Azana Rahman vs Tezalpatty Tea Private Limited

Azana Rahman & Anr. ...Appellant(s)

Versus

Tezalpatty Tea Company Pvt. Ltd. ...Respondent(s)

Present: For Appellant : Mr. A.K. Shrivastava, Mr. Akash Sharma, Mr. Rishav Ranjan, Advocates. For Respondents : Mr. Nishant Das, Aatrayi Das, Mr. Atul Kumar, Advocates.

WITH Company Appeal (AT) No. 136 of 2022

IN THE MATTER OF:

Azana Rahman & Anr. ...Appellant(s)

Versus

Mohijuli Tea Company Pvt. Ltd. & Ors. ...Respondent(s)

Present: For Appellant : Mr. A.K. Shrivastava, Mr. Akash Sharma, Mr. Rishav Ranjan, Advocates. For Respondents : Mr. Nishant Das, Aatrayi Das, Mr. Atul Kumar, Advocates.

ORDER

(Hybrid Mode)

16.10.2024: These appeals are against an impugned order dated

20.05.2022 wherein a petition under Section 241-242 of the Companies Act,

2013 filed by the Appellant herein was dismissed on the ground the appellants

have no locus to file a petition since were not members of M/s Tezalpatty Tea

Company Pvt. Ltd. and M/s Mohijuli Tea Company Pvt. Ltd. 2

2. It is urged initially Smt. Rumena Rahman and Mr. Adilur Rahman were

partners in M/s Tezalpatty Tea Company and M/s Mohijuli Tea Company.

However, these firms were converted into private limited companies and

admittedly there were 5 shareholders, all family Members, namely Late Mrs.

Rumena Rahman, Mrs. Nilufar Rahman, Late Adilur Rahman, Atikur Rahman

and Nazma Husain Hazarika sister of Late Mrs. Rumena Rahman in these two

companies.

3. It is argued all other shareholders by a Deed of Assignment dated

08.03.2007, had assigned their shares for consideration in favour of Adilur

Rahman (since deceased), though this fact is disputed by the Learned Counsel

for the Respondent stated inter alia the terms and conditions of the said Deed

of Assignment dated 08.03.2007 were never complied with and such

Assignment Deed is subject matter of challenge before the Ld. Civil Court.

4. Admittedly the Appellants filed an application to obtain Succession

Certificate in respect of shares belonging to Adilur Rahman but it was

dismissed on technical ground viz they were not holding physical share

certificate(s) or copies thereof. However, in the Annual Returns of the

companies, admittedly Adilur Rahman was shown as a shareholder and

admittedly the Appellants are legal heirs of Late Adilur Rahman.

5. The question is if such legal heirs could file a petition for oppression

and mismanagement.

6. In M/s World Wide Agencies Pvt. Ltd. & Anr. Vs. Margaret T. Desor

& Others. (1990) 1 SCC 536, in a petition for Oppression and

Mismanagement if filed by the legal heirs of the deceased shareholder, the

Court held as under:

3

"24. We do not agree for the reason mentioned before. It further appears to us the Australian judgment does not reconcile to logic in accepting that legal representative can petition for winding up, which is called the "sledge-hammer remedy", but would refuse the lesser and alternative remedy of seeking relief against oppression and mismanagement though the latter remedy requires establishment of winding up on just and equitable ground as a precondition for its invocation. It would be rather incongruous to hold that the case for winding up on just and equitable ground can be made out by the legal representatives under Section 439(4)(b) of the Act but not the other. This does not appear to be logical. It appears to us that to hold that the legal representatives of a deceased shareholder could not be given the same right of a member under Sections 397 and 398 of the Act would be taking a hyper-technical view which does not advance the cause of equity or justice. The High Court in its judgment under appeal proceeded on the basis that legal representatives of a deceased member represent the estate of that member whose name is on the register of members. When the member dies, his estate is entrusted in the legal representatives. When, therefore, these vestings are illegally or wrongfully affected, the estate through the legal representatives must be enabled to petition in respect of oppression and mismanagement and it is as if the estate stands in the shoes of the deceased member. We are of the opinion that this view is a correct view. It may be mentioned in this connection that succession is not kept in abeyance and the property of the deceased member vests in the legal representatives on the death of the deceased and they should be permitted to act for the deceased member for the purpose of transfer of shares under Section 109 of the Act.

25. In some situations and contingencies, the "member" may be different from a "holder". A "member" may be a "holder" of shares but a "holder" may not be a "member". In 4

that view of the matter, it is not necessary for the present purpose to examine this question from the angle in which the learned Single Judge of the Calcutta High Court analysed the position in the case of Kedar Nath Agarwal v. Jay Engineering Works Ltd., to which our attention was drawn.

26. Admittedly in the present case, the legal representatives have been more than anxious to get their names put on the register of members in place of deceased member, who was the Managing Director and Chairman of the company and had the controlling interest. It would, therefore, be wrong to insist their names must be first put on the register before they can move an application under Sections 397 and 398 of the Act. This would frustrate the very purpose of the necessity of action. It was contended on behalf of the appellant before the High Court that if legal representatives who were only potential members or persons likely to come on the register of members, are permitted to file an application under Sections 397 and 398 of the Act, it would create havoc, as then persons having blank transfer forms signed by members, and as such having a financial interest, could also claim to move an application under Sections 397 and 398 of the Act. The High Court held that this is a fallacy that in the case of persons having blank transfer forms, signed by members, it is the members themselves who are shown on the register of members and they are different from the persons with the blank transfer forms whereas in the case of legal representatives it is the deceased member who is shown on the register and the legal representatives are in effect exercising his right. A right has devolved on them through the death of the member whose name is still on the register. In our opinion, therefore, the High Court was pre-eminently right in holding that the legal representatives of deceased member whose name is still on the register of members are entitled to petition under Sections 397 and 398 5

of the Act. In the view we have taken, it is not necessary to consider the contention whether as on the date of petition, they were not members. In that view of the matter, it is not necessary for us to consider the decision of this Court in Rajahmundry Electric Supply Corpn. Lid. v. A. Mageshwara Rao. In view of the observations of this Court in Life Insurance Corporation of India v. Escorts Limited it is not necessary, in our opinion, to consider the contention as made on behalf of the appel- lant before the High Court that the permission of the Reserve Bank of India had been erroneously obtained and consequently amounts to no permission. In the present context, we are of the opinion that the High Court was right in the view it took on the first aspect of the matter."

7. Further in Positiveedge Technology Pvt. Ltd. & Anr. Vs. Asmita

Katdare & Anr. Company Appeal (AT) No. 177 of 2020, this Tribunal held

as under:

"5. We have carefully gone through the various submissions made by the parties and are observing as follows:

a. It is very much clear that both the Appellants and the Respondents are known to each other for a long time and knows each other families also. It is not in dispute that the Appellant No.2 has purchased the share of California, US based Company on the same identity from the Respondents. It is also not in dispute that in the objections filed by the Appellant before the Tribunal, they have not raised the issue of mother as an inheritor. The Appellants (Respondent at Tribunal) have raised only the issue of production of probate and appropriate legal heir Certificate from Respondents at Tribunal. The issue of mother of Late Mr. Mondal, legal heir was not raised at Tribunal and hence a new ground. In any case the mother has 6

already released her rights as far as back on 25.12.2015 by way of a letter. Even the Respondents are agreeable that let the shares be transmitted in the name of the all three (mother, wife and daughter). Identity is not denied, he cannot take a plea topsy-turvy. He is prohibited by his conduct-estoppel by conduct.

b. Section 115 of the Evidence Act, 1872 speaks as follows: "Section 115. Estoppel - When One person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing."

c. In the present case the Appellant company have not assigned a tenable or sound reason as well as taken the correct approach to the issue of transmission. The appellant himself has purchased the shares of the respondents of USA based company at a consideration on the same plea, no doubt, but taking a different plea in India and without communicating in explicit terms when this fact was known to the Appellant no.2 since the date of death of Late Mondal or earlier. Indian Evidence Act, 1872 does not permit taking one stand at one place & a different stand at other place.

d. Companies Act, 2013 vide chapter IV specifically regulates the mechanism for Transfer & Transmission of Securities. Hence, as per Section 430 of the Companies Act, "Civil Court not to have Jurisdiction" on such issues."

8. Considering the facts, the petition for Oppression and Mismanagement

was dismissed by the Ld. NCLT only on the ground the petitioners as on the

date were not shareholders of the Respondent companies hence could not

have filed a petition under Section 241 and 242 of the Companies Act, 2013, 7

cannot be sustained in view of the judgments cited above, especially in view

of the facts the appellants are legal heirs of Late Adilur Rahman, shareholder

in both the companies. This position of law stands fairly submitted by the

Learned Counsel for the Respondent. In the circumstances, the impugned

order dated 20.05.2022 is set aside and C.P. No. 15/GB/2021 is restored to

its original position. The rights and contentions of both the parties are left

open to be decided on merits by the Ld. NCLT.

9. In view of the above observations, both these appeals are disposed of.

Pending I.As, if any, are also disposed of.

[Justice Yogesh Khanna] Member (Judicial)

[Mr. Ajai Das Mehrotra] Member (Technical)

R.N./Manu