In a derivative suit, the death of a director-plaintiff does not necessitate the abatement of the proceedings. Legal successors who inherit shareholding rights are entitled to continue the litigation, and courts should prioritize the protection of corporate interests over technical procedural requirements like formal share transmission.

ORDER :

T.V.THAMILSELVI, J.

Challenging the impugned order passed by the trial Court in I.A.Nos.1 and 3 of 2024 in O.S.No. 580 of 2023, the fourth defendant has preferred the above revisions.

2. Before the trial Court, the plaintiffs 2 to 5, who are the legal heirs of the original plaintiff, filed I.A.No.1 of 2024 under Section 151 of Civil Procedure Code to permit the third respondent herein to represent the first respondent Company in O.S.No.580 of 2023;

3. I.A.No.2 of 2024 was filed under Order XXII Rule 10 read with Section 151 of Civil Procedure Code to substitute the name of the ninth respondent as “M/s Gajaananda Jewellery Mart Private Limited” consequent to the scheme of amalgamation of M/s Gajaananda Jewellery Mart Private Limited” with M/s TCS Textiles Private Limited.

4. I.A.No.3 of 2024 was filed under Order XXII Rule 3 of Civil Procedure Code to implead the respondents 2 to 4 herein as the legalheirs of the deceased V.R.A.R.Ramakrishnan.

5. On hearing both sides the trial court allowed all the three applications. Aggrieved by the order, the fourth defendant has preferred I.A.Nos.1 and 3 of 2024.

6. The deceased first plaintiff viz., V.R.A.R.Ramakrishnan was a holder of 50% of shares in the 2^nd plaintiff Company viz.,The Rathna Textile Mills Pvt Ltd., and he was one of the directors of the said Company and filed a suit in O.S.No.580 of 2023 against six defendants and the defendants 1 to 5 are the legalheirs of one T.S.Rathina Sabapathy, who was the brother of the 1^st plaintiff. The first plaintiff and his brother T.S.Rathina Sabapathy floated a Company by name Rathina Textile Mills Private Limited/2nd plaintiff herein. The second plaintiff was incorporated at Bangalore in the State of Karnataka. The nominal capital of the 2^nd plaintiff was Rs.5,00,000/-(Rupees Five Lakhs Only) divided into 5000 Equity shares of Rs.100/- each. The first plaintiff and his brother took 400 shares each and no share had been issued beyond 800 shares, but his brother T.S.Rathina Sabapathy, since deceased, claimed 620 shares in the 2^nd plaintiff viz., The Rathtna Textile Mills Private Limited, after his death, the defendants 1 to 5 have succeeded only 400 shares, but, the defendants 1 to 5 claim that they are having 620 shares of the 2^nd plaintiff viz., The Rathtna Textile Mills Private Limited. Therefore, dispute arose between them and litigation was initiated by invoking Company Law before the High Court of Karnataka at Banglore. In the meanwhile, they executed a Sale Deed in favour of the sixth respondent in respect of the property standing in the name of the Company. They sold the property in favour of the sixth respondent with an intention to defeat the plaintiff’s right and to alienate the property fraudulently. The sale Deed dated 14.11.2005 is sham and nominal and not acted upon and would not bind the plaintiffs.

7. On 16.09.1978 Schedule “A” mentioned property was purchased in the name of the 2^nd plaintiff and on 12.09.1995 when the 1^st plaintiff filed a Company Petition for voluntary winding up of the 2^nd plaintiff for the reasons stated in the Company Petition in C.P.No.117 of 1995, on 12.09.1995 when the first plaintiff had asserted in the Company petition that T.S.Rathnasabapathy (since deceased) had agreed for the division of the property and allotment of 50% of the property to the 1^st plaintiff, on 17.02.1996 when the said T.S.Rathnasabapathy (since deceased) filed a c