Can a Company refuse to transmit share to legal heirs of the shareholder on the basis that ‘Will’ contains a condition to sell these shares to the Company? and Does NCLT have the jurisdiction or power to go into the matter of settlement, when considering a letter of intimation under Section 56 of the Companies Act, 2013 – Shanivi Construction Pvt. Ltd. Vs. Kaashvi Prasher & Ors. – NCLAT New Delhi
In this case, a ‘Will’ included a condition that legal heirs shall sell these shares to the Company and if the Company is not willing to purchase the said shares within five years, she would be free to sell the shares in the open market. On such basis, the Company refused to transmit the said shares in the name of legal heirs.
NCLAT held that:
(i) There was no need for the Company to have interpreted or acted upon the provisions included in the Will of Shareholder, since the intimation under section 56 of the Companies Act was merely about transmission of said shares and not about execution of Shareholder’s Will.
(ii) The settlement is not relevant when a letter of intimation under section 56 of the Companies Act, 2013 is under consideration. Moreover, the NCLT does not have the jurisdiction or power to go into the matter of settlement, when considering a letter of intimation under section 56 of the Companies Act, 2013.
(iii) The point in the Last Will of Shri Gagan Parasher that interest of a third party has been created vis-à-vis legal heirs, would be a matter to be decided by a court of appropriate jurisdiction and therefore, not an issue to be decided by NCLT when considering a case for transmission of shares.
