 2 CLJ 203 (SC), at paragraph 26 (at page 217). the Supreme Court, while dealing with the scope of the Special Court constituted under the Special Court (Trial of offences Relating to Transactions in Securities) Act, 1992, held that the Special Court "is intended to encompass curial or judicial bodies which have the jurisdiction to decide matters or claims, inter alia, arising out of transactions in securities entered into between the stated dates in which a person notified is involved." But there is no decision whatsoever to support the view that the Company Law Board while dealing with an application under Section 111A acts as a civil court. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial tribunals. In Sundaram Finance Ltd. v. M.K. Kurian (2006) 1 M.L.J. 506 a Division Bench of the High Court of Madras held that. "A particular expression is often defined by the legislature by using the word "means" or the word "include". Sometimes the words "means and includes" are used. The use of the word "means" indicates that definition is hard and fast definition, and no other meaning can be assigned to that expression than is put down in that definition. The word "includes" when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import, but also those things to which the clause declares they shall include. The words "means and includes" on the other hand, indicate "an exhaustive explanation of the meaning which, for the purpose of the Act. must invariably attach to those words or expression". Thus, even under the Companies Act, the CLB cannot be equated to a civil court. Section 24 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 provides that Limitation Act shall, as far as may be, app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. Thus, the petitioners have full knowledge of the impugned transmission, but they have not chosen to file an appeal within two months from the date of their knowledge of the refusal of the Companies to recognize the right of transmission. The petitioners concede in C.P. No. 11 of 2005 that there is a delay of 10 months in filing the petition, by applying the limitation prescribed under Article 137. However, they attempt to get over the same by alleging that there is a fraud committed by the respondents and that the fraud came to be discovered only subsequently, thereby the petitioners attempt to invoke Section 17 for the condonation of the delay. The CLB is not being a Court cannot invoke Section 17 of the Limitation Act. The rights of the petitioners have accrued on the death of S. Sivaramakrishna Aiyer namely, 19.09.2000 and therefore, by virtue of Article 113, they ought to have enforced their rights over the shares within three years of death of S. Sivaramakrishna Aiyer, which has not been done, but enforced only on 26.07.2005, thereby the right of the petitioners is lost. According to the petitioners, as set out in para 1.5 of the application, in C.A. No. 81 of 2005, seeki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court of judicature at Madras which stand deleted with effect from 05.10.1994, a legatee has to go to a civil court to adjudicate any question affecting his rights as a legatee. Thus the CLB is not concerned with the Will of (late) S. Sivaramakrishna Aiyer at all. The entire petitions are based on the construction and interpretation of the Will of (late) S. Sivaramakrishna Aiyer and his deceased wife. The Wills have to be proved in accordance with the mandate prescribed in the Evidence Act and Succession Act and then the Wills have to be interpreted in an appropriate proceeding by a competent civil court. The CLB would relegate the parties to a civil court for the proper adjudication. 6.9 The Supreme Court while dealing with the principles of interpretation of statutes held in (a) Sri Nasiruddin v. State Transport Appellate Tribunal that if the precise words used are plain and unambiguous, they are bound to be construed in their ordinary sense and further that where the words are plain the Court would not make any alteration; (b) Vemareddy Kumaraswamy Reddy and Anr. v. State of A.P. - held that (i) a statute is an edict of the legislature, the elementary principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amily relationship and the probability that he would use words in a particular sense, in order to arriving at a right construction of the Will and to ascertain the meaning of the language when used by that particular testator in that document. (c) The true intention of a testator has to be gathered not by attaching importance to isolated expressions but by reading the Will as a whole with all its provisions and ignoring none of them as redundant or contradictory. (d) The Court must accept, if possible, such construction as would give to every expression some effect rather than that which would render any of the expressions inoperative. The Court will look at the circumstances under which the testator makes his Will such as the state of his property, of his family and the like. (e) To the extent that it is legally possible effect should be given to every disposition contained in the Will, unless the law prevents effect being given to it. If there are two repugnant provisions conferring successive interest, if the first interest created is valid the subsequent interest cannot take effect but a court of construction will proceed to the farthest extent to avoid repugnancy. 6.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretation of Clause 26 of the Will of (late) S. Sivaramakrishna Aiyer which provides that any property left out in this Will and also the properties acquired after the date of the Will shall be divided between the daughters and daughters -in -law equally. Accordingly, (late) S. Sivaramakrishna Aiyar's daughters and daughters -in -law shall take equally any items of properties which have been left out in his Will and also the properties acquired after the execution of his Will. The words "I may hereafter acquire" forming part of Clause 26 should be construed as only shares which are not specifically bequeathed under the Wills of both the deceased. The Wills upto Clause 9 are identical. It is the wish of the testators that the management and control of the four companies, namely TRTCL, The Peermade Tea Company Limited, TPPL and TWEL are to be in the control of the respective legal heirs to whom the shares are bequeathed. By virtue of Clause 14, (late) S. Parvathavardhani Ammal, bequeathed to her husband all her shares in TRTCL, TPPL and TWEL. In Clause 15 she bequeathed the balance of shares in the other companies to her five daughters equally. Thus, there is a conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed as the owner of the shares of the deceased. Section 211 of the Indian Succession Act, explicitly provides that the executor of a deceased person is his legal representative for all purposes and all the property of the deceased person vests in him as such. In view of this, all the properties of (late) S. Sivaramakrishna Aiyar are vested in the executor who is alone competent to maintain the petitions. Section 213 of the Indian Succession Act provides that the right as executor or legatee can be established in any court of justice only if probate or letters of administration is obtained. By virtue of Section 307 of the Indian Succession Act an executor has wide powers to dispose of the property of the deceased, vested in him under the Will either wholly or in part, in such manner as he may deem fit. Section 332 contemplates the assent of the executor to complete a legatee's title to his legacy. By virtue of Section 333, the assent of the executor is essential to divest his interest as executor and to transfer the subject of the bequest of the legatee. Therefore, the petitioners must make a claim with the executor, being the legal representative of (late) S. Sivaramakrishna Ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave not proved the violation of any law and therefore, no rectification can be allowed.. The shares namely, 32,492. shares acquired by (late) S. Sivaramakrishna Aiyer subsequent to the execution of the Will do not fall within Clause 26 of the Will of (late) S. Sivaramakrishna Aiyer. Therefore, the second respondent is entitled to the entire 39,388 shares held by (late) S. Sivaamakrishan Aiyer in TPPL and neither the petitioners nor the fifth respondent nor the daughters -in -law are entitled to any portion of the impugned shares. In TWEL only 15 shares are held in the name of the deceased S. Sivaramakrishna Aiyar as per the register of members, but the prayer of the petitioners is far more number of shares. The petitioners never approached the companies for transmission of the impugned shares. There has been no cause of action for the present company petitions. 6.15 (Late) S. Sivaramakrishna Aiyer held 70,902 shares in TRTCL on the date of his death, which includes the shares purchased and acquired by him from (late) S. Parvathavardhini Ammal as per her Will. The transmission of shares in TRTCL to the respondents 3 & 4 and (late) S. Veerasubramonia Sarma was based on legal advice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having any title or interest in the shares registered in his name. By virtue of Section 2(1) of the Code of Civil Procedure an executor is deemed to be a legal heir of a deceased. The petitioners cannot, therefore, approach the CLB invoking Section 111A. (Late) S. Sivaramakrishna Aiyer. held as on the date of his death only 15 shares in TWEL, which remain un -transmitted in favour of his legal heirs, and therefore, the petitioners must go against the executors for any relief in respect of the shares of (late) S. Sivaramakrishna Aiyer held in TWEL. 7. Shri Ramakrishnan, learned Counsel, his rejoinder submitted: The judgements of the Bombay High Court in (a) M Srinivasulu Reddy v. Kishore R Chhabria; (b) Shirish Finance & Investments P Ltd v. M. Srinivasulu Reddy (Division Bench); and (c) Gopal Krishna Baliga v. Poona Industrial Hotel Ltd (supra) would categorically show that the civil court is also competent to entertain a suit for the rectification of register of members at the instance of a member, while the CLB may pass orders in a proceeding under Section 111A of the Act. The Judgment in Karamsad Investments Ltd v. Nile Limited and Ors. (supra) dealing entirely with different s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company petitions on various accounts, raised by the petitioners. 9. While according to the respondents the Companies herein being public companies cannot invoke the provisions of Section 111 read with Section 111A for the relief of rectification of the register of members, it is asserted by the petitioners that Section 111A has to be read in conjunction with Section 111 and not independent of each other. In this context the relevant provisions of Sections 111, 111A and various case laws cited by both sides assume relevance. 10. Section 111 deals with power to refuse registration and appeal against refusal, relevant clauses of which read thus: 111(1) If a company refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission hy operation of law of the right to, any shares or interest of a member in, or debentures of the company, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of die company who is in default shall he punishable with fine which nun extend to one thousand rupees, and with a further fine which may extend to one hundred rupees for every day after the first day after which the default continues. (10) Every appeal or application to the Company Law Board under Sub -section (2) or Sub -section (4) shall be made by a petition in writing and shall be accompanied by such fee as may be prescribed. (12) If default is made in complying with any of the provisions of this section, the company and every officer of the company who is in default, shall he punishable with fine which may extend to fifty rupees for every day during which the default continues. ... ... ... ... ... ... (14) In this section "company" means a private company and includes a private company which had become a public company by virtue of Section 43A of this Act. Section 111A dealing with rectification of register on transfer runs as follows: (1) In this section, unless the context otherwise requires "company" means a company other than a company referred to in Sub -section (14) of Section 111 of this Act. (2) Subject to the provisions of this section, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the term "intimation of transmission" is included in the proviso by virtue of Section 28 read with Section 111A(7). This would harmonise the text of the proviso with the context of the whole statute, i.e., Depositories Act, 1996. Viewed in this manner, if is to be seen that both the terms "instrument of transfer" and "intimation of transmission are mentioned in Section 111(1) and Section 111(2) By virtue of Section 111A(7) the appeal by applying the provisions of Section 111(5), (7), (9), (10) and (12). Thus the terms "intimation of transmission" is deemed to be included in the proviso to Section 111A(2) by necessary implication. This in my view is the only harmonious construction which can he put on proviso to Section 111A(2) of the Act to give effect to the intention of the legislature. The proviso cannot be read in isolation. It has to be in the manner indicated above. No dichotomy or disharmony can be created in the rights and remedies of the shares held in public companies object of the Depositories Act (Section 28) is to make law in addition and not in derogation of the "law for the time being in force". 12. A combined readin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mchand Chhabria (supra) concluded that in view of the fact that Section 111A was inserted in the Act pursuant to the enactment of the Depositories Act which is applicable to listed companies, all the provisions as are applicable to a private company should also be applicable, in case of unlisted public companies. 13. Shri Dulip Singh, learned Senior Counsel, since deceased, and Shri T.K. Seshadri, learned senior Counsel, while tracing the history of the provisions of Sections 111 and 111A. before as well as after enactment of the Depositories Act, 1996, pointed out that the right of appeal provided under the proviso to Section 111A(2) is conferred only on the transferee in respect of a refusal to register a transfer or the intimation of transfer and not of transmission of shares by operation of law. Any person, who is aggrieved on account of a company refusing to accept transmission of shares can only seek his remedy only through a civil court, (whose jurisdiction is not barred in Sections 111 & 111A of the Act), in support of which a number of decision has been cited by learned Senior Counsel. The lis in - (i) Gopai Krishna Baiiga v. Poona Industrial Hotel Limited (supra) is whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertain a suit for rectification of register of members at the instance of a member and pass such orders as the CLB may pass in a proceeding under Section 111A: and (vi) NEPC Micon Ltd. and Ors. v. Sushi Prakash Khemka and Ors. (supra) concerned with the jurisdiction of the CLB under Section 111A recognising a right under the Companies Act. to seek relief for rectification of register of members and the common law right of an aggrieved person to file a petition in a competent civil Court for rectification. In this connection, the judgment in Kesha Appliances (P) Ltd. v. Royal Holdings Services Ltd. and Ors. (2006) 71 CLA 189, assumes utmost relevance, wherein the learned single Judge of the Bombay High Court while considering the legal proposition whether a judgment is an authority on proposition of law, which it decides, found that the lis in the judgment of the learned single Judge in M. Srinivasulu Reddy v. Kishore R. Chhahria. (supra) and of the Division Bench in Shirish Finance & Investment (P) Ltd. v. M. Sreenivasulu Reddy (supra) is that the right of rectification of the shares is common law right and such right is not affected by the provisions of Section 111A, which inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o direct am company to rectify the register or the records if the transfer of shares is in contravention of the provisions of the Securities and Exchange Board of India Act. 1992 or regulations made there under or in the Sick Industrial Companies (Special Provisions) Act. 1985: (iii) Karamsud Investment Ltd. v. Nile Limited (supra) that private companies are governed by Section 111; and (iv) M. Srinivasulu Reddy v. Kishore R. Chhabria (supra) that while private company is governed by the mechanism as contemplated under Section 111, public company is covered by a different mechanism under 111A; and (v) Tej Prakash S. Dangi v. Coramandal Pharmaceuticals Limited (supra) that by a recent amendment brought about by the Depositories Ordinance, 1996, Section 111 has been confined to a private company and a new Section 111A empowers the Company Law Board to direct any company to rectify the register or the records if the transfer of shares is in contravention of the provisions of the Securities and Exchange Hoard of India Act or regulations made there under or in the Sick Industrial Companies (special provisions) Act, 1985, being obiter -dicta will not render any assistance to this Bench, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of members of the Companies invoking the provisions of Section 111A(3). 16. The petitioners, it is contended by the respondents, not being investors have no locus standi to seek redressal under Section 111A(3) for rectification of the register of members. The term "investor" going by the Stroud's Judicial Dictionary would mean any person who applies one's monies in properties with an intention to make gain. The petitioners herein, undoubtedly never invested any of their own funds to acquire the impugned shares, but are claiming by way of operation of law under the Will of (late) S. Sivaramakrishna Aiyer. The issue now is whether an inheritor can be treated to be an investor. The underlying principles governing Section 399 on the right of members to apply under Sections 397 and 398 as pointed out by Shri Ramaknshnan, learned Counsel will be of some assistance to reach a definite conclusion. The applicants must hold the requisite number of shares in terms of Section 399 at the time of invoking the provisions of Section 399. The Apex Court, while considering the right of legal representatives of a deceased member in World Wide Agencies P. Ltd and Anr. v. Mrs. Marg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B is bound to give any relief under Section 111/111A, if it is found that complicated questions of fact or law or disputes of complicated nature or serious disputes relating to tile are involved when came to be considered by this Board in D.R. Talayarkhan v. Transgene Biotek Ltd. (supra), it was held thus: There are judicial pronouncements that the jurisdiction of the CLB under Section 111 (old Section 155) is discretionary in nature, providing a summary remedy in non -controversial matters or in matters where a quick decision is necessary so as to obviate an irreparable injury to a party. The CLB is not bound to give any relief under Section 111, 111A, if it is found that complicated questions of facts or law or disputes of complicated nature or serious disputes relating to title are involved. Where the allegations are forgery and fabrication of documents, which could only be resolved by oral testimony tested by cross examination cannot be resolved on the strength of the averments made in the affidavits, defeating the purpose and object of the summary procedure prescribed by Section 111, 111A. The proper course in such cases of complexity, necessitating investigation is to relega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of each case. It is not mandatory that whenever allegations of fraud are made, the parties should be relegated to a civil suit. Thus, the legal position is well -settled that the CLB in exercise of its discretion would decide, on the facts of each case, whether to entertain a petition for rectification under Section 111A, despite seriously disputed controversies or to relegate the same to a civil suit. 19. This Board in that case found that the issues involved therein were so complicated that they could not be decided in a summary manner, and accordingly refused the relief of rectification of the register of members under Section 111A as claimed by the petitioner therein and relegated the parties to a civil suit. In this connection, the categorical findings of this Board, in Khurshid Alam v. P. Pagnon Co. Private Limited and Ors. (supra) assume relevance which reads as under: Whether to deal with the issues under Section 111 ot the Act or relegate the parties to a suit, depends purely upon the facts and issues involved in a proceeding and there can be no rigid yardstick to decide the same in one way or the other. In fact as held by the apex court in the case of Amm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an application under Section 111 of the Act. The findings of the Kerala High Court, assume greater importance in deciding the applicability of the provisions of the Limitation Act to the proceedings before the CLB, which read as under: Power of the CLB while dealing with Section 111 of the Act was considered by the Apex Court in Canara Bank v. Nuclear Power Corporation of India Ltd. (1995) 16 CLA 417. After considering the powers, a three -member Bench of the Supreme Court found that it is a court for the purpose of trial of offence relating to transaction in the Special Court (Securities) Trial of offences Relating to transactions in Act, 1992. Power of rectification under Section 111 before tin amendment was exercised hy the court under Section 155 Noncing the history of enactment of Section 111, it was observed as follows: Section 111, as set out above, was incorporated in the Act subsequent to the report of a committee appointed to consider amendments to the Companies Act. The Sachar Committee, as it came to be called, said. Under the existing law, there are two remedies open to an aggrieved person to file an appeal under Section 111, or to apply to the court for rectific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the person aggrieved has to file before the C.I.B an "appeal", Sub -section (4) requires the person aggrieved to apply, Sub -section 4 speaks of it as an "appeal" or an "application" Sub -section (sic) as an "application and Sub -section (10) as an "appeal or application" which shall be made "by a petition in writing The words appeal and "application" in the context of the pr visions of Section 111 have the same meaning Plainly, it is an application that has to be made. Thereafter, the Apex Court at paragraph 31 held as follows: 31. Now, under Section 111 of the Act as amended with effect from 31st May. 1991 the CLB performs the functions that were theretofore performed by courts of civil judicature under Section 155. It is empowered to make order directing rectification of the' company's register, as to damages costs and incidental and consequential orders It may decide any question relating to the title of any person who is a party before it to have his name entered upon the company's register and any question which it is necessary or expedient to decide, it may make interim orders. Failure to comply w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, whose no gross negligence or deliberate in action or lack of bonafidies is imputable to the parties seeking condonation of delay in the present case. I could see that the legal heirs of (late) S. Sivaramakrishna Aiyer were engaged in resolving the disputes before approaching the CLB, as borne out by the various communications produced before the Bench, leaving apart the disputed correspondence. There is, therefore, justification 10 condone the delay of ten months, which is according condoned in the interest of justice. Therefore, the company petitions cannot be dismissed on the ground of limitation. 23. The Wills left by (late) S. Sivaramakrishna Aiyer and (late) S.S. Parvathavardhani Ammal are not being challenged by any of the legal heirs, but serious disputes are in relation to the interpretation of certain material clauses forming part of the Wills. While according to the petitioners, a Will can be interpreted by all judicial/quasi judicial authorities, it is vehemently opposed by the respondents that a Will has to be interpreted in an appropriate proceeding by a competent civil court. In this connection, Section 75 of the Indian Succession Act, 1925 states as follows: F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not draw support from and of them. In view of this statutory bar found in Section 75 of the Indian Succession Act, the plea of the petitioners, that the C.I.B is empowered to interpret the Will of (late) S. Sivaramakrishna Aiyer, in the light of the principles enunciated by the Supreme Court in Ammonia Supplies Corporation (P) Ltd. v. Modern Plastic Containers Pvt. Ltd. and Ors. (supra) that complicated question of fact or law can be adjudicated in a summary proceeding cannot be appreciated. The petitioners must necessarily seek the intervention of a competent civil court for adjudication of their rights over the shares impugned in the company petitions. There is, therefore, no need to deal with the exhaustive arguments advanced for both sides on interpretation of the relevant clauses of the Will of (late) S. Sivaramaknshna Aiyer supported by a number of case laws and various provisions of the Indian Succession Act, justifying their respective stand taken in the matter. 25. Having found that it is only a civil court which has jurisdiction to determine questions as to what person or what properly is denoted by any words in a Will, it shall now be considered whether the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same day namely, 29.03.2003, perused the minutes of the share transfer committee and without any discussion whatsoever, approved the same without even endeavoring to comply with the requirement of Article 18, which stipulates that "Even transmission of a share shall he verified in such a manner as the Board of Directors may require and the Company may refuse to register any such transmission until the same he so verified." 26. It is clear from the above minutes that there was no deliberation at all both at the share transfer committee and at the board meetings on devolvement of the impugned shares under Clause 1 0 or any other clause of the Will of (late) S. Sivaramakrishna Aiyer before giving effect to the transmission of shares at such meetings. All the relevant minutes are silent as to whether the board of TPPL and TRTCL have ascertained the details in relation to - (i) number of shares held by (late) S. Sivaramakrishna Aiyer at the time of execution of his Will; (ii) number of shares acquired by (late) S. Sivaramakrishna Aiyer after the date of his Will: and (iii) number of shares held by (late) S. Sivaramakrishna Aiyer at the time of his death, in these Companies, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 20,470 equity shares of TRTCL by the fourth respondent, pursuant to the irregular transmission, in favour of the fifth respondent, is hit by Section 27 of the sale of Goods Act, 1930. on account of which the fifth respondent, the buyer acquired no better title to those shares than the seller, namely, the fourth respondent had and therefore, the acquisition of 20.479 shares of TRTCL by fifth respondent is bad in law. I am not constrained to accept the plea of ignorance on the part of the fifth respondent, of the disputes among the legal heirs of (late) S. Sivaramakrishna Aiyer in relation to the impugned shares, in the light of the correspondence which remain undisputed before the Bench and cannot, therefore, be said that the purchase of shares by the fifth respondent was without notice of any defect in title therein. Thus, the names of the transferees are found, without sufficient cause, entered in respect of the impugned shares at the instance of the board of directors, in the register of members of TPPL, and TRTCL. The prayer in C.P. No. 10 of 2005 is for (i) rectification of the register of members of TWEL in respect of (a) 2429 shares of TWEL reportedly held by (late) S. Siv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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