Dispute As To Inheritance Of Shares Cannot Be Decided In Proceedings U/s 241/242 Of Companies Act, 2013: Supreme Court of India - Synopsis
Nilanjana Ganguly 9 Jul 2020

Case name- ARUNA OSWAL v. PANKAJ OSWAL

The Supreme Court says that a dispute of inheritance of shares cannot be decided under section 241 and 242 of the Companies Act, 2013. Section 241 of the Companies Act deals with an application to the National Company Tribunal for Relief in Cases of Oppression, etc. whereas Section 242 deals with the power of the Tribunal to deal with these requests. This case involves the family dispute between the wife and the son of the late Mr. Abhey Kumar Oswal, who had owned as many as 5,35,3,960 shares in M / s during his lifetime. Oswal Agro Mills Ltd. is a listed company. In that case, NCLT and NCLAT held that the complaint filed by Pankaj Oswal, alleging exploitation and mismanagement of the company's affairs, could be sustained. The Tribunal dismissed Aruna Oswal 's claim that the key issue presented as to the inheritance of the estate of the deceased was a legal dispute and could not be said to be an act of injustice and mismanagement and that such a conflict could not be dealt with in the company petition filed during the civil suit.

In reference to a previous case, Sangramsinh P. Gaekwad V. And Ors. V. Shantadevi Gaekwad(dead) LRs and Ors. (2005), the bench comprising of Justice Arun Mishra and Justice S. Abdul Nazeer said that the basis of the petition is the claim and the right of inheritance 1/4th shareholding cannot be decided in proceedings under section 241/242 of the Act. Filing any petition under these sections is a misinterpreted exercise. It is very much necessary for Respondent no.1 to establish his right of inheritance on behalf of the shares he is claiming before a Civil Court. The question of law, title and interest is basically the adjudication of civil rights between the parties as to the effect of the ruling on the appointment in a civil suit. It would not be necessary to conduct these concurrent proceedings and to issue a waiver, as alleged under section 244, prior to the judgment of the civil suit. Respondent No.1 himself had preferred to make use of the civil suit remedy because, after that, the filing of an application under sections 241 and 242 was nothing but an afterthought. The Court also said that Pankaj Oswal should have waited for the judgment on the name ,right , title and interest in the civil suit in respect of the shares in question. Consequently , the Court ordered the withdrawal of the proceedings brought before the NCLT with the option to refocus all the issues, if any, if the case is decided in favor of Pankaj Oswal and its shareholding is increased to the extent of 10% needed under section 244.


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