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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)

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                   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  05th February,  1997

leaving behind a Will dated 23rd June, 1996 in favour of his

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

19th February, 2009 was issued by the District Judge, Jaipur

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jointly  in  favour  of  GD  and  DR  Group.   GD  executed

transfer deed dated 27th April, 2009 in favour of DR Group.

She also executed Will dated 10th May, 2009 in favour of

DR Group.  She died on 29th September, 2009.  Vide letter

dated 15th July, 2009, DR Group claimed transmission and

transfer of shares in their favour on the basis of succession

certificate dated 19th February, 2009 issued by the District

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

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 23rd 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 23rd June, 1996 and they were also not

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

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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  10th 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  23rd June,  1996.

Further  contention  was  that  she  died  intestate  on  29th

September,  2009 and that  DG has been disinherited by

LMJS in his Will dated 23rd 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 28th July, 2011.  In the said application,

all the issues raised by the UD Group were examined prima

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facie, including validity of succession certificate dated 19th

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  16th 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?

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(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

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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

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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

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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  19th 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 19th February, 2009

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was in violation of stay order dated 20th 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 19th February, 2009.  Writ Petition

No.7524 of 2008 wherein order dated 20th August,  2008

was passed itself  was got disposed of as infructuous on

18th January,  2011 in view of  order dated 19th February,

2009.  UD Group was in no manner connected with those

proceedings.   As  regards  Suit  filed  by  UD  Group

challenging  order  dated  19th February,  2009,  interim

application for stay of order dated 19th February, 2009 was

dismissed on 28th 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 23rd 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 10th May, 2009.

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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  20th 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

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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

23rd 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

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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

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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

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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  

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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

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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;

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(iii) GD  signed  the  transfer  deeds  and communicated the same to the Board of Directors; and

(iv) The civil court vide order dated 28th 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

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