New Delhi, July 07, 2020: The The Supreme Court has observed that a dispute as to inheritance of shares cannot be decided in proceedings under section 241/242 of the Companies Act, 2013 and the decision of the right, title and interest, in the civil suit concerning shares in question.

In appeal, the bench comprising Justices Arun Mishra and S. Abdul Nazeer Sangramsinh P. Gaekwad and Ors. v. Shantadevi P. Gaekwad (Dead) through LRs. and Ors., (2005) 11 SCC 314, it was held that the dispute as to inheritance of shares is eminently a civil dispute and cannot be said to be a dispute as regards oppression and/or mismanagement so as to attract Company Court's jurisdiction under sections 397 and 398 of Companies Act, 1956.

The Court said that under Section 241 of the Companies Act deals with application to the National Company Tribunal for Relief in Cases of Oppression, etc and Section 242 deals with the power of Tribunal to deal with such applications. The case pertains to family tussle between wife and son of Late Mr. Abhey Kumar Oswal, who during his lifetime, held as many as 5,35,3,960 shares in M/s. Oswal Agro Mills Ltd., a listed company.

In this case, NCLT and NCLAT held that the application filed by Pankaj Oswal, alleging oppression and mismanagement in the affairs of the company is maintainable. The Tribunal rejected the contentions of Aruna Oswal that the main dispute raised as to the inheritance of the estate of the deceased is a civil dispute and could not be said to be an act of oppression and mismanagement and that such a dispute could not be adjudicated in a company petition filed during the civil suit's pendency.

The Supreme Court said that Pankaj Oswal should have waited for the decision of the right, title and interest, in the civil suit concerning shares in question.

Therefore, the Court directed the dropping of the proceedings filed before the NCLT with the liberty to file afresh, on all the questions, in case of necessity, if the suit is decreed in favour of Pankaj Oswal and his shareholding increases to the extent of 10% required under section 244.

News Courtesy:PIB | Hindu| DC | LE | LI | LO | IE | LL | PTI |ht | ET | UNI | DNA | FP | Jurist |IndToday|

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