Aruna Oswal vs Pankaj Oswal  Nominee Vs Legal Heir Whether NCLT can try a civil matter?
Channel: R V Seckar
Date: 2020-10-08

Aruna Oswal vs Pankaj Oswal     Nominee Vs Legal Heir  Whether NCLT can try a civil matter? 
By observing that inheritance of shares is a civil matter and cannot be decided by company tribunals, the Apex Court has set a precedent that will do away with parallel proceedings in future disputes.
Supreme Court decided eminently and authoritatively a dual legal battle as to inheritance of shares involving the family members of an industrial house, in the matter of Aruna Oswal vs Pankaj Oswal & Ors(Civil Appeal No. 9340 of 2019, decided on July 6, 2020).
 The latest judgment of the Supreme Court will bring clarity to the corporate sector while dealing with such disputes.
The case is the outcome of a family tussle. The patriarch, during his lifetime, made a nomination in the prescribed manner in favour of his wife in respect of his shares (amounting to 39.88 per cent) in Oswal Agro Mills Ltd. The disgruntled son (respondent 1) filed a partition suit in the High Court, claiming entitlement to one-fourth of the estate of the father, including one-fourth of the shares inherited by his mother from his father in the said Company, and similarly one-fourth of the shares out of the 11 per cent in another company as inherited by the mother from his father. The High Court passed an interim order to maintain status quo concerning shares and other immoveable property. It is to be noted that as on the date of the interim order, the shares stood registered in the name of the mother, who continues to own the shares.

While the suit was pending, respondent 1 also moved the National Company Law Tribunal (NCLT) alleging ‘oppression and mis-management’ under the provisions of the Companies Act, 2013, without even owning the threshold limit of 10 per cent of the shares in the company. 
His mother filed an application before the NCLT challenging the maintainability of the oppression and mismanagement petition on various grounds, including that she was the absolute owner of shares as per the provisions of the Act.

In essence, it was the principal contention of the mother that the main dispute raised as to inheritance of the deceased father’s estate was a civil dispute and could not be said to be an act of ‘oppression and mismanagement’, and parallel proceedings on the same issue were not appropriate. 
However, curiously, the NCLT directed filing of reply to the petition, without deciding the question of maintainability. This was challenged before the National Company Law Appellate Tribunal (NCLAT), which in turn directed the NCLT to decide the question of maintainability of the petition. The NCLT thereafter dismissed the challenge to maintainability and held that the son, being a legal heir, was entitled to one-fourth of the shares. Therefore, the matter eventually reached the Supreme Court of India.

Courtesy : The Hindu   This content is shared for education and dissemination of knowledge purpose only and not for any commercial purpose.