JAYALAKSHMI ACHARYA Vs. KAL ELECTRONICS AND CONSULTANTS PVT LTD

JUDGEMENT

(1.) THIS is a petition filed under Section 111(2) of the Companies Act, 1956 (hereinafter referred to as "the Act"), seeking rectification of the register of members of respondent No. 1-company by effecting transmission of the impugned shares in favour of the petitioner and claiming bonus or rights shares and dividend, if any, in respect of the impugned shares. It is stated in the petition/rejoinder that the deceased, P. M. Subba Rao, brother of the petitioner, was the absolute true and full owner of the impugned shares--65 shares originally allotted and 65 bonus shares in respondent No. 1-company. The deceased, Subba Rao, had paid the full value of the shares. The deceased, Subba Rao, though married to respondent No. 5 never lived with her and was leading a bachelor life most of his life. The deceased, Subba Rao, was residing with the petitioner and later died on September 1, 1995, in the petitioner's house. The deceased, Subba Rao, gifted the impugned shares and delivered them to the petitioner. In support of her claim, the petitioner has produced an extract from the personal diary maintained by the deceased, Subba Rao, in which he had written in his own handwriting the details of his investment in shares, fixed deposits and bank deposits. The deceased had also indicated his desire in the said diary as to to whom the various deposits and shares should go in the event of his death. According to the petitioner, the diary is virtually the last will of the deceased, Subba Rao, Banks, other companies--Widia Ltd. and Cameo Share Registry Ltd., Madras, have recognised her rights in respect of bank deposits and shares held by the deceased, Subba Rao. Thus, the petitioner is entitled to the impugned shares absolutely.

(2.) Shri O. P. Talwar, managing director of the first respondent, in his reply on behalf of the company has stated that the deceased, Subba Rao, and Shri O. P. Talwar (managing director of the first respondent), had jointly applied for allotment of the impugned shares (45 shares on April 13, 1982 and 20 shares on August 28, 1982). Payment towards 45 shares was made in equal proportion both by the deceased, Subba Rao and Shri O. P. Talwar and for 20 shares by the deceased, Subba Rao, exclusively. It is further stated that he had paid the entire amount of Rs. 6,500 for the shares to the deceased, Subba Rao, the fact of which is disputed by the petitioner. Respondent No. 1-company allotted the shares in the joint names of the deceased, Subba Rao, and Sri O. P. Talwar and issued the share certificates in their joint names. Subba Rao expired on January 1, 1995. Based on the copy of the death certificate and after obtaining professional advice, the company passed a resolution dated October 8, 1995, deleting the name of the deceased, Subba Rao, from the register of shareholders in accordance with Section 108 of the Act. At present, the impugned shares stand in the name of the surviving joint shareholder, i.e., Shri O. P. Talwar, managing director of the first respondent. The other legal heirs of the deceased, Subba Rao, viz., respondents Nos. 2 to 4, had also made a claim with the company in respect of the impugned shares. But respondent No. 1-company could not effect transmission of the shares in their favour for non-production of the succession certificate or probate or court order. The genuineness of the extract from the personal diary of the deceased, Subba Rao, is questioned. It is also contended that the Company Law Board has no jurisdiction. Even otherwise, there has been a delay of 12 months and the petition, therefore, is barred by limitation.

(3.) DURING the hearing Shri A. G. Sirsi, advocate for the petitioner, and Sri B. Venkataraman, authorised representative for the first respondent, reiterated their submissions in their respective pleadings. While the petitioner's contention is that the impugned shares were gifted to her absolutely by the deceased, Subba Rao, the first respondent contends that the impugned shares were in the joint names of the deceased, Subba Rao, and Shri O. P. Talwar. Regulation 25 of Table A in the First Schedule to the Act is applicable to the company and since the shares were held jointly by the deceased, Subba Rao, and Shri Talwar, after the death of Subba Rao, it was Shri Talwar who alone became entitled to the impugned shares and no title in respect of those shares can pass to the petitioner. In this connection, he cited the case Ram Govind Misra v. Allahabad Theaters Pvt. Ltd. [1986] Tax LR 1681 (All) ; [1989] 66 Comp Cas 358 (All). Counsel for the petitioner relying upon the decision in Smt Kamala Pai v. Esso Standard Refining Co. of India Ltd. (Appeal No. 1 of 1977, dated February 23, 1977) stated that though the impugned shares were in joint names, the petitioner is entitled to the same by virtue of the gift made by the deceased, Subba Rao. He further stated that in India the principle of joint tenancy is not recognised.