National Company Law Appellate Tribunal
Chettinad Coal Washeries Pvt Ltd vs Dr. M.A.M. Ramaswamy Chettiar&Anr on 6 September, 2022
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) No. 43 of 2022
(Filed under Section 421 of the Companies Act, 2013),
(Arising out of the impugned final order dated 26.05.2022, passed by
the `National Company Law Tribunal', Chennai Bench) in
TCA/1/2016 in TCP/1/2016 (CA/1/2014) on the file of
(Company Law Board) in CA No. 69/2016)
In the matter of:
Chettinad Coal Washeries Pvt Ltd
5th Floor, Rani Seethai Hall Building,
603, Anna Salai,
Chennai - 600006 ..... Appellant/Respondent
v.
1. Dr. M.A.M. Ramaswamy Chettiar of
Chettinad Charitable Trust
Chettinad House,
R.A. Puram, Chennai - 600028 .... Respondent No.1/Applicant
2. Mr. M.A.M.R. Muthiah
S/o. Late Dr. M.A.M. Ramaswamy
Residing at ``Chettinad House''
R.A. Puram, Chennai - 600028 .... Respondent No.2/
(Proforma Respondent)
Present :
For Appellant : Mr. Dhruv Mehta, Senior Advocate
For Mr. AR. Ramanathan &
Mr. R. Jawaharlal, Advocates
For Respondent No. 1 : Mr. S. Ravi, Advocate
For M/s. Gupta & Ravi, Advocates
For Respondent No. 2 : Mr. T. Mohan, Advocate
For Mr. Dwarakesh Prabhakaran,
Advocate
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022
Page 1 of 64
WITH
Company Appeal (AT) (CH) No. 45 of 2022
[Filed under Section 421 of the Companies Act, 2013)
(Arising out of the impugned final order dated 26.05.2022, passed by
the `National Company Law Tribunal', Chennai Bench) in
TCA/1/2016 in TCP/1/2016 (CA/1/2014) on the file of
(Company Law Board) in CA No. 69/2016)
In the matter of:
Mr. M.A.M.R. Muthiah
S/o. Late Dr. M.A.M. Ramaswamy
Residing at ``Chettinad House''
R.A. Puram, Chennai - 600028 ..... Appellant/Applicant/
Proposed Party
v.
Dr. M.A.M. Ramaswamy Chettiar of
Chettinad Charitable Trust
Chettinad House,
R.A. Puram, Chennai - 600028 ..... Respondent-1
Chettinad Coal Washeries Pvt Ltd
5th Floor, Rani Seethai Hall Building,
603, Anna Salai,
Chennai - 600006 ..... Respondent-2/Respondent
Present :
For Appellant : Mr. T. Mohan, Advocate
For Mr. Dwarakesh Prabhakaran,
Advocate
For Respondent No. 1 : Mr. S. Ravi, Advocate
For M/s. Gupta & Ravi, Advocates
For Respondent No. 2 : Mr. Dhruv Mehta, Senior Advocate
For Mr. AR. Ramanathan &
Mr. R. Jawaharlal, Advocates
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022
Page 2 of 64
JUDGMENT
(Virtual Mode) Justice M. Venugopal, Member (Judicial):
Company Appeal (AT) (CH) No. 43 of 2022:
Introduction:
The Appellant/Respondent has preferred the instant Comp. App (AT) (CH) No. 43 of 2022 in renumbered TCP/1/2016 (CA/1/2014, on the file of Company Law Board) in CA/69/2016, on being dissatisfied with the `impugned order' dated 26.05.2022, passed by the `National Company Law Tribunal', Chennai Bench, in allowing TCA/1/2016.
Appellant's Submissions:
1. The Learned Senior Counsel Mr. Dhruv Mehta, appearing for the `Appellant' / `Chettinad Coal Washeries Pvt. Ltd., submits that the `Applicant' (`Deceased') filed CA/1/2014, as per Section 73 (4) read with Section 74 (1) of the Companies Act, 2013, claiming that the `Interest -
Free Loan' given by him earlier to 01.04.2013 when Section 73 and 74 of the Companies Act, 2013 (came into force) had obtained the `Nature of Deposit', under Section 74 of the Companies Act, 2013, and that the `Appellant'/`Company' should be directed to return the same (Principal Sum - Rs.55,26,38,122.91, Interest Sum - Rs.11,05,27,625/-). Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 3 of 64
2. The Learned Counsel for the Appellant points out that the `Appellant' filed a `Reply' to the main CA/1/2014 and on a demurrer, filed an `Application' under Regulation 44 of the `Company Law Board Regulation', in CA/1/2016 (renumbered as TCA/1/2016, on the file of `National Company Law Tribunal', Chennai).
3. The Learned Counsel for the Appellant brings it to the notice of this `Tribunal' that the 2nd Respondent / Applicant filed CA/69/2016 in CP/1/2014 (erstwhile CA/1/2014, on the file of `National Company Law Tribunal') to substitute him as `Legal Heir'/`Representative' of the `Petitioner' in `Company Application'/`Petition'.
4. It is represented on behalf of the Appellant, on 09.02.2015, the `Applicant' (Deceased) in CA/1/2014 had declared the `1st Respondent' / `Public Trust' and on 16.02.2015, he declared `Dr. M.A.M. Ramaswamy Chettiar Trust', a `Private Trust'. As a matter of fact, according to the `Appellant', the `Applicant' (Deceased) had executed a `Will' bequeathing all his immovable and movable properties (including `Fixed Deposits' and `Loans') to the 1st Respondent/Trust.
5. The Learned Counsel for the Appellant submits that the Applicant (Deceased) in his `Will' had stated that he intended to transfer `some of the movable properties', in favour of the Private Trust during his lifetime. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 4 of 64 Furthermore, the Applicant (Deceased) on 30.09.2015 had transferred all his movable properties, listed in the `Schedule' to the `Will' in favour of the `Private Trust' by an `Oral Gift', including the `Loan/Deposit' with the `Appellant'.
6. The Learned Counsel for the Appellant comes out with a plea that as per Clause 9 (iii) of the `Private Trust Deed', all the properties of the `Private Trust' stand transferred to the `Public Trust', on the demise of the Applicant (Deceased) and hence, the `Deposit' made with the `Appellant', stands vested in favour of the `Applicant's Trust and the 1st Respondent has the right to be substituted, as the `Legal Heir'/`Representative'.
7. The Learned Counsel for the Appellant points out that before the `National Company Law Tribunal', Chennai Bench, the Appellant's case was that the Applicant (Deceased) gave a `short-term-interest-free loan' to the `Appellant' and that the `Applicant' (Deceased) that the same attained the character of `Deposit', being disputed by the `Appellant'. In this connection, the Learned Counsel for the Appellant submits that the `Appellant' had filed `Documents' to demonstrate that with the consent of the `Applicant' (Deceased - during his lifetime) the same was converted into long term (10 years interest free loan) and after adjusting the sum payable by the Applicant (Deceased) Rs.38,52,88,189/- was standing in Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 5 of 64 the Books and it would become payable to the `Legal Heir', only during March 2023.
8. The Learned Counsel for the Appellant takes a stand that assuming that the 1st Respondent is impleaded and the `Tribunal' holds that the `Loan' is actually, in the nature of deposit and directs the `Appellant' to repay to the 1st Respondent and assuming the `Will' is held as `not legal' and `valid', the 1st Respondent's argument that all the movable properties including the `Loan', listed in the Schedule to the `Will' were orally gifted, will stand automatically disproved.
9. The Learned Counsel for the Appellant proceeds to point out that if the `Will' is not `Proved' in the `Testamentary Proceedings', before the Hon'ble Madras High Court, the Schedule attached to the `Will' also stands disproved. Hence, the 1st Respondent's claim that the movables listed in the `Schedule' to the `Will' was orally gifted to the `Private Trust' on 30.09.2015, also stands `disproved'. Resultantly, as per Clause 9 (iii) of the `Private Trust Deed' the alleged deposit could not have been transferred to the 1st Respondent on the demise of the Applicant, in certain event, the Appellant is to initiate `Legal Proceedings', to seek and obtain refund from the 1st Respondent. In the interregnum, the 2nd Respondent will claim the said amount from the Appellant. Therefore, it Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 6 of 64 is the plea of the Appellant, that it has a `Locus' to file the instant `Appeal', as the Appellant's rights will be seriously and irreversibly prejudiced.
10. The Learned Counsel for the Appellant refers to Section 122 of the Transfer of Property Act, 1882, defining `Gift' and points out that as per Section 123 of the Transfer of Property Act, 1882, a `movable property', can be gifted either by a `Registered Instrument' signed by the `Donor' (Applicant (Deceased) or by an `Attorney' on his behalf with `Attesting Witness') or by `Delivery'. Also, it is pointed out on behalf of the `Appellant' that there is no `Registered Document' executed by the `Donor' (Applicant) duly witnessed, gifting the `Loan'/`Deposit' to the `Private Trust'.
11. Advancing his argument, the Learned Counsel for the Appellant submits that there is no `Delivery' for the purported deposit, as no `Receipt' was issued. Therefore, it is the plea of the `Appellant' that the `Oral Gift' is in `breach' of Section 123 of the Transfer of Property Act, 1882.
12. The Learned Counsel for the Appellant contends that to overcome the `legal' hurdle, the 1st Respondent had argued that since the alleged Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 7 of 64 deposit (though not specifically mentioned) forms part of the `Schedule' to the `Will' and the `Will' was handed over to Mr. A.C. Muthiah, after execution on 18.09.2015 and 30.09.2015, the `Applicant' (Deceased) orally gifted the alleged deposit, the handing over of the `Will' (including its Schedule) constitutes the `Delivery'. Further, if the `Will' is not established in `Testamentary Proceedings', the whole argument of the 1st Respondent falls through.
13. The Learned Counsel for the Appellant submits that Section 123 of the Transfer of Property Act, 1882, defines `Delivery' as ``Such delivery may be made in the same way as goods sold may be delivered.''. Also that, Section 2(2) of the Sale of Goods Act, 1930, defines `Delivery' as ``delivery'' means voluntary transfer of possession from one person to another''. Therefore, transfer of possession of the alleged deposit is a requirement to comply with the ingredients of Section 123 of the TP Act, read with Section 2 (2) of the Sale of Goods Act, 1930.
14. The Learned Counsel for the Appellant comes out with a plea that even assuming the alleged deposit, forming part of the `Schedule' to the `Will', handing over of the `Will', will not constitutes `Delivery' and for an illustration, if a rare painting was orally gifted, by writing on a `piece of paper' the name of the painting and handing over the paper, the same Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 8 of 64 would not constitute delivery, as contemplated in Section 123 of the TP Act read with Section 2 (2) of the Sale of Goods Act.
15. Alternatively, the Learned Counsel for the Appellant submits that if the said amount is taken as a `Loan' (subject matter of the Application as well as Interlocutory Application, filed by the `Appellant', on maintainability), it would constitute an `Actionable Claim', as per Section 3 of the Transfer of Property Act, 1882.
16. The Learned Counsel for the Appellant adverts to Section 130 of the TP Act, 1882, by stating that an `Actionable Claim' (with or without consideration) can only be transferred by an `Execution of an Instrument in writing', signed by the `Transferor' (Applicant) or his duly `Authorised Agent' and relies on the decision of the Hon'ble High Court of Allahabad in Maiyan Dalip Rajeshwari Debi v. Mohan Bikram Sah, reorted in AIR 1945, Allahabad Page 409, wherein at paragraphs 26 and 27, it is observed and held as under:
26. ``A question has arisen what would be the appropriate section of the Transfer of Property Act (4 of 1882) applicable to such a gift and how such a gift should be effected under the law. Learned Counsel for the plaintiff has relied on Section 123 which says that for the purpose of making a gift of moveable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered. He has argued that the Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 9 of 64 handing over of the fixed deposit receipts amounted to a delivery and was sufficient compliance with the provisions of the law.
Learned Counsel for the defendant, however, has urged that even if the fixed deposit receipts were handed over to the persons concerned, it would not be sufficient compliance with Section 123 of the Act, and according to him so long as the Rani was in a position to withdraw the money from the banks it could not be said that she had made a gift of it. He has, however, argued that the proper section applicable is not Section 123 but Section 130 of the Transfer of Property Act, and he contends that a fixed deposit is a debt or an actionable claim and a transfer of the same could only be made by an instrument in writing signed by the transferor. To my mind, Section 130 is the proper section and a fixed deposit in a bank clearly comes under the heading of a debt or an actionable claim. An actionable claim is defined in Section 3 of the Act:
``Actionable Claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the civil Courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.'' Learned counsel cited before us a single Judge decision of Gentle J. reported In re Travancore National & Quilon Bank Ltd. (1), where the question was whether a fixed deposit receipt could be transferred by an endorsement on its back, and it was held that it was not a negotiable instrument and an endorsement on the back did not have the same effect as an endorsement of a bill of exchange or promissory note and that under Section 130, Sub- section (1), of the Transfer of Property Act, a written instrument was necessary. Evidently the endorsement on the back of the promissory note was not accepted as an instrument in writing signed by the transferor.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 10 of 64 The two other cases cited by him are reported in Doraisami v. Doriswami Iyangar (2) B.N. Ry. Employee's U. Bank v. Seager (3). The first was not a case relating to a fixed deposit and the question mainly was as to what amounted to a written assignment of the debt. The second was a case of a creation of an equitable charge. None of these three cases are really very helpful on the point before us, but on a careful examination of the section, I have come to the conclusion that the proper section applicable was Section 130 of the Transfer of Property Act.
27. When money is deposited in a bank, to the extent of the deposit, the bank is a debtor and the only difference between an ordinary deposit and a fixed deposit is that in the case of a fixed deposit the person making the deposit undertakes that he would not withdraw the money within a certain period. There being no instrument in writing in this case it cannot be argued that if Section 130 of the Act was applicable the provisions of that section had been complied with. If Section 123 of the Act was applied, the question would arise whether the handing over of the fixed deposit receipts, if proved, amounted to a delivery. The fixed deposit receipts represented the money in the bank and as they were payable to either or survivor, either of the joint depositors could withdraw the whole amount, but on such withdrawal he would be trustee for the other to the extent of his share. It is argued that in case of a gift and the handing over of the fixed deposit to the donees no such question of trust as regards the half share of the money would arise and therefore it must be deemed that it was a completed gift. In case Section 123 were applicable then the handing over of the fixed deposit receipt may be enough. But to my mind the making of a gift of a fixed deposit in a bank is not the making of a gift of moveable property but is the gift of an actionable claim. I am of the opinion that Section 130 of the T.P. Act, applies and the handing over of the fixed deposit receipt would not be enough, but it will be necessary to have a document in writing signed by the transferor. In Sethna v. Hemingway (1) in the case of a gift of the amount in fixed deposit in a bank Section 130 of the Act was applied. As I agree with the Court below, that it is not Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 11 of 64 proved that the Rani made any gift of the money, nor was it proved that she actually handed over the fixed deposit receipts to the various donees and as I am further of opinion that the proper section applicable is Section 130 of the Act, it must be held that the plaintiff has failed to prove any valid gift in her favour. On this finding the plaintiff's suit must fail, but there are the other points raised before us which I may briefly dispose of.''
17. The Learned Counsel for the Appellant advances an argument that the 1st Respondent claims that transfer of the alleged deposit took place by means of Clause 9 (iii) of the `Private Trust Deed' and hence the same is `conveyance', as per Section 2 (10) of the Indian Stamp Act, 1899, subject to stamp duty under Tamil Nadu Stamp Act. Moreover, the 1st Respondent had not produced any stamp document and as per Section 35 of the Indian Stamp Act, no instrument chargeable with duty (and if not duty is paid) shall be admitted in evidence for any purpose. Therefore, it is the contention of the Appellant that the 1st Respondent cannot place any reliance on the alleged transfer of the `Loan'/`Deposit' by the `Private Trust' to the `1st Respondent'.
18. The Learned Counsel for the Appellant contends that the `1st Respondent' had placed reliance on the `Will' of the `Applicant' (Deceased) to `Claim' that the `movables' listed in the `Schedule' were orally `Gifted' on 30.09.2015. Added further, even assuming that the execution and validity of the `Will' is not established by the 1st Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 12 of 64 Respondent in `Testamentary Proceedings' before the Hon'ble Madras High Court, the very basis of oral `Gift' fails and that the 1st Respondent cannot be impleaded, based on the reliance made on the `Will'. In this connection, the Learned Counsel for the Appellant points out that the 1st Respondent is not relying on the `Will' for collateral purposes, but claims that the alleged deposit (one of the movable property listed in the `Schedule' to the `Will') was gifted / complete by handing over the `Will'. Therefore, the right claimed by the 1st Respondent to the purported deposit (claiming a right to substitute itself) arises from (a) inclusion of the alleged Deposit as a movable property in the Schedule to the Will and
(b) Clause 9 (iii) of the Private Trust Deed, by which the same was allegedly transferred to the 1st Respondent and assuming the `Will' is disproved in `Testamentary Proceedings' (pending before the Hon'ble Madras High Court), the oral gift will fall through, and the 1st Respondent would have no right to substitute itself as the Legal Heir / Representative of the deceased Applicant.''.
19. The Learned Counsel for the Appellant while winding up his argument, place for allowing the Comp. App (AT) (CH) No. 43 of 2022 and adjourned the hearing in the substitution applications filed by the Respondents sine die and pending before the `Tribunal', awaiting final adjudication of the `Will' in `Testamentary Proceedings'. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 13 of 64 1st Respondent's Contentions:
20. The Learned Counsel for the 1st Respondent contends that `Dr. M.A.M. Ramaswamy' during his lifetime made a `Deed of Declaration of Trust' dated 16.02.2015 (Registered as Doc. No. 61 of 2015, in the Office of S.R.O., Mylapore), constituting a `Private Trust' under the `name and style of Dr. M.A.M. Ramaswamy Chettiar Trust' and he had executed a `Deed of Declaration of Trust' dated 09.02.2015 (Registered as Doc. No. 51 of 2015, in the Office of the S.R.O., Mylapore), constituting a `Trust' under the name and style of `Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust'.
21. The Learned Counsel for the 1st Respondent refers to the various Clauses of the `Trust Deed' of `Dr. M.A.M. Ramaswamy Chettiar Trust', wherein it is mentioned as follows:
``Clause 8 (Objects of the Trust) :
To safeguard the movable properties of the settler and to ensure that he is enjoying the same as beneficiary without interruption during his life time.
Clause 7 :
The said Clause of the Trust Deed mentions that the properties of the Trust shall inter alia be `Any other movable properties that the founder shall transfer to the trust by means of delivery of possession in future'.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 14 of 64 Clause 9 :
The said Clause of the Trust Deed indicates the `Beneficiaries' of the Trust and it is evident that Dr. M.A.M. Ramaswamy Chettiar will be the sole `Beneficiary of the Trust', during his life time.
Clause 9 (3) :
In the said Clause of the Trust Deed, it is mentioned that after the lifetime of the settlor, the properties of this Trust would go to Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust, the charitable trust registered under Doc. No. 51 of 2015 dt. 09/02/2015 in the Office of SRO, Mylapore.
Clause 14 :
The said Clause of the Trust Deed, provides that the duration of the Trust shall be for the lifetime of the `Settlor' and thereafter as provided by Clause 9 (3) aforesaid, the properties of the Trust shall vest in the Trustees of Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust.''
22. The Learned Counsel for the 1st Respondent points out that the perusal of the registered `Will' dated 18.02.2015 of `Dr. M.A.M. Ramaswamy' under Clause 5 mentions about the constitution of `Dr. M.A.M. Ramaswamy Trust' and `Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust' and in fact, Clause 10 indicates that, out of the movable properties belonging to him in the Schedule, he intends to transfer some of the `movable properties' to and in favour of `Dr. M.A.M. Ramaswamy Chettiar Trust', during his lifetime. Schedule 1-B contains Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 15 of 64 the list of `Movables', namely, `Fixed Deposits' in `Companies' and `Loans' and `Advances'.
23. The Learned Counsel for the 1st Respondent refers to the First Meeting of the `Board of Trustees' of `Dr. M.A.M. Ramaswamy Chettiar Trust' was held on 06.04.2015, in which, `Dr. M.A.M. Ramaswamy' was present and further that `Clause 9' of the `Minutes', is as under:
``Acceptance of gifts of movable assets by Dr. M.A.M. Ramaswamy to the Trust - The draft letter as placed before the meeting and initiated by Dr. A.C. Muthiah was approved.''
24. The Learned Counsel for the 1st Respondent adverts to the Second Meeting of the `Board of Trustees' of `Dr. M.A.M. Ramaswamy Chettiar Trust' on 06.11.2015, in which, it was resolved that ``The Trustees placed on record the oral gift of all the movable assets owned and possessed and mentioned in the `Will' dated 18/02/2015, registered as Doc. No. 16 of 2015, before the Sub Registrar, Mylapore, by the Founder Dr. M.A.M. Ramaswamy to Dr. M.A.M. Ramaswamy Chettiar Trust made by him by oral declaration to the Trustees in the presence of Mr. V. Jayaraman & Mr. K. Muthuvellayan on his birthday on 30th September 2015. The Trust has accepted the oral gift of all the movable properties.'' Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 16 of 64
25. The Learned Counsel for the 1st Respondent points out that the aforesaid circumstances exhibit that `Dr. M.A.M. Ramaswamy' listed out `all the movable assets possessed by him' in the `Will' dated 18.02.2015 (Registered as Doc. No. 16 of 2015) and handed over the original `Will' to `Dr. A.C. Muthiah' and made an `Oral Gift', of all the `movable assets' owned by him making a declaration of the `Trustees' in the presence of one Mr. Jeyaraman and Mr. K. Muthu Vellaiyan on his birthday on 30.09.2015 and that the `Trust' has accepted the `Oral Gift', of all the movable properties.
26. The Learned Counsel for the 1st Respondent forcefully contends that, there is a `Gift' of the `Fixed Deposits' and `Loans and Advances' (which includes the `Deposit' of the `Appellant Company') by `Dr. M.A.M. Ramaswamy' to and in favour of `Dr. M.A.M. Ramaswamy Chettiar Trust' on 30.09.2015 which was accepted by the `Private Trust'. That apart, following the demise of `Dr. M.A.M. Ramaswamy on 02.12.2015', the properties gifted by `Dr. M.A.M. Ramaswamy' on 30.09.2015 to `Dr. M.A.M. Ramaswamy Chettiar Trust', became the properties of the `1st Respondent' / `Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust'.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 17 of 64
27. The Learned Counsel for the 1st Respondent submits that the `1st Respondent' / `Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust' is entitled, to step into the shoes of `Dr. M.A.M. Ramaswamy', before the `National Company Law Tribunal', because of the fact that the `Deposits', lying with the `Appellant' / `Company' was gifted to `Dr. M.A.M. Ramaswamy Chettiar Trust' and consequent to the demise of `Dr. M.A.M. Ramaswamy' on 02.12.2015, it became the property of the `1st Respondent' in view of `Clause 9 (3)' of the `Deed of Trust' dated 16.02.2015.
28. It is pointed out on behalf of the 1st Respondent that the `Appellant'/`Company' cannot take advantage of the fact that it had not issued the `Deposit Receipt' and further that `Dr. M.A.M. Ramaswamy' had listed out all the movable properties, through a registered `Will' dated 18.02.2015 and handed over the `Will' to the `Trustees' of the `1st Respondent' gifting all the `movable assets' listed in the Schedule', in the `Will'.
29. The Learned Counsel for the 1st Respondent contends that there is `constructive delivery' of the `Movable Assets' by the `Donor' Viz. `Dr. M.A.M. Ramaswamy', to the `Donee', on 30.09.2015. on his birthday Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 18 of 64 which was accepted by the `Trustees' of `Dr. M.A.M. Ramaswamy Chettiar Trust'.
30. According to the Learned Counsel for the 1st Respondent there is a valid gift of all the `Fixed Deposits' and `Loans and Advances', owned by `Dr. M.A.M. Ramaswamy', in favour of `Dr. M.A.M. Ramaswamy Chettiar Trust' on 30.09.2015, as recorded in the Minutes of the Meeting dated 06.11.2015. Further, following the demise of `Dr. M.A.M. Ramaswamy' on 02.12.2015, by virtue of Clause 9 (3) of the `Deed of Trust' dated 16.02.2015, the properties of `Dr. M.A.M. Ramaswamy Chettiar Trust' will automatically become the properties of the `1st Respondent'.
31. The Learned Counsel for the 1st Respondent submits that the instant `Company Appeal' filed by the Appellant is liable to be `dismissed', because of the fact that the `Appellant' / `Chettinad Coal Washeries Private Limited', have no `Locus' to assail the `impugned order' dated 26.05.2022, passed by the (`National Company Law Tribunal'), substituting the `1st Respondent' / `Trust', in place of `Dr. M.A.M. Ramaswamy'. Hence, the Learned Counsel for the 1st Respondent prays for dismissing the Comp. App. (AT) (CH) No. 43 of 2022. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 19 of 64 1st Respondent's Decisions:
32. The Learned Counsel for the 1st Respondent relies on the decision of the Hon'ble Supreme Court of India in Mrs. Hem Nolini Judah (since Deceased) and After her, her Legal Representative Mrs. Marlean Wilkinson v. Mrs. Isolyne Sarojbashini Bose & Ors., reported in 1962, Supp (3) SCR 294 : AIR 1962 SC 1471, wherein at paragraphs 7 to 9, it is inter alia, observed as under:
7. ``..... In order therefore that the appellant should succeed on the basis of the letters of administration of the will of Mrs. Mitter which had been granted to her with respect to this house, she had to show that Mrs. Mitter was the full owner of this house at the time she made the-will in her favour. Now the appellant could show this by other evidence; but if the appellant wanted to rely on any will of Dr. Miss Mitter in favour of Mrs. Mitter, in proof of full ownership of Mrs. Mitter of this house, it would amount to this that the appellant was saying that Mrs. Mitter was the owner of the house as the legatee under the will made by Dr. Miss Mitter. The appellant would thus be asserting the ownership of Mrs. Mitter of the whole house as a legatee, and this is what sub-section (1) of Section 213 clearly forbids, for it says that no right as a legatee can be established in a Court of Justice, unless the Probate or letters of administration have been obtained of the will under which the right as a legatee is claimed. It is true that so far as the will of Mrs. Mitter in favour of the appellant is concerned, she has obtained letters of administration of that and she can maintain her right as a legatee under that will; but that will in her favour only gives her those properties which really and truly belonged to Mrs. Mitter, that will however does not create title in the appellant in properties which did not really and truly belonged to Mrs. Mitter that will however does not create title in the appellant in properties which did not really and truly belong to Mrs. Mitter but which Mrs. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 20 of 64 Mitter might have thought it fit to include in the will. Therefore, as soon as the appellant, in order to succeed on the basis of the will in her favour of which she obtained letters of administration, alleges that Mrs. Mitter was full owner of the property able to will it away to her, she had to prove the title of Mrs. Mitter to the property. Now if that title rests on Mrs. Mitter's being legatee of Dr. Miss Mitter the appellant will have to prove that Mrs. Mitter had the right as a legatee under the will of Dr. Miss Mitter. As soon as the appellant wants to prove that, Section 213 will immediately stand in her way for no right as an executor or a legatee can be proved unless Probate or letters of administration of the will under which such right is claimed have been obtained. The words of Section 213 are not restricted only to those cases where the claim is made by a person directly claiming as legatee. The section does not say that no person can claim as a legatee or as an executor unless he obtains Probate or letters of administration of the will under which he claims. What it says is that no right as an executor or legateee can be established in any Court of Justice, unless Probate or letters of administration have been obtained of the will under which the right is claimed, and therefore it is immaterial who wishes to establish the right as a legatee or an executor. Whosoever wishes to establish that right, whether it be a legatee or an executor himself or somebody else who might find it necessary in order to establish his right to establish the right of some legatee or executor from whom he might have derived title, he cannot do so unless the will under which the right as a legatee or executor is claimed has resulted in the grant of a Probate or letters of administration.
Therefore, as soon as the appellant wanted to establish that Mrs. Mitter was the legatee of Dr. Miss Mitter and was therefore entitled to the whole house she could only do so if the will of Dr. Miss Mitter in favour of Mrs. Mitter had resulted in the grant of Probate or letters of administration. Admittedly that did not happen and therefore Section 213(1) would be a bar to the appellant showing that her mother was the full owner of the property by virtue of the will made in her favour by Dr. Miss Mitter. The difference between a right claimed as a legatee under a will and a right which might Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 21 of 64 arise otherwise is clear in this very case. The right under the will which was claimed was that Mrs. Mitter became the owner of the entire house. Of course without the will Mrs. Mitter was an equal heir with her daughters of the property left by Dr. Miss Mitter, as the latter would be taken to have died intestate, and would thus be entitled to one-fourth. It will be seen from the judgment of the High Court that it has held that the appellant is entitled to the one-fourth share to which Mrs. Mitter was entitled as an heir to Dr. Miss Mitter and granted the plaintiff-respondent a declaration with respect to only half the house. Therefore, the High Court was right in holding that Section 213 would bar the appellant from establishing the right of her mother as a legatee from Dr. Miss Mitter as no Probate or letters of administration had been obtained of the alleged will of Dr. Miss Mitter in favour of Mrs. Mitter. The contention of the appellant on this head must therefore fail. Re. (ii).
8. Turning now to the question of res judicata, learned counsel for the appellant has been unable to point out any judgment inter parties in which the question of title to this house has been decided and which would bar the plaintiff-respondent from raising the question of title which she has raised in the present suit. As we have already said questions of title are not decided in proceedings for the grant of Probate or letters of administration. Whatever therefore might have happened in those proceedings would not establish the title to the house either of the appellant or of Mrs. Mitter. In particular, learned counsel for the appellant relied on the order of the High Court dated December 17, 1943, by which the application of the plaintiff-respondent for letters of administration of the will of Dr. Miss Mitter was dismissed. In that ease certain preliminary issues were framed one of which related to estoppel with respect to Mrs. Mitter's right to this property. What happened in that case was that Mrs. Bose who had made the application did not appear and thereupon her application was dismissed for that reason obviously under 0rder 17, Rule 2 of the Code of Civil Procedure. In these circumstances there can be no question of res Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 22 of 64 judicata as to the title to the property in dispute. The contention on this head must therefore be rejected.
Re (iii)
9. As to estoppel, reliance is mainly placed on the applications of Mrs. Bose herself for the grant of letters of administration of a will alleged to have been made in her favour by Mrs. Mitter. In that application Mrs. Bose had shown the house as if it belonged to Mrs. Mitter. Her application was as we have already noted dismissed. It may be that Mrs. Bose in her application for letters of administration showed this house as the property of her mother Mrs. Mitter; but as we have already said, proceedings leading to the grant of Probate or letters of administration have nothing to do with titles. Further estoppel can only arise as is clear from Section 115 of the Indian Evidence Act, when one person has by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief. Therefore before Mrs. Bose can be estopped from pleading that Mrs. Mitter was not the owner of the entire property it must be shown that by her showing the house as the property of Mrs. Mitter in her application for letters of administration she intentionally caused or permitted the appellant to believe that thing to be true and to act on that belief. It is obvious that the appellant cannot be said to have acted in her turn with respect to this house simply because Mrs. Bose said in her application for letters of administration that the house belonged to Mrs. Mitter. It appears that after the death of Mrs. Mitter the three sisters put forward sthree separate wills each in her favour and there was no question of one sister acting on any representation made by another. We are therefore of opinion that no question of estoppel arises in this case.
33. The Learned Counsel for the 1st Respondent cites the decision of Hon'ble Supreme Court of India in Commissioner, Jalandhar Division & Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 23 of 64 Ors. v. Mohan Krishan Abrol & Anr., (2004) 7 SCC Page 505 at Spl. Pg. 513, wherein at paragraph 10, it is observed as under:
10. ``A bare reading of Section 211 shows that the property vests in the executors by virtue of the will and not by virtue of the probate. Will gives property to the executor; the grant of probate is only a method by which the law provides for establishing the Will.
In the case of Kulwanta Bewa v. Karam Chand Soni [AIR 1938 Calcutta 714], it has been held that Section 211 provides that the estate of the deceased vests in the executor; that the vesting is not of the beneficial interest in the property; but only for the purposes of representation. In the case of Meyappa Chetty v. Supramanian Chetty [AIR 1916 PC 202], the Privy Council has held that an executor derives his title from the Will and not from Probate. The personal property of the testator (including right of action) vests in the executor(s) on the death of the testator. For purposes of deciding this matter, section 336 of the Act is also relevant as it provides for assent of the executor to the legacy after the death of the testator. It provides that an executor gets divested of his interest as an executor from the death of the testator when he assents to a specific legacy. Section 213 acts as a bar to the establishment of rights under the Will by an executor or a legatee unless probate or letters of administration have been obtained. This bar comes into play only when a right as an executor or a legatee under Will is sought to be established. However an unprobated Will can be admitted in evidence for collateral purposes in any other proceedings apart from probate proceedings. (See: Cherichi v. Ittianam [AIR 2001 Kerala 184]). Therefore, on the demise of the testatrix, the said property vested in the executors. The question which arises for determination on the facts of this case is whether the executors assented to the vesting of the said property in the Hospital in terms of Section 336 of the 1925 Act. In this case, the facts show that the executors never objected to the vesting of the said property in the Hospital. Three executors were appointed under the Will. They never objected to the legacy. Several meetings of the executors had taken place both before the death of the Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 24 of 64 testatrix on 26-11-1962 and even thereafter for updating the accounts and to obtain probate and at no stage they objected to the vesting of the property in the Hospital. Although application for probate was made, the State was not a party-respondent. In fact, mutation was made in favour of the Hospital as far back as 2-4- 1970 to which the executors never objected. In the circumstances, the executors had assented to the legacy in favour of the Hospital. Looking to the terms of clause 2 of the Will, we hold that the Hospital was not a beneficiary, but a full owner of the property; that on the demise of the testatrix the property vested in the executors who assented by their conduct to the legacy of the demised premises in the Hospital and consequently, the eviction proceedings were maintainable under the 1973 Act.''
34. The Learned Counsel for the 1st Respondent adverts to the decision of the Hon'ble Supreme Court of India in Manovikas Kendra Rehabilitation & Research Institute v. Prem Prakash Lodha, (2005) 7 SCC 224 Spl. Page at 226 , wherein at Paragraph 3, it is observed as under:
3. `` Having heard the learned counsel for the parties, we are satisfied that the impugned order of the High Court cannot be sustained. What would be the effect of the death of the landlord on the decree for eviction, passed by two courts below, shall have to be examined by the High Court if it can take note of such subsequent event, but before a decree under appeal may be reversed someone shall have to be heard in support of the decree.
The term ``legal representative'' has been defined in clause (11) of Section 2 of the Code of Civil Procedure as meaning a person who in law represents the estate of a deceased person, and includes any person who intermediates with the estate of the deceased. The question of abatement would arise only when there is no legal representative. The appellant before us who claims to be donee of Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 25 of 64 the suit property certainly falls within the definition of ``legal representative'' as noticed hereinabove. The appellant's prayer for being brought on record in place of the deceased respondent in the High Court could not have been denied. Whether the decree under appeal can be sustained or not in view of the subsequent event, would be a question to be examined by the High Court but only after the applicant before it was permitted to be brought on record. We do not express any opinion on that aspect of the issue as the same would be examined by the High Court on its own merits.''
35. The Learned Counsel for the 1st Respondent falls back upon the decision of the Hon'ble High Court of Madras in G. Ganesan & 5 Ors. v. P. Sundari & 2 Ors., reported in (2011) 2 CTC at Pages 435 and 436, wherein, it is observed and held as under:
``A close reading of the above judgments would make it very clear that it is the settled proposition of law that in view of the bar contained in Section 213 of the Act, an unprobated Will cannot be admitted in evidence in any proceeding to establish any right or title derived under the Will. However, for collateral purposes such an unprobated Will can be proved in evidence.
[Para 17] Now in the case on hand, the question is as to whether the unprobated Will is sought to be proved by the Respondents for collateral purpose as it is claimed by them. The learned Counsel for the Respondents would submit that no right or title is attempted to be established under the Will so as to fall within the bar contained in Section 213 of the Act, instead, according to him, the document is used only to prove that the earlier Will for which Letters of Administration is sought for has been subsequently cancelled. This according to the learned Counsel for the Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 26 of 64 Respondents is a collateral purpose. But, we find it too difficult to accept the said contention. The said Will of the year 1993 is sought to be used to defeat the claim of the Appellants to get Letters of Administration on the earlier Will. Unless, the due execution and contents of the said Will by which the earlier Will is stated to have been cancelled are proved, the Respondents cannot succeed in their plea to defeat the claim of the Appellants for Letters of Administration. The contents of the said Will of the year 1993 can be proved only in an appropriate probate proceeding. Unless the said Will of the year 1993 is proved that it is the last Will of the deceased and it satisfies all the other legal requirements, the earlier Will for which Letters of Administration proceeding has been initiated cannot be negatived. Proof of the same cannot be made in the present Suit because the same could be done if only the Respondents approach the Court for probating the said Will either by making a counter claim or by initiating separate proceedings. For the Respondents, the right to oppose the issuance of probate in respect of the earlier Will itself is derived only from the unprobated subsequent Will. As held by the Full Bench of this Court in Ganshmdoss v Gulab Bi Bai, AIR 1927 Mad 1054, the bar contained in Section 213 of the Indian Succession Act is applicable even to a Defendant in a Suit. Therefore, we are of the firm view that the purpose for which the Will of the year 1993 is sought to be proved by the Respondents in evidence is only for the main purpose to establish that the said Will is the last Will cancels the earlier Will and the said purpose is not merely collateral as it is sought to be made out by the Respondents. Apart from that, in Commissioner v. Mohan Krishnan Abrol, 2004 (4) CTC 35 (SC), the Hon'ble Supreme Court has held that even for such collateral purposes the unprobated Will cannot be used in a probate proceedings.
[Para 18] Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 27 of 64 Company Appeal (AT) (CH) No. 45 of 2022:
Preface:
36. The Appellant (2nd Respondent - in Comp. App (AT) (CH) No. 43 of 2022), has preferred the instant Comp. App (AT) (CH) No. 45 of 2022 in renumbered TCP/1/2016 (CA/1/2014, on the file of Company Law Board) in CA/69/2016, on being dissatisfied with the `impugned order' dated 26.05.2022, whereby and whereunder, the `National Company Law Tribunal', Chennai Bench, had dismissed CA/69/2016, filed by the 2nd Respondent/Applicant.
Appellant's Contentions:
37. The Learned Counsel for the Appellant submits that Appellant is the `Son' and `Sole surviving Clause-I Heir of the Original Applicant' (Late Dr. M.A.M. Ramaswamy) in C.P. No. 1 of 2014 (TCP No. 1 of 2016), and that a `refund of Interest Free Loan', given by the `Applicant' for the period from 23.03.2013 and 30.03.2013, to the 2nd Respondent/Company was Rs.55,26,38,122.91.
38. According to the Appellant, his father (Late Applicant) was suffering from `Stage IV Liver Cancer' and was taking medicines which had seriously incapacitating effect on his mental faculties and after prolonged suffering, he expired on 02.12.2015. Moreover, from the Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 28 of 64 beginning of Year 2015 itself, he was `not of sound disposing state of mind to take wise decisions' and was admitted in Malar Fortis Hospital, during Feb'2015 and subsequently his condition had deteriorated.
39. The Learned Counsel for the Appellant contends that the Appellant's Father (Applicant/Deceased), mental faculty was irreversibly affected and his actions, were not based on rationale or logical thinking/analysis. Consequently, certain persons who had long- standing dispute(s) with the Appellant's father and were litigating for decades in various Courts and in business front, took advantage of his mental condition, to appropriate the joint Family Properties of the Appellant's father.
40. It is represented on behalf of the Appellant that the `Creation of Private Public Trust', purported execution of the `Will', etc., was the handiwork accentuated by the personal greed of certain persons and minions, surrounding the Appellant's father and the Appellant's father, because of his `unsound state of mind', acceded to such evil designs.
41. The Learned Counsel for the Appellant points out that the `Appellant' / `Legal Heir' of the `deceased Applicant', had applied for a `Legal Heir' Certificate, before the Tahsildar, Mylapore Taluk, Chennai, Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 29 of 64 which was contested by the `1st Respondent' and that after the detailed enquiry, based on the supporting documents furnished by the `Appellant' and arriving at a satisfaction, the `Legal Heir Certificate' was issued on 11.03.2016.
42. The Learned Counsel for the Appellant brings it to the notice of this `Tribunal', that the `Appellant' as `Sole Legal Heir' of the `Applicant' (since deceased), preferred an `Application' on 29.02.2016 under Regulation 28 of the Company Law Board Regulations, for `substituting himself' as the `Legal Heir' and later filed an `Application' for substitution on 31.03.2016 and at that point of time,. the `National Company Law Tribunal Rules', were not notified, hence they are inapplicable. In this connection, it is the plea of the `Appellant' that Regulation 28 of the Company Law Board Regulations should have been considered and the said Regulation runs as under:
28. ``Substitution of legal representative (1) In the case of death of any party during the pendency of the proceedings before the Bench, the legal representatives of the deceased party may apply within thirty days of the date of such death for being brought on record as necessary parties ......''
43. The Learned Counsel for the Appellant takes a stand that the `National Company Law Tribunal', had committed an error in applying Rule 53 of the NCLT Rules, 2016, (which was not in force at the time of Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 30 of 64 filing of Contesting Application for Substitution as Legal Representative, by the `Appellant' and the 1st Respondent).
44. The Learned Counsel for the Appellant advances an argument that when the 1st Respondent had filed the `Application', only when the `Appellant' had a `Legal Right to step into the shoes of the `Applicant' (Deceased) and that the 1st Respondent had no `Locus' to prepare any application and till date has no `Locus standi', as the `Competent Court' is yet to decide the `Locus' of the `1st Respondent'.
45. The Learned Counsel for the Appellant points out that it is the alternate plea of the `1st Respondent', its interests in the `alleged deposit' (subject matter of the main Application Viz., CA/1/2014), stood transferred to itself, from the `Private Trust' on `02.12.2015' (date of death of the `Applicant') and hence, as per the `Company Law Board Regulations' (old one) and as per `NCLT Rules', 2016, the `1st Respondent' does not have any `Legal Right', since it is a `Transferee' and not a `Successor-in-interest', having any `Legal' right to the `purported deposit'. In any event, such a `Right' flowing from a `Will' cannot be proved without the `Letters of Administration', being granted in terms of Section 57 read with Section 213 of the Indian Succession Act, 1925.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 31 of 64
46. The Learned Counsel for the Appellant urges that the `1st Respondent' had relied upon the alleged `Will' dated 18.02.2015 of the `Applicant' (since `Deceased') vide para 3 (iii) of its substitution application, but the Petition filed by the 1st Respondent, praying for the grant of `Letters of Administration' of the purported `Will' in Original (being Original Petition No. 894 of 2016) does not content that the purported `Deposit' as part of the `estate' of the `Applicant' (since `Deceased').
47. The Learned Counsel for the Appellant contends that while the `1st Respondent' has claimed that `all movables were gifted on 30.09.2015' by the `Applicant' (`Deceased') to the `Private Trust', before the Hon'ble Madras High Court, the `1st Respondent' had claimed `Right' to the `Shares' of `Chettinad Cement Corporation Limited' (even though shares are movable) and thus the `1st Respondent' takes a `contra' stand to suit its convenience.
48. The Learned Counsel for the Appellant submits that in regard to certain other movables Viz. Motor Vehicles (which were also `allegedly', `orally', gifted by the `Applicant' (`Deceased') to the `Private Trust' and on the death of the `Applicant' (`Deceased'), were to be transferred to the `1st Respondent', it is brought to the fore that, the `1st Respondent' filed a Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 32 of 64 `Writ Petition No.11045 of 2017', wherein it had prayed for an `issuance of direction' against the `Regional Transport Officer', Chennai, to transfer ownership to the `Charitable Trust' and on 13.07.2018, the Hon'ble High Court of Madras at paragraphs 12 to 14, had observed the following:
12. ``Having considered the facts and circumstance of the case the main contention of the petitioner is that 12 Vehicles which are subject matter of the writ petition, are the properties of the petitioner's trust.
13. The learned counsel for the Petitioner mainly relied upon Clause 7 in the trust deed dated 16.02.2015. In Clause 7 of the trust deed, the founder has created the trust for a sum of Rs.1,000/- and also indicated that any other movable properties founder shall transfer to the Trust by means of delivery of possession. In future, shall also be included as trust property.
14. The above clause clearly indicates that only on transfer of any movable properties by founder himself in future the properties will come as Trust properties. In the given case no material was placed to show that any such transfer was taken place in respect of movable properties in favour of private trust. On the contrary, the counsel for the petitioner would state that there was oral gift in respect of movable properties in favour of the private trust. I am of the view that only when trust acquire the ownership of such properties by transfer as stated in Clause 7, then Clause 9 would come into play that is, after the life time of the settlor, the properties of this trust would go to the public trust. Clause 9 is subject to the proof of clause 7 i.e., transfer. Admittedly, the case of transfer in favour of public trust is a disputed fact and the same cannot be decided in this writ petition since it is matter of evidence.'' Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 33 of 64 and dismissed the Writ Petition, because of the disputed fact being involved and directed the Petitioner therein to workout the remedy in the manner known to `Law'.
49. The Learned Counsel for the Appellant adverts to the fact that the `1st Respondent' had filed a Civil Suit in C.S. No. 20 of 2019, on the file of the Hon'ble High Court of Madras, seeking a relief of `Declaration', `Permanent Injunction' and for other `Reliefs'. Furthermore, in the said `Suit', the `Appellant' had filed an `Application' seeking to reject the `Plaint' on the following grounds:
(a) ``The provisions of the Motor Vehicles Act, 1988 there cannot be an oral transfer. Any transfer can only be in terms of the provisions of the statute.
(b) The Charitable Trust has to establish itself that it is legally created trust. The subject of the creation of the purported trusts itself is seriously disputed and a matter pending adjudication before this Hon'ble Court in OP No. 894 of 2016 (presently converted as TOS No. 27 of 2021). The purported Trust Deeds dated 09.02.2015 and 16.02.2015 not having got the sanction of any court of law, the suit is barred and liable to be thrown out in limine and no cause of action is made out (Appl No. 1129 of 2019).'' and that the said `Application' was dismissed on 17.03.2022.
50. In this regard, the `Appellant' submits that the `Hon'ble High Court' had opined that the `issue involved needs to be tested in `Trial' and Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 34 of 64 therefore, `Tribunal' could not have decided the matter in a `Summary Proceedings'.
51. It is the version of the `Appellant' that the `Appellant' had filed O.S.A. 127 of 2022 (an `Appeal' before the `Hon'ble High Court of Madras' and that an `interim stay' was granted on 06.06.2022 and the main `Appeal' is pending consideration. In fact, the `1st Respondent' is indulging in `Forum Shopping', in a bid to appropriate the `movable properties', even before determination of the `Title' to the `Movables', owned by the `Applicant' (`Deceased'), which can only be done either in the pending `Testamentary Proceedings' or by way of a `Civil Suit'.
52. The Learned Counsel for the Appellant contends that the `1st Respondent' is not entitled to the `Loan', extended to the `2nd Respondent' and in fact, the `National Company Law Tribunal', Chennai Bench, had committed an error in granting the `Letters of Administration' to the `Trust' in a summary proceeding and hence, prays for allowing the instant Comp. App (AT) (CH) No. 45 of 2022.
1st Respondent's Pleas:
53. The Learned Counsel for the 1st Respondent contends that the 1st Respondent is not claiming any right as `Executor' and `Legatee' under Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 35 of 64 the `Will' dated 18.02.2015 and per contra, the `Will' dated 18.02.2015 is relied upon by the 1st Respondent for collateral purposes.
54. The Learned Counsel for the 1st Respondent adverts to the fact that the `Appellant' / `Applicant' (`Mr. M.A.M.R. Muthiah') had filed CA/69/2016, seeking to substitute himself in the place of `Dr. M.A.M. Ramaswamy' on the strength of a `Legal Heir Certificate' dated 11.03.2016 and further that the validity of the `Legal Heir' Certificate assailed before the Hon'ble High Court of Madras in W.P. No.15003 of 2106 and the same is pending and therefore, it cannot be relied upon.
55. The other stand of the 1st Respondent is that a mere perusal of the registered `Will' dated 18.02.2015 executed by `Dr. M.A.M. Ramaswamy' shows that the `Adoption' of the `Appellant' was contrary to the custom and usage of the community and contrary to the `Will' dated 09.02.1970, executed by `Raja Sir M.A.M. Muthiah Chettiar'.
56. The Learned Counsel for the 1st Respondent takes a plea that the adoption of the `Appellant' by `Dr. M.A.M. Ramaswamy' was not in accordance with `Law' and further that the relationship between `Dr. M.A.M. Ramaswamy' and the `Appellant' (`Mr. M.A.M.R. Muthiah') was so strained that the said `Dr. M.A.M. Ramaswamy' had not even Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 36 of 64 permitted the `Appellant' to perform his obsequies or ceremonies pertaining to his death.
57. The Learned Counsel for the 1st Respondent contends that the definition of `Legal Representative' includes a `Donee' of a `Property' as per decision of the Hon'ble Supreme Court of India in Manovikas Kendra Rehabilitation & Research Institute v. Prem Prakash Lodha, (2005) 7 SCC at page 224.
58. Moreover, it is projected on the side of the `1st Respondent'/`Trust' that though during the life time of `Dr. M.A.M. Ramaswamy', he gifted the `Movable Property' to the `Private Trust', he died before the `Trust' could be brought on record. After the death of `Dr. M.A.M. Ramaswamy', as per Clause 9 (3) of the `Trust Deed' dated 01.02.2015, all the properties are vested with the `1st Respondent'. The 1st Respondent is the `Successor-in-interest' of the `Donee' of the `movable property', gifted by `Dr. M.A.M. Ramaswamy' and therefore, it is contended that the `1st Respondent' is entitled to get itself substituted in place of `Dr. M.A.M. Ramaswamy'.
59. The Learned Counsel for the 1st Respondent submits that the `National Company Law Tribunal' is entitled to decide all the disputed questions of fact and if need be, may direct the `Parties' to adduce the Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 37 of 64 evidence by means of an `Affidavit' and also permit the `Parties' to be cross-examined.
Citation of 1st Respondent:
60. The Learned Counsel for the `1st Respondent' relies on the decision in Cherichi v. Ittianam AIR 2001 Kerala 184, wherein at Paragraphs 7, 8 and 10, it is observed and held as under:
7. ``Section 213 of the Indian Succession Act, 1925 (hereinafter referred to as "the Act") says that no right as executor or legatee can be established in any Court unless a Court of competent jurisdiction has granted probate of the Will under which the right is claimed or has granted Letters of Administration in respect of the Will. Section 213 of the Act was amended by adding the words "Indian Christians" after the word "Mohammedans" with a view to providing that in case of Wills executed by Christians also, the requirement under Section 213(1) of the Act is not necessary. The purpose of the State Amendment made to the Act, as stated above, is to avoid the cumbersome procedure of obtaining probate or Letters of Administration in respect of the Will executed by Christians for the purpose of establishing right under the Will when such right is sought to be asserted in proceedings in Court. The prohibition under Section 213 of the Act is regarding establishing any right under the Will without getting probate or Letters of Administration and that section cannot be understood as one by which the vesting of right as per the provisions of the Will is postponed until the obtaining of probate or Letters of Administration. The Will will take effect on the death of the executant of the Will and what Section 213 of the Act says is that the right as executor or legatee can be established in any Court of justice only if Probate or Letters of Administration is obtained.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 38 of 64
8. Amendment to Section 213 of the Act cannot be said to be an amendment which has retrospective operation. Cases in which the bar under Section 213 of the Act is not there, execution of the Will can be proved in proceedings in which the right as executor or legatee is sought to be established. The necessity to obtain Probate or Letters of Administration as provided in Section 213(1) of the Act arises only when right as executor or legatee is sought to be established in a Court and hence that Section does not prohibit the use of the Will which is unprobated as evidence for purposes other than establishment or right as executor or legatee. So, the requirement of obtaining probate becomes relevant at the time when the establishment or right as executor or legatee on the strength of a Will is sought to be made in a Court of justice. Irrespective of the fact whether a Suit is filed before or after the amendment to Section 213 of the Act if execution of the Will sought to be relied on in judicial proceedings is attempted to be proved after the amendment, it cannot be said that in cases covered by Section 213 of the Act in respect of Christians, the Will must be one in respect of which probate has been granted. Obtaining of probate in respect of a Will can also be for purposes other than the purpose for which it is not necessary to get a probate and for that reason also it cannot be said that after the amendment to Section 213 of the Act, there is no need for granting probate, or Letters of Administration.
10. In Sheonath Singh v. Madanlal, AIR 1959 Rajasthan 243, it was held that Section 213 of the Act does not vest any right or rather any substantive right in anybody and what it really does is to regulate the mode of proving a Will, that is, procedure. It was further observed in the above decision that what Section 213 really does is that it lays down a rule of procedure, that Rule being that a person seeking to establish his right in any Court of justice as executor or legatee under a Will must have obtained the probate of the Will under certain circumstances mentioned in the Section. The Section precludes the establishment of a right as executor or legatee in a Court of justice but does not affect the right as such for which the Court must look elsewhere. The High Court of Rajasthan Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 39 of 64 was of the definite view that Section 213 of the Act lays down a rule of procedure and not of any substantive right. This Court in a recent decision in Acho Dominic v. Xavier, 2000 AIHC 2210, had occasion to consider the effect of amendment made to Section 213 of the Act. The amendment to the above section was made during the pendency of the Appeal and at the time when the suit was pending in the Lower Appellate Court the provision was that for establishing right as mentioned in Section 213 of the Act, Will had to be probated. In the above decision it was held by this Court that the amendment brought about could be taken into account in deciding the Second Appeal. In Hem Nolini v. Isolyne Sarojbashini, AIR 1962 SC 1471, it was held that the words of Section 213 of the Act are not restricted only to those cases where the claim is made by a person directly claiming as a legatee. It was also observed by the Supreme Court that the section does not say that no person can claim as a legatee or as an executor unless he obtains probate or Letters of Administration of the Will under which he claims and what it says is that no right as an executor or legatee can be established in any Court of justice unless probate or Letters of Administration have been obtained of the Will under which the right is claimed.'' Legal Representative:
61. Section 2 (11) of the Civil Procedure Code, defines `Legal Representative' meaning `a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued;
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 40 of 64
62. It is to be borne in mind, whether the person sought to be substituted has any `Right' or whether he is the `Legal Representative of Heirs', as defined in Section 2 (11) of the Civil Procedure Code.
63. A `Legal Representative' ordinarily means `a person who in Law represents the estate of deceased person or persons on whom the said estate devolves on the date of the individual', as per decision, Sarada v. Chakkunny, reported in AIR 1992, Ker. Page 249.
64. The term `Legal Representative' is synonymous with the term `Personal Representative' and is inclusive of not only the `Heirs', but also intermeddles with the estate of the deceased as well as the person who in law represents the estate of the deceased and it is not necessarily confined to her alone. Therefore, the `Executors', `Administrators', Assignors are `persons' acquiring interest by devolution under `Order 20 Rule 10 of the Civil Procedure Code' or a `Legatee' under the `Will' or `Legal Representatives', as per decision by the Hon'ble Supreme Court of India in Chiranjilal v. Jasjit Singh, reported in 1993 (2), SCC Page 507. Indian Succession Act, 1925:
65. Section 211 of the Indian Succession Act, 1925, `Character and property of executor or administrator' as such - reads as (1) `The executor or administrator, as the case may be, of a deceased person is his Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 41 of 64 legal representative for all purposes, and all the property of the deceased person vests in him as such' (2) `When the deceased was a Hindu, Muhammadan, Buddhist, [Sikh, Jaina or Parsi] or an exempted person, nothing herein contained shall vest in an executor or administrator any property of the deceased person which would otherwise have passed by survivorship to some other person'.
66. It is pointed out by this `Tribunal', that in the Judgment of the Hon'ble High Court of Madras dated 07.09.2015 in O.S.A. No. 174 of 2015 (Division Bench), between M.V. Krishna Rao (Deceased) v. K. Shivakumar (vide India Kanoon at Page 3, wherein at paragraph 12, it is inter alia observed as under:
``.....The purpose of impleading all the legal representatives arises, as even if there is a dispute of inheritance between the different persons claiming from the deceased, that should not prejudice the proceedings initiated by the deceased and when the inter se rights are determined among the persons claiming estate of the deceased, those could be determined separately or even some time in the same proceedings to come to a conclusion as to who should be the beneficiary of the decree, if any, passed in the suit.''
67. Section 212 of the Indian Succession Act, 1925, `Right to Intestate's Property', provides -- (1) `No right to any part of the property of a person who has died intestate can be established in any Court of Justice, unless letters of administration have first been granted by a Court of competent Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 42 of 64 jurisdiction'. (2) `This section shall not apply in the case of the intestacy of a Hindu, Muhammadan, Buddhist, Sikh, Jaina, [Indian Christian or Parsi]'.
68. Section 213 of the Indian Succession Act, 1925, `Right as executor or legatee when established', enjoins (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'.
69. Section 214 of the Indian Succession Act, 1925, under the head, `Proof of representative title a condition precedent to recovery through the Courts of debts from debtors of deceased persons'.-- (1) `No Court shall-- (a) pass a decree against a debtor of a deceased person for payment of his debt to a person claiming on succession to be entitled to the effects of the deceased person or to any part thereof, or (b) proceed, upon an application of a person claiming to be so entitled, to execute against such a debtor a decree or order for the payment of his debt, except on the production, by the person so claiming of-- (i) a probate or letters of administration evidencing the grant to him of administration to the estate of the deceased, or (ii) a certificate granted under section 31 or Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 43 of 64 section 32 of the Administrator-General's Act, 1913 (3 of 1913), and having the debt mentioned therein, or (iii) a succession certificate granted under Part X and having the debt specified therein, or (iv) a certificate granted under the Succession Certificate Act, 1889 (7 of 1889), or (v) a certificate granted under Bombay Regulation No. VIII of 1827, and, if granted after the first day of May, 1889, having the debt specified therein.' (2) `The word "debt" in sub-section (1) includes any debt except rent, revenue or profits payable in respect of land used for agricultural purposes.'
70. Section 215 of the Indian Succession Act, 1925, - under the Caption `Effect on certificate of subsequent probate or letters of administration runs to the effect that --(1) `A grant of probate or letters of administration in respect of an estate shall be deemed to supersede any certificate previously granted under Part X or under the Succession Certificate Act, 1889 (7 of 1889), or Bombay Regulation No. VIII of 1827, in respect of any debts or securities included in the estate.' (2) `When at the time of the grant of the probate or letters any suit or other proceeding instituted by the holder of any such certificate regarding any such debt or security is pending, the person to whom the grant is made shall, on applying to the Court in which the suit or proceeding is Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 44 of 64 pending, be entitled to take the place of the holder of the certificate in the suit or proceeding:
Provided that, when any certificate is superseded under this section, all payments made to the holder of such certificate in ignorance of such supersession shall be held good against claims under the probate or letters of administration.
71. Section 216 of the Indian Succession Act, 1925, `Grantee of probate or administration alone to sue, etc., until same revoked', provides that -- `After any grant of probate or letters of administration, no other than the person to whom the same may have been granted shall have power to sue or prosecute any suit, or otherwise act as representative of the deceased, throughout the State in which the same may have been granted, until such probate or letters of administration has or have been recalled or revoked'.
Deposit:
72. It is to be pointed out that `Deposit', is given at the behest of an `individual', who is making it. When the `Deposit' is payable on `Demand', the `Deposit Sum', become `Payable', when a `Demand' is made.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 45 of 64 Loan:
73. A `Loan' is availed by a `Borrower'. In respect of `Loan', an `Obligation' to repay a `Sum', arises immediately, on receipt of `Loan'. Whether a `Transaction' is a `Loan' or `Deposit' is to be determined, based on the intention of the `Parties' and all `Circumstances'.
74. In this connection, this `Tribunal', relevantly points out that the decision of Hon'ble Supreme Court of India in Ram Janki Devi & Anr. v. Juggilal Kamlapat AIR 1971 SC, at Page 2551, wherein it is among other things observed that;
``........ The relationship between the parties, the surrounding circumstances at the time of the transaction, the pecuniary position of the appellant are all overwhelming features to corroborate the oral as well as the documentary evidence of the respondent that the amount was deposited with the appellant.''
75. Further, in the decision of Hon'ble Supreme Court of India in Ram Rattan Gupta v. Director of Enforcement, reported in AIR 1966 SC at Page 495, wherein it is observed and held that;
`` ...... It follows that ordinarily a deposit of an amount in the current account of a bank creates a debt; but it need not necessarily involve a contract of loan. Whether a deposit amounts to a loan depends upon the terms of the contract whereunder the deposit is made.'' Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 46 of 64 Companies Act, 1956:
76. To be noted, that the `Explanation' to Section 58A of the Companies Act, 1956, provided for the purpose of this Section `Deposit' means, any `disposition' of `money' with and includes, any `amount' borrowed by a `Company', shall not include such `Categories of Amount', as may be prescribed in consultation with the `Reserve Bank of India'. For invoking the jurisdiction of the `Tribunal', even partial failure by the `company', would suffice in the considered opinion of this `Tribunal'.
77. Section 2 (31) of the Companies Act, 2013, defines `Deposit', which includes, any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India. Filing of Suit:
78. Under Section 75 of the Companies Act, 2013, action can be taken by an `Individual Depositor' or by a `Group of Depositor' or `Association of Persons', by filing a `Suit' or the `Proceedings' against the `Company' and its `Officers', responsible for `Default'.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 47 of 64 Indian Trusts Act, 1882:
79. `Section 5' - Trust of immovable property: A `Trust' relating to an `immovable property', is a `Non-Testamentary Instrument' and the same, to be `valid', it is to be `registered'.
80. According to second part of Section 5 of the Indian Trusts Act, 1882, a `Trust', in relation to a `movable property' can be created either by a `Declaration in a Non-Testamentary Instrument' in writing, signed by the `author' of the `trust' and `registered' or by a `transferor' to the `Trustee' or `Trustees', the ownership of the property.
81. As per Section 6 of the Indian Trusts Act, 1882, in order to create a valid `Trust'. The `Author' of `Trust' with reasonable certainty by any `words' or `acts' (a) An intention on his part to create a `Trust'
(b) Purpose of Trust (c) Beneficiary (d) Trust Property (e) Transferring the `Trust' property to the `Trustee', except when a `Trust' is created by a `Will' or he himself the `Trustee'.
82. In respect of an instrument of `Trust', there will be two main `Parties', (a) The `Settlor' on one side and (b) `Trustees' on the other side and (c) The `Beneficiaries' / `3rd Parties' to the `instrument', although not being direct `Parties', which will be like a `Tri-partite Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 48 of 64 Transaction', as per decision, Commissioner of Income Tax v. Kamla Town Trust, reported in AIR 1996 SC at Page 620.
Principles of Natural Justice:
83. The `Rules of Natural Justice', are not the `embodied rules'. The Principles of Natural Justice are embedded as `part of Article 14 of the Constitution of India, as per decision of the Hon'ble Supreme Court of India in Union of India v. Tulsiram Patel AIR 1985, SC at Page 1560.
84. A `Tribunal' / an `Adjudicating Authority is obligated to specify reasons for arriving at a decision in a given case, in which, prejudicially affects a `Litigant' / `Stakeholder'. Furnishing of reasons in an `Order' / `Judgment' of an `Adjudicating Authority' / `Tribunal', will ensure a `degree of fairness' and excludes `arbitrariness' in the process of `decision making'.
85. The ascribing of reasons in an `Order' / `Judgment' will guarantee `consideration' by the concerned `Authority'. It will also minimise the chance of `vice of an arbitrariness'. It will also introduce `clarity' in `decision'. No wonder, an `Order'/`Judgment' of an `Authority'/`Tribunal' must be written with a `positive vein'. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 49 of 64
86. What is important is that, the reasons are clear and explicit, so as to exhibit that the `Tribunal'/`Adjudicating Authority' had given due weightage / consideration to the points in `controversy', in a given case. Undoubtedly, the assigning of reasons in a `given proceedings', specified by an `Authority'/`Tribunal', is the `Heart' and `Soul' of any `Order', which will stand the test of `scrutiny' before a `Superior Forum'. Assessment (in Comp. App (AT) (CH) Nos. 43 & 45 of 2022):
87. It transpires from the contents of CA/1/2014 (on the file of erstwhile `Company Law Board', Chennai Bench), later on renumbered as TCP/1/2016 (on the file of `National Company Law Tribunal', Chennai), the `Applicant' (`Dr. M.A.M. Ramaswamy', since deceased) had prayed for issuance of directions in making the repayment of the `Deposit Sum' / `Loan' of Rs.55,26,38,122.91 along with `Interest' due thereon. In reality, in CA/1/2014 (TCP/1/2016), the `Applicant' (`Dr. M.A.M. Ramaswamy' - Deceased) had claimed the actual sum due Viz. (Principal - Rs. 55,26,38,122.91), (Interest - Rs.11,05,27,625/-). In CA/1/2014 in TCP/1/2016 at Serial No. V, under the Caption `Terms and Conditions' of the `Deposit' and `Date of Maturity', it is mentioned as under:
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 50 of 64 ``Short-Term Borrowing which is reflected in the Current Liabilities in the Balance Sheet as at 31.3.2013 and payable within 12 months.''
88. Before the erstwhile Company Law Board, `Additional Principal Bench, Chennai', the `Appellant'/`Chettinad Coal Washeries Private Limited' in Comp. App (AT) (CH) No. 43 of 2022 (as Respondent), had filed a `Reply' (to CA/1/2014, filed by the `Applicant' / `Dr. M.A.M. Ramaswamy' (since Deceased) on behalf of the Company (through its Director), inter alia stating that the `Applicant' had complied with the requirement of Rule 2 (b) (ix) of the Companies (Acceptance of Deposits) Rules, 1975, at the time of giving the `Loan' and the same was taken note of, by the `Board of Directors' of the `Company' (`Chettinad Coal Washeries Private Limited') and in addition, in accordance with the Schedule VI of the Companies Act, 1956, the amount received from the `Applicant' was expressly recorded as `Unsecured Loan' from `Related Parties' (and not as `Deposits') in the `Audited Financial Statements' of the `Company' (`Chettinad Coal Washeries Private Limited') for the Financial Year 2012-13. Furthermore, the `Applicant' as a `Member' was provided with the Annual Accounts of the `Appellant's Company' (`Chettinad Coal Washeries Private Limited') for the Financial year 2012-13.
Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 51 of 64
89. Moreover, the `Appellant' (`Chettinad Coal Washeries Private Limited') as `Respondent'/`Company' before the `Company Law Board', it its `Reply', had taken a specific stand that the `Loan' given by the `Applicant' (since Deceased) was not a `Deposit' within the meaning of `Companies Act, 1956, read with Deposit Rules', and hence, the remedy under Section 58A of the Companies Act, 1956, is not available to the `Applicant'.
90. The stand taken by the `Appellant'/`Chettinad Coal Washeries Private Limited' in CA/1/2014, before the `Company Law Board', Chennai Bench, in its `Reply' was that the definition of `Deposit, as per Section 2 (31) of the Companies Act, 2013, came into force on 01.04.2014 and it can only relate to `Deposit' (as defined in Section 2 (31) of the Companies Act, 2013), made after 01.04.2014 and it cannot have `retrospective' or `retroactive' effect.
91. The other plea of the `Appellant' (in Comp. App (AT) (CH) No. 43 of 2022) is that the `Loan' was given by the `Applicant' from 23.03.2013 to 31.03.2013, as a `Member' to a `Private Company' of which he was a `Member' (Company) and hence the fetter as per Section 73 (1) of the Companies Act, 2013, has no `Application' whatsoever. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 52 of 64
92. Besides the above, Section 73 (4) of the Companies Act, 2013, will apply, only in respect of `Deposits' taken from `members' after the commencement of the Companies Act, 2013, and that that too, in compliance with Section 72 (2) of the Companies Act, 2013, therefore, invocation of Jurisdiction of the Company Law Board, as per Section 73 (4) of the Companies Act, 2013, is not maintainable.
93. The clear cut position taken by the `Appellant' / `Chettinad Coal Washeries Private Limited' in its `Reply' (to CA/1/2014) was that Section 74 (1) of the Companies Act, 2013, relates to `Deposit' under the Companies Act, 1956, as defined in the `Deposit Rules, 1975. Hence, a `Loan' which falls within the exclusion under Rule 2 (b) ix of the Deposit Rules, 1975 (as in the present case) does not fall in the ambit of Section 74 (1) of the Companies Act, 2013.
94. Further, in the instant case, according to the `Appellant', a `Loan' was given before the Commencement of the Companies Act, 2013, and the same is not a `Deposit', within the meaning of the Companies Act, 1956, read with `Deposit Rules, 1975. Therefore, Section 74 (2) of the Companies Act, 2013, has no `Application'.
95. According to the `Appellant'/`Chettinad Coal Washeries Private Limited', the `Audited Financial Statements' of the Appellant's company Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 53 of 64 for the Financial Year 2012-13, expressly record the amounts received from the `Applicant' as `Unsecured Loan' and not as a `Deposit'. Further, the claim of the `Applicant' (Deceased) in CA/1/2014 that `interest-free- loan' was interest bearing (15%) Deposit, is an after thought and unsupported by any documentation, etc.
96. It is pointed out by this `Tribunal' that the `Appellant'/`Company' (`Chettinad Coal Washeries Private Limited') in its `Reply' to CA/1/2014, had taken a plea that since the `Applicant' (Deceased) had extended `long-term-interest-free-loan' with a tenure of 10 years, no amount is outstanding as on date and the same would fall due only between 23.03.2023 and 31.03.2023. Further, the `Application' in CA/1/2014, was filed by the `Applicant' (since Deceased) without supporting `Affidavit' and in fact, the CA/1/2014 was not filed as per Section 58 A of the Companies Act, 1956 and as per Regulation 14 of the Company Law Board Regulations, all `Applications' are required to be supported by an `Affidavit' of the `Applicant', except in respect of Applications under Section 58 A (9) of the Companies Act, 1956.
97. It is the version of the `Appellant' / `Chettinad Coal Washeries Private Limited' in its `Reply' to CA/1/2014, before the `Company Law Board', that the `Applicant' (since Deceased) gave an interest-free-loan of Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 54 of 64 Rs.55,26,38,122.91 between March 23.03.2013 to 31.03.2013 to the `Appellant'/`Company' (`Chettinad Coal Washeries Private Limited') and out of the said `Sum', `Chettinad Holdings (P) Limited' (a `Group Company') repaid a Sum of Rs.3,78,00,000/- on behalf of the `Appellant' / `Company' to the Applicant on 16.11.2013 by way of Cheque No.086254 dated 16.11.2013, drawn on Indian Bank in favour of the `Applicant' and that the `Applicant' (since Deceased) had not deducted the same from the amount claimed in CA/1/2014.
98. According to `Appellant'/`Company' (`Chettinad Coal Washeries Private Limited'), the `Applicant' / `Dr. M.A.M. Ramaswamy' (Stud Farm owed monies to the `Appellant' / `Company' and further the `Applicant' also owed monies to `Chettinad Corporation Private Limited' (another Group Company) and with the consent of the `Applicant' (since Deceased), the aforesaid dues were settled by adjusting a sum of Rs.12,95,49,934/- from the long-term-interest-free loan in the Financial Year 2013-14. Therefore, the total sum of long-term-interest-free loan standing in the Books of the `Appellant' / `Company', in the name of the Applicant (since Deceased) is only Rs.38,52,88,189/- and this particular fact was suppressed by the `Applicant' in `CA/1/2014'. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 55 of 64
99. On behalf of the `Appellant'/`Company' (`Chettinad Coal Washeries Private Limited') in Comp. App (AT) (CH) No. 43 of 2022, it is brought to the notice of this `Tribunal, on 24.07.2017 in CA/1/2016 in CA/1/2014, the `National Company Law Tribunal', Division Bench-I, Chennai, had passed the following order:
``Counsel for Petitioner present. Counsel for Respondent also present and submitted that the matter has been filed under the testamentary jurisdiction in the Hon'ble High Court of Madras in relation to probate of the will of late Dr. M.A.M. Ramasamy Chettiar. The same has been converted into regular suit for deciding the issue. At this stage, it is not appropriate to draw any conclusion in the matter before this Bench. Therefore, we adjourn the matter sine die. However, the parties are at liberty to mention the matter at the time when the Hon'ble High Court of Madras decides the issue.''
100. It is not in dispute that the `1st Respondent' / `Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust' in Comp. App (AT) (CH) No. 43 of 2022 is the `Applicant' in TCA/1/2016, seeking to permit it to `substitute' / `bring on record' the `Legal Heirs'/`Representatives' of the deceased `Applicant' (Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust) in the place of `late Applicant' in CA/1/2014.
101. The `Appellant' in Comp. App (AT) (CH) No. 45 of 2022, filed CA/69/2016 in CP/1/2014 (earlier CA/1/2014) as an `Applicant' to Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 56 of 64 substitute him, as the `Legal Heir' / `Representative' of the `Petitioner' in the main Company Petition.
102. Dealing with the aspect of `Locus standi' of the `Appellant' / `Chettinad Coal Washeries Private Limited', in preferring the Comp. App (AT) (CH) No. 43 of 2022, raised on behalf of the `1st Respondent' / `Trust', to assail the `impugned order' dated 26.05.2022., passed by the `Tribunal', substituting the `1st Respondent' in place of `Dr. M.A.M. Ramaswamy' (since deceased) on the basis that the `Appellant'/ `Chettinad Coal Washeries Private Limited', is not an `Aggrieved Person', this `Tribunal', points out that in TCA/1/2016 (earlier numbered as CA/1/2016), pending on the file of Company Law Board, Chennai, the `Appellant' / `Chettinad Coal Washeries Private Limited' (in Comp. App (AT) (CH) No. 43 of 2022), is arrayed as `Respondent' and in CA/69/2016 filed by the `Appellant' in Comp. App (AT) (CH) No. 45 of 2022, before the `Tribunal', the `Appellant' in Comp. App (AT) (CH) No. 43 of 2022 (`Chettinad Coal Washeries Private Limited') is shown as `Respondent'.
103. It is pertinently pointed out by this `Tribunal' that the word `Aggrieved' means, `a substantial grievance', `a denial of personal', Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 57 of 64 `pecuniary' or `private right' or `imposition upon a party of a burden' or `an obligation'. An `Appeal' against an `Order' of `Tribunal', may be filed by a `Litigant', whose `legal right' is `breached' by an `act' complained and is adversely affected by the `Order' or `Decision' of the `Tribunal'.
104. It must be borne in mind that in CA/1/2014 (filed before the Company Law Board, Chennai), the `Applicant' was Dr. M.A.M. Ramaswamy (deceased) and a direction was sought from the `Appellant' / `Chettinad Coal Washeries Private Limited' (Respondent in CA/1/2014), to make `repayment' of the `Deposit' / `Loan' along with interest, due thereon. Further, in TCA/1/2016 in TCP/1/2016 and CA/69/2016 in TCP/1/2016 before the `National Company Law Tribunal', Division Bench-I, Chennai the `Appellant' in Comp. App (AT) (CH) No. 43 of 2022 is shown as `Respondent'. Taking into account of the fact that the `Appellant'/`Chettinad Coal Washeries Private Limited' as Respondent had filed a detailed `Reply' in CA/1/2014, filed by the `Applicant' (Deceased), taking different pleas, denying the `Claim' of the `Applicant' in `CA/1/2014' that the `interest-free loan' was in fact interest bearing (15%) deposit, was an after thought, unsupported by any documentation, etc., this `Tribunal', keeping in mind the `reliefs' sought for, by the respective `Applicants' in TCA/1/2016 (CA/1/2016) and CA/69/2016 (in Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 58 of 64 TCP/1/2016) comes to a categorical conclusion, that the `Appellant' in Comp. App (AT) (CH) No.43 of 2022 has a `Locus' to prefer the instant Comp. App (AT) (CH) No. 43 of 2022 as an `Aggrieved Person', having grievance, and being affected adversely by the `impugned order' dated 26.05.2022 of the `Tribunal'. Viewed in that perspective, this `Tribunal' holds that the Comp. App (AT) (CH) No. 43 of 2022, filed by the `Appellant' / `Chettinad Coal Washeries Private Limited' is maintainable in `Law'.
105. It is pointed out by this `Tribunal' that `Probate' could be granted only to an `Executor' under the `Will' expressly or by an `Application', all other persons who `Claim' under the `Will' as `Legatees' or `Beneficiaries', including a `Universal Legatee' or a `Residuary Legatee' are entitled only for the `Grant of Letters of Administration with the `Will' annexed', as per decision in Laxman. S/o. Satteppa Hanchinamani v. Basavanni, S/o. Sattappa Hanchinamani & Anr., reported in AIR 2018, Karn. 100.
106. It cannot be forgotten that the `Grant of Probate' or `Letters of Administration' cannot `confer' `Title' to the `Property', as per decision of the Hon'ble Supreme Court of India in Delhi Development Authority v. Mrs. Vijaya C Gurshaney & Anr., AIR 2003 SC Page 3669. Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 59 of 64
107. In `Law', the `Will' must be proved in the manner provided in Section 68 of the Indian Evidence Act, 1872, read with Section 63 of the Indian Succession Act, 1925.
108. There is no two opinion of the fact that the `1st Respondent' / `Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust' has filed a `Probate Proceedings' (POS No. 27 of 2021), in regard to the `Will' of the the `Applicant'/`Dr. M.A.M. Ramaswamy (since Deceased) on 18.02.2015. Since, the formation of Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust', is under challenge, the `Contesting Parties' to the present `Litigation' and the `National Company Law Tribunal', Chennai Bench, in all `fairness', `propriety' and `sobriety' are to wait for the result of the `Testamentary Proceedings' (subsequently, converted in to regular Suit), etc.; for determination, on the file of the Hon'ble High Court of Madras, (especially, when on 24.07.2017, the `Tribunal' had adjourned the proceedings in CA/1/2016 in CA/1/2014 - `sine die' and all the more, when `Parties' were granted `Liberty', to mention the matter at that time when the Hon'ble High Court of Madras, decided the issue), as opined by this `Tribunal'.
109. Continuing further, the `validity', `execution' and `legality' of the `Will' is inter-oven with the `Claim' of the `1st Respondent' / `Trust' that Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 60 of 64 all the `Movable Properties', including the `Loan' given by the `Applicant' (Deceased) was orally gifted to the `Private Trust' in terms of the `Deed of Trust' dated 16.02.2015 and by the covenants of the said `Deed of Trust', they were transferred to the `1st Respondent'/`Trust', on the death of the `Applicant'.
110. It cannot be brushed aside that the `Tribunals' are chosen to deliver `justice' to the `Litigants'. The `National Company Law Tribunal' is performing a `judicial function' to `dispense justice' and cannot `dispense with justice', in our processual system of jurisprudence.
111. As far as the present case is concerned, that on behalf of the `1st Respondent'/`Trust' (in Comp. App (AT) (CH) No. 43 of 2022), that a plea was raised before the `National Company Law Tribunal', Chennai Bench, that the `Oral Gift of all Movables', including the purported `Deposit' was made by the `Applicant' (Deceased) on 30.09.2015. As a matter of fact, the `Appellant'/`Chettinad Coal Washeries Private Limited', in its `Reply' took various pleas before the `Tribunal'.
112. However, on going through the entire gamut of the `impugned order' dated 26.05.2022 in TCA/1/2016 (CA/1/2016) in TCP/1/2016 (CA/1/2014) and in CA/69/2016 in TCP/1/2016, passed by the `National Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 61 of 64 Company Law Tribunal', Division Bench-I, Chennai, this `Tribunal' comes to a consequent conclusion that the `impugned order' dated 26.05.2022 bristles with `legal infirmities', because of the fact that it had not taken into account of the contents of notes of the submissions furnished by the `Appellants' and the `1st Respondent'/`Trust' in Comp. App (AT) (CH) Nos. 43 and 45 of 2022 in a `Qualitative', `Quantitative' and `Threadbare' fashion, not discussed about the `pros and cons' of the `submissions' made in a detailed manner, in the absence of `Adjudication' / `Determination of Controversies' relating to the `Movables' owned by the `Applicant' (Deceased), in an appropriate proceedings by the `Competent Forum', (including the aspect of the plea of the `Appellant' in Comp. App (AT) (CH) No. 45 of 2022 that the `1st Respondent' / `Trust' cannot `Claim' any `Tangible' or `Intangible' property, based on the `Two Trust Deeds' dated 09.02.2015 and 16.02.2015 respectively - not obtained the sanction of any `Court of Law', and there being a conspicuous silence in regard to the applicability of Regulation 28 of the CLB Regulations 1991, permitting the `Legal Heirs' to prefer an `Application' for `Substitution'.
113. More importantly, in the case on hand, the Appellant's (in Comp. App (AT) (CH) No. 45 of 2022), `Legal Heir' Certificate dated 11.03.2016 is assailed in W.P. No.15003 of 2016 and pending before the Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 62 of 64 `Hon'ble High Court of Madras' and in any event, without waiting for the result of the pending proceedings between the `Parties' in relation to `Will' and `Trust Deeds', etc., the `impugned order' dated 26.05.2022, passed by the `National Company Law Tribunal', Division Bench-I, Chennai in allowing the TCA/1/2016 for adjudicating TCP/1/2016, thereby, permitting the `1st Respondent'/`Trust' to step into the shoes of the `Applicant' (Deceased) and resultantly, dismissing the CA/69/2016 in TCP/1/2016 are clearly `unsustainable' in the `eye of Law' and the same being an `otiose one'. To put it pinpointedly, unless the pending `Lis' between the `Parties' are finally decided, no interest in the `property' can said to be that of them, so as to `substitute' / `implead' them, as `Party' / `Parties', especially when the `validity' of the `Will' dated 18.02.2015, is yet to be established, in the manner known to `Law' and in accordance with `Law'. Viewed in that perspective, this `Tribunal', is perforced to interfere with the `impugned order' dated 26.05.2022 in TCA/1/2016 in TCP/1/2016 and in CA/69/2016 in TCP/1/2016 and sets aside the same, to secure the `ends of justice'.
114. As a logical corollary, the `impugned order' dated 26.05.2022 in TCA/1/2016 in TCP/1/2016 and in CA/69/2016 in TCP/1/2016, on the file of the `National Company Law Tribunal, Division Bench-I, Chennai, is set aside for the reasons ascribed by this `Tribunal' in these two Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 63 of 64 `Appeals'. The matter is remitted back to the `National Company Law Tribunal', Division Bench-I, Chennai, for fresh consideration, and for passing a reasoned speaking order (ofcourse, un-influenced and un- trammelled with any of the observations made by this `Tribunal' in these `Appeals'), granting liberties to the respective `Parties' to make a mention and to proceed further, in the subject matter in issue, soon after the adjudication of pending `Testamentary Proceedings', between the `Parties' before the Hon'ble High Court of Madras. Disposition:
With the aforesaid observations and directions, the Comp. App (AT) (CH) No. 43 of 2022 and Comp. App (AT) (CH) No. 45 of 2022 are Disposed of. No costs. The I.A. No. 540 of 2022 (`For Stay') in Comp.
App (AT) (CH) No. 45 of 2022 is Closed.
[Justice M. Venugopal] Member (Judicial) [Kanthi Narahari] Member (Technical) 06/09/2022 SR/TM Company Appeal (AT) (CH) Nos. 43 & 45 of 2022 Page 64 of 64