Pawan Kumar Ahluwalia vs Himangini Singh (Legal Heir Of Late Shri Kjs Ahluwalia) & Ors. & Ors.

Court: National Company Law Appellate Tribunal
Case type: Company Appeal(AT)
Decided on: 11-03-2026

<div> 1 NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) No.59/2026 ( Arising out of the judgement and order dated 13.02.2026 passed by the National Company Law Tribunal, Principal Bench, New Delhi in CP No.49/241- 242/PB/2023 ) In the matter of: Pawan Kumar Ahluwalia Appellant Vs Himangini Singh (Legal Heir of Late Shri KJS Ahluwalia & Ors) Respondent For Appellant : Mr Rajiv Nayar and Mr Naveen Pahwa, Sr Advocates with Mr. Mahesh Agarwal, Mr Rishi Agarwala, Mr. Ankur Saigal, Ms Geetika Sharma, Mr Uday Adiatya Jettly, Ms Shambhavi, Ms Pramita Mishra, Mr. Prabhav Bahargawa, Advocates. For Respondent : Mr Arun Kathpalia, Mr P. Nagesh and Mr. Abhijeet Singh, Sr Advocates with Mr. Saurabh Kalia, Mr. Sameer Chaudhary, Mr Atinder Saumya Singh, Mr S Shishir, Ms Tannu Rana, Mr Akshay Sharma, Ms Diksha, Ms Heena, Mr Shouraditya, Advocates. JUDGEMENT JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) The present Appeal is filed under Section 421 of the Companies Act, 2013 assailing an impugned interim order dated 13.02.2026 passed by the Ld. National Company Law Tribunal, New Delhi in CP No. 49/241-242/PB/2023 , whereby it is held that Respondent Nos. 1 and 2 (i.e.Petitioner Nos. 1 and 2 before the NCLT) are “entitled to transmission” of 55,97,768 equity shares standing in the name of Late Shri KJS Ahluwalia. 2 2. The impugned order arises out of a Company Petition filed under Sections 241–242 of the Companies Act, 2013 alleging oppression and mismanagement in M/s KJS Cement (I) Limited. The Petitioners before the Ld. NCLT, Delhi sought to invoke jurisdiction under Section 244 by claiming eligibility on the footing of an asserted 31.84% shareholding, including (i) 21% shares admittedly standing in the name of Late Shri KJS Ahluwalia, and (ii) additional shares allegedly routed through Respondent Nos. companies. It is argued the claim of 3–10 eligibility itself was fundamentally flawed, in as much as on the date of filing of the Petition, Petitioner Nos. 1 and 2 were not reflected as members in the Register of Members or in the records of the Depository in respect of the said 21% shareholding, nor had any valid transmission been effected in their favour. Further, no waiver application under the proviso to Section 244 was moved or allowed. 3. The Appellant raised a preliminary objections of maintainability on the grounds inter alia : a. the Petitioners did not satisfy the mandatory threshold under Section 244 at the time of filing; b. the alleged authorization of Respondent Nos. 3–10 Companies was defective and based on fabricated/back-dated Board Resolutions; c. the legal heirs had not obtained valid transmission of shares; d. the shares in question were held in dematerialised form, and under law, transmission must be effected through the Depository Participant and not by direction to the Company; e. the title to the shares was seriously disputed in view of a Gift Deed 3 4. The Appellant had raised an objection of threshold saying the Petition was not maintainable ab initio , since the Respondents did not satisfy the mandatory eligibility criteria under Section 244 on the date of institution. Crucially, Respondents Nos. 1 and 2 were not members on the face of the record, in respect of the 55,97,768 shares (standing in the deceased shareholder’s name), and no waiver application under the proviso to Section 244 was moved. It was argued the Ld. NCLT, however, erroneously conflated “entitlement to transmission” with “existing membership”, thereby directing transmission of 21% shareholding, effectively manufactured eligibility post-filing. The Tribunal failed to appreciate jurisdiction cannot be assumed on the basis of a hypothetical or future transmission, and eligibility cannot be created through an interlocutory direction. 5. It is further urged the reliance placed on decision reported as 1990 (1) SCC 536 , titled “M/s World Wide Agencies Ltd. v. Margarat T. Desor” was misplaced, as the said judgment did not involve rival title claims or a subsisting registered instrument transferring title. It was argued the Gift Deed dated 27.09.2017 stood executed during the lifetime of Late Shri KJS Ahluwalia and was never declared void or invalid by any competent court. The Ld. NCLT, without setting aside the said Gift Deed, proceeded to grant transmission in favour of the alleged legal heirs, thereby indirectly nullifying a registered instrument without trial or adjudication. 4 6. It was argued despite recording specifically at paragraph 37 of the impugned order that the issue concerning the Power of Attorney and Gift Deed require further enquiry after completion of pleadings, the Ld NCLT proceeded to hold the Respondents Nos. 1 and 2 are “entitled to transmission” of 55,97,768 shares and directed adherence to statutory procedure. It was argued such a direction is not merely preservative; it carries immediate and irreversible consequences and makes the remaining proceedings largely illusory; thereby supplying the very foundation of locus under Section 244. It was argued the Ld. NCLT has thus granted the principal relief sought in the Petition at a preliminary stage, rendering the maintainability issue illusory and creating irreversible consequences. 7. It was argued the Ld. NCLT has, in effect, used an interlocutory transmission direction to (i) prejudge disputed title instruments, and (ii) manufacture or fortify Section 244 eligibility post-filing. Such an approach defeats the legislative scheme of Section 244 , renders the statutory threshold otiose, and permits assumption of jurisdiction where none existed at inception. It was argued the issues relating to the genuineness of the Gift Deed and the scope of the Power of Attorney involve serious and disputed questions of title which are civil in nature and require adjudication upon evidence and the Ld. NCLT has wrongly relied upon decision reported as 2025 INSC 1065 , titled “Shailja Krishna vs Satori Global Ltd. & Ors.”, to justify its direction on transmission. It was argued in Shailja Krishna, the petitioner was an existing promoter-member whose subsisting membership had allegedly been wrongfully 5 divested, and the Supreme Court examined the validity of instruments in that context. In the present case, however, the Petitioners were not members on the date of filing; the shares stood in the name of the deceased shareholder; no transmission had occurred; and no waiver under Section 244 was sought or granted and the Ld. NCLT itself recorded the issues concerning the Gift Deed and Power of Attorney required further enquiry, yet proceeded to declare the Petitioners “entitlement to transmission”, thereby virtually determining disputed title in summary jurisdiction. It is argued reliance on Shailja Krishna is highly misplaced and does not override the principle laid down in the decision reported as (2020) 10 SCC 538, titled “Radha Exports (India) (P) Ltd. v. K.P. Jayaram”, that serious disputes regarding forgery and validity of documents must be adjudicated upon evidence and not conclusively decided in summary proceedings. 8. Thus the crux of the arguments as raised by the learned senior counsel for the appellant is while hearing the issue of maintainability, the Ld NCLT had decided on merits. The learned counsel for the appellant referred to the submissions made by both the sides only on maintainability and submitted only after deciding the issue of maintainability, due representation ought to have been given to them to argue on the merits of the case. He referred to the fact the shares which were directed to be transmitted in favour of the respondents were in fact gifted to the wife of the appellant in the years 2017 itself on the basis of a Power of Attorney executed by the deceased KJS Ahluwalia in the year 2000 as he was not interested in the business of M/s KJS Cement India Ltd. It was 6 argued there were several family companies and in the year 2017; an oral family settlement was entered into by virtue of which deceased KJS Ahluwalia had gifted his shares to the wife of the appellant and in terms of such gift deed the appellant had filed letters before the various banks for releasing Mr. KJS Ahluwalia from various guarantees. He referred to the additional documents filed by him to show in June, 2017 Mr KJS Ahluwalia as well as his another brother Mr. Prashant had resigned as director from this company and intimations to this effect were sent to ROC. Further, it was argued the issue of inheritance of shares etc. cannot be looked into by the Ld. NCLT per settled law by the Hon’ble Supreme Court. 9. However, the learned senior counsel for Respondent submitted if one peruses the written submissions filed by the appellant herein, filed before the Ld. NCLT one would find such written submissions were not only on the question of maintainability but also on merit. Further he referred to the terms of the th Power of Attorney dated 9 August, 2000 which never authorized the power of attorney holder viz the appellant herein to execute a gift deed of shares of the deceased. We have also examined the said Power of Attorney. The Power of Attorney was primarily in respect of movables and immovable properties of Mr KJS Ahluwalia situated at Satna, MP and as he was not able to look after his properties at Satna, MP, he appointed his younger brother-the appellant herein to look after those properties and to even sell, pledge, donate etc. if found suitable. It was on the basis of this power of attorney of the year 2000, a gift deed was purportedly executed on 27.09.2017 by Mr. Pawan Kumar viz the 7 appellant herein in favour of his wife i.e. after about 7 years of the execution of th the power of attorney. Now a bare perusal of the power of attorney dated 9 August, 2000 would show it did not ever give any authority to the appellant herein to execute a gift deed in favour of his wife for shares of the deceased in the company, registered in Delhi and not in Satna, MP. Though it was an argument of the appellant herein that in the year 2017 the deceased himself had resigned from the directorship of the company; but then what stopped Mr. Ahluwalia, now deceased, to execute gift deed himself in favour of his brother’s wife. There is nothing on record to say except the resignation from the post of director in the company, anything further was done by the deceased. Qua gift of his shares, no intimation was ever given by Mr. Ahluwalia to the Registrar of Companies. 10. During the course of argument the Respondent had also shown us the financial statement of the year 2021-22 which rather shows deceased KJS Ahluwalia as an owner of his shares and there exists a note that Mr. KJS Ahluwalia is a deceased member, who expired on 13.10.2021 having shareholding more than 5% equity shares of the company as on 31.03.2022; the deceased member is holding the shares of the company in demat form and has not been transmitted to the legal heirs by the depository. The aforesaid shares cannot be transferred at the discretion of the company. 11. Now these financial statement did not disclose if the shares were activated in the year 2017 by wife of the appellant. The financial statement of the company 8 duly signed by the appellant himself show Mr. KS Ahluwalia was still an owner of the shares in the year 2022. The letters of withdrawal of guarantees of Mr. KJS Ahluwalia, as placed on record, admittedly did not bear the signature of Mr. KS Ahluwalia, hence it cannot be said if the deceased was ever made aware of any such gift deed or release of his guarantees etc. as no written document was ever signed by the deceased in favour of the appellant or his wife after the year 2000. 12. Qua the issue of inheritance there is no dispute the Respondents 1 and 2 are the Class 1 heirs of late KJS Ahluwalia. In Shailja Krishna Vs Satori Global Limited and Ors (2025) SCC Online SC 1889, the Hon’ble Supreme Court held: </div><table><thead><tr><th>31. In the instant case, it is an admitted fact that the</th><th></th></tr></thead><tbody><tr><td>determination of whether the gift deed is valid or not is central</td><td></td></tr><tr><td>to the decision herein and, therefore, the NCLT did have full</td><td></td></tr><tr><td>jurisdiction to decide whether the gift deed is valid or not, or</td><td></td></tr><tr><td>whether it is against the provisions of the 1956 Act and/or</td><td></td></tr><tr><td>internal regulations of the COMPANY, including but not limited</td><td></td></tr><tr><td>to the AoA and the Memorandum of Association.</td><td></td></tr></tbody></table><table><tbody><tr><td>42. Applying the tests laid down in the aforesaid authorities,</td><td></td></tr><tr><td>we have come to the conclusion that the Appellant was the</td><td></td></tr><tr><td>victim of oppression and mismanagement in the instant case</td><td></td></tr><tr><td>for two reasons: first, that the circumstances surrounding the</td><td></td></tr><tr><td>gift deed and the subsequent transfer of shares are seriously</td><td></td></tr><tr><td>questionable and must be declared invalid and secondly, the</td><td></td></tr><tr><td>board meetings have been conducted in a mala fide manner</td><td></td></tr><tr><td>and against both the statutory requirements of the 1956 Act</td><td></td></tr><tr><td>and the internal regulations of the COMPANY. Both of these</td><td></td></tr><tr><td>instances show that the affairs of the COMPANY were being</td><td></td></tr><tr><td>conducted in a manner prejudicially affecting the Appellant.</td><td></td></tr></tbody></table><div> 13. Thus the above authority clarified the Ld. NCLT has power to look into the validity of the gift deed and consequent transfer of shares. 9 14. Now we note not a single document has been filed/produced which bear the signatures of late Mr. KJS Ahluwalia either confirming the gift deed and/or transfer of shares with the RoC or qua guarantees withdrawn. Admittedly till he died his guarantees were never withdrawn. The financial statements of the year 2021-22 as well as 2022-23 duly show Mr. KJS Ahluwalia, an owner of the shares and there is no reference in such financials qua any alleged gift deed. Per Section of the Act, the register of members is a prima facie evidence of the 95 contents contained therein and Section 397 of the Act refers to admissibility of such documents. Admittedly such 21% shares stood registered in the name of deceased till he had expired. The circumstances relied upon by the appellant do show suspicious nature of execution of gift deed. Admittedly the property existed at Delhi and not at Satna (MP). Further the deceased had his own wife and daughter who were alive, hence there was no reason for him to ignore his Class I heirs and execute gift deed in favour of his brother’s wife. Further, the power of attorney of the year 2000 relates only to movable and immovable properties situated at Satna, MP and it did not contain any authority to gift the subject shares belonging to KJS Ahluwalia to any one much less to wife of the appellant herein. The said power of attorney appears to have been executed only for looking after the properties of the deceased at Satna and nothing else. 15. We have also perused the impugned order and we find all the three issues viz qua maintainability of Respondents No.1 and 2 to file a petition under Section 241-242; the jurisdiction of the tribunal to adjudicate issues of fabrication of documents, including the gift deed and the entitlement of Respondents/legal 10 heirs of deceased were analyzed and settled by the impugned order. The Ld. NCLT held: 32. As regards Petitioners Nos 1 and 2 are concerned, they are undisputed legal heirs of late Mr. KJS Ahluwalia and as such entitled to receive 21% shares held in the name of late Mr. KJS Ahluwalia, on transmission and therefore in our view are independently entitled to make a petition under section 241- 242. Reliance is placed upon the judgment by the Hon’ble Supreme Court in the matter of M/s. World-Wide Agencies Ltd. vs Margarat T. Desor 1990 (1) SCC 536 wherein it was categorically held that legal heirs of deceased members whose name is still in register of members, are entitled to maintain a petition for oppression and mismanagement. Relevant portion of the judgement is extracted below: 24. We do not agree for the reason mentioned before. It further appears to us the Australian judgment does not reconcile to logic in accepting that legal representative can petition for winding-up, which is called the "sledgehammer remedy", but would refuse the lesser and alternative remedy of seeking relief against oppression and mismanagement though the later remedy requires establishment of winding up on just and equitable grounds as a precondition for its invocation. It would be rather incongruous to hold that the case for winding-up on just and equitable ground can be made out by the legal representatives u/s 439(4)(b) of the Act but not the other. This does not appear to be logical. It appears to us that to hold that the legal representatives of a deceased shareholder could not be given the same right of a member under Sections 397 and 398 of the Act must be strictly construed of the Act would be taking a hyper- technical view which does not advance the cause of equity or justice. The High Court in its judgment under appeal proceeded on the basis that legal representatives of a deceased member represent the estate of that member whose name is on the register of members. When the member dies, his estate is entrusted in the legal representatives. When, therefore, these vestings are illegally or wrongfully affected, the estate through the legal representatives must be enabled to petition in respect of oppression and mismanagement and it is as if the estate stands in the shoes of the deceased member. 11 We are of the opinion that this view is a correct view. It may be mentioned in this connection that succession is not kept in abeyance and the property of the deceased member vests in the legal representatives on the death of the deceased and they should be permitted to act for the deceased member for the purpose of transfer of shares u/s 109 of the Act. 24. 25. In some situations and contingencies, the "member" may be different from a "holder". A "member" may be a "holder" of shares but a "holder" may not be a "member". In that view of the matter, it is not necessary for the present purpose to examine this question from the angle in which the learned Single Judge of the Calcutta. High Court analysed the position in the case of Kedar Nath Agarwal v. Jay Engineering Works Ltd. and Ors. to which our attention was drawn.” Emphasis Supplied The chart furnished and recorded earlier demonstrates the shareholding of the Respondent No. 1 Company which shows that Petitioners meet the requirements of Section 244. Therefore, as regards the 1st issue, we hold that the petition is held to be maintainable. In any event, we exercise the power under proviso to Section 244(1)(b) of the Companies Act, 2013 to enable the Petitioners to prosecute the case on merits. 16. We are also of the view in the present case the respondents have satisfied the requirement under Section 244 of the Companies Act, 2013 both in terms of shareholding value and numerical strength as collectively they hold 31.84% of the issued share capital of the company as on the date of filing which extends the statutory minimum of 10%. Further, the petition was filed by 12 out of total th 17 shareholders of the company i.e. more than 1/10 of total number of members. The annual return of the company for the financial year 2021-22 particularly the list of shareholders as on 31.03.2022, confirm this position that 10 shareholders hold an aggregate of 31.84% shareholding, had instituted the petition and the issue of validity of the gift deed as also the respondents No.1 12 and 2 being entitled to transmission of 20% shares, was dealt with by the Ld. NCLT below as under:- 33. As regards the second issue with respect to summary jurisdiction of the NCLT, the position has been settled by the Hon’ble Supreme Court in the matter of Shailja Krishna vs Satori Global Limited, Civil Appeal No. 6377-6378 of 2023, held as follows: 30. The aforesaid decisions confirm the view that the NCLT/CLB possess a wide jurisdiction to decide all such matters that are incidental and/or integral to the complaint alleging oppression and mismanagement. Such power is, however, subject to any other legislative enactment specifically debarring the NCLT/CLB from exercising its powers in this respect. 31. In the instant case, it is an admitted fact that the determination of whether the gift deed is valid or not is central to the decision herein and, therefore, the NCLT did have full jurisdiction to decide whether the gift deed is valid or not, or whether it is against the provisions of the 1956 Act and/or internal regulations of the COMPANY, including but not limited to the AoA and the Memorandum of Association. 35. As regards the third issue, we observe that as per Respondents’ own case, transfer on account of Gift deed dated 27.09.2017 could not be effected due to non-fulfilment of an essential condition mentioned in the Gift Deed. It has been submitted on behalf of the Respondents that the Income Tax Department has seized the original gift deed in a raid and a personal guarantee issued by Ld. Mr. KJS Ahluwalia therefore could not be released by the Bank, which is an essential condition of the above gift deed. Admittedly as per the documents placed on record by the Respondents, 21% shares, allegedly the subject matter of Gift Deed dated 27.09.2017 are still in the name of late Mr. KJS Ahluwalia. Therefore, Petitioner No. 1 and 2 being legal heirs of late Mr. KJS Ahluwalia, are entitled to get those 21% shares transmitted in their favor. 37. A reading of the above power of attorney, prima facie, we find that this Power of Attorney was primarily meant for managing all the assets of Satna through his trusted brother, the Respondent No. 2. So, the Power of Attorney was given in good will for managing the estate in the best possible manner. 13 The scope of this Power of Attorney prima facie does not show that it includes the transfer of shares or change of the shareholding pattern of the company in question. All that we can infer from this POA is that since the executant found it difficult being a businessman otherwise busy in other business, has given his authority to his brother - Respondent No. 2 to undertake the necessary steps in the interest of the company. We are unable to find any manner of indication that Respondent brother could take away the share by way of gift deed in favor of his wife. In any event it needs further enquiry after completion of pleadings. 38. Be that as it may, the shares are recorded and maintained at the registered office of the Respondent No.1 Company situated at New Delhi. The Power of Attorney speaks only about management of property at Satna, Madhya Pradesh. In any event, as we have observed earlier, the gift of shares by Respondent no. 2 in favor of his spouse i.e., Respondent no. 8 that has not been effected in the books of records of the Respondent no 1 Company in the manner prescribed by law. Admittedly, the shares in the demat form are still in the name of late Sh. KJS Ahluwalia. The Petitioners no. 1 and 2 are the class-1 legal heirs and as such would be entitled to transmission of shares in their name, by law. There is no impediment in law for them to inherit the shares on the demise of Late Sh. KJS Ahluwalia. The Respondent No. 2 or his spouse (Respondent No. 8) have not even made an attempt to transmit the shares except giving various reasons as above, for long number of years which also brings a doubt as to why no action was taken even though the alleged gift deed was purportedly executed on 27.09.2017. Further, late Sh. KJS Ahluwalia died only on 15.10.2021 and the gift deed was executed on 27.09.2017 during the lifetime of late Mr. KJS Ahluwalia and that too using a POA dated 08.08.2000 when admittedly Respondent No.1 company was not even acquired by late Mr. KJS Ahluwalia and his brothers. This prima facie shows that the Petitioners have made out a case in their favour for transmission of shares. 39. We therefore prima facie come to the conclusion that the Power of Attorney basis which the gift deed is said to have been executed in the year 2017 has not been put into effect by transmission of shares in the name of Respondent No. 8 - spouse of Respondent No. 2. Since the shares still continued to be in in the name of late Sh. KJS Ahluwalia, in demat form, Petitioner nos. 1 and 2 are alone entitled to the benefit of 14 transmission of shares as their class-1 legal heirs. We hold accordingly. 17. Thus we see no reason at this stage to upset the findings of the Ld. NCLT qua maintainability and qua validity of the Will. One of the argument raised before us was if prayer (c) is allowed at an interim stage then there shall be nothing left in the company petition. We disagree. If one looks at the gambit of prayers made in the Company Petition we can say the petition would not be infructuous upon grant of prayer (c) alone. The petition contains other prayers from (a) to (s) besides (c) , which need further deliberations and this is no ground to upset a reasoned finding by the Ld. NCLT. The question here was not only the validity of gift deed, surrounded by suspicious circumstances as described above, but was also qua the power flowing from Power of Attorney of 2010 to execute such document viz gift deed and we also find no such power was ever given to the appellant therein to execute gift deed of shares in a company situated at Delhi. Thus to our mind no further enquiry rather is left on this score. Now an issue qua an alleged oral family settlement in 2017 was also raised. But considering the facts, prima facie , these claims not reflected in the annual statements of later years. It appears it all started upon the death of Mr. KJS Ahluwalia, as he left only his widow and a daughter. Now the impugned order does not stop the appellants to prove any such oral settlement or the deceased’s consented to such settlement, in the proceedings pending before the Ld. NCLT. 18. Though an objection qua authorization of Respondents No.3 to 10 companies was raised but the respondents allege Mr. Jatin Pal Singh, a director 15 of Respondent No.3 to 5 vide a validly executed Board Resolution had authorized Mr. Rajeev Verma to file the company petition. The appellant’s allegation of irregularity is rather based on delay in updating MCA Portal which was due to system upgradation. 19. Regarding the objection of the company’s role in transmission of shares, Section 56(4)(c) of the Act imposes a mandatory obligation to transmit shares by operation of law, within one month. Article of Association of the company also prescribe a detailed transmission procedure. The impugned order in its para 47 and 49 has rather directed Respondent No.1 in appeal to apply as per the prescribed rules for effecting transmission and registration of shares to the company or the authority and further directed to enter the name of Respondent No.1 in the register of members as rightful shareholders upon receipt of application for transmission in accordance with the procedure prescribed. As per record the Respondent had sought transmission of her husband shares vide letter dated 1.2.2022 and email dated 9.2.2022 enclosing the requisite documents but the company did not respond to the same nor informed Respondent about the status/procedure for transmission through RTA/DP . Now since there is no legal requirement on succession certificate, hence the company cannot evade the responsibility under the guise of Depository Participant. The fact the shares were held in dematerialized form does not absolve the company. In Adesh Kaur Vs Eicher Motors Ltd & Ors (2018) 7 SCC 709 it was held the company and its depository participants, shares a principal-agent relationship 16 hence the appellants’ failure to respond or direct the respondent to the depository participants precludes it from avoiding liability. 22. The appeal is devoid of merits and thus is dismissed. 23. Pending application IAs No.1294 to 1296 are disposed of. (Justice Yogesh Khanna) Member (Judicial) (Mr. Ajai Das Mehrotra) Member (Technical) Dated:11-03-2026 Bm </div>