IND/1644/2014 & IND/1645/2014 in CP No. 54/2014. Case: Sanmathy Cotha Pasuparthy Vs C. Krishnaiah Chetty & Sons Pvt. Ltd. and Ors.. Company Law Board
| Case Number | IND/1644/2014 & IND/1645/2014 in CP No. 54/2014 |
| Counsel | For Appellant: Chitra Narayan, Advocate and For Respondents: Thriyambak Kannan, Advocate |
| Judges | Kanthi Narahari, Member (J) |
| Issue | Code of Civil Procedure, 1908 (CPC) - Order I Rule 10, Order I Rule 10(2); Companies Act, 1956 - Sections 397, 398, 405; Indian Contract Act, 1872 - Sections 16(3), 19A |
| Judgement Date | June 05, 2015 |
| Court | Company Law Board |
Order:
Kanthi Narahari, Member (J), (Chennai Bench)
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The present application is filed under section 405 of the Companies Act, 1956 r/w Regulation 44 of CLB Regulations, 1991 seeking permission of this Bench to implead the applicant as party respondent in the main company petition. The counsel appeared for the applicant submitted that the present company petition has been filed by her mother for relief's against the acts of oppression and mismanagement being carried out with respect to the affairs of the R1 Company (hereafter 'the Company'). The applicant submits that the daughters in the family, including the applicant and her sister have at all times been excluded from participation in the joint family business and properties. After the death of her father, the applicant was informed that her father had bequeathed some jewellery and a sum of Rs. 5,00,000/- to her under a will. On further enquiry, the applicant has found that there was no such will executed by deceased Sri C.V. Narayan. The applicant has also found that it has been the practice in the joint family to obtain release deeds from the daughters of the family soon after they turn 18 years old. Accordingly, the applicant had also been made to sign a similar release deed dated 12.04.1993, relinquishing her rights to the joint family businesses and properties in consideration for a sum of Rs. 50,000/- soon after she turned 18 years of age. This is void for several reasons out of which two reasons are being highlighted. The applicant was born on 13.02.1975. As on the date of signing of the release deed she was 18 years and 2 months. The applicant has always lived with her parents' since her birth and has been cared for by them with no exposure to any issues or with respect to the business or properties. The applicant did not know that there are different kinds of properties called self-acquired, joint family and ancestral properties. The applicant also did not know what properties were available in the family. The applicant was completely taken care of by her parents, and always heeded their stipulations. The relationship between the applicant and her father was such that the father was in a position to dominate the will of the applicant and has used that position to obtain an unfair advantage over the applicant and in requiring her to sign the release deed. In the above circumstances the release deed is a document which has not been signed with the free consent of the applicant and is voidable as per section 19A of the Indian Contract Act, 1872. The applicant seeks leave to refer to the terms of the release deed to elaborate on the above. It is evident from what is stated above that the father was in a position to dominate the will of the applicant and the transaction on the face of it is unconscionable and as such it is patent that undue influence is practiced against the applicant. By using undue influence, fraud has been played on the applicant in getting release deed. The transaction is patently unconscionable and as such the burden of proving the document was without undue influence is on the persons who rely on the release deed as per section 16(3) of Indian Contract Act, 1862. The applicant submits that she has led a sheltered life under the care of her family, and at the very young age of 18 years, been asked to sign the said documents, without any knowledge of the contents thereof, and importantly, without any understanding of its implications. The applicant is not aware if any other documents have been signed by her in trust, and by honouring the request of her father, simply out of her love and regard for him. The applicant submits that the said document evidently takes advantage of her lack of knowledge and understanding of her entitlements, and is void, and that she is entitled, as a coparcener in the joint family, to a share of all the joint family properties other paternal great grandfather, which devolved on his family member as detailed above. The applicant submits that the shares in the company also constitute joint family property, and that she would have a right to the shares that were held by her father. Accordingly, the applicant had filed a suit bearing OS No. 1471 of 2014 before the City Civil Judge at Bangalore for the relief's of declaration that the release deed dated 12.04.1993 is void, and for a partition of the joint family properties including the shares held by her father in the company. The jewellery and cash given to the applicant as being the bequeathed from her father has been added back by the applicant to the joint family properties for the purpose of partition. In so far as the company is concerned, the applicant submits that she is entitled to a 5/16th share of the shares in the company that were held by her father late Sri C.V. Narayan on the following basis;
(a) The applicant and her sister are coparceners in the joint family property devolved from late Sri Adinarayan Chetty and would be entitled to a share of all the joint family properties;
(b) The joint family business was carried out through the company and the 48,640 shares in the company constituted joint family property of late Sri Adinarayan Chetty;
(c) On a notional partition on the death of late Sri C.V. Narayan, the shares held by late Sri C.V. Narayan in the company would be partitioned between late Sri C.V. Narayan, the applicant and her two siblings in four parts. The shares vesting in late Sri C.V. Narayan would devolve through succession on the applicant, her two siblings and her mother in equal parts.
(d) Save and except his share of the entire shareholding held in his name on a notional partition, late Sri C.V. Narayan could not bequeath the shares in the company held in his name through a testament, since the shares were not his individual or self-acquired property.
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The applicant has been kept out of all the dealings with the joint family properties, following the practice of her family to exclude the women from the properties and businesses of the family. The applicant has thereafter come to understand that there has been a family settlement dated 09.01.2014 between the petitioner and the respondents herein with respect to the shares/and or the business of the company. The applicant submits that she has not been...
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