Delhi High Court
Mrs. Margaret T. Desor And Others vs Worldwide Agencies (P.) Ltd. And Others on 21 September, 1989
JUDGMENT
1. The order will dispose of a preliminary objection taken by respondent No. 2, Mrs. Amrit K. Singh regarding the maintainability of the petition under sections 297, 298 and 433 of the Companies Act, which has been filed by the petitioner, Margaret T. Desor and two others.
2. The petition relates to the affairs of M/s. Worldwide Agencies Pvt. Ltd., which is carrying on business as travel agents at G-49, Connaught Circus, New Delhi. According to the information that is available from a certified copy of the annual returns of M/s. Worldwide Agencies Pvt. Ltd., as on February 16, 1976, M/s. Worldwide Agencies Pvt. Ltd. had the following shareholders :-
Shares 1. S. Amrit Singh Saluja 5 2. S. Balwant Singh 405 3. Mrs. Surinder Kaur Saluja 405
4. Mr. Tarlochan Singh Saluja --5. Mr. Yash Pal Malhotra 250 6. Mr. Surinder Kumar Desor 550 7. Mrs. Amrit K. Singh 350
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3. The said annual returns also record that 250 shares of Tarlochan Singh were transferred to S. K. Desor on August 12, 1975, and 350 shares of Mrs. S. K. Saluja were transferred on August 7, 1975 to Mrs. Amrit K. Singh.
Surinder Kumar Desor was a British national, as was Amrit Singh. Balwant Singh and Yash Pal Malhotra were Indians.
4. As per the certified copy of the annual return of M/s. Worldwide Agencies made up to February 15, 1984, the shareholders were S. K. Desor, Mrs. Amrit K. Singh, Yash Pal Malhotra, Mrs. Amrit Gupta, Mrs. Savitri Devi Kohli, Mr. A. S. Saluja and Mr. Balwant Singh. They held the following shares :-
Shares 1. S. K. Desor 600 2. Mrs. Amrit Kaur Singh 545 3. Mrs. Yash Pal Malhotra 250 4. Mrs. Amrit Gupta 200 5. Mrs. Savitri Devi Kohli 5 6. Mr. A. S. Saluja 5 7. Mr. Balwant Singh 405
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5. It is obvious that S. k. Desor was the largest shareholder of M/s. Worldwide Agencies.
6. The allegations in the petition are that Mrs. Margaret Desor was married to S. K. Desor in England where they stayed for a number of years, and the second petitioner was born to S. K. and Margaret Desor in England, and the third petitioner had been born to S. K. and Margaret Desor in India.
7. It is stated in the petition that after the marriage, S. K. Desor and Margaret Desor returned to India with the second petitioner. By way of abundant caution, the marriage between S. K. Desor and Margaret Desor was and Margaret Desor was registered under the Special Marriage Act in the year 1972.
8. It is stated in the petition that the third petitioner was born in India; that the first petitioner is a British subject, and the second petitioner is a British citizen.
9. S. k. Desor died on March 5, 1985.
10. It is also asserted in the petition that the second petitioner has relinquished her rights, if any, to the shares which were held by her father S. K. Desor, and as far as the third petitioner-minor, is concerned, it is stated that such shares as can be held by petitioner No. 2 shall be held by petitioner No. 1 as guardian of petitioner No. 3.
11. It is asserted in the petition that while in England, S. K. Desor was carrying on the business of travel agency in which Margaret Desor assisted her husband, and it is only when she returned to India, that she became a housewife, and did not participate in the travel agency business of M/s. Worldwide Agencies.
12. It is also asserted in the petition that 545 shares which are shown as being held by Mrs. Amrit K. Singh, are held by her benami for S. K. Desor, and that appropriate steps with respect thereto will be taken at the appropriate time.
13. In the petition, it is also asserted that on the death of S. K. Desor, the office of M/s. Worldwide Agencies was closed on 5th, 6th and 7th March, 1985.
14. It is also asserted that a meeting of the board of directors took place on march 12, 1985, at which meeting Margaret Desor, petitioner No. 1 was co- opted on the board of directors by resolution of that date, but has not been allowed to function as such.
15. It is also asserted that petitioner No. 1 was present at the said meeting of the board of directors, and petitioner No. 1 applied to the directors present, for the transfer of the shares held by her late husband, S. K. Desor, to her name as his wife and legal heir. She has also furnished an affidavit of Mrs. Kim Paul, petitioner No. 2, relinquishing her claim to the shares held by her late father. It is stated that in view of the application and the affidavit furnished by her and daughter of S. K. Desor, the board of directors have resolved that they have no objection to transmit the shares held by S. K. Desor and mrs. Margaret Desor on executing an indemnity bond. It was resolved that actual transfer of shares, however, will take effect after permission of the Reserve Bank of India has been obtained by petitioner No. 1, and succession certificate has been obtained with regard to the properties of S. K. Desor.
16. The board recorded that Mrs. Margaret Desor had applied for allotment of 5 shares vide her letter dated March 12, 1985, and she has undertaken to make payment within one week. The directors recorded that they have no objection to it, and it was resolved to allot her 5 shares out of the unsubscribed capital of the company, and that the shares will be issued soon. The board further resolved that in view of the allotment of these shares, and her interest in the shares of her late husband, S. K. Desor, Margaret Desor is appointed a director of the company subject to the permission of the Reserve Bank of India.
17. In the petition, in support of the pleas of oppression, it is alleged that the conditions that were imposed by the board of directors regarding the succession certificate and indemnity were onerous and oppressive.
18. It is asserted in the petition that taking advantage of the fact that the keys of the premises of M/s. Worldwide Agencies Pvt. Ltd. were with her, Mrs. Amrit K. Singh, has removed valuables belonging to Mrs. Margaret Desor, which had been kept by S. K. Desor is the safe of the company.
19. It is also asserted that mrs. Amrit K. Singh has also operated the bank account of the company without informing the bankers of the company of the death of S. K. Desor, and withdrawn about Rs. 40,000 from the bank on the pretext that this amount was needed to pay the salary of the staff of M/s. Worldwide Agencies Pvt. Ltd., whereas only a sum of Rs. 8,000 was payable.
20. It is also alleged that Mrs. Amrit K. Singh refused to give account for Rs. 40,000 which had been withdrawn by her after the death of S. K. Desor.
21. It is also stated in the petition that on March 12, 1985, Mrs. Amrit K. Singh filed a suit bearing No. 430 of 1985, seeking a declaration that she was director in charge of the company, and was entitled to function as such without any let or hindrance by the defendants in the said suit. The defendants in the said suit were stated to be Mrs. Margaret Desor, petitioner (defendant No. 1), and Sameer Desor, petitioner (defendant No. 2). In the suit, father of S. K. Desor and his two brothers were made defendants Nos. 3, 4 and 5, respectively, and the company was made defendant No. 6.
22. In the suit, Mrs. Amrit K. Singh also sought a direction that defendants Nos. 1 to 5 in the suit were not shareholders of the company, nor are they concerned with it in any capacity whatsoever, that defendants Nos. 1 to 5 be directed not to interfere in the affairs of the company; and that it be declared that Mrs. Amrit K. SIngh was the director in charge, and that she be permitted to function without any let or hindrance. A copy of the said plaint was annexed to the instant petition.
23. The petitioner in this petition asserts that the said suit bearing No. 430 of 1985, was filed only with a view to harass the petitioners as well as to wrongly and illegally capture the control of the affairs of the company.
24. It is also asserted in the petition that the documents of the company were removed by Mrs. Amrit K. Singh.
25. It is also asserted in the petition that notice was addressed to Mrs. Amrit K. Singh regarding a meeting of the board of directors to be held on March 12, 1985 at 10.00 a.m., but she did not attend the same.
26. In these circumstances, it is said that the affairs of M/s. Worldwide Agencies Pvt. Ltd. are being managed in a manner prejudicial to the interest of the company and oppressive to the petitioners.
27. Various other pleas are raised in the petition, and the reliefs sought in the petition are : (i) removal of Mrs. Amrit K. Singh from the office of the director; (ii) appointing the first petitioner, Mrs. Margaret Desor as chairman-cum-managing director of the company; (iii) directing the board of directors to register the transmission of shares of S. K. Desor in the name of the first petitioner; (iv) and directing Mrs. Amrit K. Singh to transfer 545 shares. In the alternative, a prayer was made to wind up the company.
28. The main objection to the maintainability of this petition before me, is; (i) that the petitioners are not registered as members of the company; their names are not recorded in the register of members; (ii) they are, therefore, not members within the meaning of the Companies Act, and particularly section 399 of the Act, and as such they cannot present a petition under section 397/398 of the Act; and (iii) that a composite petition as filed, wherein an alternative prayer is made for winding up the company, is not maintainable.
29. Mr. P. B. menon, who appears for Mrs. Amrit K. Singh, respondent No. 2, and for M/s. Worldwide Agencies, respondent No. 3 says that it is only members, who are recorded as members in the register of members, who are entitled file a petition under sections 397 and 398 of the Companies Act.
30. It must be borne in mind that the petitioners in this case claim to be heirs of S. K. Desor, deceased, and claim that they have become owners of the shares held by him as such, by transmission, by operation of law.
31. Collins English Dictionary, 1979 edition, gives the following meaning to the word "transmission" - (i) the act or process transmitting; (ii) the act or process of sending a message, a picture, or other information from one location to one or more other locations by means of radio waves, electric signals, light signals etc. Transmission is stated to be derived from the word "transmitter" which is said to mean "sending across". It appears that transmission takes place from one point to another instantaneously without let or hindrance, as in the case of transmission of radio waves and electric signals, etc. "Transmission" should, therefore, mean an immediate or instantaneous sending across. In this sense, when one is dealing with transmission of shares, it must mean that upon the death of the last holder of shares, in law, there is an instantaneous transfer of ownership to the heirs of the last holder and the property therein must vest in the heirs from the moment of death onwards. This would happen by virtue of operation of law of succession. To complete the formalities of law, it may be necessary in certain cases to apply for succession certificate or the letters of administration, but the succession certificate or the letters of administration only recognises the pre-existing change of ownership from the deceased holder to the heirs, which occurs at the moment of death. This position, that ownership of property rights vis-a-vis the shares held by the deceased is transferred to the heirs of a deceased holder is recognised by necessary intendment by the proviso to section 108 of the Companies Act. It says that "nothing in this section shall prejudice any power of the company to register as shareholder or debenture-holder any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law". This exception is carved out against the requirement of section 108 of the Companies Act, which requires that shares of a company are not to be transferred to another person without an instrument of transfer postulated by that section. Clearly, there is a difference between transfer of a share, which is a voluntary act of a shareholder to another person, and the transmission of a share to an heir by operation of law. In the instant case, it must also be borne in mind that the board of directors have at no stage refused to register the transmission of shares in the name of the petitioners.
32. A number of cases have been cited by Mr. Menon in support of the contentions that have been raised by him in connection with the non- maintainability of this petition under section 397, 398 and 433 of the Companies Act.
33. The first case cited by Mr. Menon is Smt. Bina Barua v. Dalowjan Tea Co. (P.) Ltd. [1981] 51 Comp Case 660. This is a case decided by the Gauhati High Court, wherein the Hon'ble Single Judge has been pleased to hold that the board of directors of the company were right in refusing to register the shares in the name of the widow and the sons of the deceased. The Hon'ble Judge came to the conclusion that the exercise of power of refusal by the board was, in the facts and circumstances of the case, bona fide. A perusal of the judgment would show that the board of directors of the company who had refused to register the shares, were members of the same family as the deceased member, whose widow and children sought to have the deceased member's shares registered in their names. It was asserted and contended that the widow of the deceased was a person of doubtful character, that she was living with someone else, and in these circumstances, it would not be in the interest of the company to have her substituted as a member in place of the deceased member. This case, therefore, was one in which the board of directors of the company who were members of the same family as the deceased, had refused to register the widow and her sons as shareholders. In the instant case before me, there is no refusal by the board of directors to register the shares in the name of the widow and the children of the deceased S. K. Desor. What the board required was that the petitioners should obtain a succession certificate, and also obtain permission of the Reserve Bank of India to hold the shares as the petitioners were not Indian nationals. This resolution of the board of directors, in my view, cannot amount to a refusal to register the petitioner and her children as members. The cited case, therefore, has no application to the present case. It is also to be noted that in the reply it is nowhere contended or stated by the respondent company, that the board of directors, has refused to register the petitioners as members, and that exercise of such power by the board of directors of M/s. Worldwide Agencies is bona fide and in the interest of the company. I have my reservations about the judgment of the Gauhati High Court, for what it decides, but I will not the matter further inasmuch as the facts of that case are different from the facts of the present case, and the judgment of the Gauhati High Court has no application to the facts of the present case.
34. Mr. Menon then cited Ved Prakash v. Iron Traders Pvt. Ltd., , in respect of the proposition that petitions under section 397 can be maintained only by those persons who are registered as members in the register of members. Facts of that case were different from the facts of the instant case. In that case, the application for rectification of the register had been dismissed by the District Judge. The petitioners filed a petition under section 397 and 398 of the Companies Act before the High Court. The District Judge had dismissed the petition for rectification on the ground that it could not be properly decided in summary proceedings for rectification. The Hon'ble Single Judge of the Punjab High Court states that the petitioners had not filed a suit for declaration that their names had been illegally removed from the register of members of the company as advised by the District Judge while dismissing a petition under section 155 of the Companies Act for rectification of the register of members. In these circumstances, the petitioners not being recorded as members of the company in the register of members, they were not entitled to present a petition under sections 397 and 398 of the Companies Act. The learned Single Judge was of the view that the petitioners had to establish their rights as members, in a suit. No suit to establish their rights as members was filed by the petitioners, "who are now seeking the same relief under the guise of an application under sections 397 and 398 of the Act". In these circumstances, the petition filed under section 397/398 was held not to be maintainable. The observations of the learned Single Judge regarding the non-maintainability of the petition under sections 397 and 398 have to be considered in the light of the facts and circumstances of that case. In that case, the petitioners, had not done what a judgment of a court had required them to do.
35. Thus, Ved Prakash's case is not an authority for the proposition of law that heirs to whom shares have been transmitted by intestate succession cannot maintain a petition under section 397/398. Further, the judgment in Ved Prakash's case is not applicable to the facts and circumstances of this case, as the instant case is not one in which the names of the petitioners were at on time incorporated on the register of members, and later on removed from register of members. This case does not help respondent No. 2.
36. Mr. Menon then referred to Balkrishan Gupta v. Swadeshi Polytex [1985] 58 Comp Case 563 of the Supreme Court. That case related to the rights which were sought to be exercised by a receiver appointed under Order 40 of the Code of Civil Procedure. In that context, the Supreme Court held that such a receiver was not a member as he was not on the register of members, and could not exercise any rights as such member. The Supreme Court was not dealing with a case under section 397/398 of the Companies Act, which was still stated to be pending in the Allahabad High Court. That court, in that case, was concerned with a case in which a meeting had been requisitioned. The appeal before the Supreme Court was by special leave against an order of the Allahabad High Court, which had dismissed the special appeal before it, questioning the right of the requisitions to issue notice under section 169 of the Act, to call an extraordinary general meeting. The said case having no parallel in the instant case, cannot be an authority for the proposition that the petition under section 397 is not maintainable. In face, such a question was not there for consideration before the Supreme Court. A receiver does not, to my mind, have the same status in law as an heir. Succession of an heir to property left upon intestacy is automatic. Property vests in the heir according to law, whereas a receiver's obligations and duties are only in accordance with the order that results in his appointment. This Supreme Court judgment, is therefore, of no assistance to respondent No. 2.
37. Mr. Menon also refers to Jawahar SIngh Bikram Singh Pvt. Ltd. v. Smt. Sharda Talwar [1974] 44 Comp Case 552 (Delhi). In that case, one Sri Kishan Talwar had instituted proceedings under sections 397 and 398 of the Companies Act. In that petition, Smt. Sharda Talwar the wife of the petitioner, Sri Kishan Talwar, was shown as a consenting party to the presentation of the petition. She was also indicated as a proforma respondent during the pendency of the proceedings. Sri Kishan Talwar, the original petitioner, died. After the death of the petitioner, she moved the court to be transposed as a petitioner. No application was made by the heirs or legal representatives of the deceased petitioner to be joined as parties, although Sharda Talwar was an heir and legal representative. Opposition to transposition of Sharda Talwar was rejected by the Single Judge of the High Court. In appeal, it was contended that the petition under section 397 had abated on the death of the petitioner, and that these proceedings could not be revived by transposing Sharda Talwar. It was held by the Division Bench that Sharda Talwar who was constructively a petitioner to the original petition, was entitled to continue the petition and that the petition under section 397 could be continued by transposing the wife of the deceased petitioner, who was already on record as a proforma respondent, as petitioner.
38. The facts of the said case are, therefore, different from the instant case, and the observations regarding the legal representatives wanting to continue the proceedings, would, therefore, be obiter. The Division Bench observations relied upon by Mr. Menon are :
"this will not of course debar the legal representatives from themselves wanting to continue the proceedings as heirs of the deceased petitioner provided they also fulfill the requirements of being members of the company."
39. It is to be noted that the Division bench has nowhere said that the legal representatives could not continue the proceedings, if they were so minded or could not maintain the petition. The question whether the legal representatives could continue the proceedings or not, was not help respondent No. 2.
40. In any case, the said case will not apply to the instant case as the question which was decided in that case related to transposition of one of the parties to a petition under sections 397 and 398, and not the one in issue in the instant case, namely, whether the heirs of the deceased S. K. Desor, who have virtually the controlling interest in M/s. Worldwide Agencies, who had not been refused transmission by the board of directors of the company, could maintain a petition under section 397 of the Companies Act, 1956.
41. Mr. Menon next relied upon Cuthberi Cooper and Sons Ltd.'s case [1937] 2 All ER 466. This is a judgment dated March 15, 1937, and even pre-dates the provision of section 210 of the English Companies Act, (which was the precursor of sections 397 and 398 of the Indian Companies Act). The said English case related to refusal of the directors to transfer shares. It was asserted by the petitioners that the directors had constantly refused to give or assign any reason for refusal to transfer shares. The Court held that the persons who had suffered the refusal of the directors, and not permitted to be recorded as members of the company, could not maintain a petition for the winding up of the company. As the case related to winding up of the company, it has no application to a petition under section 397 of the Companies Act, which related to relief in cases of oppression. The cited case, therefore, does not help respondent No. 2. In any case, it is worthy of note that a Division Bench of this court, on a construction of section 439 of the Indian Companies Act, has taken a contrary view in Bhaskar Stoneware Pipes (P.) Ltd. v. Rajinder Nath Bhaskar [1988] 63 Comp Case 184.
42. The next case cited by mr. Menon is State of Kerala v. West Coast Planters' Agencies Ltd., [1958] 28 Comp Case 13 (Ker). This was a criminal case. The observations made therein have no application to the facts and circumstances of the instant case. S. Viswanathan v. East India Distilleries and Sugar Factories Ltd., [1957] 27 Comp Case 175 (Mad), cited by Mr. Menon, only explains the legal meaning of a "share". That is not the matter before me. The matter before me is whether the petitioners can, in the facts and circumstances of the instant case, maintain the petition under sections 397 and 398 of the Act.
43. Mr. Menon then cited M. G. Amirthalingam v. Gudiyatham Textiles Pvt. Ltd. [1972] 42 Comp Case 350 (Mad). This is a case in which the directors of the company had refused to register the heir of the deceased member as a member of the company. Being a case of refusal of the board of directors, what is stated in that case is of no application to the case before me. As stated above, in the instant case, the board of directors of the company, M/s. Worldwide Agencies, have not refused to transmit the shares in the name of the petitioners. As such, the said case is inapplicable to the facts of the case before me and is of no help to respondent No. 2.
44. Mr. Menon next referred to Shanti Prasad Jain v. Kalinga Tubes Ltd. [1965] 35 Comp Case 351 (SC). Mr. Menon wishes to rely upon the observations of the Supreme Court which explained the nature of jurisdiction of court on a petition under section 397 and 398 of the Companies Act. The observations of the Supreme Court are "it (section 397) gives a right to members of a company who comply with the conditions of section 399 to apply to the court for relief under section 402 of the Act. or such other reliefs as may be suitable in the circumstances of the case, if the affairs of a company are being conducted in a manner oppressive to any member or members including any one or more of those applying". The Supreme Court never said in this case that only members can apply under section 397. In any case, I am not inclined to add the word "only" to what has been said by the Supreme Court. The Supreme Court was not, in that case, dealing with the question whether heirs of a deceased member who had died intestate can apply to the court under section 397 of the Companies Act or not, and as such the observations of the Supreme Court do not help the respondent. In the present case, what is required to be determined is whether the heirs of the deceased member who have not been refused transmission of the shares by the board of directors, can apply under section 397 of the Act.
45. Mr. P. B. Menon then contended that a composite petition under sections 397, 398 and section 433 of the Companies Act is not maintainable, and in support of his proposition, referred to Kilpest Private Ltd. v. Shekhar Mehra [1987] 62 Comp Case 717, a judgment of a Division Bench of the Madhya Pradesh High Court, Mr. Menon, relying upon observations of the said court, contended that a composite petition is not maintainable under section 397, 398 and 433 of the Companies Act. However, a contrary view has been expressed by a Division Bench of this court, which is reported as Bhaskar Stoneware Pipes (P.) Ltd. v. Rajinder Nath Bhaskar [1988] 63 Comp Case 184. In that case, the Division Bench was considering an appeal against an order passed by a single judge, whereby the learned single judge had admitted a petition under section 397, 398 and 433 of the Companies Act for hearing. The Division Bench of the High Court rejected the appeal. The plea raised in the said appeal was that the petitioner could not maintain a petition for winding up of the company as they were not members of the company. THe Division Bench of this court, after considering the meaning of the word "contributory", held that this petition for winding up could be maintained by heirs of the deceased member/contributory. I am bound by the said judgment. In any case, I am in respectful agreement with the view expressed by the Division Bench in as much as the provisions of section 397 itself require that the company court is to provide relief in certain cases against oppression when circumstances exist that would make it just and equitable to wind up the company.
46. It is well settled by authority that as a preliminary to grant of a petition under section 397 of the Act, the court should come to the conclusion that otherwise the case is one where it is just and equitable that the company be wound up. A company can be wound up on the grounds mentioned in section 433. One of the grounds mentioned in section 433 is that it is just and equitable to wind up the company. This be being the position, I see no substance in the contention of Mr. Menon that the petition which is filed under section 397, 398 and 433 of the Companies Act, is not maintainable. In fact, the Division Bench of this court held in Bhaskar Stoneware Pipes (P.) Ltd. v. Rajinder Nath Bhaskar [1988] 63 Comp Case 184 that (p. 209) :
"Section 397 requires two conditions to be fulfillled before an order is passed under that section (i) there must be acts of oppression and mismanagement; and (ii) the affairs of the company must be such that it is just and equitable to wind up the company".
47. As such the contention of Mr. Menon has no force, and I reject the same.
48. It is also to be noted that in reply-affidavit which was filed by respondent No. 2, it was nowhere contended by her, that being composite petition under section 397 and 398, the instant petition is not maintainable on that account. I, therefore, do not need to say any more than what has been stated above.
49. Mr. Vinoo Bhagat appearing for the petitioners, in reply to the contentions that have been raised by Mr. Menon, contends that the instant petition is maintainable by the petitioners. He referred to the text book, inter alia, Buckley on the Companies Act, (Fourteenth Edition, Volume 1, page 491,) where it is stated "for the purpose of a petition under this section (210 of the English Companies Act), `member' includes the personal representative of the deceased member". Buckley refers to In re Jermyn Street Turkish Baths Ltd. [1970] 3 All ER 57; [1970] 1 WLR 1194, 1205, in support of these observations. Buckley adds a note that "without affecting this point, the said judgment of the single judge was reversed in [1971] 1 WLR 1042 by the Court of Appeal".
50. Gore-Browne on Companies, 42nd edition at page 798, referred to by Mr. Bhagat, states that, "it has recently been settled that the personal representatives of a deceased member, even though they are not registered as members, are entitled to present a petition under section 210. In In re Jermyn St. Turkish Baths Ltd., (supra) Pennycuick J. held that, "on its true construction, section 210 required that the word `member' should include the personal representatives of a deceased member, on whom title to his shares devolved by operation of law".
51. Mr. Bhagat has referred to In re Jermyn Street Turkish Baths Ltd. [1570] 3 All ER 57, decided by Pennycuick J. Pennycuick J. relying upon the judgment in Bayswater Trading Co. Ltd. [1970] 1 All ER 608 held that, (at page 65), "it seems to me that personal representatives of the deceased member must be regarded as members of a company for the purpose of section 210. I was referred on this point to the decision of Buckley J., in In re Bayswater Trading Co. Ltd. [1971] 1 All ER 608 (Ch D), in which the learned judge held that for the purpose of section 353 of the Act, the word `member' must include representatives of a deceased member. It seems to me that section 210 requires that a similar meaning should be put on `a member' in that section". Justice Pennycuick, therefore, rejected the contention of the respondents before him, that the petitioners, not being members of the company, have no locus standi to present the petition under section 210.
52. Mr. Bhagat also relies upon Halsbury's Laws of England, (Fourth-Edition, Volume 7, page 1010) in support of his contention that legal heirs or personal representatives are members. In the said volume of Halsbury's Laws of England, it is stated in a footnote that "'member' in this context includes the personal representatives of a deceased member : In re Jermyn Street Turkish Baths Ltd. [1970] 3 All ER 184."
53. A perusal of the judgment of the court of appeal against the order of Justice Pennycuick shows that the Court of Appeal did not express itself against what was stated by Justice Pennycuick.
54. Besides referring to In re Jermyn Street Turkish Baths Ltd. [1970] 3 All ER 57, Mr. Vinoo Bhagat also referred to the provisions of section 273 of the Indian Succession Act. Mr. Bhagat says that by virtue of the fact that S. K. Desor had died intestate and a succession certificate has been obtained by the petitioner, Mrs. Margaret Desor, from a competent court, with respect to the shares held by S. K. Desor, she has to be treated as a member, as the board of directors of the company have not refused to register her as a member. He says that by virtue of the provisions of section 273 of the Indian Succession Act, the succession certificate so obtained is conclusive, and as such cannot be questioned by any person in any other proceedings. I agree.
55. Besides this, Mr. Bhagat relies upon the fact that in the instant case, no plea has been taken by respondent No. 2 that the board of directors of M/s. Worldwide Agencies has refused to register the shares in the name of the petitioners. What the board of directors required was to obtain a succession certificate which the petitioners have, and also to obtain permission of the Reserve Bank of India to hold the shares that were held by S. K. Desor.
56. It is not in dispute that after the filing of the petition, the petitioners have obtained the permission of the Reserve Bank of India to hold the shares which had been held by S. K. Desor. This, according to Mr. Bhagat, is conclusive in the observations of the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd. [1986] 59 Comp Case 548 (SC), wherein it was held that once the permission to hold shares is given by the Reserve Bank of India before or after filing of petition, it is not open to any person to question that permission. As permission of the Reserve Bank of India has been obtained in this case, the observations of the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd., [1986] 59 Comp Case 548 (SC), are clearly applicable, and it is not open to respondent No. 2 to question the grant of that permission to the petitioners vis--vis avis the shares of M/s. Worldwide Agencies, held by S. K. Desor, deceased.
57. Mr. Bhagat also says that although the objections regarding by non- maintainability of a composite petition have not been taken by respondent No. 2 in the reply-affidavit, such a contention is also not available to respondent No. 2, as a Division Bench of this court has already expr3esed a contrary view in Bhaskar Stoneware Pires (P.) Ltd. v. Rajinder Nath Bhaskar [1988]63 Comp Case 184 at page 205. As stated above, this judgment binds me, and such I have to hold that this contention of Mr. Menon has no force.
58. Mr. Bhagat also points out that in Gulabrai Kalidas Naik v. Laxmidas Lallubhai Patel [1977]47 Comp Case 151 [Guj], it has been said that in a given case, "the petitioners invoking the court's jurisdiction under sections 397 and 398 are in a position to show that even though their names are not to be found in the register of members of the company, yet if they have such an indisputable and unchallengeable title to the membership of the company, that court may entertain a petition at their instance".
59. In the instant case, the petitioners are the wife and children of S. K. Desor. They have obtained letters of administration under section 273 of the Indian Succession Act which is conclusion. They have also obtained permission of the Reserve Bank of INdia to hold the shares which were held by S. K. Desor. Thus, in view of the judgment of the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd., [1986] 59 Comp Case 548 (SC), they have perfected their title to the shares which were held by S. K. Desor, and keeping in view what has been stated in Buckley, 14th edition; Gore-Brown On Companies 1972 edition, I am of the view that it would be consistent with opinion and authority to treat such person as the petitioner as members for the purpose of maintainability of petition under sections 397 and 398 of the Act.
60. There is another aspect that may be mentioned. Section 210 of the English Companies Act, which preceded section 397 of the Act, has now been replaced by section 75 of the English Companies Act, 1980. Section 75(9) of the English Companies Act, 1980, provides that the section shall apply to a person who is not a member, but to whom shares have been transferred or transmitted by operation of law, and the reference to a member shall be constructed accordingly.
61. In the facts and circumstances of the instant case, by virtue of the letters of administration, keeping in view the shareholding of S. K. Desor as evidence by Forms 32 which has been filed by respondent No. 2, as made up to February 15, 1984, S. K. Desor had 600 shares (out of the total share capital, issued and paid-up, of 2010) which are now held between the petitioners. They have an undisputed right to hold 600 shares of the company out of a total of a 2010 shares. This is considerably more than the 1/10th of the shareholdings which is required to held by the persons presenting a petition under section 397 of the Act by section 399 of the Act. These 600 shares make these petitioners the largest shareholder.
62. Not to permit an enquiry in to the assertions which have been made in this petition for oppression, which have been briefly adversely to in the earlier part of this order, could itself be a very gross from of oppression, and in my view, respondent No. 2 cannot be permitted to of that.
63. For the reason aforesaid, I reject the preliminary objection of respondent No. 2 that this petition is not maintainable.
64. The petition has already been admitted to hearing. I direct the parties to lead oral evidence in court in support of their respective contetions. The petitioners shall lead their evidence first.
65. Case to come up for recording evidence of the petitioners, on November 14, 1988.