Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7914 OF 2015

(ARISING OUT OF SLP (CIVIL) NO.4384 OF 2013)

JAI MAHAL HOTELS PVT. LTD. … APPELLANT

VERSUS

RAJKUMAR DEVRAJ & ORS. … RESPONDENTS

WITH

CIVIL APPEAL NO.7915 OF 2015

(ARISING OUT OF SLP (CIVIL) NO.4903 OF 2013)

WITH

CIVIL APPEAL NO.7919 OF 2015

(ARISING OUT OF SLP (CIVIL) NO.13752 OF 2013)

WITH

CIVIL APPEAL NO.7916 OF 2015

(ARISING OUT OF SLP (CIVIL) NO.13756 OF 2013)

WITH

CIVIL APPEAL NO.7917 OF 2015

(ARISING OUT OF SLP (CIVIL) NO.14309 OF 2013)

WITH

CIVIL APPEAL NO.7918 OF 2015

(ARISING OUT OF SLP (CIVIL) NO.14322 OF 2013)

1

Page 2

J U D G M E N T

ADARSH KUMAR GOEL, J.

1.Leave granted. The question raised in these appeals

relates to the scope of power under Section 111 of the

Companies Act, 1956, to direct rectification in the share

register of a company. The question has to be examined in

the context of correctness of the view taken in the

impugned order passed by the High Court directing

rectification at the instance of Respondent No.1-Rajkumar

Devraj and Respondent No.2-Rajkumari Lalitya Kumari (the

“DR Group”), who are the son and daughter respectively of

late Maharaja Jagat Singh (“LMJS”) .

2.LMJS held shares in M/s. Jai Mahal Hotels Pvt. Ltd.,

M/s. Ram Bagh Palace Hotels Pvt. Ltd., M/s Sawai

Madhopur Lodge Pvt. Ltd. and M/s. S.M.S. Investment

Corporation Pvt. Ltd. He died on 05

th

February, 1997

leaving behind a Will dated 23

rd

June, 1996 in favour of his

mother Gayatri Devi (“GD”). Succession certificate dated

19

th

February, 2009 was issued by the District Judge, Jaipur

2

Page 3 jointly in favour of GD and DR Group. GD executed

transfer deed dated 27

th

April, 2009 in favour of DR Group.

She also executed Will dated 10

th

May, 2009 in favour of

DR Group. She died on 29

th

September, 2009. Vide letter

dated 15

th

July, 2009, DR Group claimed transmission and

transfer of shares in their favour on the basis of succession

certificate dated 19

th

February, 2009 issued by the District

and Sessions Judge, Jaipur (Civil), transfer deed dated 27

th

April, 2009 executed by their grand mother Gayitri Devi

(“GD”) along with revalidation of the letter issued by the

Registrar of Companies.

3.The application having not been accepted by the

Company, the DR Group filed appeals before the Company

Law Board (“CLB”), New Delhi. Urvashi Devi, grand

daughter of husband of GD from another wife (“UD

Group”) filed application for impleadment stating that the

succession certificate was a nullity. She accepted validity

of Will dated 23

rd

June, 1996 executed in favour of GD by

LMJS but contested the succession certificate. It was her

further case that DR Group had no right of succession in

view of Will dated 23

rd

June, 1996 and they were also not

heirs of GD as LMJS was adopted in another family. Further

3

Page 4 stand was that since at the instance of GD, proceedings

were stayed, succession certificate could not be granted

even at her instance. Stay granted by the High Court was

in a petition seeking consolidation of a probate case and

succession certificate. Section 370 of Succession Act was

also invoked. It was also submitted that the settlement

which was the basis of succession certificate was not

genuine. Her Will dated 10

th

May, 2009 was also

contested. Urvashi Devi, Prithvi Raj and Jai Singh also

sought transfer of shares in their favour claiming as heirs

of GD. It was submitted that GD could not enter into any

settlement contrary to the Will dated 23

rd

June, 1996.

Further contention was that she died intestate on 29

th

September, 2009 and that DG has been disinherited by

LMJS in his Will dated 23

rd

June, 1996.

4.Suit No.32 of 2010 was also filed by the UD Group

before the District Judge, Jaipur, raising the dispute of

succession to the estate of GD. In the said suit, CMA No.20

of 2010 was filed under Order XXXIX Rules 1 and 2 CPC, for

temporary injunction. The application was dismissed by

detailed order dated 28

th

July, 2011. In the said application,

all the issues raised by the UD Group were examined prima

4

Page 5 facie, including validity of succession certificate dated 19

th

February, 2009. The Court on considering the rival

submissions held :

“In such condition seeing the said entire facts

and circumstances and the documents

submitted no prima facie case is made out by

the applicants for stopping the implementation

of the order dated 19.02.2009 passed in S.A.

No.134 of 1998 by the Learned District Judge,

Jaipur till the disposal of the suit.”

5.The CLB dismissed the appeals filed by the DR Group

vide order dated 16

th

March, 2011. The Board framed

following questions for consideration :

“(i)Whether order dated 19.02.2009 in

Succession Case No.134/98 is a nullity?

(ii)Whether a Will exists?

(iii)Whether the alleged Will dated 23.06.1996

is required to be proved or disprove?

(iv)Whether the probate proceedings in Case

No.32/2006 could be dismissed/disposed of

on the basis of a settlement between the

private parties?

(v)Whether probate proceedings exist as on

date?

(vi)Whether construction of the Will is

required?

(vii)Whether bar of Section 370 of the Indian

Succession Act operates in the facts and

circumstances of this case?

(viii)Whether Sections 373, 381, 383 and other

provisions of the Indian Succession Act are

applicable in the facts and circumstances of

this case?

(ix)Whether Late Maharaj Jagat Singh was

adopted?

5

Page 6 (x)Who really are the legal representatives for

the shares held in the sole name of the

deceased?”

6.To decide the above questions, following issues were

framed :

(i)Whether these petitions involve disputed

and complicated questions of law and

facts regarding entitlement to the estate

of late Maharaj Jagat Singh?

(ii)If these petitions involve complicated

questions of law and facts, whether

these are maintainable before the CLB?

To be precise, whether the CLB has

jurisdiction in this matter or it is ousted

on account of the competent court i.e.

Civil Court having jurisdiction in this

matter.

(iii)In case, the CLB exercising its discretion

proceeds to decide the entitlement to

shareholding attracting the provisions of

sub-section (7) of Section 111, is the CLB

competent to decide whether the alleged

Will is proved or disproved? And as well

as other questins enumerated in para 51

above.

(iv)Further, can be CLB ignore that in view of

the stay order of the High Court the

order dated 19.02.2009 in Case

No.134/98 on which issuing of

Succession Certificate is based and

Succession Certificate is the basis for the

petitioners in C.P. Nos.13 to 16 to claim

transmission of shares, is a nullity, is it

ab initio void in law, is it without

jurisdiction, is it a merely nullity, it is not

necessary for anybody who objects to

that order, to apply to set it aside, he can

only rely on its invalidity when it is set up

against him, although he has not taken

steps to set it aside, such order cannot

give rise to any right whatever not even

to a right to appeal, it can give rise to no

6

Page 7 rights and impose no obligations, the

same can be ignored as nullity, that is,

non-existent in the eye of law and it is

not necessary to set it aside?

(v)Whether the order dated 19.02.2009 is

unenforceable due to the bar of Section

370 of the Indian Succession Act, 1925

for granting Succession Certificate in the

presence of the Will?

(vi)Can in view of Section 381 of the

Succession Act, the Succession

Certificate granted jointly in the name of

the Rajmata and two grand children be

operative after the demise of the

Rajmata?

(vii)Can the probate proceedings in case

No.327/06 be dismissed on the basis of a

settlement between private parties?

(viii)Can probate proceedings decide

entitlement?

(ix)Whether the CLB shall proceed to decide

whether in the face of the alleged Will

disinheriting Devraj & Lalitya, Late

Rajmata can directly or indirectly still

make them entitle to the estate of Late

Maharaj Jagat Singh?

(x)Whether in the presence of the alleged

Will disinheriting Devraj & Lalitya, the

estate of Late Maharaj Jagat Singh

devolve upon Rajkumari Urvashi,

Maharaj Prithviraj Singh, Maharaj Jai

Singh and Maharaja Bhawani Singh

whose case is based on adoption of Late

Maharaj Jagat Singh?

(xi)Whether the CLB can decide these

questions in a summary jurisdiction is

the main issue to be considered in this

matter?

7.It was held that the Board could not decide the

complexity of facts and law which had arisen and such

7

Page 8 questions could be decided before the Civil Court and not

before the CLB. In this view of the matter, the matter was

not gone into on merits. The concluding part of the order

is as follows :

“67. Having carefully considered the facts of

the present case and the nature of the

allegations made by the parties as mentioned

above and applying the ratio of the decisions

mentioned above, I am of the view that such

disputed and complicated questions of law and

facts cannot be decided by the CLB in the

summary jurisdiction under Section 111 of the

Act. Such questions which are involved in the

present case can be decided before the Civil

Court on the basis of the oral and documentary

evidence adduced by the parties in support of

their respective cases. The CLB is not the forum

to adjudicate on these complicated questions of

law and facts. The issue “whether the

application is not maintainable on account of its

involving complicated questions of title” it is not

necessary to decide the other issues raised in

the case. ………”

8.DR Group moved the High Court of Delhi under

Section 10F of the Companies Act. UD Group also filed

appeals before the High Court. The High Court allowed the

appeals of DR Group and dismissed the appeal filed by the

UD Group. The operative part of the order passed by the

High Court is as follows :

“38. Having considered carefully, the facts of

the present case and the nature of the

allegations made by the respondents, it is clear

that the alleged disputes raised by the

respondent group in so far as the rectification

8

Page 9 issue is concerned are all illusory. Admittedly

these shares were in the name of Jagat Singh

who had bequeathed them to his mother

Maharani Gayatri Devi and she in terms of a

settlement arrived at between her grandchildren

followed by her Will had bequeathed the said

share holding thereafter in favour of her

grandchildren i.e. the petitioner group. The

respondents who were the cousins of Jagat

Singh are not even claiming as legal heirs of

Jagat Singh but only in their capacity of his legal

representatives; these allegations do not in any

manner affect the title of the shareholding of

Jagat Singh. There is no involvement of any

fraud or forgery. Petition under Section 111 of

the Companies Act was well maintainable.

39. The CLB returning a finding opposite has

committed an illegality which is liable to be set

aside. It is accordingly set aside. The order

dated 16.3.2011 is set aside; the member

register of the companies be rectified in the

name of the petitioner group and the petitioners

i.e. Dev Raj and Lalitya Kumari be substituted in

lieu of Jagat Singh.

40. As noted Supra, the appeals filed by the

respondent group are infructuous; they have

supported the order of the CLB, their prayer in

the appeal that the shares register be rectified

in their favour as necessarily to be dismissed as

even as per their own statement, they do not

have any document to support their submission

that they are entitled to the rectification of the

member register qua these shares of Jagat Singh

in their favour.”

9.Thus, the High Court held that the succession

certificate dated 19

th

February, 2009 issued by the

competent court had to be taken as conclusive evidence

under Section 381 of the Indian Succession Act. The plea

that the succession certificate dated 19

th

February, 2009

9

Page 10 was in violation of stay order dated 20

th

August, 2008 was

rejected. It was observed that stay order was passed at

the instance of GD herself whose statement itself was the

basis of the order dated 19

th

February, 2009. Writ Petition

No.7524 of 2008 wherein order dated 20

th

August, 2008

was passed itself was got disposed of as infructuous on

18

th

January, 2011 in view of order dated 19

th

February,

2009. UD Group was in no manner connected with those

proceedings. As regards Suit filed by UD Group

challenging order dated 19

th

February, 2009, interim

application for stay of order dated 19

th

February, 2009 was

dismissed on 28

th

July, 2011. The Court had refused to

grant any interim injunction in favour of UD Group and

other plaintiffs. As regards disinheritance of DR Group in

Will dated 23

rd

June, 1996, it was observed that the reason

for disinheriting as mentioned therein was not against the

DR Group but only against the estranged wife of the

testator. The GD who was the legatee herself bequeathed

her rights in favour of the DR Group by duly signing the

transfer deeds and communicating the same to the Board

of Directors. She also executed Will dated 10

th

May, 2009.

10

Page 11 Mere fact that the same had been challenged was no bar

to the claim of the DR Group.

10.We have heard S/Shri H.P. Rawal, Sanjiv Sen, learned

senior counsel for the Companies, Shri Vikas Singh,

learned senior counsel for the UD Group and Shri C.A.

Sundaram, learned senior counsel for the DR Group and

perused the records.

11.Contention raised on behalf of the appellants mainly

is that jurisdiction under Section 111 of the Companies Act

is summary in nature and complicated questions of title

cannot be adjudicated upon in the said jurisdiction.

Reliance has also been placed on Ammonia Supplies

Corpn. (P) Ltd. vs. Modern Plastic Containers (P)

Ltd.

1

, Standard Chartered Bank vs. Andhra Bank

Financial Services Ltd.

2

, Luxmi Tea Company Limited

vs. Pradip Kumar Sarkar

3

and Bajaj Auto Ltd. vs. N.K.

Firodia

4

. Further submission is that succession

certificate was void on account of interim order passed by

the High Court dated 20

th

August, 2008. Reliance has

1 1998 (7) SCC 105

2 2006 (6) SCC 94

3 1989 Supp. (2) SCC 656

4 1970 (2) SCC 550, 557

11

Page 12 been placed on Mulraj vs. Murti Raghonathji Maharaj

5

,

Manohar Lal vs. Ugrasen

6

, Ajudh Raj vs. Moti

7

and

Chiranjila Shrilal Goenka vs. Jasjit Singh

8

.

12.It was also submitted that DR Group could not inherit

the rights of LMJS in view of the language of the Will dated

23

rd

June, 1996 and also on the ground that the Will

executed by GD was under challenge. In absence of the

said Will, DR Group could not acquire any rights as UD

Group was entitled to inherit the estate of GD.

13.Per contra, Shri Sundaram supported the view taken

by the High Court. His submission is that there is no real

dispute. The succession certificate in favour of DR Group

has to be acted upon especially when in the suit filed by

the UD Group, interim order has been declined and it has

been found that there was no prima facie case in

challenge to the said certificate. Pendency of suit without

there being any interim order in favour of the UD Group in

respect of succession to the estate of the GD was of no

consequence. The scope of power under Section 111(7) of

the Companies Act included jurisdiction to decide a

5 (1967) 3 SCR 84

6 2010 (11) SCC 557

7 1991 (3) SCC 136

8 1993 (2) SCC 507

12

Page 13 question of title. Apart from succession certificate and the

Will, GD had executed transfer deed and communicated

the same to the Board of Directors. In the face of her

statement in proceedings for succession certificate

followed by transfer deed, no dispute whatsoever,

remained as to the rights of DR Group to have the shares

transferred in their favour. The Board of Directors was

dominated by the UD Group who abused its position to

deprive DR Group of their rights. The CLB failed to

appreciate the scope of its jurisdiction as well as the scope

of controversy between the parties. The High Court rightly

allowed their appeal. Apart from relying upon the

judgment in Ammonia (supra), reliance was also placed

on judgment of Calcutta High Court by Ruma Pal, J. (as she

then was) in Nupur Mitra vs. Basubani Pvt. Ltd.

9

.

14.We have given due consideration to the rival

submissions. The main question for consideration is

whether there is any real dispute between the parties

about the entitlement of DR Group to have the shares

transferred in their favour and whether the exercise of

9 1999 (2) Calcutta Law Times 264

13

Page 14 jurisdiction by the High Court is beyond the scope of

Section 111 of the Companies Act.

15.We are of the opinion that there is no real dispute

between the parties as held by the High Court. DR Group

has furnished the succession certificate as well as the

transfer deed executed by GD in their favour. The same

had to be acted upon. Moreover, the civil court in interim

application moved by the UD Group held that the UD

Group had no prima facie case. The said order was

required to be acted upon subject to any further order that

may be passed in any pending proceedings between the

parties. There is no conflicting order of any court or

authority. There is thus, no complicated question of title.

Moreover, there is no bar to adjudication for purposes of

transfer of shares unless the court finds otherwise. The

stay order obtained by GD herself could not debar her

from making a statement to settle the matter. The

judgments relied upon by the appellants have no

application to such a fact situation.

16.In Ammonia (supra), the scope of jurisdiction of the

Company Court to deal with an issue of rectification in the

14

Page 15 Register of Members maintained by the Company was

considered. Following Public Passenger Service Ltd.

vs. M.A. Khadar

10

, it was held that jurisdiction under

Section 155 was summary in nature. If for reasons of

complexity or otherwise, the matter could be more

conveniently decided in a suit, the Court may relegate the

parties to such remedy. Subject to the said limitation,

jurisdiction to deal with such matter is exclusively with the

Company Court. It was observed :

“31. ……..It cannot be doubted that in spite of exclusiveness to

decide all matters pertaining to the rectification it has to act

within the said four corners and adjudication of such matters

cannot be doubted to be summary in nature. So, whenever a

question is raised the court has to adjudicate on the facts and

circumstances of each case. If it truly is rectification, all

matters raised in that connection should be decided by the

court under Section 155 and if it finds adjudication of any

matter not falling under it, it may direct a party to get his right

adjudicated by a civil court. Unless jurisdiction is expressly or

implicitly barred under a statute, for violation or redress of

any such right the civil court would have jurisdiction. ……..”

17.Thus, there is a thin line in appreciating the scope of

jurisdiction of the Company Court/Company Law Board.

The jurisdiction is exclusive if the matter truly relates to

rectification but if the issue is alien to rectification, such

matter may not be within the exclusive jurisdiction of the

Company Court/Company Law Board.

10 AIR 1966 SC 489

15

Page 16 18.In Standard Chartered Bank (supra), scope of

Section 111(7) was considered. It was observed that

jurisdiction being summary in nature, a seriously disputed

question of title could be left to be decided by the civil

court. It was observed :

“29 ……The nature of proceedings under Section 111 are

slightly different from a title suit, although, sub-section (7) of

Section 111 gives to the Tribunal the jurisdiction to decide any

question relating to the title of any person who is a party to the

application, to have his name entered in or omitted from the

register and also the general jurisdiction to decide any

question which it is necessary or expedient to decide in

connection with such an application. It has been held in

Ammonia Supplies Corpn. (P) Ltd. v. Modern Plastic

Containers (P) Ltd. that the jurisdiction exercised by the

Company Court under Section 155 of the Companies Act, 1956

(corresponding to Section 111 of the present Act, before its

amendment by Act 31 of 1988) was somewhat summary in

nature and that if a seriously disputed question of title arose,

the Company Court should relegate the parties to a suit, which

was the more appropriate remedy for investigation and

adjudication of such seriously disputed question of title.”

19.In Luxmi Tea Company Limited and Bajaj Auto

Ltd. (supra), it was observed that a company did not have

any discretion in rectifying its register except to require

the procedure being followed.

20.In the present case, as already observed, there is no

real dispute between the parties. The DR Group followed

the due procedure. It had the succession certificate in its

16

Page 17 favour apart from the transfer deed from GD, who

admittedly inherited rights from LMJS. Will in favour of GD

is beyond any dispute. Thus, the DR Group derived rights

from the GD by documents executed by her in her lifetime

and conveyed to the Company. Even if the Will of GD is

not taken into account, for purposes of issue of

rectification, the documents executed by GD clearly

entitled the DR Group to have the rectification made.

21.The decisions in Mulraj, Manohar Lal, Ajudh Raj

and Chiranjilal Shrilal Goenka (supra) are of no

relevance to a situation where the beneficiary of the

interim order itself opts to proceed with the matter in

respect of which stay is granted by higher Court. In the

present case, GD having settled the matter and having

herself sought rectification, the interim order granted at

her instance could be no bar against the DR Group. The

decisions sought are thus, of no relevance to such a

situation.

22.We sum up our conclusions as follows :

(i)LMJS executed will in favour of his

mother – GD which is not in dispute;

(ii)GD and DR jointly obtained succession

certificate;

17

Page 18 (iii)GD signed the transfer deeds and

communicated the same to the Board of

Directors; and

(iv)The civil court vide order dated 28

th

July,

1991 declined to grant temporary

injunction finding no prima facie case

against the succession certificate.

23.In above circumstances, even in summary

jurisdiction, the CLB had no justification to reject the claim

of the DR Group. The High Court rightly reversed the said

order.

24.In view of the above, we find no merit in these

appeals. The same are dismissed with costs quantified at

Rs.5 lakhs in each of the appeals.

………… ..……..…………………………….J .

[ANIL R. DAVE]

………… ..….………………………………..J.

[ADARSH KUMAR GOEL]

NEW DELHI

SEPTEMBER 23, 2015

18