w w w . L a w y e r S e r v i c e s . i n

Universal Cables Limited & Others v/s Arvind Kumar Newar & Others

Company & Directors' Information:- ARVIND LIMITED [Active] CIN = L17119GJ1931PLC000093

Company & Directors' Information:- U M CABLES LIMITED [Active] CIN = U26932WB1987PLC091221

Company & Directors' Information:- UNIVERSAL CABLES LIMITED [Active] CIN = L31300MP1945PLC001114

Company & Directors' Information:- N C CABLES LIMITED [Active] CIN = U74899DL1999PLC101990

Company & Directors' Information:- D AND M CABLES PRIVATE LIMITED [Active] CIN = U31902DL2013PTC255812

Company & Directors' Information:- UNIVERSAL CORPORATION LIMITED [Active] CIN = U74899DL2000PLC103817

Company & Directors' Information:- J K CABLES LIMITED [Active] CIN = U74899DL1997PLC087912

Company & Directors' Information:- M. K. UNIVERSAL PRIVATE LIMITED [Active] CIN = U70109DL2006PTC154153

Company & Directors' Information:- T C L CABLES LIMITED [Under Liquidation] CIN = U31300UP1993PLC015914

Company & Directors' Information:- S R CABLES PRIVATE LIMITED [Active] CIN = U74899DL1991PTC043375

Company & Directors' Information:- K G CABLES PRIVATE LIMITED [Active] CIN = U28910DL2007PTC161688

Company & Directors' Information:- UNIVERSAL INDIA LTD [Amalgamated] CIN = U17222WB1990PLC048613

Company & Directors' Information:- CABLES (INDIA) PVT LTD [Active] CIN = U31300OR1982PTC001090

Company & Directors' Information:- ARVIND AND COMPANY PRIVATE LIMITED [Active] CIN = U51109UR1990PTC011558

Company & Directors' Information:- J P CABLES PRIVATE LIMITED [Active] CIN = U31501DL2009PTC195679

Company & Directors' Information:- A. KUMAR AND COMPANY PRIVATE LIMITED [Active] CIN = U19201UP1995PTC018833

Company & Directors' Information:- UNIVERSAL E P PRIVATE LIMITED [Active] CIN = U74899DL1982PTC013400

Company & Directors' Information:- A G UNIVERSAL PRIVATE LIMITED [Active] CIN = U25200DL2008PTC178400

Company & Directors' Information:- S KUMAR & CO PVT LTD [Not available for efiling] CIN = U51909WB1946PTC014540

Company & Directors' Information:- S KUMAR AND COMPANY PRIVATE LIMITED [Converted to LLP] CIN = U45203DL1964PTC117149

Company & Directors' Information:- J O CABLES PRIVATE LIMITED [Active] CIN = U74899DL1992PTC048663

Company & Directors' Information:- KUMAR (INDIA) PVT LTD [Strike Off] CIN = U51909WB1986PTC041038

Company & Directors' Information:- R R UNIVERSAL PRIVATE LIMITED [Active] CIN = U52100MH2013PTC243592

Company & Directors' Information:- K M CABLES PRIVATE LIMITED [Active] CIN = U31300DL2005PTC141637

Company & Directors' Information:- V R CABLES PRIVATE LIMITED [Strike Off] CIN = U31300DL1997PTC087219

Company & Directors' Information:- K K CABLES PRIVATE LIMITED [Active] CIN = U74899DL1990PTC042453

Company & Directors' Information:- P KUMAR & CO PRIVATE LIMITED [Strike Off] CIN = U27105WB1998PTC087242

Company & Directors' Information:- M P CABLES PVT LTD [Strike Off] CIN = U31300CT1981PTC001878

Company & Directors' Information:- KUMAR L P G PRIVATE LIMITED [Strike Off] CIN = U23201DL2001PTC113203

Company & Directors' Information:- R L CABLES PRIVATE LIMITED [Active] CIN = U31501HR2010PTC040968

Company & Directors' Information:- CABLES (INDIA) PVT LTD [Strike Off] CIN = U31300WB1986PTC041555

Company & Directors' Information:- KUMAR CABLES PRIVATE LIMITED [Under Process of Striking Off] CIN = U31300JH1974PTC001134

Company & Directors' Information:- V P CABLES PVT LTD [Strike Off] CIN = U99999DL1981PTC011959

Company & Directors' Information:- UNIVERSAL PRIVATE LIMITED [Active] CIN = U45202PB1984PTC001388

Company & Directors' Information:- M KUMAR AND CO PVT LTD [Strike Off] CIN = U18101DL1982PTC014823

Company & Directors' Information:- S A CABLES PRIVATE LIMITED [Strike Off] CIN = U51109DL2008PTC179635

Company & Directors' Information:- B N KUMAR & CO PVT LTD [Strike Off] CIN = U52341WB1941PTC010643

Company & Directors' Information:- G C CABLES PRIVATE LIMITED [Under Process of Striking Off] CIN = U28113DL2009PTC193677

Company & Directors' Information:- K R UNIVERSAL PRIVATE LIMITED [Active] CIN = U74999HR2014PTC052725

Company & Directors' Information:- S K CABLES PRIVATE LIMITED [Strike Off] CIN = U31300DL1983PTC014930

Company & Directors' Information:- UNIVERSAL PVT LTD [Not available for efiling] CIN = U51909PB1948PTC001338

    APO. Nos. 89 to 91, 95 & 96 of 2020 with TS. No. 6 of 2004 & I.A. Nos. GA. 1 of 2020

    Decided On, 01 October 2020

    At, High Court of Judicature at Calcutta


    For the Appearing Parties: Saktinath Mukherjee, Ranjan Kr. Bachawat, Kalyan Kumar Bandopadhyay, Amitesh Banerjee, Jaydip Kar, Aspi Chinoy, Anindya Kumar Mitra, Abhrajit Mitra, Jayanta Kumar Mitra, Partha Sarathi Sengupta, S.K. Kapur, S.N. Mookherjee, Hirak Kr. Mitra, Surajit Nath Mitra, K.V. Viswanathan, Ratnanko Banerjee, Hirak Kumar Mitra, Joy Saha, Sr. Advocates, Arindam Banerjee, Paritosh Sinha, Saubhik Chowdhury, Dripto Majumdar, Anubhav Sinha, Sayan Roychowdhury, Satyaki Mukherjee, Paritosh Sinha, Sakya Sen, Vineet Naik, Debanjan Mandal, Sanjiv Trivedi, Soumya Roychowdhury, Harsh Vardhan Lodha, Jishnu Chowdhury, Kunal Vajani, Rachit Lakhmani, Sanket Sarawgti, Sarvapriya Mukherjee, Shaunak Mitra, Meenakshi Pariwal, Deepan Kumar Sarkar, Iram Hassan, Aditya Vikram Lodha, Swarnendu Ghosh, Dr. Birendra Saraf, Janak Dwarkadas, Mahesh Aggarwal, Malay Seal, Mukul Rohatgi, Namrata Vinod, N.G. Khaitan, Prasun Ghosh, Pratik Mukhopadhyay, Rohan Dakshini, Suchismita Chatterjee, Vaibhavi Pandey, Vineeta Meharia, Debdutta Sen, Asmita Raychaudhuri, Rajesh Upadhyay, Yash Vardhan Deora, Advocates.

Judgment Text

1. THE COURT: These appeals have been preferred by different limited companies and a registered society, aggrieved by a common judgment and order dated September 18, 2020, passed in G.A No.1735 and G.A. No. 1845 and some other connected applications arising out of T.S No. 6 of 2004. T.S No.6 of 2004 is a testamentary suit for grant of probate of the alleged last will and testament of late Priyamvada Debi Birla (PDB). Upon death of the executor it was converted to a suit for grant of Letters of Administration. These appellants are not parties to the testamentary suit. The appellants filed individual appeals along with an application for leave to prefer the appeal and for further interim reliefs. Leave was granted in terms of prayer (a). Hearing proceeded on the application for stay. The parties were requested to restrict their arguments only on the point of interim stay of the operation of the order impugned.2. They challenge the directions given in the impugned order to the extent that Administrator pendente lite Committee; ‘APLC’ for short; appointed in the course of probate proceedings, has essentially been given superlative authority in matters touching the affairs of the appellants/companies. The directions issued through the order essentially requires the plaintiffs to implement the decisions dated July 19, 2019 and July 30, 2019 of APLC, taken by its majority, as also all consequential decisions of the APLC in furtherance of those decisions. The modality of operating the directions in the impugned order result in creating a situation where the appellants/companies are disabled from acting in consonance with the provisions of the Companies Act, 2013, and the authority and supremacy of the statutory position of the Board of Directors and voting rights of the shareholders in terms of the share-holdings in terms of the provision of the Companies Act.3. The society argued that the membership of PDB ceased on her death and the plaintiff No.1, Harsh Vardhan Lodha (HVL) was neither a trustee nor in the managing committee, but the order impugned amounted to interference with its affairs.4. The appellants have produced e-mails dated September 21, 2020 by which APLC intimated the judgment and order impugned to these appellants, seeking necessary compliance and urge that interim order staying the judgment impugned may be passed in order to protect the running of these companies.5. Learned Senior Advocates appearing for the appellants pointed out that the judgement suffered from inherent lack of jurisdiction, non application of mind, misconception of law, contradiction, and perversity. It was argued that the appealing companies and society are not even defendants in the probate suit and, therefore, no order affecting them could have been issued and that the impugned order is totally without jurisdiction, going by Section 247 of the Indian Succession Act, 1925. The testament which is subjected to the probate proceedings cannot be construed as something which authorises any activity by or on behalf of the estate of the testatrix, in excess of the shareholdings in the companies concerned, it is argued. To demonstrate this point succinctly, it is argued that the shareholding referable to the estate is that which is dependent upon the shareholding reflected in the affidavit of assets filed in the suit. It is argued that under the guise of the power under Section 247 of the Succession Act and the order issued by the learned Trial Court, purportedly under that Section; APLC cannot be permitted to interfere with the affairs of the appellants. The submission is that the APLC can only decide upon and regulate the voting power within the limit of the voting rights as regards the shares which are referable to the estate of the testatrix enlisted in the affidavit of assets.6. It is submitted these companies and the society were separate and distinct legal entities. APLC cannot dictate to the share holders of these companies the manner in which voting right should be exercised. The appellants referred to the affidavit of assets filed by the defendants to show that the defendants had admitted in the probate proceedings that the estate of PDB in terms of share holding in these companies was 1% or less of the total shares of the companies. Most of the companies are public limited companies and listed with the Bombay Stock exchange and National Stock exchange. That the plaintiff No. 1 Harsh Vardhan Lodha (HVL) had been a director of these companies prior to the death of PDB in his individual capacity and he became the elected Chairman since 2007-2010. The judgment impugned had the effect of annulling the resolutions passed in the Annual General Meetings. Moreover, by the judgment and order impugned the APLC was given the power to adjudicate administer and manage these companies and the society. Several portions of the judgment have been pointed out by the appellants to show apparent contradictions. While recording that the APLC has the liberty to approach the appropriate forum in case they detected any mismanagement in the company, the learned Judge proceeded to direct the plaintiff to implement the decision of the APLC dated July 19, 2019, July 30, 2019. The result of which, amounts to the APLC controlling the management and the voting rights of all the share holders. The appellants relied on the order by which the APLC was appointed and urged that the APLC was only empowered for the limited purpose to administer the estate of the deceased by registering their names in respect of the shares held by PDB. It was further urged that the APLC participated in the Annual General Meetings and exercised their voting rights to the extent of their share holding.7. The appellants drew the attention of the court to a decision of a coordinate bench of this court in the matter of Priyamvada Devi Birla vs. Ajay Kumar Newar and Ors., reported in 2016 SCC Online Cal 1541. On an application filed by two sets of defendants for a mandatory injunction upon Birla Corporation in which PDB had some shares for a issuance of direction upon HVL and Birla Corporation, the court held that injunction sought for against HVL could not be granted as he was not a party in the probate suit, in his capacity as the chairman of the Board of Directors in Birla Corporation. The court refused to pass any direction either for the production of the relevant documents relating to the proposed deal with Reliance Infrastructure or against HVL, as the company could not be linked up with his position as a legatee under the Will. It was held that the decisions taken by the Board of Directors could not be a subject matter of scrutiny by the Probate Court.8. Reference was made to the decision of Shashi Prakash Khemka vs. NEPC India Ltd., reported in 2019 SCC Online SC 223, in support of the contention that a Civil Court did not have jurisdiction to entertain any suit or proceeding in the matter, in respect of the power which had been conferred on the National Company Law Tribunal, when the dispute was over the control, administration and resolutions passed in the Annual General Meeting of the company. It was submitted that APLC did not have any right of Succession on the death of PDB to the directorship of the companies. The appointment to the office of director ought to have been done in terms of the provisions of the Companies Act, 2013. Reliance was placed on the decision of Priyamvada Devi Birla (deceased) vs. Madhav Prasad Birla (deceased) reported in AIR 2006 Cal 6.9. Reference was further made to the decision of Bacha F Guzdar, Bombay vs. Commissioner of Income Tax, Bombay, reported in AIR 1955 SC 74, in support of the contention that a share in a company could not be likened to a sum of money settled upon and subject to executory limitations to arise in future. It was rather to be regarded as an interest of the share holder of the company, measured, for the purpose of the liability and dividend, by a sum of money. According to the appellants APLC could not be considered as the owner of the companies in which PDB had some shares which were her personal estate and not in the nature of real estate. The company stood as a separate juridical entity distinct from the share holders.10. Reference was also made in the decision of Western Coalfields Limited vs. Special Area Development Authority, Korba and Anr., reported in (1982) 1 SCC 125, wherein it was held that property of the company was not the property of the share holders. The shareholders had merely an interest in the company arising under its Articles of Association, measured by a sum of money for the purpose of a liability and by a share in the distributed profit.11. Reference was made to the decision of Ramchandra Ganpat Rao Hande @ Handge vs. Vithal Rao Hande & Ors., reported in 2011 (4) Mh.L.J. 50, in support of the contention that although a probate suit would be regulated by the Code of Civil Procedure, the proceedings could not be in the form of a suit within the meaning of the expression under the Code of Civil Procedure. The provisions of the Code of Civil Procedure, to the extent they were not inconsistent with those of the Indian Succession Act, could be followed bearing in mind the limited jurisdiction and function of the Probate Court. Thus, the power of the probate court to grant an interim order had to be construed in relation to the grant of probate and letters of administration. Such a proceeding was not concerned with the title or even the existence of the property, but could only determine whether the Will was executed by the testator of his own free will. The Probate Court could not to be converted to decide issues alien to the grant of probate.12. Another decision was cited namely, Sukhal Sarkar vs. Union of India and others, on the proposition that a court of law had to act within the four corners of the statutory command and not deviate from it. That what could not be done directly could not be done indirectly.13. The interlocutory order issued by the learned Single Judge is one essentially in favour of the defendants. Therefore, we have heard the learned Advocates for the defendants in support of the order. The learned Senior Advocates for the defendants argued that the different decisions inter partes at various stages through the progress of the probate suit by the Probate court as well as the Appellate Court and the Hon’ble Supreme Court would tend to show that HVL has always been trying to control the estate of PDB and he had no authority to do so when he has been found, in different stages of the probate suit and matters arising therefrom, of having acted against the interest of the estate of PDB. It was argued that the estate of PDB is what has been recognised through the different orders by the Probate Court and the Appeal Courts as the controlling interest on the basis of shareholdings in various companies, directly or indirectly, which is referred to as the M P Birla Group of Companies. Reference has been made to some other materials to indicate that it will be prejudicial to the interest of the estate and the management of the various companies which come under the M P Birla Group of Companies, if the order impugned in these appeals is stayed. It is argued that at any rate there is no ground made out for ad interim order of stay since the prima facie case is in favour of sustaining the impugned order and the balance of convenience is definitely in favour of its continued sustenance in the interest of preserving the estate of PDB. It is also argued that irreparable injury would be caused to the estate if the plaintiff no. 1 is permitted to ride on the companies on the large controlling interest referable to the estate of PDB in those companies. It is also pointed out on behalf of the defendants that cross holdings in different companies, trusts and institutions coming under the M P Birla Group have definitely to be borne in mind while dealing with the jurisdiction over the estate of PDB. It is argued out that the impugned order issued by learned Probate Court is well within the jurisdiction under Section 247 of the Succession Act and the fundamental issues involved relating to the management of the estate of PDB do not fall for any consideration under the provisions of the Companies Act, 2013. It is also indicated that this is also an issue covered inter partes against the plaintiff no. 1 and such inter partes decisions are final and binding.14. It is also pointed out that the Company Law Board has also set aside the transfer of shares in the name of executor (since deceased) of the Will of PDB. That deceased executor is the father of the plaintiff no. 1, through whom, the plaintiff no. 1 is claiming to be in control.15. We may record here and now that we have not heard the APLC, since, in our considered view, it is not necessary to deal with any submission by the APLC while we are considering the applications for stay pending in intra Court appeals against the order of the Probate Court issued under Section 247 of the Succession Act and of which the APLC are not apparently aggrieved.16. We may, however, note that we have noticed that there was dissent in the APLC and the learned Advocates appearing for the members of the APLC wanted to point out certain matters touching the APLC’ decision. We are of the view that this is a matter which can gain attention at the final hearing of these applications and the appeals, since, as of now, we are only considering the questions whether an interim order of stay pending further consideration of the application for stay is to be issued at this stage.17. It is well settled that the position of Administrator pendente lite (APL) in terms of Section 247 of the Succession Act is that the APL represents the estate of the deceased for all purposes, except distribution of the estate. APL shall be subject to the immediate control of the probate Court and shall act under its direction. Except to the limit it is circumscribed by the last limb of Section 247, the control of the Court over the APL and the extent of its authority to issue directions to the APL spreads through the scope and extent of the statutory purpose for which APL can be appointed in terms of Section 247.18. It is fundamental that the eligibility of a share-holder; either if it is only one share or bulk of shares and stocks; the voting rights and the involvement in the company on the strength of the shares would stand regulated, primarily by Sections 47 and 88 of the Companies Act. In Vodafone International Holdings BV vs. Union of India and Another reported in (2012) 6 SCC 613, the Hon’ble Supreme Court held, inter alia, that the control and management is a facet of holding of shares and voting rights whose shares represent congeries of rights and controlling interest is an incident of holding majority shares. Their Lordships further held that control of a company vests in the voting powers of its shareholders and that the shareholders holding a controlling interest can determine the nature of the business, its management and various other matters touching the affairs of the company. Obviously, therefore, the controlling interest is definitely referable to the shareholdings. In the case in hand, it, truly is part of the estate of PDB. The power of the Probate Court under Section 247 of the Succession Act necessarily includes the power to regulate and permit such shares which are in the domain of commercial activity to be utilised to generate appropriate income and to better utilise the same in the best interest of the affairs of the estate of PDB, which would ultimately reflect on the end beneficiaries, which also includes charitable trust, educational institutions and other such activities.19. We have studied the impugned order issued by the Probate Court in the backdrop of the quality and extent of jurisdiction available under Section 247 of the Succession Act. We have bestowed our anxious consideration on the basis of the fundamental issues at this stage, as to whether the said order is to be stayed at this stage, till the final disposal of the stay applications and the appeals. We see that the impugned order refers to material facts; reflects reasons and demonstrates judicial consideration and determination of matters which fall within the domain of Section 247 of the Succession Act. We cannot treat it as a perverse decision or one which deflects the course of justice; or, that it is not in the best interest of the PDB’s estate. On the basis of various materials on record, to which we may not make any copious reference now, we notice that there are different

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orders inter partes which tend to indicate that this matter requires further consideration without any interlocutory order staying the operation of the impugned order. We are also of the view that the power of the APLC to control and administer the estate of PDB is repeatedly asserted through the different judicial orders of the Probate Court, the Division Bench of this Court as well as the Hon’ble Supreme Court of India. We, therefore, do not find any reason to issue any order of stay as sought for at this stage.20. We may, however, clarify that the word “implement” occurring in paragraph (a) among the three directions issued by the learned Judge means “abide by”. It is further clarified that the operation of paragraph (b) among the directions would be a restriction on plaintiff no. 1 Harsh Vardhan Lodha to the extent of it being a restriction from holding any office in any of the entities of the M P Birla Group during the pendency of the suit, on the strength of the shares referable to the estate of PDB.21. We hasten to add that since we are keeping open all issues for further consideration and are only proceeding to decide as to whether an ad interim order is to be issued, we are not dealing with the judicial precedents referred to by the learned Advocates for the appellants, though it is not as if we are not bearing in mind the fundamental principles brought in through those precedents, referable to the realm of testamentary jurisdiction and company law.22. In the result the prayer for ad interim stay of the judgement and order impugned dated September 18, 2020 is declined.23. Affidavit-in-Opposition to the stay applications be filed within October 21, 2020. Reply thereto if any be filed within November 17, 2020. List the appeals and applications for final hearing after expiry of the aforesaid period. Liberty to mention.