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High Court Of Calcutta
Kalyan Jyoti Sengupta
PRIYAMVADA DEVI BIRLA, RAJENDRA SINGH LODHA - Appellant
Versus
LAXMI DEVI NEWAR - Respondent
Testamentary Suit 6 Of 2004
Decided On : 03/23/2005
Kalyan Jyoti Sengupta - LAXMI DEVI NEWAR, RADHA DEVI MOHATA, K. K. BIRLA & ORS. - O. 21 R. 35, 37, 38; O. 39 RR. 1, 2; S. 211 INDIAN SUCCESSION ACT, 1925 - The court, while considering the appointment of an administrator pendente lite and an interim injunction in a probate proceeding, held that the properties of the deceased vested in the executor under Section 211 of the Indian Succession Act, 1925, and that the executor's right to control and administer the property during the pendency of the probate proceeding was a legal one that could not be interfered with lightly. The court also held that the majority shareholding in one hand constituted an undefined or unspecified right or status which had a far-reaching effect in the affairs of the company and was nothing short of property in the real sense.
Fact of the Case:
Laxmi Devi Newar, Radha Devi Mohta, K. K. Birla, Basant kr. Birla, Ganga Prasad Birla, and Y. B. Birla filed three applications for the appointment of an administrator and/or a committee headed by an independent and impartial administrator over the estate left by Priyamvada Devi Birla, since deceased, and also for an order of injunction restraining the propounder/plaintiff from dealing with, disposing of any of the assets or properties of the deceased and/or exercising any right and control of the companies. The two ladies, Laxmi Devi Newar and Radha Devi Mohta, were the sisters-in-law of the deceased, while the four Birlas had lodged their caveats intending to oppose the grant of probate but had not been made parties defendant as yet.
Finding of the Court:
The court held that the properties of the deceased vested in the executor under Section 211 of the Indian Succession Act, 1925, and that the executor's right to control and administer the property during the pendency of the probate proceeding was a legal one that could not be interfered with lightly. The court also held that the majority shareholding in one hand constituted an undefined or unspecified right or status which had a far-reaching effect in the affairs of the company and was nothing short of property in the real sense.
Issues: 1. Whether the properties of the deceased vested in the executor under Section 211 of the Indian Succession Act, 1925? 2. Whether the executor's right to control and administer the property during the pendency of the probate proceeding was a legal one that could be interfered with lightly? 3. Whether the majority shareholding in one hand constituted an undefined or unspecified right or status which had a far-reaching effect in the affairs of the company and was nothing short of property in the real sense?
Ratio Decidendi: 1. The court held that the properties of the deceased vested in the executor under Section 211 of the Indian Succession Act, 1925, and that the executor's right to control and administer the property during the pendency of the probate proceeding was a legal one that could not be interfered with lightly based on the following grounds: - The executor is the de jure owner and is entitled to control and manage the entire estate left behind by the deceased. - Unless there are allegations against the executor as to mismanagement and act of waste and devastation, the executor cannot be removed. - Executor is not like a Receiver. 2. The court held that the majority shareholding in one hand constituted an undefined or unspecified right or status which had a far-reaching effect in the affairs of the company and was nothing short of property in the real sense based on the following grounds: - A person holding major shares really controls the affairs of the company. - The directors appointed by the majority shareholders are the de facto controller and manager of the company.
Final Decision: The court directed the propounder by his controlling shareholding not to move any resolution nor support any resolution aiming to sell, encumber any assets of the M. P. Birla group of companies nor closure thereof, without express leave of the Court. The propounder shall also maintain status quo in relation to the other properties.
( 1 ) FIRST three mentioned applications have been taken out by one Smt. Laxmi Devi Newar, one Smt. Radha Devi Mohta defendant No. 1 herein, defendant No. 2 herein and, jointly by four persons viz. one K. K. Birla, Basant kr. Birla, Ganga Prasad Birla, Y. B. Birla, for identical interlocutory reliefs viz. for appointment of Administrator and/or a committee headed by an independent and impartial Administrator be appointed in and over the estate left by the said Priyamvada Devi Birla, since deceased (hereinafter referred to as the said deceased) and also order of injunction restraining the propounder/plaintiff from dealing with disposing of any of the assets or properties of the deceased and/or exercising any right and control of the companies. The two ladies above being the defendants in the suit are the sisters-in-law of the said deceased (husband's sisters) and they have been contesting the grant of probate in relation to the will said to be the last one of the said deceased ; while the above mentioned four persons viz. the birlas have lodged their caveats intending to oppose the grant but they have not been made parties defendant as yet. Their caveats are sought to be discharged on the ground that the aforesaid persons have no interest in the estate of the said deceased. All these three applications contain identical prayers even in word by word.
( 2 ) THE last three applications have been taken out by the plaintiff r. S. Lodha for dismissal of all the three respective applications for interlocutory reliefs, in limine and with costs and/or stay of all further proceedings in connection with the aforesaid all the three applications.
( 3 ) ALL the aforesaid six applications were moved for obtaining ad interim relief as prayed for in the respect applications.
( 4 ) MR. S. B. Mukherjee learned. Senior Advocate, Mr. P. K. Roy, senior Advocate (now deceased) with Mr. S. Pal Senior Advocate at the time of moving of their respective applications upon instructions clearly submit that they are not pressing for interim order of appointment of administrator and such prayer shall be made after completion of filing of affidavit at the final hearing, if these three applications are admitted for hearing.
( 5 ) THE ground for obtaining interim order of injunction in all the three applications are identically similar even I find the averments made in the respective petitions are verbatim reproduction of each other. Basic argument of all the learned appearing Counsels of the applications' group are common and identical but the respective learned Counsels while appearing separately has put forward their individual brand of final touch of their argument in specialized manner.
( 6 ) MR. S. B. Mukherjee has in essence spearheaded their attack against Lodha for ad interim relief for injunction. He while highlighting the statements and averments made in the petition submits that the document which is alleged to be last testamentary instrument is an unnatural one apart from other illegalities. It will appear that entire estate of the said deceased lady has been given away to Lodha who is a rank stranger. Admittedly this gentleman is neither a relation nor lineal descendant, but he developed a close connection with the said deceased during last few years of her life in connection with business activities. This gentleman is a chartered Accountant and was Auditor of several group companies belonging to larger Birla Family. Taking advantage of his fiduciary position, this gentleman was able to influence the mind of the said deceased to execute the will and thereby entire estate of this lady is sought to be acquired by him. This gentleman is not an industrialist nor he had or has any experience in running industry. The Universally well known Birla family knows how to control, manage and run industry with their inborn capacity and skill. Therefore, according to him this large business activities with the vast assets and properties
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