Pankaj Oswal's petition at NCLT against Oswal Agro Mills maintainable: NCLAT
Pankaj's mother Aruna Oswal, Oswal Agro Mills Ltd and its associate firm Oswal Greentech Ltd moved the National Company Law Appellate Tribunal (NCLAT) questioning the maintainability of Pankaj's plea as he does not have the required 10 per cent of the total issued, paid-up and subscribed capital of the company to be eligible to file matter under Sections 241 and 242 of the Companies Act, 2013.
A two-member NCLAT bench headed by Justice S J Mukhopadhaya dismissed the petitions filed by Aruna, Oswal Agro Mills and Oswal Greentech and upheld the order of the Chandigarh bench of the National Company Law Tribunal (NCLT) in this regard.
"We find no merit in these appeals. They are accordingly dismissed," said the NCLAT.
The appellate tribunal said Pankaj's plea "should be heard on merit" by the NCLT and it was "fit case for waiver" also under the Companies Act.
The NCLT had on November 13, 2018, held that Pankaj, son of late industrialist Abhey Kumar Oswal, was "eligible" in terms of Section 244 of the Companies Act, 2013 to file "oppression and mismanagement" case against the companies.
Abhey Kumar Oswal, during his lifetime, held 5.35 crore shares of Oswal Agro Mills (around 40 per cent), which is a listed entity.
During his lifetime, Abhey Kumar Oswal had on June 18, 2015, filed a nomination in favour of his wife Aruna under the Companies Act. After his death, Aruna was registered as the holder of the said 5.35-crore shares on April 16, 2016.
While his son Pankaj filed a partition suit in February, 2017 before the Delhi High Court claiming to be entitled to one-fourth of the estate of Late Abhey Kumar Oswal and also claimed that part of the estate comprised the said 5.35-crore shares.
The partition suit is still pending and an order of status quo was passed on February 8, 2017.
Subsequently, Pankaj also approached the NCLT alleging "oppression and mismanagement" into the affairs of Oswal Agro Mills under Sections 241 and 242 of the Companies Act, 2013.
Pankaj submitted that as he was one of the four heirs of Late Abhey Kumar Oswal and thus was entitled to claim one-fourth of 5.35 crore shares. On that basis, he claimed that he had more than 10 per cent of the shareholding in Oswal Agro Mills.
On May 29, 2018, the NCLAT in this matter directed the NCLT that maintainability issue should be heard first. The NCLT on November 13, 2018 decided in favour of Pankaj's eligibility.
This was again challenged by Aruna and the companies before the NCLAT. They contended that in view of the nomination filed by Late Abhey Kumar Oswal during his lifetime and the registration of the name of Aruna, Pankaj cannot claim rights for those shares.
However, counsel representing Pankaj contended Abhey Kumar Oswal died intestate and is survived by four Class I legal heirs -- his widow, two sons and a daughter. Pankaj being the eldest son is one of the four legal heirs.
The appellate tribunal said that right arising out of an instrument does not vest with nominee automatically on the death of the original holder of the instrument. Nominee does not mean that the amount or the share belongs to the nominee.
"On the death of the holder of the instrument, the amount/ share vests with the legal heirs, the nominee merely holds the amount/ share herein till the matter of vesting is decided in favour of the legal heirs," said the NCLAT in its order dated November 14, 2019."We hold that the application under Sections 241, 242 & 244 of the Companies Act, 2013 was maintainable at the instance of Pankaj Oswal otherwise also, in view of the matter that his claim relating to the shares of Late Abhey Kumar Oswal which is pending in a suit before the Court of Competent Jurisdiction, we hold that this is a fit case for waiver under sub-section (4) of Section 244 of the Companies Act, 2013 and for that the application under Sections 241, 242 should be heard on merit," it said. KRH MKJ
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