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TMI Blog2020 (2) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... ively of late Mr. Santanu Mondal. Mr. Santanu Mondal was 50% Shareholder of Respondent No.! Company i.e. M/ s.PositiveEdge Technologies Private Limited until his untimely demise on 18.04.2015. The Pet; 40ners, as legal heirs & legal representatives, are entitled to the right, title and interest of the shares held by late Mr. Mondal in Respondent No. 1 Company. (2) M/s.PositiveEdge Technologies Private Limited (hereinafter referred to as Respondent No. 1 Company/ Company) was incorporated on 15.02.2008 as a Private Company within meaning of Section 3(.1)(iii) of Companir Act, 1956 ; having registered office at No.597, MAPLE, 15th bross, Ring Road, 6th Phase JP Nagar, and Bengaluru-560017. It is interalia engaged in the business of providing consulting, *develop, customize and deal in computer software solutions in tl..e field of client/ server etc. The Respondent No.2 namely Shivendra Singh Sainger is a Director of Company. (3) Late Mr. Mondal was also a Sharebolxler in Positive Edge Solutions LLC, which is group Compa.n.# of Respondent No. 1 Company, incorporated under the laws of State of California in the United States of America. Upon the demise of late Mr. Mondal, Responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of powers, under the Article of Association waived the requirement of producing the succession certificate and recognized the Petitioners as the heir and legal representative of Mr. Santanu Mondal. Neither had the Board of Directors ever acknowledged the Petitioners as members of the Company, nor had any instrument of transmission been executed in favour of the Petitioners. (2) It is stated that the Shareholder is a person who acquires or obtain shares of the Company either by buying it himself/ herself by way of transfer or transmission. He/she becomes a member once his/her name is entered in the Register of Members. The name of Petitioners verily does not appear in the Register of the Respondent No. 1 Company. They have relied upon Paragraph 4 of the Article of Association of the Respondent No. 1, which state that: Subject to the provision of the Companies Act, 1956 and these Articles, the shares shall be under the control of the Board of Directors, who may allot or otherwise dispose off, the same to such persons on such terms and conditions and either at a premium, at a par or at discount and at such times as the Board thinks fit", Therefore, it is contended that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l heirs of the deceased member i.e. Mr. Santanu Mondal. (5) It is stated that the "Membership Interest Purchase Agr.eement" was entered into between the Petitioners and Respondent No. 2, on 20.12.2016. It was only through the said Agreement that the Petitioner No. 1 offered to sell 1,000 units of the outstanding membership interest that she held in the US Company, Positive Edge Solutions LLC (PES, LLC) to Respondent No.2, which he had accepted upon paying an agreed consideration. The transfer of any such membership interest in foreign entity could not be said to have any bearing on the Respondent No. 1, which is an Indian entity and is governed by its own Article of Association prepared and adopted while adhering to the Indian laws. Two separate entities incorporated in different jurisdiction under respective laws have separate set of rules that govern them and actions performed in one cannot be imported into another as a matter of precedent. Even the Petitioner in Paragraph No.8 of the petition has admitted and stated that The MIP Agreement had no connection with the 5, 000 equity shares held by Late Mr. Mondal in Respondent No. 1 Company . The "Membership Interest Purchase Agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of the Company only if the Board of Directors agree upon production of succession certificates. Unless the transmission of shares is accepted by the Company, the receiver of such shares does not become a Shareholder in respect of them. It, therefore, necessarily implies that it is not enough that there is a contract between the deceased Member and the receiver for sale of the shares but there has to be a further contract between the receiver and the Company in order to entitle the receiver to become a Member or Shareholder of the Company. Unless such a contract is completed, no transmission can be recognized. The Respondents are under no legal obligation to follow whatever criteria had been agreed at the time of the transfer of interest in the US Company. Both of them are different legal entities and the events in former do not in any manner binds the Respondents. The Petitions states that they are not required to produce any document to prove their status as the only heir of Late Mr. Mondal which in itself is an absurd and strange proposition to make. It is a universal fact that mere projection of oneself as the sole legal heir does not make anyone as such and the same has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther late Mr. Santanu Mondal, who demised on 18.04.2015, was the Shareholder of 5,000 equity shares in Respondent No. 1 Company; b. Whether the Petitioners filed requisite documents as per law to prove that they are legal heirs of Mr. Mondal so as to claim transmission of his shares; c. Whether the Respondents are justified to take different stands to keep the issue pending, and forcing the Petitioners to approach the Tribunal seeking for direction to the Company for transmission of shares in question; d. Whether acts of Respondents in illegally refusing to affect transmission of shares in question amounts to acts of Oppression. 7. It is relevant to refer para 4 of the Articles of Association of the Respondent No. 1 Company which shows that Subject to the provisions of the Companies Act, 1956, and these Articles, the shares shall be under the control of the Board of Directors, who may allot or otherwise dispose off, the same to such persons on such terms and conditions and either at a premium, at a par or at discount and at such times as the Board thinks fit. As detailed supra, procedure for Transmission of Shares of the Company are dealt with under Articles 15 to 20 of Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate is required to be produced when such succession is in dispute and not supported by relevant evidence. In order to avoid any further litigation on the issue, the Petitioner also sought permission from the Tribunal to cause paper notification in English Newspaper "The Hindu" and in Kannada Newspaper "Udayavani". Accordingly, the Tribunal permitted the same by an order dated 20.11.2019. Accordingly, the Petitioner caused advertisement of the petition in 'The Hindu' and "Udayavani" on 10.12.2019, which reads as under: "A petition under Section 58 of the Companies Act, 2013, for transmission of shares held by Late Mr. Santanu Mondal in Positive Edge Technologies Private Limited was presented by Asmita Katdare on the 20th day of November 2019, and the said Petition is fixed for hearing before the Bengaluru Bench of National Company Law Tribunal on 09.01.2020. Any person desirous of supporting or opposing the said Petition should send to the Petitioner's advocate, notice of his intention, signed by him or his advocate, with his name and address, so as to reach the Petitioner's advocate not later than two days before the date fixed for the hearing of the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of Applicant No.2 by her duly constituted Attorney, Mrs. Rekha Katdare. d. Affidavit dated 23.02.2020 executed on behalf of Applicant No.2 by her duly constituted Attorney, Mrs. Rakha Katdare. e. Letter of Indemnity dated 23.02.2020 executed on behalf of the Applicants by their duly constituted Attorney, Mrs. Rekha Katdare. f. The details of Shareholders as on 31.03.2018 filed by Respondent No. 1 Company with the Ministry of Corporate Affairs. 13. The acts of Respondents in forcing the Petitioners to approach the Tribunal for the transmission of shares in question, by resorting to arbitrarily exercise of Powers conferred on the Company and its Directors as per the Articles of Association of Company, arnounts to oppression. The Petitioners were denied the opportunity of becoming Members of the Company, on unjustified grounds from 18th April, 2015, when Mr. Mondal died, till date. Therefore, the Petitioners are deemed to be Shareholders of R-1 Company with effect from 1 st May, 2017, as the Petitioners have submitted all requisite documents early as on First April, 2017, and thus they are also entitled for all consequential benefits on par with other shareholder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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