The National Company Law Appellate Tribunal, New Delhi ruled that the legal heirs of deceased shareholder can’t question transfer of deceased’s shares to other shareholders at throwaway price.
The tribunal noted that admittedly the sale took place and the Board of Directors transferred those 2500 shares only to Respondent. The deceased accepted the sale and he got the entire sale consideration. He resigned from the Board of Directors. However, the other Respondent agitated on the grounds that these shares ought to have been allotted on pro rata basis by the Board of Directors to all 3 shareholders and hence Respondent filed TP for distribution of shares on pro rata basis.
It was thus held in TP that the shares of the deceased be reallotted to the shareholders by duly following the procedure laid down in Companies Act and Articles of Association.
The bench stated that the grievance of the appellant is now since the transfer of shares was held to be illegal hence the legal heirs of deceased should get those shares and/or a fair price.
The bench was not inclined to accept this contention since initial transfer was challenged only by Respondent and that too on the ground he should also get a slice of it. The deceased admittedly never alleged/claimed any right on such shares after he had received the entire consideration and after he had executed letter.
The court observed that despite the Supreme Court decision in 2018 the deceased never took any action for transfer of shares in his favour by 2021 i.e. till he was alive. The appellants/legal heirs of the deceased came into action six months after his death and are now trying to misinterpret the order passed in TP to their benefit. The transfer of shares by the deceased was never an issue pending before the Company Law Board or NCLT and neither the deceased challenged such transfer. It was purely a dispute between other directors and the deceased himself opted out of that frame. Hence the appeal has no merit.
Facts
The appellants are legal heirs of Mr. Narendra Gopalbhai Patel, who was the promoter and shareholder of Respondent company. The other Respondents were also the shareholders of Respondent company. It is alleged in the last quarter of July, 2013, Mr. Narendra Gopalbhai Patel, was persuaded by some Respondents to sell his entire shareholdings to them pursuant to which the deceased resigned from the post of the director and had transferred his entire shareholding to Respondents at a throw away price of Rs.275/- per share wherein the actual price was Rs.3230.64.
Case Details
Case Name: Rashmika Narendra Patel and Ors v/s Therm Flow Engineers Pvt Ltd adn Ors
Citation: COMPANY APPEAL (AT) NO.150 OF 2024
Counsel for Petitioner : Mr Abhijeet Sinha, Sr. Advocate, Mr. M.S. Vishnu Sankar, Mr Pavan Godiawala, Mr K0shy John, Mr Aditya Santhosh, Mr. Athira G Nair, Ms Anjali Singh, Advocates.
Counsel for Respondent : Mr Ashish Dholakia, Sr. Advocate, Ms Gauri Rasgotra, Mr. Dinesh Moorjani, Mr. Rohan Chawla, Mr Shivansh Agarwal, Mr Gunav Gujral, Advocates for R1.
Court: NCLAT, New Delhi
Judge: Justice Yogesh Khanna Member (Judicial) and Mr. Ajai Das Mehrotra Member (Technical)
Decision Date: 29/07/2024
