NARINDER KUMAR SEHGAL Vs. LEADER VALVES LTD

JUDGEMENT

(1.) THIS is an appeal/petition under Section 111 of the Companies Act, 1956. On the same facts another appeal/petition was filed by one Shri Devender Kumar Sehgal against the same company. Since the facts and issues involved are the same, both the appeals/petitions are being disposed of by this single order.

(2.) It is stated in the petition that Leader Valves Ltd. incorporated in 1977 was promoted, inter alia, by one Sh. Dwarka Dass Sehgal, who, at the time of his death on April 11, 1982, had a total shareholding of 33 per cent, Sh. D. D. Sehgal was also partner of a firm, Sehgal Oil and General Mills, Jalandhar. Sh. D. D. Sehgal held 29,535 shares of Rs. 100 each in the company on behalf of the firm apart from his personal holding of 325 shares. The firm consisted of Sh. D. D. Sehgal and his five sons. It is further stated that after the demise of Sh. D. D. Sehgal, one of his sons, Sh. Devender Kumar Sehgal, filed a suit in 1989 in the Court of Additional Senior Sub-Judge, Jalandhar, which was compromised between the parties and a decree was passed on September 4, 1990, declaring that all the partners of Sehgal Oil and General Mills, Jalandhar, are owners of 4,977 shares besides the share of Late Sh. Sehgal going to his widow and one of his daughters. Subsequent to this decree, the petitioners approached the company for transmission of 4,977 shares which was not accepted by the Board on the ground that the applications are not legally in order. Later by a letter, the company had stated that it was not a party to the settlement and had no knowledge of the total number of legal claimants and further that the claimants should procure a certificate of succession before approaching the company for transmission. The appellants not only sought the transmission of 4,977 shares each in their name, hut also prayed for interim relief to restrain any change in the constitution of a board of directors as well as to restrain the board from taking any decision other than what is required in the normal course of the business.

(3.) THE company has also submitted that the articles of association have adopted regulations contained in Table "A". Under article 26 of Table A, it is provided that in case of death, the executor or administrator shall be the only person recognised by the company as having any right to the shares registered in the name of such member. THE company has only required the appellant-petitioner to submit the succession certificate/pro-bate/letter of administration to establish this fact. Thus no cause of action has arisen in favour of the appellant-petitioner and prayed that the appeal be dismissed with costs. THE company has also cited the following cases :