Company Law Board
Mrs. Pushpa Vadera vs Thomas Cook (India) Ltd. on 28 April, 1995
Equivalent citations: [1996]87COMPCAS921(CLB)
ORDER
1. This is an appeal filed on March 28, 1990, by Mrs. Pushpa Vadera, an Indian inhabitant (hereinafter referred to as "the appellant") under Section 111 of the Companies Act, 1956, for issuance of necessary directions to Thomas Cook (India) Limited (hereinafter referred to as "the respondent") to register the transmission of shares in the name of the appellant.
2. It is stated in the appeal that the appellant is the widow of the late Shri Dev Raj Vadera and the deceased was a registered member of the respondent-company in respect of 2,300 equity shares. The appellant has further stated that the deceased, the late Shri Dev Raj Vadera, who expired on April 1, 1986, leaving behind a will whereby the deceased bequeathed his entire estate to the appellant being his wife. In the appeal details of correspondence exchanged between the appellant and the company have been referred to ; wherein the appellant had all along been informing the respondent-company that probat'e of the will is not necessary to be taken for 'a Hindu in the Union Territory of Delhi. It is further stated that she had also agreed to execute the indemnity bond and obtained no objection from her two sons, namely, Mr. Misha Vadera and Mr. Neeraj Vadera, and other relevant documents to fully secure and protect the interest of the respondent-company. In support of her contention that probate of the will is not necessary in the Union Territory of Delhi, she relied upon the judgment of the Delhi High Court in the case of Chancier Bhati v. Harnuth Singh [1981] 20 DLT (SN) 32. It is further stated that the last request made by the appellant to the respondent-company was turned down by the respondent-company, vide its letter dated January 25, 1990, which was received by the appellant on January 30, 1990, and the appeal has been filed within two months thereof. It is submitted that the respondent-company ought to have relied upon the judgment of the Delhi High Court, referred to above and should not have insisted on probate of the will as the same is neither necessary for a Hindu in the Union Territory of Delhi nor in view of the settled position of law. It is further submitted that the judgment though applies to immovable property being subject-matter in that suit yet the consequences thereof are to waive the obtaining of probate, and it is immaterial whether the will relates to immovable property or movable property and that the respondent-company ought to have transmitted the, shares in the name of the appellant on the no-objection certificate from the only heirs of the deceased and on the undertaking of the appellant to execute all indemnity bonds and affidavits and other documents for protecting and securing in full the interest of the respondent-company. It is stated that the respondent-company ought to have transmitted the shares in the name of the appellant in terms of its articles of association on the basis of an indemnity bond and security as would be deemed proper by the board of directors.
3. In reply, the respondent-company have submitted that the appeal discloses no cause of action against the company and in any event no cause of action has accrued to the appellant to file or maintain the appeal and further stated that the appeal against the respondent is misconceived and not maintainable. It is stated that the appellant is guilty of delay or laches and/or that the claim of the appellant is barred by the law of limitation. In reply the respondent-company stated that they do not admit the appellant as the widow of the late Shri Dev Raj Vadera, as alleged or otherwise. It is stated that the company is not aware whether the said deceased expired on April 1, 1986, as alleged and/or he died leaving behind the alleged will whereby the deceased bequeathed his entire estate to the appellant. It is further stated that the will is not a valid will and is, therefore, of no effect as the will has not been executed and attested in the manner provided under the Indian Succession Act, 1925. The witness clause of the will reads as under :
"In witness whereof, I have signed this will in the presence of undermentioned witnesses, who have submitted thereto as attesting witnesses in my presence".
4. It is further stated that in the present case the testator has signed the will in the presence of witnesses ; it is, however, not stated whether or not the witnesses and/or either of them have attested or signed the will in the presence of each other. Under the circumstances, the respondent-company has stated that the will is void and of no effect. It is further stated that they are not bound to recognise the will or the validity thereof and or that under the alleged will of the said deceased, his alleged wife, is exclusively entitled to hold the estate of the deceased as an absolute owner with full power of disposition as alleged or otherwise. Under the circumstances, it is stated that unless the legal representatives obtain a probate or letters of administration or succession certificate from a duly constituted court of competent jurisdiction in respect of the said will, the respondent-company cannot give any recognition or way to the said will. Under the circumstances, it is stated that the respondent-company can only treat the said deceased as having died intestate. It is further stated that in view of the aforesaid position, the transfer agents of the respondent-company have already intimated the appellant on July 26, 1986, that the transmission of shares could only be effected on the appellant obtaining a suitable legal representation from any competent court in India and the shares could not be transmitted to her name on the authority of the certified copy of the will forwarded. The respondent-company has also invited attention to articles 62 and 65 of the articles of association of the company which are reproduced hereunder :
"Article 62.--The executors or administrators or holders of a succession certificate or the legal representatives of a deceased member (not being one or two or more joint holders) shall be the only persons recognised by the company having any title to the shares registered in the name of such member, and the company shall not be bound to recognise such executors or administrators or holders of a succession certificate or the legal representatives unless such executors or administrators or legal representatives shall have first obtained probate or letters of administration or succession certificate, as the case may be, from a duly constituted court in the Union of India ; provided that in any case where the board in its absolute discretion thinks fit, the board may dispense with production of probate or letters of administration or succession certificate, upon such terms as to indemnity or otherwise as the board in its absolute discretion may think necessary and under Article 65 register the name of any person who claims to be absolutely entitled to the shares standing in the name of a deceased member, as a member", "Article 65.--Subject to the provisions of the Act and articles 61 and 62 any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any member, or by any lawful means other than by a transfer in accordance with these articles, may, with the consent of the board (which it shall not be under any obligation to give), upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article or of such title as the board thinks sufficient, either be registered himself as the holder of the shares or elect to have some person nominated by him and approved by the board registered as such holder ; provided nevertheless, that if such person shall elect to have his nominee registered, he shall testify the election by executing in favour of his nominee an instrument of transfer in accordance with the provisions herein contained, and until he does so, he shall not be freed from any liability in respect of the shares".
5. While referring to the aforementioned articles, it is submitted that Section 36 of the Companies Act, 1956, expressly provides that subject to the provisions of the Act, the memorandum and articles of association shall, when registered, bind the company and the members thereof to the same extent as if they had been signed by the company and by each member and contained covenants on its and his part to observe all the provisions of the memorandum and articles of association. It is further stated that by virtue of Section 36, the articles of association are binding on the respondent-company in reference to its members, including the said deceased and vice versa as if they had signed a contract to be bound by the articles and any member of the respondent-company in his capacity as a member can enforce the rights given to him by the articles and can prevent the respondent-company from contravening the articles and can insist upon the strict observation of the articles according to their constructions. Under the circumstances, by virtue of the provisions of the articles and in particular Article 62 it has become mandatory for the appellant to produce a probate or letter of administration or succession certificate from a duly constituted court in India in order to be recognised by the respondent-company as they have a right to the shares of the said deceased. It is further stated that Article 65 contains mandatory provisions that a person must produce such evidence that he/she sustains the character in respect of which she proposes to act under the articles of association or of such title as the board thinks sufficient, to be registered herself as the holder of the shares. It is further stated that the alleged will of the said deceased is not a valid and effective will and, therefore, the will is null and void and of no effect and not binding on them. It is further stated that the order of the Delhi High Court in the case of Chander Bhan v. Harnath Singh [1981] 20 DLT (SN) 32 related to immovable property and not transmission of shares. It is further stated that it is not relevant or applicable to the facts and circumstances of this case and the subject-matter and the issues arising in this appeal. It is stated that in the present case, the relevant part of the estate of the said deceased are shares in the respondent-company, a company limited by shares and the registered office of the company is situated in the State of Maharashtra and it is a body corporate and is governed by a constitution embodied in its memorandum and articles of association. It is further stated that the appellant wrote to the respondent company's transfer agent on June 27, 1986, and it was replied to by the transfer agent, vide their letter dated July 26, 1986, and this appeal has been filed on March 10, 1990, i.e., three and half years after the date of the refusal. They have, therefore, denied that the appeal is within the time and submitted that the appeal is time barred and is liable to be dismissed. Having regard to what has been stated in the reply, it is further stated that in view of the facts and circumstances of the case and/or having regard to the provisions of the articles of association and the Companies Act and/or otherwise the Company Law Board should not pass or be pleased to pass orders for registration of transmission of shares in the name of the appellant.
6. In the rejoinder, the appellant has denied that the appellant is guilty of any delay and laches and/or that the claim is barred by law of limitation. It is stated that the appellant wrote several letters asking for the shares to be registered in her name and stating that she has furnished all necessary evidence to show that she was the bona fide legatee by virtue of a duly executed will. Despite such letters and despite the legal position as explained to the respondent-company, that a will does not have to be probated in the present case, when the respondent-company ignoring the above averments communicated its refusal to transfer the shares by its letter dated January 30, 1990 ; the appellant filed the present appeal within the statutory period of two months. It is further stated that the will is a valid will since it is has been executed in accordance with the mandatory Section 63 of the Indian Succession Act and further invited attention to the said provision which states "it shall not be necessary that more than one witness be present at the same time, and no particular form of attestation shall be necessary." It is further stated that the respondent has merely to satisfy itself in accordance with the standards of a reasonable prudent man that the appellant is the sole legatee under the will and their two sons are the only other heirs of the deceased. It is further stated that article 62 of the articles of association empowers the respondent to dispense with the production of probate "upon such terms as to indemnity or otherwise". It is further stated that the stand of the respondent reduces the entire Indian Succession Act and the right that the appellant has under the Act to inconsequence.
7. Shri Virender Ganda, advocate, appearing on behalf of the appellant, while reiterating the submissions made in the appeal and rejoinder submitted that cause of action arose to the appellant on January 30, 1990, when it received the respondent-company's letter dated January 25, 1990, wherein it finally refused to effect the transmission unless the letter of probate is produced. In this connection, he submitted that appeal has been filed within two months of the refusal by the respondent-company as provided under Section 111 of the Act.
8. He further submitted that under the Indian Succession Act, a will need not be stamped or registered, and it is a document whose registration is optional under the provisions of the Indian Registration Act. He further submitted that the relevant provisions are Section 63 of the Indian Succession Act and Section 18 of the Indian Registration Act. He also invited our attention to the observations made by the Supreme Court in the case of Ishwardeo Narain Singh v. Kamta Devi, AIR 1954 SC 280, wherein it was held that there is a fallacy still present in the minds of judges that a will must either be registered or deposited with a District Registrar under the provisions of the Indian Registration Act and it was further held categorically that to draw an adverse inference against a will's genuineness because it is not registered, is not warranted by law. In this connection, he relied upon the case laws of Srinivasa v. K. V. Srinivasa Rao, AIR 1986 Kar 9 ; Ruprao v. Ramrao, AIR 1952 Nagpur 88 and Behari Lal Ram Charan v. Karam Chand Sahani, AIR 1968 Punj 108.
9. He further submitted that Section 2(f) of the Indian Succession Act, 1925, defines "probate" as the copy of a will certified under the seal of a court of competent jurisdiction with a grant of administration to the estate of the testator. He submitted that the purpose of probate/letters of administration is not to validate the right of the legal heirs but merely to authenticate the existence of a will. He also submitted that when an application for probate of a will is moved, the only question which the court is called upon to determine is whether the will is true or not and it is not in the province of the court to determine any question of title to the property covered by the will. In this connection, he relied upon the following judgments :
Komollochun Dutt v. Nilmttun Mundle [1879-80] ILR 4 Cal 360, Mayho v. Williams (2 NWPHC 268) and Arunmoyi Dasi v. Mohendra Nath Wadadar [1893-94] ILR 20 Cal 888.
10. He further submitted that obtaining a probate of will is not a condition precedent to the establishment of a right where the will has been made by a person in respect of property situated at a place other than Bombay, Madras and West Bengal. In this connection, he placed reliance on the observations made in the case of Jagdish Chandra v. Chandra Shekhar Sharma [1988] 2 CCC 985 (MP). He further argued that the respondent-company cannot compel the appellant to go to the court and seek letters of probate or administration in respect of the will, when the statute itself exempts her from doing so. He further submitted that when statu-torily there is no need to get the will probated and if the same is insisted upon, the appellant will suffer further loss of time in the courts as well as having to pay an enormous court-fee.
11. He further invited our attention to the provisions of sections 57 and 213 of the Indian Succession Act and submitted that the combined reading of these two provisions would show that where parties to the will are Hindus, Sub-section (2) of Section 213 of the Indian Succession Act applies and Sub-section (1) has no application and as a consequence a probate will not be required to be obtained by a Hindu in respect of a will. He further submitted that it is quite clear that the probating of a will shall be necessary only when the will is executed within the local limits of the ordinary original civil jurisdiction of the High Courts of Judicature at Madras, Calcutta and Bombay. Consequently, the probate of the will executed by the testator in Delhi cannot be insisted upon by the respondent-company. In this connection, he referred to the following case laws :
Bhaiya Ji v. Jageshwar Dayal Bajpai, AIR 1978 All 268, Nobal Ram v. Smt. Gayatri Devi [1968] All LJ 69 and Chander Bhan v. Harnath Singh [1981] 20 DLT (SN) 32.
12. During the course of hearing, Mr. Virender Ganda, advocate, appearing for the appellant, filed two affidavits of Shri R.N. Sharma and Shri Bharat Bhushan wherein they have affirmed that the deceased has left a will executed by him on March 25, 1986, at New Delhi, in favour of his wife after having read with full knowledge and approval of its contents and the testator has signed the said will in their presence. Further, both Shri R.N. Sharma and Bharat Bhushan, attesting witnesses, have affirmed that they have signed the said will in each other's presence. He further submitted that the will is dated March 25, 1986, and eight years have elapsed and there has been no claim by any person of any subsequent will or any other dispute as to authenticity or validity of the will. He further submitted that under the circumstances the respondent-company is essentially required to be satisfied by the legal heirs on the following issues :
(i) That they are in fact the legal heirs ; (ii) That there are no other legal heirs ;
(iii) That there was an intention of the testator to give to one or all such legal heirs, all or a portion of his estate ;
(iv) That none of the legal heirs have any objection to this.
13. He further pointed out that Article 62 of the articles of association of the company authorises the board in its absolute discretion, if it thinks fit, to dispense with production of probate or letters of administration or succession certificate, upon such terms as to indemnity or otherwise as the board in its absolute discretion may think necessary and under Article 65 register the name of any person who claims to be absolutely entitled to the share standing in the name of a deceased member, as a member. He further submitted that the discretion has to be used judiciously and in the interest of the shareholders who are the real owners of the company and not arbitrarily. In this connection, he referred to the company cases in the matter Berry and Steward v. Tottenham Hotspur Football and Athletic Co. [1935] 5 Comp Cas 472 ; [1936] 3 All ER 554 (Ch D). He further argued that the power to refuse cannot be exercised arbitrarily or for any collateral purpose and can be exercised only for a bona fide reason in the interest of the company and the general interest of the shareholders. In this regard, he referred to the company cases In the matter of Luxmi Tea Co. Ltd. v. Pradip Kumar Sarkar [1990] 67 Comp Cas 518 (SC) and Master Silk Mills Pvt. Ltd. v. Dharamdas Horgovindas Mehta [1980] 50 Comp Cas 365 (Guj). He also referred to the case law in the matter of K.V. Sasidhar v. Dhanalahshnii Bank Ltd. [1989] 2 Comp LJ 344 (CLB), wherein it was held that even where the directors enjoy a general and blanket power of refusal under the articles of the company, it does not become an absolute power and it too should be exercised only in the interest of the company and in order to enable the Company Law Board or the court to examine whether it was so exercised, it is necessary that the directors should give their reasons. He further submitted that the respondent-company has been just unreasonable in insisting upon the letter or probate, which even the law relating to succession does not require to be obtained. He referred to the case law in the matter of Kamala Rani Pandit v. Kalitara Glass Moulding Works Pvt. Ltd,, under sections 397 and 398 of the Companies Act, 1956, before the Company Law Board in Company Petition No, 19 of 1991-Corporate Advisor-April 1992-at page 189 also reported in [1995] 3 Comp LJ 218 (CLB) ; wherein it was held that so long as the board of directors are satisfied that the petitioners are the legal heirs, it is not necessary for the company to insist on the production of succession certificate, as is the case here, and it would have been in order for the board of directors of the company to register transmission of shares by obtaining an indemnity bond, as generally done by some companies rather than insisting upon production of succession certificates. He further submitted that the appellant is an old widow and thus deserves sympathetic consideration.
14. Shri Maniar, advocate appearing for the respondent-company, referred to City Equitable Fire Insurance Co. Ltd., In re [1925] Ch 407 and submitted that by virtue of Section 36 of the Indian Companies Act the articles of association are a contract between the company and its shareholders whereby the members undertake to abide by these articles. He further submitted that the provisions of the Indian Succession Act are to be applied for limited purposes. In this connection, he placed reliance on Findi v. Finch, AIR 1943 Lahore 260, wherein it has been held that the preamble to the Succession Act makes it clear that the Act was only intended to apply to matters of succession and it was never the intention of the Legislature when it passed the Succession Act to legislate for any matters other than those connected with intestate and testamentary succession. He also referred to Article 62 of the articles of association which requires production of a succession certificate from executors or administrators unless such executors or administrators shall first obtain probate or letter of administration or succession certificate, as the case may be. He also referred to Article 65 of the articles of association in this respect and emphasised that in view of the provisions of Section 36 of the Companies Act, 1956, the articles of association are binding on the respondent-company in reference to its members and submitted that in view of the large amount involved and in view of the articles of association of the company, it is mandatory for the petitioner to produce the probate or letter of administration or succession certificate. In this connection, reliance was also placed on the judgments in the case of Borland's Trustee v. Steel Brothers and Co. Ltd. [1901] 1 Ch 279, Beattie v. E & F Beattie Ltd. [1938] 1 Ch 708 and Hickman v. Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch 881. He further submitted that on the basis of the aforementioned judgments, the respondent-company was right in insisting on the production of probate of the will. He also referred to a case law in the matter of Amraoti Electric Supply Co. Ltd. v. R.S. Chandak [1954] 24 Comp Cas 465 ; AIR 1954 Nagpur 293, wherein it was held that the company would be entitled to demand letters of administration from the heirs when the articles of association of the company authorise it to do so and as such submitted that there is nothing wrong in the company's asking for probating of the will or letters of administration.
15. We have considered the various pleadings and averments made before us. The questions for consideration are :
(a) Whether the appeal is in time ;
(b) whether a will executed by a Hindu in the Union Territory is required to be probated ; and
(c) whether the company is rightly insisting on a probate of the will or letters of administration when there is a provision in the articles of association of the company that the respondent-company can exercise the discretion to dispense with the production of probate, letters of administration or succession certificate in deserving cases.
16. Before we proceed to consider these issues, it is necessary to note that both as per Section 111 of the Companies Act and the articles of association of the company it is the company which has the power to register or refuse the registration of transfer/transmission of shares. In the present case, right from 1986 till 1990, it is respondent No. 2, the transfer agent of the company, which has been corresponding with the appellant asking for various details/documents. When the power of registration or refusal is vested with the company (board of directors) especially when in cases of transmission of shares, a certain discretion has been vested with the board of directors to dispense with various formalities, how could respondent No. 2, being only transfer agents of the company continue to take the stand that the shares could not be transmitted without legal representation ? In none of the letters written by respondent No. 2 to the appellant has there been any reference that the letter was being issued on the authority of a decision of the board nor even in the reply filed by the company is there any mention that the board of directors ever considered the transmission of impugned shares. The company has only attached a copy of the resolution of the board dated January 9, 1993, when the board had taken a decision to authorise filing of a reply to the petition.
17. In other words, none has produced any document before us to show that the board had considered the transmission of shares at any time before filing of the petition by the appellant. For the first time the company wrote a letter dated January 25, 1990, to the appellant wherein also there is no mention whether the board considered the said transmission of the shares at all.
18. Another point that we have noted in this case is that respondent No. 2, even assuming that it had the authority of the board to seek various information/documents from the appellant, had asked for at different point of time, legal representation in the form of succession certificate, probate, etc., a true copy of the will of the deceased certified by a judicial authority and whether the same was registered, heirship certificate from the court. Now, in the present reply to the petition the company has raised many further objections like genuineness of the death of the shareholder, the validity of the signature of the witnesses and the validity of the will itself. These objections were never communicated to the appellant earlier.
19. In the instant case, the shareholder, D. R. Vadera, had died on April 1, 1986, leaving behind a will whereby the deceased bequeathed his entire estate to the appellant being his wife. The appellant, vide her letter dated July 16, 1986, addressed to Tata Consultancy Services Ltd, the company's transfer agents, requested for transmission of the aforementioned 2,300 equity shares in her favour and since then the protracted correspondence was going on between the appellant and the share transfer agents. It was only on December 12, 1989, that one of the sons of appellant addressed a personal letter to Shri P. B. Madhavji, deputy chairman of the respondent-company and the respondent-company and the appellant also wrote for the first time a letter on January 4, 1990, directly to the respondent-company and the respondent-company for the first time replied to the appellant, vide letter dated January 25, 1990, which was received by the appellant on January 30, 1990, advising the appellant to furnish a probate of the will for transmission of shares in her favour. It is not clear from the aforementioned letters as to whether the appellant's request for transmission of shares on the basis of the will and various other indemnities offered by her, was ever considered by the board of directors of the respondent-company. Even in the respondent company's letter dated January 25, 1990, the appellant was advised that their solicitors have advised for production of probate in view of the large value of the shares in question and the same cannot be undertaken to create a precedent in this case. It is further noted that it is not clear as to whether the said advice of the solicitors was placed before the board of directors for consideration. From the correspondence available, in any case the respondent-company has not filed any resolution of the board of directors refusing to transmit the shares without probate of the will. From the contents of the letter, even though it is not apparent that the company had refused the registration of transmission of shares, yet the message is clear that without production of the letter of probate, shares could not be transmitted as is evident from the second paragraph of that letter.
"We have been advised by our solicitors that in view of the large value involved at today's market price of the shares, waiving production of probate and accepting an indemnity should not be undertaken to create a precedent in this manner.
We have also been advised that the case quoted by you in your letter relates to immovable property and not to equity shares."
20. Since this is the first time that the appellant has received a letter directly from the company, we are of the view that this is the letter which has provided the cause of action for the appellant to file this appeal which has been filed within two months thereof. As such this appeal is in time.
21. Regarding the second issue whether a probate of the will is necessary in a case of the instant type, a large number of cases were cited by counsel for the appellant to the effect that in law, no probate of the will is necessary. The legal provisions considered in all the cases cited by counsel for the appellant relate to sections 57 and 213 of the Indian Succession Act. It is relevant to read the provisions of these sections.
"213. (1) No right as executor or legatee can be established in any court of justice unless a court of competent jurisdiction in India has granted probate of the will under which the right is claimed or has granted letters of administration with the will or with a copy of an authenticated copy of the will annexed.
(2) This section shall not apply in the case of wills made by Muhammadans, and shall only apply,--
(i) in the case of wills made by any Hindu, Budhist, Sikh or Jain where such wills are of the clauses specified in clauses (a) and (b) of Section 57 . . ."
"57. The provisions of this part (Part VI), which are set out in Schedule III shall, subject to the restrictions and modifications specified therein, apply--
(a) to all wills and codicils made by any Hindu, Budhist, Sikh or Jaina, on or after the first day of September, 1870, within the territories which at the said date were subject to the Lt. Governor of Bengal or within the local limits of the ordinary original civil jurisdiction of the High Courts of Judicature at Madras and Bombay ; and
(b) to all such wills and codicils made outside those territories and limits so far as relates to immovable property situated within those territories or limits ; and
(c) to all wills and codicils made by any Hindu, Budhist, Sikh or Jaina on or after the first day of January, 1927, to which those provisions are not applied by clauses (a) and (b) :
Provided that marriage shall not revoke any such will or codicil."
22. A combined reading of these provisions would show that where a party to the will is a Hindu and the will is made in a territory other than those mentioned in Section 57(a) and properties in dispute are not in Bengal, Bombay or Madras, Sub-section (2) of Section 213 of the Act applies and Sub-section (1) has no application. In the present case, the will was executed in Delhi and the property in question is the shares in the respondent-company. In other words, the property in question is a movable property. From the reading of the provisions of Section 213, it is clear and apparent that while Sub-section (1) has no application in respect of a will regarding immovable properties situated in territories other than Bengal, Bombay and Madras, it is silent regarding movable properties. Even the company in its letter dated January 25, 1990, has advised the appellant that the decision in the case cited by the appellant in his earlier letter, viz, Chander Bhan v. Harnath Singh [1981] 20 DLT (SN) 32, relates to immovable property and not to equity shares.
23. This issue relating to the applicability of the requirements of a will in respect of movable properties has been considered in the following cases and the courts have come to the conclusion that the same provisions relating to will regarding immovable properties are applicable in the case of movable properties also.
(1) In Bhaiyaji v. Jageshwar Dayal Bajpai, AIR 1978 All 268, the issue was relating to a sum of Rs. 11,000 which the plaintiff claimed on the basis of a will and the question considered by the court was whether a probate or succession certificate was required to be obtained by the plaintiff before obtaining a decree in their favour. Relying on the provisions of sections 213 and 57 of the Indian Succession Act, the court held that in the instant case no probate of the will was required.
(2) In Ruprao v. Ramrao, AIR 1952 Nag 88, again the issue was regarding need for a probate of a will bequeathing arrears of maintenance due to the deceased. In this case also the provisions of sections 57 and 213 of the Act were examined and the court held that there was no need for a probate of the will.
(3) In Ramchand Ganeshdas v. Sardara Singh, AIR 1962 Punj 382, the court held that no probate was necessary in order to set up a claim regarding property either movable or immovable on the basis of a will executed in Punjab.
24. Therefore, the legal proposition that emerges from a reading of these cases is that the ratio of non-requirement of a probate of the will is also applicable in respect of movable properties. Therefore, we are of the view that in the instant case, under law, there is no need for a probate of the will which was executed in Delhi relating to the shares in the respondent-company. The reliance of Shri Maniar on Finch v. finch, AIR 1943 Lahore 260, we feel, has no application in this case as the entire issue relating to transmission has arisen out of a will which is a matter dealt with in the Indian Succession Act.
25. Now, the question that arises is when in law there is no need for a probate of the will, whether the company could insist for the same. The company has relied on articles 62 and 65 of its articles of association, the text of which has already been indicated in para 3 of this order. Sri Maniar, counsel for the respondent-company, cited a catena of judgments regarding the binding effect of articles of the company on the members of the company. The binding nature of the articles of the company is well known and does not need any elaboration. But in the present case while the articles require production of the probate or letters of administration or succession certificate, yet, it has also given the powers to the board of directors to dispense with such production. In other words, discretion has been vested with the board. The company also produced a list of cases wherein the company had registered transmission of shares standing in the name of the deceased to the legal heirs on the basis of a will without production of the required documents. It was explained during the hearing that in all these cases either the number of shares involved was small or they were in respect of employees of the company. From the letter of the company dated January 25, 1990, it is seen that the company was reluctant to register the transfer only on the ground that the market value of the shares was very high. Sri Maniar cited relevant case laws on the subject to show that the board of directors have full authority to call for a probate of the will if the articles so provide and as Article 62 clothes the board with absolute discretion to dispense with the requirements of the Article and in the normal circumstances we would not examine why the board did not exercise such discretion. But in the present case we feel that it is essential to do so. We have already pointed out that when the first letter from the company was issued on January 25, 1990, to the appellant, there was no indication that the board ever considered the request for registration of the transfer of the impugned shares. The letter also did not bring to the notice of the appellant the provisions of Article 62. The only time, as we could see from the records before us, the board ever considered the request for registration of transfer of these shares was in the circular resolution dated January 9, 1993, wherein authorisation was obtained for filing a reply to the appeal. It is relevant to reproduce the first three paragraphs of the resolution which was annexed to the reply to the appeal.
"An appeal has been filed under Section 111 of the Companies Act before the Company Law Board, New Delhi, by Mrs. Pushpa Vadera, the widow of the late Devraj Vadera who held 2,300 shares of Rs. 10 each in the company against the refusal by the company relating to the transmission of the shares in her name on the ground that the provisions of articles 62 and 65 of the articles of association had not been complied with.
Article 62 provides that the executors or administrators or holders of a probate, letters of administration or succession certificate or the legal representative of the deceased member who held shares in a single name shall be the only persons recognised by the company as having any title to the shares registered in the name of the deceased the company shall not be bound to recognise such persons unless they had obtained the requisite probate, etc., from a duly constituted court of competent jurisdiction in India.
The appellant has merely furnished copies of the death certificate and the alleged will dated April 1, 1986. Moreover, there are certain infirmities and deficiencies in the will having regard to the provisions of the Indian Succession Act, 1925."
26. This resolution was a circular resolution. There is nothing in this resolution to indicate that the members of the board have been made aware of the discretionary powers vested in them by Article 62 and whether they considered exercising such discretion especially when this resolution was moved for the purpose of authorising the filing of a reply to the appeal. In other words, the attention of the board was drawn only to a part of Article 62 and not the entire article. Thus non-application of mind by the board of directors to the request for registration of transmission of shares is apparent and clear. In the normal circumstance we would have remitted the case back to the board of directors to reconsider the issue taking into consideration the legal points raised in the petition and also the availability of discretionary powers with the board to register the transmission without production of probate of will. But we do not propose to do so for the following reasons :
(a) The impugned shares have been in limbo for nearly nine years and all the benefits attached to the shares have been denied to the legal heirs of the deceased.
(b) We have already observed that, in law, there is no need for a probate of the will in the present case.
(c) Even assuming that there has to be probated, we find that the reason for rejection is that the value of the shares was high (as indicated on the company's letter dated January 25, 1990). Now, we understand that the market price of the shares has gone up further substantially. In a case of transfer of shares in which the board would be justified in refusing registration of transfer of shares on account of large percentage, the market price of the shares has no relevance.
(d) The board did not seem to have considered various relevant factors placed in the appeal when it passed the circular resolution and have just been guided by the text of the resolution placed for its approval.
(e) In the long nine years the company has neither received any other claim nor any objection from anyone to transmit the shares in favour of the appellant and finally,
(f) The reason that by transmitting the shares without production of the legal representation the company would be creating a precedence is also baseless since as per the company's own admission there are cases where they have done so.
27. In the reply to the petition and also during arguments the company raised certain objections regarding the validity of the will. One of them is regarding the attestation by the witnesses that they have not signed in the presence of each other. In this connection, it may be pointed out that the testator had signed the will in the presence of attesting witnesses and the attesting witness had affixed their signatures on the said will in the presence of the testator. At the time of hearing, the appellant has filed two affidavits of Sri Bharat Bhushan and Sri R.N. Sharma confirming that Sri Dev Raj Vadera, son of the late Sri Hans Raj, has left a will executed by him on March 25, 1986, at New Delhi in favour of his wife Smt. Pushpa Vadera, the appellant in this case ; after having read with full knowledge and approval of its contents, with the filing of these affidavits affirm that they have signed the said will as witnesses in each other's presence, the defect pointed out by the company no longer subsists. As per sub-clause (c) of Sub-section (3) of Section 63 of the Indian Succession Act, a will is required to be affirmed by witnesses and no particular form of attestation is prescribed and it is also not necessary that more than one witness should be present. What is required is that a will should be attested. We have on record two affidavits from the attesting witnesses. We do not find any merit in the arguments advanced by the advocate appearing for the respondent-company in this regard. In fact the respondent-company in its letter dated January 25, 1990, never raised any objection regarding the execution of the will. As such we do not find the objection relating to the validity of the will sustainable.
28. In regard to the relief to be granted, if we have to consider the various conclusions we have arrived at ; that in the instant case, in law, there is no need for a probate of will ; that even otherwise the board of directors never applied their mind to the entire provisions of Article 62 ; that the plea of defective will is not justified ; the same is obvious that we should direct the company to register the transmission of the shares in favour of the appellant without any further delay or requirement. However, counsel for the appellant, Sri Ganda undertook to furnish to the company an indemnity bond, a no objection letter from the two sons of the appellant and also a letter of guarantee from Hans Hotel Pvt. Ltd. In view of this we direct the company to register the transmission of 2,300 shares standing in the name of the deceased in the name of the appellant, Smt. Pushpa Vadera, within 15 days of her furnishing an indemnity bond and letter of guarantee, both to the value of shares as on April 1, 1986, and also a letter of no objection from her two sons. On registration of transmission, all benefits that accrued to the shares as on April 1, 1986, and which arose after that date shall be passed on to the appellant.
29. There will be no order as to costs.