IN THE HIGH COURT AT CALCUTTA CIVIL APPELLATE JURISDICTION ORIGINAL SIDE APO No.

153/2006 PLA 204/2004 TS No. 6/2004 GA No. 1605/2006

Rajendra Singh Lodha
v e r s u s

Ajay Kumar Newar & Ors.
APO No. 197/2006 PLA No. 204/2004 TS No. 6/2004 GA No. 1727/2006

Rajendra Singh Lodha
v e r s u s

Ajay Kumar Newar & Ors.
P R E S E N T: The Hon'ble Mr. Justice PINAKI CHANDRA GHOSE an d The Hon'ble Mr. Justice TAPAN KUMAR DUTT. Heard on : 29.06.06, 10.07.06, 11.07.06, 13.07.06, 2.08.06, 3.08.06, 8.08.06, 9.08.06, 22.08.06, 23.08.06, 30.08.06, 5.09.06, 6.09.06, 12.09.06, 14.09.06, 19.09.06, 1.11.06, 15.11.06, 16.11.06, 22.11.06, 29.11.06, 13.12.06, 3.01.07, 17.01.07, 18.01.07, 25.01.07, 31.01.07, 7.02.07, 14.02.07, 15.02.07, 28.02.07, 1.03.07 and 19.04.07.
Delivered on :

11.10.2007

For the appellant: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Anindya Kumar Mitra , Sr. Adv. Shaktinath Mukherjee, Sr. Adv. Pratap Chatterje, Sr. Adv. Bikash Ranjan Bhattacharya, Sr. Adv. Malay Kumar Ghosh, Adv. Abhrajit Mitra, Adv. Sanjit Kumar Trivedi, Adv. Debanjan Mandal, Adv. Joseph Banerjee, Adv.

For Smt. Radha Devi Mohatta: Mr. Mr. Mr. Mr. S. B. Mookherjee, Sr. Adv. P. K. Das, Sr. Adv. S. N. Mookherjee, Sr. Adv. Ratnanko Banerjee, Adv.

For Shri Ajay Kumar Newar & Ors.:Mr. S. Pal, Sr. Adv. Mr. B. Sen, Sr. Adv. Mr. N. G. Khaitan, Adv. Mr. Debdatta Sen, Adv. Ms. Vineeta Meharia, Adv. For Shri G. P. Birla: Mr. Balai Ch. Ray, Sr. Adv. Mr. D. N. Sharma, Adv. Mrs. Rupa Bandopadhyay, Adv. Mr. T. K. Chaudhuri, Adv. For Shri K. K. Birla & Ors.: Mr. S. P. Sarkar, Sr. Adv. Mr. Pramit Kr. Ray, Adv. Mr. Saumik Mukherjee, Adv.

Pinaki Chandra Ghose, J. : Two appeals have been filed by the
appellants challenging a common judgment and order dated 19th May, 2006 passed by the Hon'ble First Court on the applications filed by Radha Devi Mohatta (hereinafter referred to as “RDM”) and Laxmi Devi Newar (hereinafter referred to as “LDN”). following order: His Lordship was pleased to pass the

“…Hence I appoint Joint Administrator, pendente lite, consisting of following persons (i) Mr. Hiranmoy Dutta, Barat-law of Bar Library Club; (ii) Promotha Nath Chatterjee, Learned Advocate of Bar Association, Room No. 1; (iii) Mr. Prabir Kumar Roy, ex-Sheriff of this Court of 10, S. N. Roy Road, Behala, Kolkata – 700 019; (iv) Mr. Sujit Bhattacharjee of 52-C, Ballygunge Circular Road, Kolkata – 700 019, who shall take charge and control of all the shareholding of the deceased Lady in all the companies and they should function as could be functioned by under law by virtue of the controlling shareholding of all the Companies left behind by the said Lady. They shall take step for rectification of all the share registers of the Companies recording their names. They shall immediately make an enquiry as to the dealings of Lodha vis-à-vis dividends and investment of the dividends and submit a report to the Court and they shall place themselves in the Board of Directors wherever it is possible by virtue of the shareholding. They shall, in consultation with each other, decide to dissolve the Board if necessary under law for the benefit of the Companies, wherever possible. Of course they must consult and take the views of Lodha in each and every step while taking decision. If his views and advice are accepted by the Administrators then the views of the contesting defendants shall be taken and if there is a difference in the two views the matter should be placed before the Court for obtaining direction. They shall remain in the office of the Administrator, pendente lite, for a

period of two years or till the disposal of the probate proceedings whichever is earlier. Therefore, Lodha shall hand over all the charges to the aforesaid appointed Administrators, pendente lite. Interim order passed earlier will continue till possession is taken by the Administrator...” The Memorandum of cross-objections in respect of the said order were also filed by the respondents in the instant appeals.

Being aggrieved by the said order, these appeals and cross-objections were filed by the parties.

Both the appeals and the cross-objections are taken up for hearing and are disposed of by this common judgment and order.

The facts of the case briefly are as follows:-

Priyamvada Debi Birla (hereinafter referred to as “PDB”), wife of M. P. Birla (hereinafter referred to as “MPB”) died on 3rd July, 2004 and left a registered Will dated 18th April, 1999 and a codicil dated 15th April, 2003 respectively. MPB died on 30th July, 1990. PDB, during her lifetime, was in

control and management of MPB Group of Companies.

By the said registered Will dated 18th April, 1999, PDB appointed Rajendra Singh Lodha (hereinafter referred to as “RSL”) as sole Executor to the Will. This Will has been challenged by the sisters of MPB, namely LDN and RDM. It is

also to be noted that MPB and PDB had no issue. It further appears that the caveats were filed on behalf of LDN and RDM and the said caveats have not been opposed by RSL.

K. K. Birla (hereinafter referred to as “KKB”), B. K. Birla (hereinafter referred to as “BKB”), G. P. Birla (hereinafter referred to as “GPB”) and Yasovardhan Birla (hereinafter referred to as “YB”) have also filed caveats challenging the said Will. The caveats filed by KKB, BKB and YB have been

discharged by the High Court and the caveat filed by GPB has been retained.

It is also to be noted that LDN, since deceased, her heirs and the Executors have been substituted in the probate proceedings. Admittedly, after the death of PDB, RSL, on 12th July, 2004 read out the said registered Will at Birla Park before the members of Birla family. On 19th July, 2004, RSL filed the probate application before this Hon'ble Court being P.L.A. No. 204 of 2004.

It further appears that a suit being C. S. No. 221 of 2004 was filed on 17th August, 2004 by KKB, GPB and others claiming that MPB and PDB had left earlier Wills dated 13th July, 1982 and the said two Wills are Mutual Wills. The claim in the plaint is that there is an irrevocable agreement between MPB and PDB that they would not revoke the said Wills.

On 18th August, 2004, KKB and others filed a petition for probate of the alleged Will of MPB dated 13th July, 1982 which has been marked as P.L.A. No. 241 of 2004. It is pointed out that the said petition was filed for probate 14 years after the death of MPB (i.e. in the year 1990). Another petition for probate was filed by GPB and others for probate of the alleged Will of PDB dated 13th July, 1982 being P.L.A. No. 242 of 2004.

After the death of PDB, RSL, as Executor, took the charge of the Estate of PDB. The said fact is also admitted by the caveators. RSL was allowed to

manage and control the Estate of the deceased testatrix (PDB) as Executor. After six months, applications were filed for appointment of Administrators pendete lite in respect of the said Estate.

Mr. Anindya Mitra, Learned Senior Advocate alongwith

Mr.

Shaktinath Mukherjee, Learned Senior Advocate and others appearing in support of this Appeal contended that the application for appointment of the Administrator Pendente Lite was filed by the respondents after the delay of six months which would show that even the caveators do not have really any apprehension that the Estate in the hands of RSL as Executor was under any risk of dilution or waste or mismanagement. In fact, the caveators have not been able to establish any act of dilution of value of shares of the Estate in MPB Group of Companies or any or mismanagement on the part of the RSL during the said period of six months.

The said application for appointment of Administrators Pendente Lite was filed on 16th December, 2004 being G.A. No. 4374 of 2004, G.A. No. 4375 of 2004 and G.A. No. 4376 of 2004 respectively.

Mr. Mitra further submitted that at the ad-interim stage the matter was heard by the Hon'ble First Court for several days and the following ad-interim order and he drew our attention to the judgment delivered by the Hon'ble First Court reported in (2005) 2 WBLR Cal 311 (Priyamvada Devi Birla vs. Laxmi Devi Newar & Ors.). He further drew our attention to paragraphs 35 and 36 which is reproduced as hereunder:

“35. Mr. A. K. Mitra and S. N. Mukherjee have agreed upon instruction from their client that the shareholding of all these companies shall not be transferred and/or disposed of till the disposal of the present application. I, therefore, direct Lodha to maintain the status quo with regard to the transfer of shares received and/or got hold of already in respect of the companies from the said deceased Lady. This order of status quo will also cover any other shareholding in respect of other companies, which might be coming to his hands. This order shall cover other immovable property also. The decision cited by both the learned Counsel are mostly related to the appointment of Administrator Pendente Lite, therefore, those decisions are not germane of the matter at this stage. 36. ……………However, it is made clear in the event any step is taken for removal of any of the Directors only prior seven days notice shall be served upon the defendants. I direct the propounder by his controlling share holding shall not move any resolution nor support any resolution aiming to sell, encumber any assets of the MPB Group of Companies nor closure thereof, without express leave of the Court. The propounder shall also, maintain status quo in relation to the other properties.”

At the ad-interim stage the Hon'ble First Court held prima facie that:

“… I do not find any allegation of mismanagement, destruction and devastation of the Estate only an allegation has been made that a jute mill is sought to be closed and the same is sought to be shifted. Explanation has been given by Lodha in his separate application stating that for economic viability of the above jute mill the said decision was taken to shift the jute mill at a different place as the existing site does not have any scope for expansion. …………………… So, I think, keeping in view the interest of the group of companies on the one hand and to safeguard the interest of the Estate of the deceased lady on the other hand slightly regulatory measure is to be taken …” After hearing the parties the Hon'ble Court was pleased to pass an adinterim order and further directed the parties to file their affidavits.

Mr. Mitra and Mr. Mukherjee alongwith others appearing on behalf of the appellant further pointed out that the Hon'ble First Court on 19th May, 2006 finally disposed of the matter but did not pass any order for appointment of Administrators over the valuable jewellery, ornaments, portfolio shares and mutual funds held by PDB personally and allowed the Executor to remain in control and management of the same though the submissions were made before the Hon'ble First Court that RSL had suppressed jewellery, ornaments, valuable gold coins etc. Incidentally, all of which were however, found intact during the inventory from the residence of PDB itself. Mr. Mitra further submitted that the Hon'ble First Court had no lack of confidence in RSL and the Hon'ble First Court,

after, having come to the conclusion that there was no mismanagement under RSL singled out the controlling block of shares held by PDB in MPB Group of Companies for appointment of four Administrators over the same with drastic powers, (a) to get the shares transferred in their own names and rectify shares register of the companies for recording their names, (b) to get themselves nominated on the Board of Directors and (c) to dissolve the existing Boards.

Mr. Mitra further submitted that there was any material disclosed subsequent to the ad-interim order justifying necessity for appointment of Administrator Pendente Lite over the controlling block of shares of MPB Group of Companies? Other Birlas would like disintegration of MPB Group because other Birlas are business rivals. This question falls for consideration in this appeal and has been discussed hereinafter. An Officer of Court appointed over shares would not have any voting right and he relied upon a decision reported in AIR 1985 SC 520 (Balkrishnan vs. Swadeshi Polytex Ltd.) [serial no. 14 of Judges Brief page 101 at 112] – property in shares does not vest in Receiver. But the Hon'ble First Court has conferred unusual power to Administrators to get shares recorded in their names by rectification of share register to vote and to become Directors. It is also submitted that after a period of 2 years 9 months, since the death of PDB, no ground of mismanagement has been established, even prima facie.

He further submitted that under Section 247 of the Indian Succession Act, the Court has power to appoint Administrators Pendente Litem. No specific

guidelines are mentioned in the said Section. Therefore, Courts have laid down the guideline through judgments. Mr. Mitra submitted that the principles for

appointment of Administrators emerge from decided cases and the principles laid down therein are still undisputed.

Appointment of Administrator is analogous to that of appointment of Receiver and he pointed out that the said position has also been accepted by the Hon'ble First Court and he drew our attention to page 45 line 7 of the said judgment in this regard. Under Order 40 Rule 1 of the Code of Civil Procedure, the appointment of Receiver should not only be just but must also be convenient.

He further pointed out that the respondents before the Hon'ble First Court relied upon the following judgments:

AIR 1933 Bom 342

(Pandurang Shamrao Laud & Ors. vs. Dwarkadas Kalliandas & Ors.) (Adapala Subba Reddy & Anr. vs. Adapala Andemma & Ors.)

AIR 1951 Madras 393

AIR 1952 Cal 418

(Goods of Borendranath Mitter & Sudhindranath Mitter vs. Arunendranath Mitter) (Mahamaya Dassi vs. Commissioner of Income

126 ITR 748

Tax, W. B. III) Williams on Executors & Administrators, 14th Edn. Page 206, and 13 CLJ 47 (Bhuban Mohini Debi vs. Kiran Bala Debi).

In AIR 1933 Bom 342 (supra) the Court held as follows:

“In other words the position of an Administrator Pendente Lite is similar to that of a Receiver. (see page 343 column 2). In my opinion, the Court has to be satisfied as to the necessity of such an administration and as to the fitness of the proposed administration, and it must also be satisfied that it is just and proper under the circumstances of the case to appoint an Administrator before subjecting the Estate to the cost of such administration. (see page 344 column 1).” He further submitted that in the decision reported in AIR 1951 Madras 393 (Adapala Subba Reddy & Anr. vs. Adapala Andemma & Ors.) the Court has held that the position of an Administrator would be analogous to that of a Receiver appointed under Order 40 Rule 1 of Civil Procedure Code. In another

decision reported in AIR 1952 Cal 418 (In Goods of Borendranath Mitter & Sudhindranath Mitter vs. Arunendranath Mitter), the Court held that applying the principle of the Court of Chancery for the appointment of a Receiver, the Court may appoint an Administrator Pendente Lite.

He further contended that in the decision reported in 126 ITR 748 (Mahamaya Dassi vs. Commissioner of Income Tax, W. B. III) the Court has held as follows:

“In the case of Gourmani Dassi vs. Baroda Kanta Jana [AIR 1919 Cal 980] that the position of an Administrator Pendente Lite in probate proceedings was clearly analogous to that of a Receiver in a partition suit…………………………The position of such an Administrator would be analogous, as held by the Division Bench of the Madras High Court, to be that of a Receiver appointed under Order 40 Rule 1 of the CPC. In the case of Ganpat Pralhad vs. Pralhad Madhoba Ruikar Trust [AIR 1952 Nag 253], it was held that the position of Receiver appointed under Order 40 Rule 1 of CPC was analogous to that on an Administrator appointed under Section 247 of the Succession Act. In the case of Pandurang Shamaro Laud vs. Dwarkadas Kalliandas [AIR 1933 Bom 342], the Bombay High Court held that the position of an Administrator Pendente Lite was similar to that of Receiver.” [see page 763]

In Williams on Executors & Administrators, 14th Edn. Page 206, the practice of the probate division is to appoint an Administrator Pendente Lite in all cases where the Court of Chancery would appoint a Receiver. The same principle was followed in the decision reported in 13 CLJ 47 (Bhuban Mohini Debi vs. Kiran Bala Debi).

He further pointed out that the appointment of Administrators Pendente Lite under Section 247 of the Indian Succession Act the criteria of necessity is also to be fulfilled. Necessity of presentation of the Estate of the deceased

testatrix is the more important criteria.

Unless grounds for necessity are Reliance was

established, there is no jurisdiction to appoint Administrators.

placed upon the decision reported in 13 CLJ 34 (Jogendra Lal Chowdhury vs. Atindra Lal Chowdhury) where the Hon'ble Court has held that whether there is anything against the appellant personally which would necessitate the Court taking the Estate out of his hands. In the decision reported in 13 CLJ 47

(supra) the Court expects a necessity to be shown for the temporary grant namely, that there is something required to be done and there is no person empowered to do it. Therefore, the Court held that the necessity for the

appointment of an Administrator Pendente Lite has been clearly made out.

In the decision reported in 1866 LR 1 P & D 103 (Horrell vs. Witts & Plumley) the Court held that :

“the rule which I laid down in the case of Bellew vs. Bellew n(1) is not applicable to all cases. Where there is no one who is legally entitled to represent or to take possession of the deceased’s property, and it is requisite to bring actions, or to make demands for the payment of money due to his Estate, it is often necessary that an Administrator Pendente Lite should be appointed; but where the deceased at the time of his death was in partnership with another person, the case is very different. But where the deceased at the time of his death was in partnership with another person the case is very different.”

In the decision reported in (2005) 2 WBLR 311 (Priyamvada Devi Birla vs. Laxmi Devi Newar & Anr.) the Court held that it is true as it appears from

the judicial pronouncement cited by the Learned Counsel at the bar in order to pass any interim order relating to the administration of the Estate, case of necessity has to be established.

It is stated in Williams on Executors & Administrators, 14th Edn., page 206 that before making a grant Pendente Lite the Court must be satisfied as to the necessity of such an Administrator.

He further drew our attention to Mortimer on Probate 2nd Edn. page 378 which is reproduced as hereunder:

“In the probate division, however, the appointment of an Administrator Pendente Lite does not follow as a matter of course whenever litigation is pending. The applicant is required to show some necessity for the grant, e.g., that it is necessary for the preservation of the Estate, for receiving rents, payment of interest, or the dividends on shares as they become due, and that no fit and proper person is in a position to discharge these offices (k). Accordingly, when the deceased at the time of his death was in partnership with another person. Court refused to grant administration Pendente Lite against the wish of the surviving partner, and stated that it would require very strong proof that he was dealing improperly with the property before it would accede to such an application (1). And where an Executor, whose appointment was not in dispute, was willing to act, and was competent to discharge the function of an Administrator, the Court refused to grant administration Pendente Lite.”

He further drew our attention to Woodroffe on Receiver 7th Edn., page 98, line 15 which is reproduced as hereunder:

“The Executor will not be displaced upon slight grounds, and a strong case must be made out to warrant the appointment of a Receiver where the Executor is willing to act. Where, however, the circumstances above-mentioned exist, such as, would justify the appointment as against a trustee and where the abuse of trust is manifest, and it is plainly apparent that there has been serious waste and misappropriation of the funds, relief will be granted, especially is this true when the mismanagement is shown not in a single instance but from an habitual course of dealing, involving the property in danger.”

The following judgments were cited on behalf of the respondents:

In the decision reported in AIR 1933 Bom 342 (supra) where the Court has held that before exercising its jurisdiction to grant Administrator Pendente Lite, it has also to be satisfied whether there is a necessity for such a grant has been made. It has been held in the said decision that each case must depend upon its own facts and upon the facts of that case, the appeal court came to the conclusion that no necessity for the appointment of an Administrator Pendente Lite had been made out. Therefore, the Court laid down the property for

appointment of Administrator that the criteria would be whether the necessity for a grant of administration Pendente Lite has been made out and on such criteria court has jurisdiction to appoint Administrator Pendente Lite.

In the decision of AIR 1952 Cal 418 (supra), the principles for appointment of Administrator has been summarized by Sir Asutosh Mookherjee, J. in 10 CLJ 263 (Brindaban Chandra Shaha vs. Sureswar Shaha

Paramanick) has been followed in paragraph 11 and thereafter the principles of appointment of Administrators summarised in paragraphs 13 and 14 as follows:

“13. 14.

The Question, therefore, is what is necessity? What is the test for it? What are the reasons thereof? It seems that the necessity rises when there are assets to be collected and there is no representative to collect them and there is a ‘bona fide’ litigation respecting the title to that representations.”

He further submitted that in the decision reported in (1948) 1 ALLER 271 (Bevan Vs. Houldsworth) the following facts were considered by the Court of Appeal while appointing Administrator Pendente Lite:

a)

The defendants were not in a position to collect the income arising out of the Estate and not in a position to enforce the claim of the Estate.

b)

The Estate was in jeopardy.

He further tried to contend before us that after a prima facie case for challenging the validity of the Will is made out, the Court is to see whether there is necessity to appoint Administrator and further that whether it will be just and

convenient to do so in the facts and circumstances of the case. The necessity and convenience for appointment of Administrator will depend on the fact situation of every case and will vary from case to case. In this context the nature of Estate of testator becomes very relevant.

According to Mr. Mitra, the necessity for appointment of Administrator arises upon the following facts: a) There has been established waste and mismanagement of the Estate by the Executor; b) c) Where there is debt due to the Estate and not being collected; Dilution of the Estate by the Executor and consequently necessity for preservation of the Estate arises; and d) Nature of the Estate.

The following decisions were cited on behalf the Appellant in the above context: In the decision reported in AIR 1956 Mad 409 (Kunjammal vs. Malayappa Iyer & Anr.) the Court specifically held that: “there is no authority for the position that whenever the Estate, or a large part of it consists of movable property and cash and the person, in possession of the Estate is a limited owner a Receiver should be appointed. It is not the law. There must be proof of a further fact, namely, that the conduct of the limited owner has been such as to raise a reasonable apprehension. We are unable to follow the reasoning of the learned Judge on which he finds that though no positive acts of waste or

spoliation have been proved, there is room for reasonable apprehension of such waste or fraudulent secretion to the detriment of the reversionary. This finding is totally inconsistent with his earlier finding that there is no positive proof of any fraud, or waste”. In another decision reported in AIR 1995 Kant 258 (F. C. S. Amalnathan & Ors. vs. J. S. Victor Basco) it appears that ordinarily the

desire of the testatrix as to who should administer her Estate and execute her Will, will have to be respected and an Executor appointed by the testator should not be removed unless there is clear evidence that his continuance as an Executor would be detrimental to the Estates of the deceased and frustrate the Will of the deceased. Some minor lapses here and there cannot be a ground to remove the named Executor. Bearing in mind this principle it has to be seen whether the respondents have established sufficient grounds to remove the petitioners from Executorship.

Mr. Mitra submitted that the following decisions were cited on behalf of the respondents before the Hon'ble First Court: In the decision reported in AIR 1933 Bom 342 (supra) where the Court laid down the principle of law that a Receiver will not be appointed as against the Executor which is as follows: “… unless there is gross misconduct or mismanagement and waste on their part ………… they will not be replaced by the Court Receiver except on very strong grounds…” Mr. Mitra further tried to draw our attention to the decision reported in AIR 1952 Cal 418 (supra) where the Court held that the Executor was alleged

to have removed and secreted cash, jewellery, and other movables and books of accounts of the Estate with a view to deprive the applicants of their just rights in the Estate and “the Executor is doing away with the Government Promissory Note belonging to the Estate” – no such allegation has been made in our case, Mr. Mitra submitted.

In the decision reported in 1948 (1) ALL E R 271 (supra) where the Court held that in Horrell vs. Witts (2) the deceased had been in partnership and the surviving partner was in perfectly good condition to carry on the business, collecting assets and so on. The Court also held that there was somebody who could collect the assets which appear to have consisted entirely of the deceased’s share in the business.

Significantly, the Hon'ble First Court has not appointed Administrator Pendente Lite over the other assets of the Estate, namely portfolio shareholding of PDB, amounts invested in mutual funds, Government and other Bonds,

undivided 1/5th share in Kumaon Orchard, ornament jewellery and gold coins and silver utensils, household articles and plates and antiques, etc. This clearly reveals that the Hon'ble First Court had found that there was no necessity for appointment of Administrator Pendente Lite over those valuable assets. The

Hon'ble First Court has appointed the Administrator Pendente Lite only over the shareholding in the M. P. Birla Group of Companies.

Mr. Mitra humbly raised the question of dichotomy and contended that when there was no necessity for appointment of Administrator Pendente Lite over the other assets, what was the necessity for appointment of Administrator Pendente Lite over the shares of PDB in M. P. Birla Group of Companies. No reason has been given in the judgment by the Hon'ble First Court for appointment of Administrator Pendente Lite over a part of the Estate and continuing the named Executor to manage the remaining part of the Estate. It clearly reveals that the Hon'ble First Court did not consider RSL untrustworthy. There is no finding of waste, mismanagement or devastate in the judgment of the Hon'ble First Court in respect of the controlling block of shares over which Administrators were appointed, or for that matter in respect of any other part of the Estate. The respondents in their cross objection have not taken any ground that allegation regarding mismanagement should have been upheld by the Learned Single Judge.

The following questions, therefore, fall for consideration in this appeal: a) Was there any necessity for appointment of Administrator Pendente Lite over the controlling block of shares of the M. P. Birla Group of Companies? b) Even assuming that ground of necessity is made out, is it just and convenient to appoint Administrator Pendente Lite over the controlling block of shares of M. P. Birla Group of Companies which will affect not only running business but also public

limited companies who are not parties to the probate proceeding and a large number of public shareholders?

Mr. Mitra further contended that there are four manufacturing companies in M. P. Birla Group of Companies in which shares are held by various investment companies and other companies within the said Group. Birlas in

their petition for Administrator Pendente Lite annexed a chart showing shareholding pattern of various companies of M. P. Birla Group of Companies in those manufacturing companies. According to Birlas’ own case and their chart, (see page 283 vol. I of the paperbook) M. P. Birla Group of Companies had control over those four manufacturing companies to the following extent: Name of the manufacturing companies Birla Corporation Ltd. Universal Cables Ltd. Vidhya Telelinks Ltd. Birla Ericsson & Optical Ltd Percentage of shares held by M.P.Birla Group of companies 48.55 43.67 40.20 35.30 Percentage of shares held by outsider members of public and various Societies 51.45 56.33 59.79 64.70

According to Mr. Mitra, is it “just” when outsiders in large numbers are involved?

His further point that the Birla Ericsson Ltd. is a joint venture company with Ericsson of Sweden having 27.50% shares. company. It is a quasi partnership

Admittedly, all those four manufacturing companies are listed

companies and there are a vast percentage of shares held by members of public varying from 37% to 61%. The number of outside members vary from 10,000 to 40,000 in these four manufacturing companies. [see para 4.5 page 29 of the impugned judgment]. None of the companies are party to the probate

proceedings and in the application for appointment of Administrator Pendente Lite. No notice of this application for appointment of Administrator Pendente Lite was given to the public shareholders by issuing a general notice through newspaper or otherwise. This is not a proceeding under Order 1 Rule 8 of the Code of Civil Procedure. Undoubtedly a large number of members of public will be affected by this appointment of Administrator Pendente Lite. Even the

companies who will be directly affected by the impugned order for appointment of Administrator Pendente Lite were not given notice. In short, the persons

interested in proper management and well running of these companies have not been before the Court. It is also submitted that it would not be “just” in the facts and circumstances of this case to appoint Administrator Pendente Lite over block of shares in M. P. Birla Group of Companies. procedural justice and fairness. There has been failure of

Mr. Mitra drew our attention to page 3 of the judgment of the Hon'ble First Court and pointed out that His Lordship held as follows:

“Going by the prayer portions of the applications made by the caveatrix, I think the prayer for appointment of the Administrator in terms of Prayer ‘b’ cannot be considered for if granted, that mount to taking over of management and control of separate juristic bodies by the Probate Court as it has no jurisdiction to do.” He further pointed out that His Lordship held that prayer (a) can be considered (see pages 3 and 33 of the impugned judgment).

According to him, both the Prayers (a) and (b) are for appointment of Administrators and relate to the same companies which are specified in Annexure ‘J’ (see page 293 volume I of the paperbook). The said prayers are set out hereunder: “Prayer (a): That an Administrator and/or a committee headed by an independent and impartial Administrator be appointed to take over all movable and immovable assets and properties of the deceased PDB forthwith including the voting right and the right of control of the deceased in respect of the companies specified in Schedule being annexure ‘J’. Prayer (b): Administrator and/or committee to be appointed herein to take over the management, affairs and control of the M. P. Birla Group of Companies set out in schedule being annexure ‘J’ and the shareholding of the companies specified in schedule being annexure ‘AA’ including voting right therein.” Hence, Mr. Mitra contended that Prayers (a) and (b) are slightly different in language aimed at the same thing, namely taking over voting right and right of control of 38 companies mentioned in Annexure ‘J’. Taking over control of the companies will imply taking over management of the affairs of the company. The Hon'ble First Court has directed joint Administrators to take control of the voting

right and also control of the companies by getting themselves appointed as Directors in the Board of Directors of the companies and to dissolve the Board of Directors of the companies, if necessary and with additional power for rectifying the share registers in their own names and incorporating their names as shareholders. It is more than taking over control of the companies. The

Hon'ble First Court has by-passed the provisions of the Companies Act and the order is contrary to the provisions of the Companies Act. He further submitted that there are specific provisions in the Companies Act for rectification of share register, appointment of Directors. Neither

shareholders nor Directors have been empowered under the Companies Act to dissolve the Board of Directors. It can only be done by Company Law Board in proceedings under Section 397 and 398 read with Section 402 of the Companies Act. All the statutory provisions have been by-passed by the Hon'ble First Court. Although His Lordship held that the probate court has no jurisdiction to take over management and control of separate juristic bodies, even then have passed an order contrary thereto. The impugned order is without jurisdiction and

contrary to principle of law as laid down by the Hon'ble First Court. The order for appointment of Administrator Pendente Lite over block of shares and directions given regarding management of the Companies should be set aside on this ground. The order of the Hon'ble First Court is contrary to law and,

therefore, suffers from vice of error of law on the face of the judgment.

According to his further submission, no case of necessity for appointment of Administrator Pendente Lite over the part of Estate, namely controlling block of shares of PDB has been established and in absence thereof, the Hon'ble First Court had no jurisdiction to pass the impugned order. The necessity is to

preserve the Estate which has been achieved by an ad interim order of injunction and there has been no compliant of dilution of shareholding.

Mr. Mitra further pointed out that there is a subsisting order of injunction restraining any dilution of controlling block of shares and all shares held by PDB during her lifetime, which safeguards against any possible dilution of the most valuable asset of the Estate, namely, the controlling block of shares in the M. P. Birla Group of Companies. There is no allegation that there has been any

violation of ad interim injunction or even any apprehension that RSL would be dealing with controlling block of shares in M. P. Birla Group of Companies and thereby act to his own detriment as the legatee. It is not the case that the main assets being controlling block of shares has not been preserved by RSL as Executor and in view of injunction, it is not even possible to deal with the same. This order of injunction has been widely publicized through the media, both print and electronic. It is also well settled law that any transfer of property in violation of order of injunction, is void. Therefore, there was no necessity for further order.

Mr. Mitra’s further contention was on the point that no ground of any waste or mismanagement or dilution of the Estate has been established or even

held by the Hon'ble First Court.

On the contrary, the Hon'ble First Court has

held in the impugned judgment as follows: “it is true at the present moment mismanagement by Lodha has not surfaced. The business of the M. P. Birla Group of Companies cannot be said apparently to be in perilous condition and not in serious jeopardy at the hands of Lodha.” In the ad interim order also the Hon'ble First Court held as follows: “I do not find any allegation of mismanagement, destruction and devastation of the Estate only an allegation has been made that a jute mill is sought to be closed and the same is sought to be shifted. Explanation has been given by Lodha in his separate application stating that for economic viability of the above jute mill the said decision was taken to shift the jute mill at a different place as the existing site does not have any scope for expansion. …………………………… so, I think, keeping in view the interest of the group of companies, on the one hand and to safeguard the interest of the Estate of the deceased lady on the other hand slightly regulatory measure is to be taken………” Therefore, the appointment of Administrator Pendente Lite over the controlling block of shares and intervention in running business are not at all justified. The grounds mentioned by the Hon'ble First Court in the judgment do

not give rise to necessity for appointment of Administrator. Some of the grounds have got no factual basis and are dehors the pleadings of the parties. The order is not supported by reasons and based on non-existent facts and, therefore, liable to be set aside.

Mr. Mitra further contended that even assuming the case of necessity is established, is it just or convenient to appoint Administrator Pendente Lite in

view of nature of that part of the Estate over which Administrator Pendente Lite has been appointed, namely running the businesses which includes separate public listed companies with thousands of public shareholders and lenders?

There is not a single judgment cited by the respondent caveators where a Court has appointed Administrator over an Estate having interest in running business. On the contrary, in the judgment of Justice Wilde noted with approval in the case cited by the respondents reported in (1948) 1 All E R 271 (supra) it has been held that: “………In Horell vs. Witts (2) the deceased had been in partnership and the surviving partner was in a perfectly good position to carry on the business, collecting assets and so on. Therefore, the sort of difficulty which arose in Bellew vs. Bellew (1) did not arise there because there was somebody who could collect the assets which appear to have consisted entirely of the deceased’s share in the business. As Sir J. P. Wilde said (L. R. P & D 104): ‘The only result of making a grant of administration Pendente Lite now would be the appointment of some person to wrangle with the surviving partner as to the management of the farm.’ In a very special case like that different considerations may apply”. Similar view was taken by this Hon'ble Court in AIR 1987 Cal 194 (State Bank of India vs. Jayshree Ceramics Pvt. Ltd.) (see Sl. No. 8 of Judges’ Brief Page 70 at page 72) and 1988 (1) CLT 61 (Ambari Tea Company Ltd. & Ors. vs. Manjushree Saha & ors.) (see Sl. No. 15 of Judges’ Brief Page 119 at page 141) where the Court held that the Receiver of Court should not be appointed over running business. Mr. Mitra further submitted that the grounds

on which the Hon'ble First Court thought the necessity for appointment of Administrator Pendente Lite arises, are not really grounds for necessity.

According to Mr. Mitra the Hon'ble First Court held that the dividend income of the Estate and the mode of utilization thereof has not been disclosed to the Court. According to Mr. Mitra, the said allegation was never made by the respondents either in the pleadings or in course of argument, nor did the Hon'ble First Court ask RSL to disclose such particulars. Had RSL been required to

furnish such particulars, he would have given full accounts. The grounds not taken by the parties should not have been relied upon by the Court and that too without giving an opportunity to deal with the same. procedural justice. This is failure of basic

Furthermore, the Hon'ble First Court held that there is strong possibility of proceeding being initiated or defended in connection with the Estate and for collecting debts from the debtors. Mr. Mitra again pointed out that the said

allegation was neither pleaded nor argued by the respondents. According to him, there is no proceeding pending, nor any debt outstanding except a loan given by PDB to East India Investment Co. (P) Ltd., a company in which PDB is the major shareholder. The Estate is such that there is very little likelihood of any

proceeding being initiated against the Estate or proceeding being filed by the Estate for collection of debts. Dividends by the companies and mutual funds are sent by cheques or automatic credit to Bank through ECS.

The Hon'ble First Court further stated in the Judgment that Lodha is a tainted person as because criminal proceeding has been instituted against him and his challenge in the criminal prosecution at the initial stage failed right upto Hon'ble Supreme Court. Mr. Mitra further pointed out that this criminal

proceeding has been instituted at the behest of the respondents which is clearly demonstrated and, therefore, they cannot take advantage thereof. This

proceeding is not one instituted by the State and there is no FIR against RSL. Even, there is no allegation in the petition or in the Affidavit-in-reply that RSL is a tainted man and as such he should be removed and Administrators be appointed. This is again dehors pleadings. Criminal proceeding does not relate to the period of Executorship of RSL. The Hon’ble Justice has held that, “the criminal charges lebelled against him is a personal charge and this charge is related to and in connection with the breach of trust which is alleged to have taken place during the lifetime of the lady but not after her death.” No allegation has been made qua Executor.

The Learned Judge further held that these are not bare allegations but have been particularized namely – unnaturalness of bequest, concealment and delay of production of Will, Executor taking substantial benefit under the Will, change of lawyer for preparation of Will, anticipatory/preemptory recitals of the Will. Mr. Mitra contended that apart from bare allegation in the affidavit in

support of caveat of unnaturalness of the Will and Executor taking benefit under

the Will, there are no allegations of change of lawyer or concealment or delay in production of the Will or anticipatory/preemptory recitals in the Will. He further drew our attention to the affidavit in support of caveat filed by KKB as also other affidavits which are similar and submitted that there is no whisper of such allegation. Therefore, according to him, no case of necessity has been made out. His Lordship held that there are serious allegations with documents as regards competence of RSL to function as Executor (see page 51 of the impugned judgment). Mr. Mitra further submitted that there is no allegation with regard to competence of RSL nor any document disclosed in this connection. No document is specified in the judgment, this is again dehors the pleadings and records. Mr. Mitra pointed out even without the pleadings and documents, the Court held that there are serious allegations with documents as regards the competence of RSL to function as Executor.

Mr. Mitra pointed out that although in the judgment it is stated that human mind is very flexible and consequently RSL cannot be trusted (see page 52 of the impugned judgment) but there are no pleadings to this effect. This is not a ground taken in the petition. Administrators Pendente Lites are appointed by the Hon'ble First Court are also human beings with human mind. He also drew our attention to the fact that under the Indian Succession Act, there is no provision for keeping control over the Executor during the pendency of the proceeding except by appointment of Administrator (see page 47 line 7 and page 52 line 14 of the impugned judgment).

Mr. Mitra said that this finding itself is contrary to what has been held in pages 56 and 57 of the judgment, where the Learned Judge held that RSL should have kept the Court informed about the transmission of shares of PDB in the investment companies in his own name as Executor and that he should have also sought the direction from the Court with regard to discovery of all the movable and immovable properties of the deceased. This has already become a suit being Testamentary Suit No. 6 of 2004. RSL is the plaintiff. All parties to the suit will be bound by any order passed in the suit and are under the control of the Court. The Court can always give directions to the parties to the suit.

According to Mr. Mitra, such findings are without any material and the pleadings. The Hon'ble First Court further held that the properties of MPB have got mixed up with the property of PDB and consequently Executor should be appointed to take control and management of the Estate of MPB (see page 53 of the impugned judgment). Mr. Mitra drew our attention to the fact that the

finding of the same Hon'ble Judge in the caveat discharge judgment is just opposite which would be evident from a decision reported in AIR 2006 Cal 6 (Priyamvada Devi Birla vs. Madhav wherefrom it appears that: “88. ……………… He (Yash Birla) is not able to demonstrate any right to be defeated if probate is granted to the Will of PDB of 1999 though it is contended by Mr. Roy that the Estate of MPB has devolved on and merged with the Estate of PDB and it is very difficult to segregate such an interest I think this is not an impossible task to segregate the properties of both Prasad Birla)

the testators. Therefore, I hold that YB has no interest in the Estate of PDB, since deceased. ………………” The above judgment at paragraph 12 line 17 page 22 also records the submissions made on behalf of the respondents that there was deemed assent to the legacy in favour of PDB by the Executors of MPB’s alleged Will. Therefore, the Estate of MPB has been fully administered and came under the ownership of PDB during her lifetime.

His Lordship held that RSL’s challenge to the criminal prosecution failed both at the initial stage as also before the Hon'ble Supreme Court. Mr. Mitra further pointed out that RSL had not applied for quashing of the complaint in the High Court nor in the appeal filed in Supreme Court. No notice has also been issued by the Hon'ble Supreme Court upon him and he never appeared before the Hon'ble Supreme Court. misappropriation of fact. Hence, according to him, it is an instance of

The Hon'ble First Court further held that the prima facie document has been produced before the Court showing that the mind of PDB and her husband was of charitable disposition (see page 49 of the impugned judgment). No

such document was disclosed before the Hon'ble First Court and, therefore, this finding has no material basis.

Mr. Mitra further pointed out that although there is no pleading or document disclosed before the Court to hold that a large number of charitable trusts had been formed by MPB and PDB from their own resources and funds. On the contrary, it is alleged that the Charitable Trusts/Societies have been set up from the resources of M. P. Birla Group.

His Lordship further held that RSL hurriedly got the shares of PDB in the Investment Companies transferred in his own name before filing of probate petition and before the completion of Shradh ceremony which would go to show that he was anxious to take control of all the Companies including other assets and properties (see page 55 of the impugned judgment). According to the

respondents, 99.84% of the Estate of PDB is comprised of these shares in the investment companies and through these investment companies the entire M. P. Birla Group of Companies are controlled. Therefore, RSL was under a duty and obligation as Executor to take control of the shares and transmission was applied for not in his personal name but as Executor to the Estate. The Court held that the shares of PDB in the investment companies transferred in his own name before filing of probate petition and before the completion of ‘shradh’ ceremony.

The said view is contrary according to Mr. Mitra since the Hon'ble First Court is of the view that the Executor should take immediate control of the Estate. Although the Hon'ble Judge held to the contrary which would be evident from the following passage of the decision as follows:

“…………… on the strength of the 1999 testamentary document the control of the entire Estate has been taken by Lodha. According to Mr. Mitra and Mr. S. N. Mukherjee and so also the provision of the law the Estate and properties vest unto him as named Executor under the provision of Section 211 of the said Act. …………………” Mr. Mitra further pointed out that RSL failed to disclose PDB’s undivided 1/5th share in Kumaon Orchards in the affidavit of assets filed by RSL which were subsequently rectified at the earliest opportunity and the said amendment of affidavit of assets was allowed by a consent order dated 16th July, 2004 and the said ground has not been pleaded nor argued before the Hon'ble First Court.

Mr. Mitra contended that Sections 213 and 214 of the Indian Succession Act applies only in legal proceedings and not in application for transmission of shares and he relied upon a decision reported in (2001) 4 SCC 325 (Clarence Pais & Ors. vs. Union of India) and submitted that the Hon'ble First Court held that RSL should have taken permission of probate court before the rectification of the share register of the 5 investment companies consequent upon transmission of shares of PDB in his own name as Executor. Articles of the companies are contrary to the principles laid down in Sections 213 and 214 of the Indian Succession Act. He pointed out that this case was also not pleaded or argued on behalf of the respondents. The articles of Association of these companies permit transmission of shares without obtaining permission from probate court. The

said subject matter is pending before the High Court for adjudication in Appeal being APOT No. 398 of 2006. There is no provision in the Indian Succession Act

that an Executor has to apply before the probate court for permission for transmission of shares, while on the other hand, the Executor is under an obligation under Section 319 of the Indian Succession Act to collect assets of the Estate.

He further pointed out that under Section 317 of the Indian Succession Act inventory by the Executor is to be done within 6 months after the grant of probate and it is not the case of the respondents that any of the movable or immovable properties of the deceased has been misplaced or wasted. On the

contrary, the Special Officers have inventorised the movables which were found to be much more than what the respondents have stated in their affidavit of assets or inventory petition.

It is also stated in the decision of the Hon'ble First Court that huge amounts are being divested by RSL in mutual investment company floated by RSL. Hence, Mr. Mitra contended that there are no pleadings, no documents, no arguments put forward before the Hon'ble First Court and it is factually incorrect. Mr. Pal, Learned Senior Advocate appearing on behalf of the respondents also accepted the said position and contended that no mutual investment company has ever been floated by RSL nor any part of the Estate of PDB invested in mutual fund by RSL.

According to the Hon'ble First Court, RSL was unmindful of his function as Executor as because he was busy appointing himself as Chairman of the Board of Directors of M. P. Birla Group of Companies (see page 57 of the impugned Judgment). Mr. Mitra pointed out that there was no pleading, no argument, no document. On the contrary, RSL was already the Chairman of all the five He was also the Co-Chairman of Birla

investment companies since 1999.

Corporation Ltd., Universal Cables Ltd. and Vindhya Telelinks Ltd., the three main manufacturing companies of the Group. He was appointed Chairman by the Boards of Directors of these Companies. The Hon'ble First Court further stated in the said decision that the search and discovery exercise have to be undertaken by persons to find out what is the value of the assets left by the deceased and whether RSL’s version or Birla’s version of the value of assets as stated in their respective affidavits of assets is correct. Mr. Mitra further contended that there was no such pleading nor it was urged before the Court and the Hon'ble First Court has not directed valuation of the assets of the Estate. Also, the Hon'ble First Court has not appointed

Administrator Pendente Lite over all the assets disclosed in the affidavit of assets. The Hon'ble First Court has only taken the control of the Companies through Administrator Pendente Lite who are directed to seek directions from His Lordship. He further contended that it is not the function of the probate court to ascertain the value of the assets especially when the maximum court fees have been paid and the extent of the assets is also undisputed.

The Hon'ble First Court held that exercising right of majority shareholding and utilization of dividends accruing to such majority shareholding are complicated issues which warrants appointment of Administrator is totally wrong since the Court for this reason alone, should not appoint Administrator. Complicated decisions with regard to management of companies and running businesses are best left in the hands of the person who knows the Estate best and who had been entrusted with such function during the lifetime of the testatrix. His Lordship also accepted and held that all these Companies used to be run by the lady with the help of Lodha. The Hon'ble First Court also held that admittedly no mismanagement by Lodha has surfaced but there is always possibility of jeopardy arising in future (see page 59 of the impugned judgment). Mr. Mitra submitted on this point that the finding militates against appointment of an Administrator. The person in whom a testator reposed confidence and who is not shown to have betrayed confidence should not be replaced. The performance of manufacturing

companies have substantially improved and value of shares were increased.

According to Mr. Mitra the Hon'ble First Court further held that it is not known that wherefrom RSL is meeting the cost and expenses of fighting the good numbers of litigation and specially the criminal prosecution in the High Court and in the Apex Court and whether the litigation expenses are being met out from the Estate or by the Executor from his own account is not known to Court. On this point Mr. Mitra submitted that it is neither pleaded nor argued before the

Hon'ble First Court and he pointed out that RSL is also a man of independent means. However, this part of the Judgment was also not supported by Mr. Pal,

Learned Senior Advocate appearing on behalf of LDN during the course of hearing. In the year 2003-04, the share of profit of RSL from Lodha & Co.,

Kolkata was Rs. 37.51 lakhs; there was a sum of Rs. 84.09 lakhs to the credit of his capital account and his drawings in that year from this firm was a sum of Rs. 22.56 lakhs.

Similarly, in the year 2003-04, the share of profit of RSL from Lodha & Co., Mumbai was Rs. 76.15 lakhs; there was a sum of Rs. 89.05 lakhs to the credit of his capital account and his drawings in that year from this firm was a sum of Rs. 68.50 lakhs. So, the total drawings in the first year was more than Rs. 100 lakhs from the two firms. He further contended that not a single penny spent from the Estate for litigation expenses.

Therefore, he submitted that the grounds relied upon by the Hon'ble First Court are not the grounds taken by the respondents but the Hon'ble First Court, which are imaginary and are not, supported by records. judgment is, therefore, legally perverse. The

He further pointed out that the Hon'ble First Court has proceeded on the basis of a set of admitted facts recorded at pages 33 to 37 of the said judgment. However, most of these so-called admitted facts are not at all admitted and

seriously contested both in pleadings as also in course of argument. However, Mr. Mitra pointed out as follows: a) The Learned Judge has proceeded as if the existence of two prior testamentary documents of 13th July, 1982 is undisputed (see no. (c) page 34 of the impugned judgment). Copy Wills have been disclosed. The original first copies of the alleged Wills are not produced at all. RSL has filed affidavit in support of caveat challenging both these alleged Wills. It is apparent from a reading of the alleged Wills of 1982 that even going by the said two alleged Wills of 13th July, 1982 the Estate of one spouse devolves upon the surviving spouse absolutely to be dealt with by him/her in any manner he/she thought fit. Only upon the prior death of the surviving spouse, the Estate of the latter would devolve (in the absence of any later disposition regarding the property) upon the named Executors (not charity) and the Executors are to give it away as they may think fit and proper to such charities as they may set up or deem fit. Yet the Learned Judge has proceeded as if vesting in charitable trust is an admitted fact. No charitable trust is even specified in the Wills of 1982. Charity is at the discretion of Executors and really for their own charitable trusts and societies vehicles for holding shares in their own companies. Under the alleged Wills of 13th July, 1982 the 3 daughters of KKB have been given the gold coins, ornaments, paintings, sculptures and jewellery. The Learned Judge has proceeded on wrong basis that RSL has admitted that the entire Estate has vested in charitable trust. The Learned Judge has also proceeded on the basis that proceeding under Section 247 (1)(A) of the Companies Act has been instituted against RSL. RSL is not even a party to such proceeding. The same applies to suppression of gold coins, jewellery and artifacts etc. from the affidavit of assets. Not only is this factually incorrect and there is no question of any admission, but in fact RSL has included those items under proper prescribed heads in the affidavits of assets. Details are not required to be given in the affidavit of assets but the estimated values are to be given for court fees. Maximum court fees have been given in this case. The Birlas have not given details

b)

c)

d)

e)

of jewellery, coins etc. in their affidavit of assets filed in connection with alleged Wills of 1982. Birlas have given ad hoc higher value of estimated Rs. 50 lakhs in order to complicate taxation matters of the Estate. RSL has given valuation as per Trial Balance of PDB maintained during her lifetime. According to Mr. Mitra the judgment given on the basis of “admitted facts” in fact, are not admitted at all and thereby the entire judgment is vitiated.

The block of shares were held by PDB at the time of her death and the nature of the Estate is nothing but the block of shares held by PDB in M. P. Birla Group of Companies. It is submitted that there is no dispute that main asset of the Estate is the controlling block of shares held by PDB in M. P. Birla Group of Companies. It is further submitted that the affidavits of assets filed by RSL disclose full details of shareholding including distinctive numbers of shares etc. The number of shares as disclosed by RSL tally with that of the respondents also (see page 83 vol. I of the Paper Book). Items are identical. All these shares have been taken

possession of by the Executor and there is no allegation that RSL has not collected these assets. Affidavit of assets also filed by the respondents/Birlas in the petition for probate of the alleged Will of PDB dated 13th July, 1982 would show the controlling of block of shares in M. P. Birla Group of Companies, which is 99.84% held by PDB.

According to the respondents through PDB’s shareholding in 5 or 6 investment companies, she controlled 4 public limited manufacturing companies, listed with the major Stock Exchanges in India. It is also submitted that these 4 public limited companies, namely, Birla Corporation Ltd., Birla Ericsson Optical Ltd., Universal Cables Ltd. and Vindhya Telelinks Ltd., which are manufacturing companies have large number of public shareholders as also large block of shares of Financial Institutions. None of these large number of shareholders are parties to the present proceeding. The shares in all the aforesaid 4 companies are widely traded in several Stock Exchanges (see page 2024 vol. VII of Paper Book). The M. P. Birla Group of Companies employ over 12500 people working at several factories and Offices situated all over India. He further pointed out that the other assets comprising the Estate, according to the respondents be insignificant compared to the value of her shares. Combined value of the gold coins, jewellery etc. would be worth around Rs. 1 crore, only 0.04% of the total value of the Estate as given by the respondents, yet the major part of the argument of the respondents was how valuable coins and jewellery were allegedly suppressed by RSL, however, found intact during inventory in PDB’s residence in Birla Park. It is also admitted from the facts as well as from the petition filed before the Hon'ble First Court by the respondents that the Estate involves running of the business.

Mr. Mitra further contended the part of the Estate over which the Administrator Pendente Lite has been appointed is concerned with running

business and any appointment of Court Officer over the controlling block of shares will tantamount to appointment over these companies; something which the Hon'ble First Court held that the probate court has no jurisdiction to do. In fact, during the hearing of the appeal, the respondents by praying for appointment of Administrator Pendente Lite over that part of the Estate of PDB “to act in accordance with law” viz. Administrators over the shareholding of PDB, are in fact trying to achieve indirectly what they know cannot be achieved directly, viz. to have Administrators appointed over the M. P. Birla Group of Companies. If Administrators are appointed over and in respect of these shares with power to exercise voting rights in respect thereof, that would enable Court Officers to play with the fate of the Companies within M. P. Birla Group of Companies. It would show the appointment of Administrators over several

running businesses having an employment force of 12,500 persons and a turn over of Rs. 1780.32/- crores. Even the news of appointment of Receiver over the companies will have disastrous consequences for employees, stakeholders, Financial Institutions and Banks, public shareholders, business collaborators, joint venture partners, managerial cadre, suppliers, customers and any one having dealings with these companies who would become wary to deal with these companies in apprehension of interference of Administrators and/or litigation. That is one of the reasons for non-appointment of Receiver over the companies. Consequently, business will suffer. The Estate of PDB is bound to suffer as

shares will diminish in value and this will have devastating effect all round in a short period of time.

It is also submitted that Courts have always been reluctant to appoint officers over running business directly or indirectly because of the difficulties of running business through Court Officers and affecting interest of large number of third parties, namely, the employees, public shareholders, Banks and Financial Institutions etc.

Mr. Mitra further relied upon a decision reported in AIR 1951 Mad 393 (supra) and submitted that the court found existence of circumstances both waste and mismanagement which required appointment of Receiver over the Estate. Yet the Court did not appoint Receiver/Administrator over the Estate and allowed the two brothers (who were in control of the Estate) to remain in control of the Estate subject to overall supervision of a Receiver. He further contended that in the decision of 1948 (1) All E R 271 (supra) the court held as follows: “In Horrell vs. Witts (2) the deceased had been in partnership and the surviving partner was in perfectly good condition to carry on the business, collecting assets and so on. Therefore, the sort of difficulty which arose in Bellew vs. Bellew (1) did not arise there because there was somebody who could collect the assets which appear to have consisted entirely of the deceased’s share in the business.” In the instant case, Mr. Mitra pointed out, more so because the Companies are being run smoothly and more profitably and share values and dividend income of the Estate have gone up.

He further drew our attention to the fact that the respondents admit that the M. P. Birla Group of Companies was under the control and management of MPB and thereafter since 1990 it was under PDB. PDB was the Chairman of all the 4 public limited manufacturing companies during her life time and the Executor, RSL was inducted as a Director of several companies of the M. P. Birla Group of Companies during the life time of PDB.

Mr. Mitra submitted summarising the case of the respondents/Birlas with regard to involvement of RSL with the management and affairs of the M. P. Birla Group of Companies is as follows:-

“i) RSL was involved in financial matters of several Companies of the M. P. Birla Group even during the lifetime of MPB [see Affidavit in support of Caveat para 15 (d) to (f) page 154 vol. I of the Paper Book]. ii) After the death of MPB in 1990, PDB reposed complete trust and confidence in RSL in matters pertaining to all the financial affairs of Group as also concerning management of all the Companies [Affidavit in support of Caveat para 15(g) page 155 vol. I]. As a matter of fact RSL was appointed founder

Trustee of M. P. Birla Foundation by MPB himself in 1986 [see on record at page 828 vol. III of the Paper Book]. iii) PDB was at all material times accustomed to act as per the wishes of RSL [see Affidavit in support of Caveat para 15(g) & 15(o) pages 155 to 156 Volume I of the Paper Book].

iv) RSL was someone “who had familiarised himself with all aspects of control” of PDB’s Estate [see Administrator petition para 15 page 120 Volume I of the Paper Book]. v) RSL has been at the helm of affairs and actively involved in the management of the 4 manufacturing companies for last several years [See A/R to Administrator petition para 8(a) page 890 Volume III of the Paper Book].

Therefore, according to respondents, RSL is not a stranger or outsider to the Estate, he is in control and was put in control by PDB and Administrator Pendente Lite is being sought for by displacing him and removing him from control. It is also submitted that RSL has been closely involved with the M. P. Birla Group of Companies and also has been a Director/Co-Chairman/Chairman of various M. P. Birla Group of Companies since long years and the said fact would be evident from the following records which are reproduced hereunder: DATE OF APPOINTMENT OF RSL & OFFICE TO WHICH APPOINTED IN INVESTMENT COMPANIES, BEFORE JULY, 2004 (DEATH OF PDB) Serial No. 1. 2 3 Name of the Company Punjab Produce & Trading Co. (P) Ltd. Gwalior Webbing Co. Pvt. Ltd. East India Investment No. Pvt. Ltd. Baroda Agent & Date 23.04.1999 23.04.1999 23.04.1999 Reference Paper Book Director/Chairman Vol. II page 453 Director/Chairman Director/Chairman Vol. II page 453 Vol. II page 453 Vol. II Office

4

23.04.1999

Director/Chairman

Trading Co. Pvt. Ltd. 5 6 7 8 Punjab Produce Holdings Ltd. Mazbat Tea Estate Ltd Mazbat Investment Pvt. Ltd. Mazbat Properties Pvt. Ltd. 03.09.1999 14.06.2004 14.06.2004 14.06.2004 Director Director/Chairman Director Director

page 453 Vol. II page 453 Vol. II page 453 Vol. II page 453 Vol. II page 453

DATE OF APPOINTMENT OF RSL & OFFICE TO WHICH APPOINTED IN MANUFACTURING COMPANIES, BEFORE JULY, 2004 (DEATH OF PDB) Serial No. 1. Name of the Company Birla Corporation Ltd. Date 12.06.1991 23.04.1996 15.09.2001 2 Hindustan Gum & Chemicals Ltd. (Joint venture with Rhodia of USA) Vindhya Telelinks Ltd 16.07.1999 05.05.2004 24.10.2001 05.05.2004 Office Director Advisor to Chairman Director/CoChairman Director Co-Chairman Director Co-Chairman Reference Paper Book Vol. III page 641 Vol. III page 642 Vol. III page 643 Supplement ary Paper Book Page 175 Supplement ary Paper Book Page 175/Vol. III page 765 Vol. III page

3

4

Universal Cables Ltd.

05.05.2004

Director/ Co-Chairman

765/830

In July, 2005, RSL became Chairman of the Birla Ericsson Optical Ltd., which is a joint venture Company with Ericsson AB of Sweden, at the request of President of the Foreign Company.

It further appears from the fact that a Board Meeting of Birla Corporation Ltd. held on 15th September, 2001 chaired by PDB from the Minute of the Meeting the following fact revealed: “The Chairman mentioned how RSL had, on the request of Late MPB, been helping all these years in many of the Group’s matters from time to time and how she keenly wanted him to succeed her. She also added how she had been desiring since a couple of years that RSL take over as Chairman of the company but RSL was keen that she continued as Chairman as long as she can. After discussion and on the suggestion of the Chairman, the Board unanimously resolved that RSL be and is hereby appointed as Co-Chairman of the Company with immediate effect.” The minutes was signed by PDB as the Chairman of the Company. Mr. Mitra submitted that all the facts go to show that PDB had confidence in the managerial ability of RSL and after her death, the foreign partners, Financial Institutions’ nominee Directors of the companies etc. also continued to have confidence in RSL. Incidentally, none of the other respondents/Birlas have ever been involved by PDB in the management or running of those companies.

Mr. Mitra further contended that since the demise of PDB, the respondents have not been able to show any change in the mode of control and management of the M. P. Birla Group of Companies. RSL was previously the Co-Chairman during the life time of PDB, has since been appointed the Chairman of the manufacturing companies. Such appointments have been made with the approval of other Directors as also the shareholders of these manufacturing companies. At each and every Annual General Meeting of these Companies since the demise of PDB, RSL has been virtually and unanimously re-elected as the Director/Chairman wherever he was due for retirement and reappointment. Banks and Financial Institutions and also public shareholders have voted in support of RSL and have expressed their full trust and confidence in him. This would be further evident from the substantial increase in the price of shares of these publicly quoted companies. Particulars of such increase of share price is evident from the chart hereinbelow: Name of the company Vindhay Telelinks Ltd. Birla Ericsson Opticals Ltd. Universal Cables Ltd. Share price as on 02.07.04 (Rs.) 30.00 11.45 14.00 Share price as on 02.01.07 (Rs.) 139.20 23.05 103.15 % of increase 464 201.31 736.79 335.02

Birla Corporation 99.95 334.85 Ltd. Companies sensex figures are given below:

Sensex Bombay Stock Exchange

Sensex as on 02.07.04 4870.58 points

Sensex as on 02.01.07 13942.24 points

% of increase 288.25%

Thereafter, Mr. Mitra contended that it would thus appear that these manufacturing companies under the leadership of RSL performed better. The

argument of the respondents regarding the increase of the share price because of general increase of sensex is thus far from truth.

He further submitted that RSL is a past President of Federation of Indian Chambers of Commerce and Industry, one of the apex trade and industrial bodies of the country and has also served inter alia on various committees including Prime Minister’s Council on Trade & Industry and Central Direct Taxes Advisory Committee set up by the Government of India. He is a Director on the Boards of National Securities Depository Ltd., Mumbai, SBI Life Insurance Company Ltd., Mumbai and several other important Boards etc. He continued that RSL has also served on important policy making and regulatory committees constituted by the Government of India/Regulatory Bodies including SEBI. Take Over Code Review Committee and Company Law Advisory Committee constituted under the Companies Act. RSL has in the past served as a Director and also Executive

Committee Member of the Central Board of the SBI and has been the past President of the Indian Council of Arbitration. In a comprehensive annual

ranking of India’s business leaders for 2004 brought out by the ‘Economic Times’, largest selling business daily and IMRB International, RSL has been placed at the rank of 48.

Mr. Mitra pointed out that other Birlas have no stake in M. P. Birla Group of Companies but want to intervene in the management. The Birlas in support of their prayer for appointment of Administrators have made a false case that the following persons have been recently appointed on the Boards of various Companies of the Group at the instance of RSL and this would upset the well settled pattern of administration. However, according to him, these following

persons have already been Directors of and/or associated with the following Companies of the M. P. Birla Group of Companies since long and during the life time of PDB.

He contended that RSL was a Director of 12 number of Companies of M. P. Birla Group of Companies during the life time of PDB.

Shri H. V. Lodha (hereinafter referred to as “HVL”) became a Director of Birla Corporation Ltd. in the year 1996; then he became a Director of Universal Cables Ltd. in the year 1998; in 2004 he became the Director of Punjab Produce Holdings Ltd.; in the year 2004 he became the Director of Vindhya Telelinks Ltd.; in the year 2004 he became the Director of Mazbat Investments Pvt. Ltd.; thereafter he became a Director of Mazbat Properties Pvt. Ltd. in the year 2004;

thereafter in the year 2004 he became a Director of The Punjab Produce & Trading Co. Pvt. Ltd.; he became a Director of Gwalior Webbing Co. Pvt. Ltd. in the year 2004; he became a Director of Baroda Agents & Trading Co. Pvt. Ltd. in the year 2004 and thereafter in the year 2004 he became a Director of East India Investments Co. Pvt. Ltd.

Shri S. N. Prasad (hereinafter referred to as “SNP”) was a Director of Baroda Agents & Trading Co. Pvt. Ltd. in the year 1988; then in the year 1995 he became a Director of Gwalior Webbing Co. Pvt. Ltd.; thereafter in the year 1995 he became a Director of East India Investment Co. Pvt. Ltd.; in the year 1995 he became a Director of Punjab Produce Holdings Pvt. Ltd.; in the year 2001 he became a Director of Canberra Traders Pvt. Ltd.; thereafter in the year 1999 he became a Director of Shreyas Projects & Trading Co. Ltd.

Shri S. K. Daga (hereinafter referred to as “SKD”) was a Director of Punjab Produce & Trading Co. Pvt. Ltd. in the year 1990; thereafter he became a Director of Punjab Produce Holdings Ltd. in the year 1999; thereafter he became a Director of Mazbat Tea Estates Ltd. in the year 1999; thereafter he became a Director of Shreyas Projects & Trading Co. Ltd. in the year 1996.

Shri D. L. Rathi (hereinafter referred to as “DLR”) became a Director of Gwalior Webbing Co. Pvt. Ltd. in the year 1984; thereafter in the year 1999 he

became a Director of Baroda Agents & Trading Co. Pvt. Ltd.; thereafter in the year 1999 he became a Director of Shreyas Projects & Trading Co. Ltd.

Shri Umesh Verma (hereinafter referred to as “UV”) who was appointed as the Director of Shreyas Projects & Trading Co. Ltd. upon resignation of SKD, was employed in the Investment Companies of the Group since 1990.

Mr. Mitra further contended that the Birlas have also questioned the appointment of a few other persons as independent Directors in the

manufacturing Companies. These appointments are made by the Boards of those Companies and confirmed at the shareholders’ meetings. However, these

independent Directors are all eminent persons from different walks of life and he drew our attention to annexure ‘L’ appearing at page 644 vol. III of the Paper book in this context.

Hence, he submitted that the application which has been filed by the respondents is nothing but malafide application with an oblique motive. He

contended that Birlas are business rivals. They have cement Companies, namely, Grasim Industries Ltd., Kesoram Industries Ltd., Century Textiles & Industries Ltd., Mysore Cements Ltd. etc. Birla Corporation Ltd. the flagship company of M. P. Birla Group of Companies is a cement manufacturing company. It is in their private interest to ruin a rival company. With this oblique motive the

application of Administrator Pendente Lite and charges of mismanagement were

made, which were all proved to be false.

In page 59 of the impugned

Judgment, the Hon'ble First Court after close scrutiny had held that no mismanagement by RSL has surfaced and the business of M. P. Birla Group of Companies are not in ‘serious’ jeopardy in the hand of RSL.

The application filed by the respondents/Birlas is also liable to be dismissed on the ground that respondents/Birlas have not approached the Court with clean hands. From their applications and affidavits it would be evident that they are trying to advance the cause of their respective businesses and not the M. P. Birla Group. They want to pave the way for weakening and disintegration of M. P. Birla Group and this would be evident from the following facts: i) Birlas’ grouse regarding Rights, Issues of Birla Corporation Ltd. in 1999 and 2001 is only that their shareholding in the Company has come down. It is really their regret that the

control of M. P. Birla Group of Companies over Birla Corporation Ltd. increased substantially. ii) Birlas by exercise of their majority shareholding in 2

Companies of the M. P. Birla Group of Companies, namely, The Rameswara Jute Mills Ltd. and Jute Investment Company Ltd. have taken over control of these companies in September, 2005. Mr. Mitra drew our attention to the full particulars given in Supplementary Affidavit paras 32-33 page 1862 Vol. VI and contended that by taking these Companies out of the fold

of M. P. Birla Group of Companies, the real motive of disintegration of the M. P. Birla Group by other Birlas has come out on the surface. iii) He further contended that another company namely, Indian Smelting & Refining Company Ltd. has been taken out of the fold of M. P. Birla Group within 48 hours of cremation of PDB. This Company is shown as part of M. P. Birla Group in suit filed by Birlas being C. S. No. 221 of 2004. However, the

name of the Company was removed from the list of Companies of M. P. Birla Group over which Administrator has been sought and he drew our attention to Administrator Petition – Annexure ‘J’ page 293 Vol. I in this context. iv) Thereafter, he submitted that the proceedings for destabilizing the Companies of M. P. Birla Group have been initiated by the Birlas. Four such proceedings started in Company Law Board – 2 against Birla Corporation Ltd. and 2 against Vindhya Telelinks Ltd. However, the Birlas have been unsuccessful in getting favourable orders from Company Law Board. Even the appeal filed by them in this Hon'ble Court has been dismissed.

According to Mr. Mitra, after a lapse of over 5 months after the demise of PDB, Birlas through Kashi Nath Tapuriah (hereinafter referred to as “KNT”) filed the applications for Administrator Pendente Lite on 16th December, 2004.

The cause of action of the Administrator petition appearing at page 115, vol. 1 of the paper book is summarized as follows: a) Closure of Soorah Jute Mill, an Unit of Birla Corporation Ltd., in March, 2004, this closure was during the life time of PDB. b) Sale of machinery of Birla synthetics, an unit of Birla Corporation Ltd., this sale also took place during the life time of PDB when she was the Chairman of the Company. c) Transmission of shares standing in the name of PDB to RSL as Executor to the Estate of PDB in 2 Companies. He further

submitted that had he not done so, the Birlas would have contended that RSL had failed to discharge his obligations as Executor and to take control of the entire Estate of PDB. In fact, this was the allegation made by the Birlas against RSL when large number of gold coins were found intact in the strong room at Madhu Kunj, Birla Park. d) Appointment of Directors on the Board of Directors of some of the Companies of M. P. Birla Group of Companies at the instance of RSL. Of those mentioned in the petition, most were appointed on the Board of the respective Companies during the life time of PDB. As to the independent Directors appointed after the demise of PDB, these are all independent Directors of high status and experience.

e)

Mismanagement of M. P. Birla Group of Companies under the control of RSL.

Mr. Mitra further submitted that all these above allegations in the Administrator Pendente Lite petition were squarely dealt with by RSL in his dismissal petition appearing at page 436, vol. II of the paper book; Affidavitof-Opposition appearing at page 763, vol. III of the paper book and supplementary affidavit appearing at page 1846, vol. VI of the paper book.

He further pointed out that realizing the apparent falsity and weakness in the allegations made in the Administrator petition, the Birlas through KNT in Reply running into around 900 pages, where the Birlas sought to run a completely new case, which is evident from the following facts: a) The substantial improvement in the performance of the M. P. Birla Group of Companies is not attributable to the good management of RSL but due to favourable market condition and this is a complete turn around from the case of mismanagement made out in the petition appearing at para 8(c) page 893 vol. III of the Paper book. b) Loss of cement worth Rs. 15 Lakhs from Satna Plant Of Birla Corporation Ltd. This one off, insignificant incident occurred However, action was taken against

during the lifetime of PDB.

Head of Marketing of Satna Division and was replaced. (Reliance

placed on supplementary Affidavit para 18, page 1853, vol. VI of the Paper Book). c) Investment of surplus funds of Birla Corporation Ltd. in Mutual Funds and simultaneous borrowings from Banks and Financial Institutions and it appears that the Birlas conveniently

suppressed the fact that this is a common industry practice followed not only by many large companies in India but also by the Companies belonging to the Birlas, he submitted. (Attention drawn to para 23 of Supplementary Affidavit at page 1855 vol. VI of the Paper Book). d) Two Rights Issues of shares of Birla Corporation Ltd. in the years 1999 and 2001 respectively at high rates of premium. According to Mr. Mitra, Birlas conveniently suppressed the fact that by virtue of these two Rights Issues, M. P. Birla Group of Company’s shareholding in Birla Corporation Ltd. substantially increased

and thus the Group benefited. It was also suppressed that the other Birla Companies and members of the Birla family, which held shares in Birla Corporation Ltd. substantially profited from these Rights Issues by relinquishing their rights entitlements in favour of M. P. Birla Group of Companies at a premium. e) Apart from Soorah Jute Mills and Birlas Synthetics, some other Units of M. P. Birla Group of Companies have been closed down. The divisions which were closed down were in fact all loss making

and most had been closed down during the life time of PDB, full particulars whereof have been given in the Supplementary Affidavit in reply to the Affidavit in Reply. Disclosure in this

regard have also been contemporaneously made in the Director’s Reports of the respective Companies, full particulars whereof have also been given in the Supplementary Affidavit (appearing at page 1901-1907, vol. VI, Para 15 & 18, page 1851, vol. VI of the Paper Book). f) Mr. Mitra further contended that performance of the cable companies belonging to the M. P. Birla Group of Companies were far behind that of their competitors. According to him,

subsequently the performance of the Cable Companies of M. P. Birla Group of Companies has vastly improved and from loss making Companies, these have all become highly profitable, full particulars whereof have been given in the Supplementary Affidavit (see pages 1914-1916, vol. VI of the Paper Book). g) Constitution of Committee of Directors of Birla Corporation Ltd. so that RSL could exercise control over the Company. Mr. Mitra submitted that i) Committee of Directors constituted during life time of PDB; ii) Other Birla Companies have similar practice; iii) permitted under Section 292 of the Companies Act. h) Appointment of key officials in senior positions in Birla

Corporation Ltd., Vindhya Telelinks Ltd. and Universal Cables

Ltd. – Mr. Mitra submitted that the Appointees are highly qualified (full particulars appearing at page 1859, vol. VI of the Paper Book). No unworthy persons are appointed. Birlas want to interfere. i) Pre-payment of loans of Financial Institutions in order to have their nominee on the Board removed. Mr. Mitra submitted that this is in the interest of the Companies. It cannot prejudice the interest of the Companies.

Mr. Mitra also pointed out that apart from the above, several other points were taken in the Hon'ble First Court though not of any substance. At the

hearing of the appeals, Respondents/Birlas have chosen to abandon all the points taken in the pleadings. The following are the particulars of the various grounds were taken in the administrator petition and affidavit in reply and which have not been argued at the hearing of the appeals. He drew our attention to the following chart in this respect: Sl. No. 1. Grounds taken in the Administrator petition and Affidavit in Reply Closure of Soorah Jute Mills Reference Appearing at para 29 in the Petition Appearing at para 30 in the Petition Appearing at para 8

2.

Sale of Plant & Machinery of Birla Synthetics

3.

Cement division of BCL making

comparatively less profits than other Birla Companies 4. Closure of Auto Trim Division of BCL

(c) and (d) in the Affidavit-in-Reply Appearing at para 15(f) in the Affidavitin-Reply Appearing at para 15(f) in the Affidavitin-Reply Appearing at para 15(e) in the Affidavitin-Reply Appearing at para 15(f) in the Affidavitin-Reply Appearing at para 15(c) in the Affidavitin-Reply Appearing at para 8(e) & 8(f) in the Affidavit-in-Reply Appearing at para 9 in the Affidavit-inReply Appearing at para 8(k) in the Affidavitin-Reply Appearing at para 33 in the Affidavit-inReply and para 28 in the Petition Appearing at para 15(g) in the Affidavitin-Reply Appearing at para 36

5.

Low production/Closure of Vinoleum Division Closure of the Birla Carbide & Gases

6.

7.

Losses of Birla DLW Ltd.

8.

Theft of Cement Bags from Satna of Rs. 15 lakhs Cable Companies are far behind their competitors Chairmanship of RSL of Birla Ericsson

9.

10.

11.

Manipulation of share price due to low liquidity Inspection of records of Companies by third parties refused

12.

13.

Constitution of Committee of Directors of BCL to make the Board defunct Companies worked overtime to fabricate

14.

records 15. Appointment of key executive

in the Affidavit-inReply Appearing at para 18 in the Affidavit-inReply Appearing at para 12 in the Affidavit-inReply Appearing at para 15(i) in the Affidavitin-Reply Appearing at para 15(j) in the Affidavitin-Reply Appearing at para 8(j) in the Affidavitin-Reply Appearing at para 21 to 28 in the Affidavitin-Reply Appearing at para 12 in the Affidavit-inReply Appearing at para 28 in the Petition Appearing at para 10 in the Affidavit-inReply Appearing at para 15(g) in the Affidavitin-Reply Appearing at para 6 in the Petition

16.

Transfer of shares between Group Companies RSL & HVL shown as independent Directors Violation by RSL of Section 20 of Banking Regulation Act Non-declaration of dividend of manufacturing companies Ante-dating appointment of Directors in Group Companies Appointment of RSL’s men/agents in key directorial positions Non-disclosure of appointment of RSL in three Mazbat Companies Lack of knowledge of English

17.

18.

19.

20. 21.

22. 23.

24. 25.

Prepayment of loans Fiduciary relationship - Chartered Accountant and client

Those above points were not argued in the appeal.

Mr. Mitra submitted that at the time of the appeal only the following grounds have been urged by the three Learned Senior Counsel appearing on behalf of the respondents in the 2 (two) several appeals : i) Considering the vastness and complexity of the Estate, it should not be left in the hands of RSL. (Dealt with at para 8.2 at page 47 of the Paper Book) ii) Serious challenge to the said last Will. (Dealt with para 8.3 at page 49 of the Paper Book.) iii) RSL is not in management of day to day affairs of the M.P. Birla Group of Companies and those are left in the hands of professional executives. (Dealt with at para 8.4 at page 55 of the Paper Book.) iv) Non-inclusion in the Affidavit of Assets of (a) 1/5th undivided share of PB in Kumaon Orchards, (b) Antiques and Gold Coins. (Dealt with at para 8.5 at page 56 of the Paper Book.) v) Rights Issues of shares of Birla Corporation Limited at high premium in the years 1999 and 2001. (Dealt with at para 8.6 at page 58 of the Paper Book.) vi) Investment of funds of Birla Corporation Limited through PLC Securities Limited, a company controlled by RSL in Mutual Funds. (Dealt with at para 8.7 at page 59 of the Paper Book.)

vii)

Transmission of shares of PB in five investment companies to RSL as Executor to the Estate of PB immediately after her demise. (Dealt with at para 8.8 at page 61 of the Paper Book.)

viii)

Conduct of RSL in producing four keys in course of inventory by Special Officers and subsequent production of further keys. (Dealt with para 8.9 at page 63 of the Paper Book.)

ix) Pendency of disciplinary proceeding against RSL before the Institute of Chartered Accounts as also pendency of criminal proceeding against RSL. (Dealt with at para 8.10 at page 65 of the Paper Book.) x) Flexibility of human mind as in possibility of RSL misconducting himself in future as Executor to the Estate. (Dealt with at para 8.11 at page 66 of the Paper Book.) xi) Discretionary order – no interference called for. (Dealt with at para 8.12 at page 67 of the Paper Book.)

Mr. Mitra further contended that the vastness and complexity in itself cannot be a ground for appointment of Administrator. On the other hand,

complexity of the Estate as in this case would be a ground in itself for rejecting an application for Administrator when the Executor is admittedly in absolute control of the complex Estate and when the testatrix herself had put the Executor/RSL in charge of such complex Estate during the life time and for at least last 5 years before her demise. He further drew our attention to AIR 1933

Bom 342 (supra) and submitted that the appointment would show that the testator had confidence in them.

He further submitted that it is the case of the Birlas that the Estate of PDB comprises of several running businesses. In fact these running businesses are large public companies, involving public participation by way of shareholding. There are altogether 38 numbers of companies which according to the Birlas constitute part of M. P. Birla Group of Companies. It is also the case of the Birlas that PDB had been controlling interest in few investment companies by way of interlocking and interweaving of shareholding of 4 quoted public manufacturing companies. Therefore, if an Administrator is appointed as prayed for by the Birlas, displacing RSL, that Administrator would be in control of large numbers of running businesses constituting part of M. P. Birla Group of Companies. It is a settled law that the Administrator /Receiver cannot be

appointed over running businesses and he placed reliance on judgments reported in AIR 1987 Cal 194 (supra) and AIR 1951 Madras 393 (supra) in support of such contention. He further drew our attention to a decision reported in 1988 (1) CLT 61 (supra) where the Hon'ble Court held as follows: “… we should not lose sight of the fact that the proceedings in the instant case is by way of suit where interlocutory reliefs have been claimed. Unless there are extraordinary or special circumstances, the Court should not take up the full time management of a running company which will entail supervision of numerous and day to day details and work…”

Hence, he contended that even the Hon'ble Single Judge in the present case at page 3 of the impugned judgment came to the conclusion that the Administrator cannot be appointed to take over the management and control of separate juristic bodies. However, at the end, the Hon'ble Single Judge has done just the reverse which is the subject matter of challenge and it would be evident that RSL has been involved in running of the M. P. Birla Group of Companies since 1991 and was the chosen successor of PDB to take over the reign of the business empire from her.

It would also be borne in mind that the M. P. Birla Group of Companies are running profitably and the Birlas have not even alleged that these Companies are not being properly managed and it may be noted that the Estate is such that involves participation of third parties namely large block of outside shareholders who had admittedly reposed full faith and confidence on RSL by electing and reelecting him as Chairman of the Companies year after year by supporting all the resolutions proposed by him. Ouster of RSL and appointment of Court

Administrator would be against the wishes of these shareholders who are not before this Hon'ble Court.

With regard to the serious challenge to the Will by the Birlas, Mr. Mitra, Mr. Shaktinath Mukherjee and others contended that the last Will and Codicil was prepared by Dr. V. Gourishankar, Learned Senior Advocate of the Hon'ble Supreme Court, according to the instruction of PDB and has been witnessed by

P. L. Agarwal, Senior Partner of Khaitan & Company who has also affirmed an affidavit dated 7th July, 2004 as an attesting witness, which is also part of the probate petition appearing at page 17 of vol. I of the paper book. The other witnesses are Dr. Madan S. Vaidya, senior Doctor attached to Belle Vue Clinic and M. P. Sharma, PDB’s personal secretary. The Affidavit dated 8th July, 2004 has also been filed by Dr. Madan S. Vaidya, is also part of the probate petition appearing at page 20 of vol. I of the paper book. M. P. Sharma identified PDB before the Registrar of Assurances, III, Calcutta at the time of registration of the Will appearing at reverse page 11 of vol. I of the paper book. Incidentally, P. L. Agarwal was also the witness to the alleged Wills of PDB and MPB dated 13th July, 1982 relied upon by the Birlas/Respondents.

According to Mr. Mitra, so far the testamentary capacity of PDB is concerned, there can be no genuine challenge whatsoever. I) PDB was in good health at the time of execution of her last Will which will be evident from the following: (a) Her various foreign trips since 1999 including pleasure trips to Antarctica, Arctic, Hawaii, China and Mexico, (full particulars whereof are appearing at page 818 vol. III of the paper book). (b) Letter of her regular physician in U.K., Professor John Cunningham certifying her condition of health, (appearing at page 1960 vol. VI of the paper book).

(c) PDB regularly attended and chaired Board Meetings of M. P. Birla Group of Companies at least since death of her husband (particulars of which are appearing at page 850 of vol. III of the paper book).

II) PDB had sufficient mental capacity to make the Will which would be evident from the following: (a) Attendances of Board Meetings of different companies including Century Textiles & Industries Ltd. (BKB controlled Company) where she had attended 14 out of 18 Board meetings in last 3 years (see page 780 para 29 vol. III of the paper book.) (b) Photographs of PDB’s interactions with various eminent

personalities including former Chief Justice of India, Governor of Karnataka, Ambassador of India to China, Mother Teresa, etc. (see page 809 vol. III of the Paper book). (c) In the letter dated 19th December, 1998, (see page 717 of vol. III of the paper book), none otherthan KNT, has referred to PDB’s strong personality and business acumen.

Mr. Mitra further contended that it cannot also be seriously contended by the Birlas or any other person that the Will was an unnatural Will. PDB’s

relationship with other members of Birla family as well as her brother KNT was not such as would lead to the inference that they should have been natural heirs of PDB. Significantly, the intestate heiresses of PDB namely RDM and LDN do

not claim in their Affidavit in support of caveat that it would be natural for PDB to give her Estate to them or they would be her natural heirs. On the other hand, PDB’s relationship with KNT and several male members of the Birla family was far from cordial. None of the male members of the Birla family were ever involved with PDB in running her businesses. Mr. Mitra drew our attention to the

references in this connection, stated hereunder: a) Letter dated 19th September, 1985 of Ashok Birla (father of YB and only son of M. P. Birla’s only brother Late Gajanan Birla) to MPB complaining that “… you have exhibited your intense bitterness

towards me and your family …………… I refer to the numerous occasions when you have condemned Uncle BK & SKB and Auntie Mrs. BK …” appearing at page 684 of vol. III of the paper book. b) Letter of YB dated 8th April, 1998 where YB states that PDB finds him ‘incapable’, appearing at page 1962 vol. VI of the paper book. c) Hand written note of PDB showing MPB was unhappy about division of assets, appearing at page 679 vol. III of the paper book. d) Letter of KNT dated 18th January, 1996 and 19th December, 1998 to PDB, appearing at page 699 and 717 of vol. III of the paper book. e) Removal of Tapuriah from Trusts/Societies, appearing at page 696 vol. III of the paper book.

He further pointed out that it is the case of the Birlas that PDB had reposed complete faith trust and confidence on RSL during her lifetime and the

Will is in English language which is also the language of the alleged Will dated 13th July, 1982, relied upon by the Birlas. There cannot be any dispute with regard to PDB’s command over English language.

He submitted that the so-called serious challenge to the Will is merely on the basis of bare pleadings not supported by any evidence and in fact contrary to the materials on record. In an endeavour to create some kind of a so-called

challenge, the Birlas made out a contradictory case on facts. There is allegation of forgery of the Will simultaneously with an allegation of exercise of undue influence on PDB to execute the Will – both are self-contradictory. He placed reliance upon a decision reported in AIR 2006 SC 1975 (Gurdev Kaur & Ors. vs. Kaki & Ors.) and contended that it has been held that there is a presumption of due execution of a Will where it is shown that the Will has been executed and attested in accordance with the requirements of statute. Further, reliance was placed on the decisions reported in Theobald on Wills, 16th Edition page 39; AIR 2005 SC 52 (Meenakshiammal & Ors. vs. Chandrashekaran & Anr.) and AIR 2005 Cal 212 (Chanchal Kumar Das & Ors. vs. Pasupati Nath Das & Ors.). On the question of burden of proof, onus to prove forgery, undue influence and coercion lies on the person who alleges.

He further contended that the application for probate of the said last Will and Codicil was filed on 19th July, 2004. Thereafter, the Birlas filed an

application dated 17th August, 2004 for probate of the alleged Will of PDB dated

13th July, 1982. This alleged Will dated 13th July, 1982 is on the face of it a seriously disputed document. Apart from the fact that by the said last Will and Codicil, earlier Will, if any, has been revoked, a few features of the alleged 1982 Will of PDB would go to show the apparent weakness in the case of the Birlas: 1. Unregistered Will. 2. Probate petition on the basis of a document which is apparently not the original of the said alleged Will. According to the Birlas, this alleged Will was kept in an envelope for the last 22 years which was to be opened after the demise of both PDB and MPB. When

production of the envelope is asked for 2 weeks after the envelope was allegedly opened, the Birlas however claimed that after the alleged Will was discovered they have not preserved the same, appearing at pages 3224 and 3227 of vol. X of the paperbook. 3. The Birlas case is that the alleged Wills of 1982 were under instructions of the couple to be probated after the death of both – however the first named Executor in MPB’s alleged Will is PDB, and vice versa in PDB’s alleged Will of 1982 where MPB is named as Executor; they are also legatees in each other’s Wills – thus, the Birlas’ case is absurd. 4. No mention of this alleged Will in any of the 4 letters written by N. G. Khaitan, Partner, Khaitan & Co., the Advocates-on-Record of Birlas between the time of PDB’s demise on 3rd July, 2004 and 30th

July, 2004 when there was for the first time reference to this alleged Will, in the Affidavit in support of caveat. 5. In a large number of deeds, documents and even affidavits of PDB, MPB is stated to have died intestate. Admittedly, these documents were not executed when PDB was allegedly dominated by RSL. If there is no Will of MPB, there can be no consequential question of there being a set of mutual irrevocable Wills of MPB and PDB. 6. Some documents stating that MPB died intestate are signed during the lifetime of PDB by the Birlas themselves and some by the partners of Khaitan & Co. follows:a) Affidavit dated 3rd April, 1991 affirmed by PDB and notarised by N. C. Shah, Advocate and Notary (of Khaitan & Co.) book). b) Affidavit dated 19th August, 1992 affirmed by PDB and notarised by N. G. Khaitan, Advocate. (see page 3199 Vol. X of the Paper Book). c) Indenture dated 22nd September, 1992 executed by and between PDB and The Punjab Produce and Trading Company Ltd. (see page 3205 Vol. X of the Paper Book). (see page 3179 vol. X of the paper Some of such documents are as

d) Deed of Declaration dated 12th March, 1997 executed between PDB, Jiyajeerao Cotton Mills and The Punjab Produce and Trading Company Ltd. (see page 3216 Vol. X of the Paper Book).

Mr. Mitra also pointed out that the suit being C. S. No. 221 of 2004 filed by the Birlas for enforcement of alleged mutual Wills of MPB and PDB of 1982 is ready for hearing but the Respondents/Birlas are opposing early hearing of the said suit.

Mr. Mitra further drew our attention to the fact that Birlas have also contended that there is a serious challenge put up by them to the probate of the said last Will and Codicil of PDB and on this ground, Administrators can be appointed. Without admitting the above proposition, he humbly submitted that in the present case there can be no serious or bona fide challenge to the said last Will and Codicil of PDB. In the circumstances, he contended, at least prima facie there can be no serious challenge to the genuineness and validity of the said last Will and Codicil of PDB. The said last Will and Codicil is at least on the existing facts and pleadings quiet unimpeachable as would be evident from the facts and materials placed before the Hon'ble Court.

He further urged before us that RSL is not in control of day to day management of the M. P. Birla Group of Companies and this contention was not

raised before the Hon'ble First Court or in the Petition or in the Affidavit-in-Reply or even in the cross-objection. Hence, this contention has no substance.

He contended that PDB during her lifetime had allowed day to day affairs of M. P. Birla Group of Companies to be managed by Company Executives which would be evident from the Will where it has been specifically stated that, “to the extent I have been exercising” would mean the same pattern of management as followed by PDB should be continued. Therefore, the allegations made against RSL that he is acting with undue haste in taking control a few days after the death of PDB is nothing but bald allegation.

The further allegation which has been made out that 1/5th undivided share of PDB in Kumaon Orchards included in the Affidavit of Assets. According to Mr. Mitra’s submission, the application for amendment of the Affidavit of Assets made in December, 2004. The application was not opposed and the affidavit of assets amended by consent, (order dated 16th December, 2004 appearing at page 82 of vol. 1 of the paper book). Admittedly, Kumaon Orchards is a joint Neither it is alleged nor it can

immovable property being managed by KKB.

possibly be conceived that RSL had nothing to gain by not including this asset in the affidavit of assets. Petition has been filed by RSL for direction upon KKB to pay amounts admittedly by due in respect of the said Orchards.

Mr. Mitra further submitted that inventory petition made 9 months after the death of PDB which was not opposed by RSL and the Special Officer recorded full co-operation received from RSL. In course of inventory, all antiques, ivory etc. mentioned in the inventory petition found. More than 300 coins found intact and preserved in boxes with all notes and papers at Birla Park and he drew our attention to 2nd Inventory Report appearing at pages 2747, 2750 of vol. IX of the paper book and page 3285 at para 51 of vol. X of the paper book and at pages 117-140 of Inventory Report. He further contended that the value of movable articles stands only about 0.04% of the total Estate. Several silver and other articles including ivory items found in Allahabad, (our attention drawn at page 144 & 147 of the 1st Inventory Report). Best possible security Birlas have also

arrangement has been made for the aforesaid four properties.

engaged security guards at the main gate of the compound at Birla Park. Security arrangements made by RSL not denied in Affidavit-in-opposition.

According to him, under Section 317 of the Indian Succession Act, inventory to be made within six months from grant of probate. Collection of

properties under Section 319 of the said Act cannot mean physical collection. Mr. Mitra contended that Affidavit of Assets is relevant only for the purpose of court fees and he relied upon the decisions reported in AIR 1980 Delhi 57 (In re: Anita Rewal); AIR 1965 Punjab 138 (Channan Devi vs. Desraj

Ramchand & Ors.) and Section 32 of Court Fees Act read with Schedule III.

He pointed out that there was no objection with regard to Rights of Issues of shares of Birla Corporation Ltd. at a high premium in the year 1999 and 2001 during lifetime of PDB. Then now why such objection after seven years? This is nothing but for the control of M. P. Birla Group over Birla Corporation Ltd. He also drew our attention to Supplementary Affidavit para 24 at page 1856 Vol. VI and Annexure ‘L’ at pages 1918-1925 of Vol. VI of the Paper Book.

Mr. Mitra submitted that allegations made that Investment of the funds of Birla Corporation Ltd. through PLC Securities Ltd. – a company controlled by RSL in mutual funds. He pointed out that such investments in mutual funds through PSC Securities Ltd. has been continuing since prior to the demise of PDB at least since 1999. Birlas themselves have annexed Accounts Statements of such

mutual funds, invested through PLC Securities Ltd. during the lifetime of PDB.

None of those mutual funds are owned or controlled by RSL. There is no allegation that PLC Securities Ltd. realising any extra benefit or any loss caused to Birla Corporation Ltd. in any manner.

He further pointed out that PDB used to invest most of her own surplus money in mutual funds which would be evident from the affidavit of assets annexed to the probate petition filed by Birlas as also the probate petition of RSL. Replacement of PLC Securities Ltd. by any other concern would amount to altering the system established and followed during the life time of PDB who was

the Chairman of Birla Corporation Ltd. It is to be noted that Birla Corporation Ltd. is a separate legal entity. It is not the case of the Birlas that the funds of the Estate of PDB are being invested through PLC Securities Ltd. and neither this has been done.

The further allegation has been made that RSL as Executor to the Estate of PDB transmitted the shares of PDB in Investment Companies immediately

after her demise and in this context Mr. Mitra submitted that without any material basis and contrary to the real facts, the Birlas have been making big issue of the fact that the transmission of shares took place on 15th July, 2004 which according to them was the day of the ‘Shradh’ Ceremony of PDB. Mr. Mitra contended that on 15th July, 2004 all the Companies of the M. P. Birla Group as also the Companies belonging to the other Birlas functioned normally. Official business was transacted normally. In fact several staff of the M. P. Birla Group of Companies did over time on that day as also on other days during the month of July, 2004 as would appear from the chart disclosed, appearing at page 1930 vol. VI of the paper book. The said chart would show that similar over time work was done during the month of July every year, inter alia for finalisation of accounts. In fact, all the M. P. Birla Group of Companies observed one day’s mourning on 5th July, 2004 as a mark of respect to PDB. Only on this day all the Companies of the said M. P. Birla Group were closed.

He further submitted that it also to be noted that the Birlas within 72 hours of the demise of PDB took over the management and control of the Indian Smelting & Refining Company Ltd. which was a part of M. P. Birla Group of Companies as admitted by Birlas in the plaint being C.S. No. 221 of 2004. Birlas have laid much stress on the submission made on behalf of RSL before the Company Law Board being C.P. No. 825/111(4)/ERB/2004. The following is the submission quoted in para 36 of the said judgment:

“… acting promptly does not mean malafide. I needed voting rights to protect the investment of the Estate as the Company holds substantial shares in other Birla Companies.” There could be no better reason for having the transmission of shares effected with promptitude after the demise of PDB. It is the obligation of RSL as Executor to protect the Estate.

It is not the case of the Birlas that RSL has wrongly exercised the voting rights in respect of these shares or that RSL caused any loss to the Estate by exercising voting rights in respect of these shares. On the other hand it is a

matter of record that performance of M. P. Birla Group of Companies has improved over the last years and this consequently bears testimony to the prudent exercise of voting rights in respect of these shares.

He further drew our attention to the decision reported in (2004) 7 SCC 505 (Commissioner, Jalandhar Division & Ors. vs. Mohan Krishan Abrol & Anr. with Mohan Krishan Abrol vs. State of Punjab) where the Hon'ble Court held as follows: “… a bare reading of Section 211 shows that the property vests in the Executors by virtue of the Will and not by virtue of the probate. Will gives property to the Executor; the grant of probate is only a method by which the law provides for establishing the Will. In the case of Kulwanta Bewa vs. Karam Chand Soni it has been held that Section 211 provides that the Estate of the deceased vests in the Executor; that the vesting is not of the beneficial interest in the property; but only for the purposes of representation. In the case of Meyappa Chetty vs. Supramanian Chetty the Privy Council has held that Executor derives his title from the Will and not from probate. The personal property of the testator (including right of action) vests in the Executor(s) on the death of the testator …” He further contended that there is a bar under Section 213 of the Indian Succession Act, 1925 (hereinafter referred to as “the said Act”) as to requirement of Probate of the Will before Executor can claim any right thereunder is only applicable in a Court of law. The Executor may rely upon the Will for any other purpose like transmission of shares of the deceased on the basis of the Will, opening of accounts of the Estate etc. and he relied upon the decision reported in (2001) 4 SCC 325 (supra) in support of his contention.

He further submitted that comments were made with regard to the conduct of RSL in producing four keys in course of inventory by the Special Officers and subsequent production of further keys, Mr. Mitra submitted as follows:

a)

The 4 keys produced by RSL to the Special Officers at the commencement of inventory were those keys which had been made over by PDB to him when she left for Belle Vue Nursing Home on 27th June, 2004. These were PDB’s personal keys

attached to a gold key ring, Mr. Mitra submitted. b) It is not expected of RSL to know which key open which door/almirah at Birla Park and neither did he know. c) RSL did whatever he could to assist the Joint Special Officer in carrying on the inventory. In their 2nd Interim Report, the

Special Officers have expressed their full satisfaction with the cooperation rendered by both sides. d) These 4 keys of PDB have substantially helped the Special Officers in opening and/or could have opened several

cupboards, lockers etc. During the hearing, a chart was handed over to the Court showing how these 4 keys led/could have led to the opening of a large number of cupboards, safes etc. and discovery of all the valuables in the house. e) On a subsequent date at the instance of the Special Officers and in terms of the order dated 11th May, 2005, RSL’s Advocates and representative went around Birla Park to collect all the keys hanging on the several almirahs and thereafter made over the same to the Special Officers, appearing at page 2834 para 16

of vol. IX of the paper book. It is not the case of the Birlas that those keys were made over to the Special Officers on 15th June, 2005 were useful for opening any unopened almirah or door. Mr. Mitra contended, such question or motive of RSL

hiding these keys initially and handing them over to the Joint Special Officers later on does not arise. f) The Birlas have not been able to show the disappearance of even one valuable item from Birla Park. Nine months after the death of PDB, the application for inventory was made in March, 2005. The scope of the petition was to inventories movables including small coins and jewellery – no allegation post inventory of any missing items. On the contrary, what was found by the Joint Special Officers in course of inventory in Birla Park, is much more than what the Birlas themselves has disclosed in the Affidavit of Assets to the probate petition filed by them being P.L.A. No. 242 of 2004. g) He further pointed out that there are two sets of security guards present at the Birla Park, one at the common entrance and the other at the entrance for the residences of PDB, KKB and BKB. There is no allegation of theft or removal of any valuables from PDB’s residence.

The further point that was urged before the Court that the pendency of disciplinary proceeding against RSL before the Institute of Chartered Accountants as also the pendency of criminal proceeding. Mr. Mitra contended that these

proceedings are subjudice before the concerned forums, the Institute of Chartered Accountants of India and the concerned Criminal Courts. In any

event, these proceedings cannot be made subject matter of or taken into account in the present proceeding. He further pointed out that all these proceedings as well as the disciplinary proceeding before the Institute of Chartered Accountants have been instituted at the behest of BKB. So far the criminal proceedings in Alipore Courts are concerned these are instituted by one R. P. Pansari, an employee of Essel Mining Ltd., an Aditya Birla Group Company, our attention was drawn in the affidavit of R. P. Pansari dated 16th February, 2005 at page 2019 vol. VII of the paper book. None of these proceedings have been started

suo motu by the Institute or by the State. These are Private Complaints. There is no FIR. Having caused these multifarious proceedings to be instituted against RSL, the Birlas themselves cannot thereafter contend that RSL is being proceeded against before various forums.

Mr. Mitra further pointed out that the Hon'ble First Court discussed the flexibility of human mind and possibility of RSL misconducting himself in future as Executor to the Estate. pleadings. This is not a ground urged by the parties in their Court Officers are also

Human beings are appointed Executors.

human beings.

The Court, if on that ground, appoints the Administrator or

Receiver then it has to be stated that this ground is legally perverse. The word “may” used in Section 247 of the said Act and the same as judicially interpreted during the last 2 centuries will become redundant and in that case, the Administrator/Receiver would have to be appointed in every case where there is a disputed Will; appointment of Administrator Pendente Lite would be a matter of course. No case has to be made out for such appointment.

He further submitted that judicial judgments pronouncing that a case of necessity is to be established, would become otiose because the Executor appointed under a Will, who will be a human being, will have flexible mind and regardless of his performance, will be liable for removal and replacement by an another human being in the shape of Administrator Pendente Lite.

Mr. Mitra further contended that the question is whether the Hon'ble First Court had any jurisdiction to appoint Administrator Pendente Lite when there was no ground of Administrator Pendente Lite has been made out by the respondents. According to Mr. Mitra: (i) In the decision of (1990) Supp SCC 727 para 9 (Wander Ltd. vs. Antox India Pvt. Ltd.) the Court held interlocutory remedy is to preserve status quo. By the impugned order the status quo since the death of PDB will be drastically disturbed without any necessity and when ad-interim injunction restraining transfer and dealing

with shares was adequate to preserve the controlling block of shares in status quo. (ii) Ignoring the settled principles of law and settled principle of law in the matter of appointment of Administrator Pendente Lite is (a) established act of mismanagement and waste by the Executor and (b) necessity, which the caveators failed to make out and (c) just and convenient – the Hon'ble First Court has failed to consider this important aspect viz. it is not just or convenient to appoint officers of Court in respect of running business. (iii) Relying on the said decisions of (1997) 2 CLJ 409 (Pratima Dutta vs. Nilima Seal) and (1990) Supp SCC 727 (supra), he submitted that the Hon'ble First Court acted unreasonably or perversely or capriciously.

He further submitted that the ground of waste or mismanagement has not been argued in this appeal by the respondents and the Hon'ble First Court applied wrong principles of law which is the ground for interference in case of discretionary order. Hence, he submitted that the Order is perverse and

unreasonable which is evident from the following facts: i. Judgment is based on grounds not raised by the parties as indicated while dealing with the grounds relied upon by the Hon'ble First Court. ii. Contradictory finding of the Hon'ble First Court.

iii.

Incorrect basis of approach namely describing disputed facts as admitted facts which is the worst example of perversity.

iv.

There is no provision for accountability to Court by the Executor/propounder proceedings. during the pendency of probate

v. vi.

Grounds neither pleaded nor argued. Relying on criminal case – “tainted” without considering who have tried to taint. The criminal case has been initiated by the Birlas, in which even charge has not yet been framed. The State has not filed the criminal case. This is also not a ground taken in the petition or affidavit-in-reply. He drew our attention to the Criminal case referred to in petition para 44 page 130 vol. I of the paperbook in this respect.

vii.

Allegations not supported by any document or established even prima facie, that the couple had charitable intention or had formed large number of trusts/societies with own funds.

viii.

Contrary to his own judgment in the caveat discharge matter, viz., the Estate of MPB and PDB can be separated.

ix.

No pleading that the Estate is in medio. The Hon'ble First Court relied on the ground that the Estate was in medio, although not so pleaded. The pleading of the respondents is that RSL took

charge of the Estate and the Learned Judge had also held so.

x.

Conjecture regarding cost of litigation and no such case is made out in the petition or affidavit-in-reply or even in course of argument.

xi.

Mr. Mitra strenuously tried to contend before us that in the present case, the Hon'ble First Court has exercised its discretion arbitrarily, perversely and ignoring settled principles of law which would be evident inter alia from the fact that the Learned Judge after coming to the conclusion on facts that RSL as Executor was not found to have mismanaged the Estate, thereafter proceeded to appoint Administrator Pendente Lite in a probate proceeding over and/or in respect of public limited Companies on the sole logic that human mind is flexible and accordingly what RSL may do in future is unknown. The Hon'ble First Court having held that the probate Court has no jurisdiction to take over management and control of separate juristic bodies, have passed an order contrary thereto. According to his own ratio, the

impugned order is without jurisdiction and contrary to principle of law as laid down by the Hon'ble First Court. The order for

appointment of Administrator Pendente Lite over block of shares and directions given regarding management of the Companies should be set aside on this ground alone. The order of the

Hon'ble First Court is contrary to law and suffers form vice of error of law on the face of the judgment.

xii.

When the Hon'ble First Court passed an order not consistent with the evidence on record and not in accordance with the principles on which judicial discretion may be exercised, the Appeal Court will exercise its own discretion in deciding whether or not the Administrators should be appointed and he relied upon a decision reported in AIR 1928 PC 49 (Binoy Krishna Mukherjee & Ors. vs. Satish Chandra Giri & Ors.) in support of his contention.

Hence, Mr. Mitra concluded that the appellant humbly prays before the Appeal Court so that the order of the Learned Trial Judge is set aside. However, the appellant renews his assurance/undertaking not to deal with and/or transfer any of the assets and properties constituting the Estate of PDB as more fully stated in the affidavit of assets filed by the appellant in connection with the present probate petition as also in the affidavit of assets filed by the Birlas in connection with the probate petition filed by them. He submitted that the adinterim order passed by the Hon'ble First Court reported in the decision (2005) 2 WBLR 311 (supra) may be continued. He also submits that the second part of the ad-interim order may kindly be reconsidered in the light of the affidavits since then filed by the parties and may kindly be withdrawn, since no case in support of confirmation of the above order has been shown. The closure of a business undertaking, sale of assets of Companies and encumbrances thereof are subject to severe regulatory measures imposed by statutes and cannot be done by the

management at their sweet will.

Birla Corporation Ltd. is at the threshold of

expansion and growth, namely expansion of capacity, setting up two captive power generation plants of 27 MW at Satna and Chandberia, cement grinding facility at Durgapur, appearing in Suppl. Affidavit at page 1852 para 17 of vol. VI of the paper book.

According

to

him,

hypothecation

or

mortgage

of

Company’s

assets/obtaining finances from Banks and Financial Institutions are usual things in any business and necessary for expansion or setting up of new

factories/plants etc. Such order as would put fetter on usual course of corporate management may kindly be withdrawn. It is also respectfully submitted by him

that any further or other order would be beyond the scope of proceedings and would affect the rights of third parties as well.

Mr. Balai Chandra Ray, Learned Advocate-General, appearing on behalf of the GPB submitted before us that for appointing Administrator Pendente Lite there should exist a bonafide dispute in relation to the pending probate application and it is necessary for such appointment having regard to the nature of the Estate. The Hon'ble First Court has exercised the discretion in appointing

Administrator Pendente Lite. In appeal it is to be proved that such discretion is arbitrary, capricious or against the principle of law and he relied upon the decisions reported in (1990) Suppl. SCC 727 (supra) and 13 CLJ 34 (supra) in

this context and submitted that the Appeal Court should not interfere unless the Court was convinced that the discretion had not been fairly exercised.

He further submitted that the Hon'ble First Court found that there exists bonafide dispute arising out of serious challenge to the validity of the Will and ‘Testament dated 18th April, 1999. In these circumstances, the Court held that a tainted person should not be allowed to manage the Estate. The Hon'ble First Court further held that the challenge on the grounds of undue influence, existence of suspicious circumstances, lack of testamentary capacity,

unnaturalness of the bequest, concealment or delay in production of the Will, Executor taking substantial benefit under the Will, change of lawyer for preparation of the Will do raise serious bonafide dispute. The Hon'ble First Court further held that in 1982 two Mutual Wills were executed by MPB and PDB whereby properties were given away to charity. Probate applications of these wills are pending and RSL has been contesting the probate application. Consequently, the property of MPB is in ‘medio’ and RSL cannot be in charge of MPB’s Estate. The appellant further challenged that RSL is not tainted because he is not yet an accused which is not correct because once a formal complaint is made in Court which has been done in this case, RSL is an accused. In support of his contention, the Leaned Advocate-General relied upon a decision reported in AIR 1981 SC 379 (Balkishan vs. State of Maharashtra).

The appellant disputes that there is any serious challenge to the probate application. According to the appellant, the grounds are stereotyped and general. What appellant has missed is that if those grounds are accepted then no probate is likely to be granted in favour of the appellant. The probate Court has to

protect and preserve the Estate and secure safety free from waste and mismanagement of the property.

He further pointed out that the Hon'ble First Court held that the Administrator Pendente Lite would be more beneficial to the Estate than the Executor, who is the sole beneficiary. The Estate is indisputably vast consisting of controlling block of shares, jewelleries, ivory, silver, rare gold coins, artifacts etc. of high value and real properties of considerable worth. The application of RDM (Radha Devi Mohatta) would show that the corporate assets are valued at about Rs. 2,500 crores whereas the affidavit of assets filed by the Executor would show the valuation disclosed by the appellant is only Rs. 4 Crores. According to him, it is true that PDB’s share holding in Birla Corporation Ltd. was negligible but the investment companies of PDB held over 60% of shares in the Birla Corporation Ltd. and she was able to control the Company.

The Learned Advocate-General further pointed out that Kumaon properties were also not stated in the affidavit of assets and the other immovable properties also now inventorised by the Special Officers appointed by the Court which were also concealed by RSL. So, according to him, RSL prayed for probate of the real

properties mentioned in the Codicil but did not include those in the affidavit of assets. Such act would indicate the personal interest of the Executor which

prevail over the beneficial interest of the Estate and he relied upon the decisions reported in 1948 All E R 271 (supra) and AIR 1933 Bom 342 (supra) in support of such contention and submitted that the Estate is of considerable value and extent, and for the safeguarding and preservation of it, proper arrangements is to be made especially when very wide discretionary powers have been given to the Executor under a Will.

He further pointed out that the Executor is the sole beneficiary under the Will. Relying on the decision of 1930 PC 24 (Vellaswamy Servai & Ors. vs. L.Sivaraman Servai) he submitted that the consideration for appointment of Administrator Pendente Lite was that “the respondent, the propounder of the Will, is the principle beneficiary under the Will.” He further submitted that an

Executor is considered to be a fiduciary. Methods adopted to increase his control on the Boards of different companies were neither transparent nor clean and accordingly he relied upon the decisions reported in AIR 2003 SC 4351 (Krishna Mohan Kul alias Nani Charan Kul & Anr. vs. Pratima Maity & Ors.) and submitted that when a person is in a fiduciary relationship with another and the latter is in a position of active confidence the burden of proving the absence of fraud, misrepresentation or undue influence is upon the person in the dominating position.

Further reliance was placed on the decision of 1896 AC 44 (George Bray vs. John Rawlinson Ford) submitted that a person in a fiduciary position is not entitled to make a profit, even he is not allowed to put himself in a position where his interests and duty conflict. Therefore, he contended that the concealment of

high value movable assets without proper explanation, and in breach of statutory duty, is not only example of such a conflict but also surrender of duty to his personal interest.

According to the Learned Advocate-General, RSL participated in the preparation of the Will. Imprint of RSL is so clear and loud on the Will and the codicil that only probability is that he took part in preparation of the Will and the codicil. Before such Will was executed by PDB, it has to be accepted that RSL

discussed and prevailed upon PDB to execute the said Will. Reliance was placed upon the decisions of AIR 1959 SC 443 (H. Venkatachala Iyengar vs. B. N. Thimmajamma & Ors.) and 1930 PC 24 (supra) in support of such contention submitting that the Court held that the respondent took a leading part in giving instructions for the Will and procuring the execution and registration. Accordingly, he submitted that it would be unsafe to give the Estate in the hands of an Executor.

He further pointed out that the Executor acted just contrary to his duty mandated by the Section. He alone had access to the houses and all the assets that were located therein. He concealed assets namely high value jewelleries,

gold coins, ivory and silver articles, etc. for more than a year.

In fact two He also

caveators LDN and RDM by filing application forced their disclosure.

contended that there is probability that the jewelleries and many valuable articles found by the Special officers as well as those removed earlier leaving large number of empty boxes, empty safe and pouches found in the strong room and other safes and almirah were concealed and ad hoc valuation was given concealing those valuable assets for personal gain. Obviously, welfare of the

Estate cannot be safe in the hands of the Executor and as such Administrator Pendente Lite has been appointed in proper exercise of judicial discretion.

Learned Advocate-General further drew our attention to the fact that this concealment of RSL took to falsehood and subterfuges. Unaccounted movable assets may easily be misappropriated. There is no explanation as to why the safe and such a huge number of boxes etc. had been lying empty. RSL never

disclosed to court, which he should have done immediately after the filing of the probate application, as to why the existence of jewelleries, ivory, silver, artifacts, rare gold coins etc. as also empty containers found by Special officers were kept concealed. Moreover, RSL never made any inventory of the jewelleries, gold coins, ivory, silver, artifacts etc. after the death of PDB. The inventory made by the Therefore, he

Special Officers cannot be compared with any other inventory.

submitted that the finding of the jewelleries etc. could not be stated to have been kept intact and this statement is intended to cloak the personal interest of the Executor.

According to him, RSL produced 4 number of keys of the almirahs and safes etc. and further stated that he did not have access to almirahs, safes, cupboards, boxes, pouches, strong room etc. because when PDB went to Belle Vue Clinic she only gave four almost useless keys to RSL. Thereafter, at the

instance of Court, the Joint Special Officers after broke open the safes and almirahs etc., to have the locks of the safes and almirahs etc., recovered most valuables from there. Therefore, he submitted that RSL was trying to conceal those valuable articles. Under the codicil he accepted the legacy as to the real properties as personal properties of PDB and RSL applied for probate of those house properties.

He further pointed out that in the affidavit-in-opposition of RSL (being G.A. No. 553 of 2005), RSL disclosed that PDB was using those houses as guest houses and various companies owned those houses and ‘Prayer (c)’ would show his personal interest is in conflict with his duty. Grant of probate would

jeopardize the title of the companies. Hence, he submitted that RSL is clearly an unreliable person and as such welfare of the Estate cannot be safe in the hands of the said Executor.

His further point of submission was on the ground of allegation against RSL in respect of professional misconduct before the Institute of Chartered Accountant. He contended that RSL has deliberately made false statement with

regard to the shradh ceremony of PDB.

Attempt was made to hide the

impropriety of transmission of shares of East India Investment at this time of grief and on shradh ceremony day. RSL made blatantly false statement with

regard to the medical files of PDB. He also stated that medical files were with M. P. Sharma who was the Secretary of PDB and has now left the job. The old

medical files were secreted in Kolkata house to deprive the caveators from challenging the Will on the ground of absence of testamentary capacity.

He also pointed out that RSL is making various financial gains through his firm PLC securities which is a 100% subsidiary of Lodha Capital Markets Limited. According to him, RSL to have immediate control over all the companies has crudely been exposed in transmission of shares of East India Investment Company. The appellant has made an illusory claim that the performance of RSL as a corporate leader has been remarkable and on the basis of such assertion the Cement Division of Birla Corporation did very well under his leadership. He

further added that it would appear that the performance of the industries of which he was a Co-Chairman or a Board Member has been dismal except cement.

Hence, the Learned Advocate-General concluded that the derivative glory of brilliant performance of RSL is nothing but a myth.

Mr. S. B. Mookherjee, Learned Senior Advocate appearing on behalf of RDM (Radha Devi Mohatta) submitted before us that the principal point which has been argued before the Hon'ble Appellate Court that whether or not the Hon'ble First Court justified, in the facts and circumstances of the case, to appoint the Administrators Pendente Lite under Section 247 of the Indian Succession Act which provides that pending any suit touching the validity of the Will of a deceased person or for obtaining or revoking any probate or any grant of letters of administration, the Court may appoint an Administrator of the Estate of such deceased person, who shall have all the rights and powers of a general Administrator other than the right of distributing such Estate and every such Administrator shall be subject to the immediate control of the Court and shall act under its discretion. Hence, he pointed out the other points that have been urged on behalf of the respondents and member of the Birla family which are as follows : a) Appointment of an Administrator Pendente Lite is a matter of judicial discretion of the Hon'ble Court of first instance and the Appellate Court would not normally interfere with the exercise of such discretion if the same has been exercised in a due and proper manner and upon noting the relevant and material facts as also the case laws bearing on the subject. The exercise of discretion in making appointment of Administrator Pendente Lite by the Hon'ble First Court is based upon and guided by certain well settled principles and these are to be found not only in Section 247 itself but also in a large number of decisions of the Courts of India and of England bearing on the subject.

b)

c)

Apart from the Section itself, the Hon'ble First Court is also required to take into account several other facts such as, the nature of the Will, the nature of the Estate, serious challenge to the Will, unnaturalness of the Will, the kind of person who has been appointed as Executor and other material points.

The other points that were urged by him before us were on the ground of the above arguments on behalf of the respondents that a discretionary order passed by the Hon'ble First Court should not be lightly interfered with by the Hon'ble Appellate Court unless the exercise of discretion by the Hon'ble First Court is based on an erroneous view of law and a mis-appreciation of the facts of the case, reliance was placed on the following decisions cited at Bar on behalf of the respondents in this context: a) 1983 Appeal Cases 191 (Hadmor Productions Limited vs. Hamilton) b) c) d) 1990 Suppl. SCC 727 (supra) 1997 (2) CLJ 409 DB (supra) 1999 (1) CHN 10 DB (Rekha Mukherjee vs. Asish Kumar Das).

He further submitted that the second main argument on behalf of the respondents and members of Birla family is that under Section 247 of the said Act, the principles applicable are that there must be a suit touching the validity of the Will of a deceased person and that the Court may appoint an Administrator of the Estate of such deceased person. The principal decisions that have been

decided both in India and in England relating to an appointment of Administrator Pendente Lite is as follows: a) AIR 1933 Bombay 342 (supra) b) AIR 1952 Cal 418 (supra) c) 1948 (1) All E R 271 (supra) Mr. Mookherjee further submitted that the other reasons and grounds for appointment of Administrator Pendente Lite which are peculiar to the facts and circumstances of the instance case are as follows: a) Firstly, the nature of the Estate mainly comprises of the controlling block of shares held by the testatrix in various companies, through a complex interlocking structure. The testatrix held shares, interalia in six investment companies. The said investment companies, in turn,

control the majority or substantial shares in five manufacturing companies which included the flagship company, Birla Corporation Ltd. The right to control is also a valuable property and, therefore, the Administrator Pendente Lite should be appointed over the share holding of the testatrix in all the six investment companies including right to control all other companies of M. P. Group specified as annexure ‘J’ which was exercised by the testatrix during her life time. The application for appointment of Administrator Pendente Lite accordingly seeks such appointment not only over the movable and immovable properties of the testatrix, but also over the voting rights and the right to control including defacto control which the testatrix exercised in respect of

various companies specified in annexure ‘J’ to the application for appointment of Administrator Pendente Lite, appearing at page 293 of vol. 1 of the paper book. He submitted that the above position laid

down in the decision reported in AIR 1973 Cal 450 (Hindustan Motors Ltd. vs. M.R.T.P. Commission).

b) The credibility of RSL is doubtful as will appear not only from his conduct before execution of the alleged Will of 1999, but even after such execution also. The relevant and material facts in this regard are stated hereunder: i) Mr. and Mrs. M P. Birla had executed the Mutual Wills on or about 13th July, 1982 whereby they made a bequest of all their assets to charity. During their life time they created trusts in 1988 in conformity with the said Mutual Wills but it appears that the Trusts were dissolved on or about 15th April, 1999 and the purported Will which is the subject matter of the instant proceeding was executed three days thereafter, i.e., on or about 18th April, 1999 and the concept of Mutual Wills has been accepted in the instant case by the Hon'ble Supreme Court of India in the case of 2006 (2) SCC 757 (Shiva Nath Prasad vs. State of West Bengal & Ors.). ii) RSL without waiting for the alleged Will of 1999 to be probated, applied for transmission of shares in the investment companies held by the testatrix and such investment companies hurriedly called board

meetings which were held on the date of the shradh ceremony of testatrix on July 15, 2004 and gave effect to the transmission of shares. Such investment companies of which RSL was the Chairman, did not even insist for probate of the Will for the transmission to be effected. Transmission thus took place on the date of the shradh ceremony of the testatrix. RSL had in fact applied for transmission on July 9, 2004 death. Such transmission of shares in

immediately after testatrix’s

East India Investment Co. Ltd. has been held not bonafide by the Company Law Board by its order dated 28th June, 2006.

c)

He further pointed out that RSL also lacks in integrity as will appear, interalia, from the following facts:

i)

In the Affidavit of Assets filed by RSL in his probate application, he had under declared the assets and properties of testatrix.

ii) RSL did not disclose the value of testatrix’s interest in Kumaon Orchards or the Provident Fund and Superannuation fund

accumulations even though the same were reflected in the trial balance which according to RSL formed the basis of his affidavit of assets filed by him alongwith his probate application and relied upon by RSL in his opposition to the Administrator Pendente Lite application. iii) Attempt was made by RSL to conceal the assets and properties of testatrix by not disclosing the details of such assets even though he had prior knowledge of the same.

iv) Even during the process of inventory being conducted at Birla Park by the Joint Special Officers, attempt was made by RSL to conceal the strong room in the residential premises of testatrix at Birla Park, Kolkata. v) RSL being the Executor of testatrix did not show the existence of the strong room in the sketch plan supplied by the representatives of RSL before the Joint Special Officers.

d) According to his further submission, RSL is not a reliable person which would appear from interalia, the following facts: i) a complaint has been filed before the Institute of Chartered Accountants of India against RSL in respect of professional misconduct for false declaration regarding the number of persons in the firm Lodha & Co. to procure more business than what his firm was eligible for. The said proceedings are pending. Such instance of professional misconduct by RSL shows him in extremely poor light. ii) RSL made incorrect statements in the Affidavit with regard to Shradh ceremony of PDB. iii) Changes in directorship not disclosed by RSL. The same may be evident from the notice dated 21st July, 2004 convening the AGM of Birla Corporation Ltd. at page 355 of vol. II of the paperbook. In the said notice it has not been mentioned that RSL was also a director of Mazbat Tea Estate, Mazbat Properties Pvt. Ltd. and Mazbat Investment

Pvt. Ltd., wherein his appointment had already taken place on June 14, 2004. It is submitted that such appointment were made and back

dated after the demise of the testatrix. iv) Investments made by the MPB Group routed through Lodha Capital Markets which is a merchant banking company and controlled by RSL himself. The said fact has been denied by Lodha in his supplementary affidavit, which is incorrect statement. All the investments were made through PLC Securities Ltd., which is a subsidiary company of Lodha Capital Markets Ltd. v) Mis-statement made by RSL in his opposition (Para 29 at page 779 Vol. III of Paper Book) with regard to the medical file of Testatrix which would be evident from the Minutes of the Meeting of the Joint Special Officers on April 19, 2005 (page 1593 of Vol. V of the Paper Book). Medical Files of the testatrix found at her residence. vi) The Hon'ble First Court for the first instance, directed an inventory to be made in respect of some of the movable assets of the testatrix and in the course of such inventory large quantity of jewelleries, gold coins and other movable assets were found. (see page 2915 Vol. IX, page 2854 Vol. IX, page 2909 Vol IX, Page 2863 Vol. IX of the Paper Book.). vii) During the course of inventory various empty bags, pouches and boxes were found.

One of the points that have been urged strenuously on behalf of RSL is that the petition for appointment of Administrator Pendente Lite is lacking in particulars and cogent grounds have not been made out for the grant of such appointment. It is now well-settled that even if all the grounds are not to be found in the four corners of the petition but if such grounds appear from the subsequent affidavits filed on behalf of the parties then these may also be taken into account for the purpose of granting the relief claimed and he placed reliance upon the decisions reported in AIR 1966 Cal 512 (Ramsankar Prasad vs. Sindri Iron Foundry Pvt. Ltd.) and AIR 1951 SC 177 (Firm Srinivas Ram Kumar vs. Mahabir Prasad & Ors.) and submitted that the Hon'ble Supreme Court held that there would be nothing improper in giving the plaintiff a decree upon the case which the defendant himself makes.

Further reliance was placed on the decision reported in AIR 1952 SC 47 (Kedar Lal Seal & Anr. vs. Hari Lal Seal) contending that the Court would be slow to throw out a claim on a mere technicality of pleading when the substance of the thing is there and no prejudice is caused to the other side, however, clumsily or inartistically the plaint may be worded. He further contended that in the instant case the Court shall judge the situation as a whole without taking a narrow legalistic view with regard to the lack of pleading in the petition. He further pointed out that there is a distinction between Sections 247 and 301 of the said Act of 1925. Section 301 provides for removal of Executor or

Administrator and provision be made for his successor and the Section goes on to

lay down that the High Court may on application suspend remove or discharge any private Executor or Administrator and provide for the succession of another person to the office of any such Executor or Administrator who ceases to hold office and the vesting in such successor of any property belonging to the Estate. The case of the applicants for appointment of Administrator Pendente Lite is not for the removal of the Executor but for the making of an interlocutory order under Section 247 of the said Act. According to him, RSL claims to be a non-

executive Director in all the companies of the M. P. Group and he being a mere figure head is not involved in the day to day affairs of the companies which are all professionally managed.

Hence, Mr. Mookherjee submitted that RSL should not have any objection if an Administrator Pendente Lite is appointed. Be it noted that RSL has not been removed in his capacity of Executor but only an interlocutory order has been passed under Section 247 in respect of the Estate of the maker of the alleged Will. Such appointment can be made without deciding whether the Executor is a good man or a bad man and without also harping on the subject of his competency or incompetency to manage the Estate of the testatrix inasmuch as there is a serious challenge to the purported Will of 1999. There is also a serious challenge to the appointment of RSL as Executor of such Will, the Estate is vast and of substantial value and the sole Executor has also been made the sole beneficiary of the said Will and thus there is a serious possibility of the interest of the beneficiary coming into conflict with his duties as Executor of the Will. By

reason of these factors it is necessary to have the appointment of Administrator Pendente Lite in the instant bonafide litigation touching the validity of the said Will and such a valuable Estate should not be left in the hands of RSL during the pendency of the probate proceedings.

Mr. Mookherjee further drew our attention to the decisions reported in AIR 1933 Bom 342 (supra); AIR 1952 Cal 418 (supra) and (1948) 1 ALL E R 271 (supra) and contended that necessity as such is not an independent principle which stands apart from the principles enunciated in the said decisions. He further pointed out that Section 247 of the said Act does not

contain any prescription, nor indicate a pre-condition to be fulfilled before an order under the said Section can be passed. The use of word “may” strongly

suggests so that the order should be passed at the discretion of the Court. Exercise of the discretion naturally would depend upon the Court’s perception, based on the materials and facts brought to its notice, regardless of pleadings filed by the parties. A strict adversarial approach is not appropriate in

testamentary matters for conscience of the Court has to be satisfied not only in the matter of granting a probate by removal of suspicious circumstances, but also in the matter of protection and preservation of the Estate even at the intermediary stage until the question of grant is finally decided either way. This idea is reinforced by the fact that an Administrator Pendente Lite be appointed under Section 247 of the said Act even without any application being made by a

party to the Court. This position is made clear by contrasting the provisions of Sections 247 and 301 of the said Act.

He further submitted that under Section 301 of the said Act, the Court could remove the Executor only on an application being made by a party, whereas under Section 247 of the said Act the Court is free to appoint an Administrator Pendente Lite without any application being made by a party.

He further argued that on merit, the main thrust of the Counsel’s argument has been that neither there is any evidence of waste, mismanagement or siphoning off of the fund of the Estate, nor is there any ground for apprehension, having regard to the nature of the Estate and conduct of the Executor so far. A careful analysis of the circumstance is therefore, necessary

to ascertain whether those circumstances exist for apprehension that the Estate is not safe in the hands of the Executor and such question was raised in the following manner: a) Whether the Estate by its nature is so vulnerable that it can be exploited easily by the Executor during the pendency of the probate application? b) Whether the conduct of the Executor in the matter of handling the affairs of the Estate or otherwise is dubious and uninspiring?

Mr. Mookherjee further pointed out that it is the case of the appellant that the principal assets of the Estate are shares in various companies and no attempt has been done to transfer any share and any attempt to do so would violate the order of injunction which is already existing. This argument

oversimplifies the situation and glosses over the fact that the value of controlled block of shares is not the share certificates but in the power one can exert on the basis of such shares. The testatrix compared to her stature as an industrialist, had a very modest income shown in her tax return but being the corporate head, on the strength of her share-holdings, she enjoyed power and influence over every affairs and finance of all the companies of M. P. Birla Group, whereas RSL occupies the same position and exerts the same power. Therefore, RSL can

abuse his position to the detriment of the Estate in a subtle and a secretive fashion. According to him, such misconduct, regardless of the statutory

regulations and provisions of the Companies Act, may not be apparent in the short run.

The argument on behalf of the appellant is that only 0.4% of the estimated total value of the Estate discovered from the strong room of the deceased. It has also been urged on behalf of the appellant that the jewellery, coins etc. discovered from the strong room that the inventory made by the Special Officers confirmed that the contents of the strong room were intact. This argument, according to Mr. Mookherjee, is naïve argument.

He drew our attention to the fact that by such inventory it cannot be said whether anything was missing or removed since the death of testatrix. The whole affair over the discovery of the Treasure Trove and conduct of RSL would show the dishonest conduct of RSL by itself is enough to discredit him as Executor to be trusted any further with the Estate. In fact, the biggest safe with combination lock inside the strong room when broke open was found to be totally empty (see page 2909, vol. IX of the paper book). Arguments advanced on behalf of RSL that the criminal cases were also been filed against RSL with regard to the improper and unprofessional conduct in the affairs of his running the business as a Chartered Accountant and with regard thereto nothing has been proved so far in connection with the criminal case or the improper or unprofessional misconduct of RSL, therefore, it is submitted on behalf of the appellant that the Court should not be influenced by the said factors. Hence, Mr. Mookherjee submitted that at least the complaint would show and can support a prima facie view for the Court to decide the question whether RSL should be allowed to continue as the Executor.

He further pointed out that elaborate submissions were advanced on behalf of the appellant with reference to various directorial appointments in favour of RSL made by the testatrix to urge that those were measures of her confidence in him. According to him, so long PDB was alive and at the helm of affair, chance of his abusing and misusing the position was entirely unlikely and, in any event, this notion falls flat when one looks at the ground reality after her death. Hence,

Clause 4 of her purported Will dated 18th April, 1999 virtually bequeath every conceivable and inconceivable right over the Estate (which in any event is under challenge), she neither in her long association with him nor in course of her ultimate journey to Belle Vue Clinic when she made over 4 keys to him, had taken him into confidence to say that there was a hidden strong room in the house and which locks would be opened by which of the 4 keys. Eventually, only one of the 4 keys could be used to open door inside children bedroom in the first floor of the house. It will also appear from the relevant minutes/inventories that whatever keys of safe, almirah etc. were found were mostly duplicate, and were so described in the tags attached to them. This abysmal ignorance of such vital matters clearly proves that despite all his ingratiating attempts to win confidence of the testatrix, the latter reposed none in him.

It is also submitted that the Court is not to adopt a crude and quantifiable test in this regard but should try to foresee, on the basis of known facts, whether a case for apprehension for waste, mismanagement and misfeasance exists to an extent that RSL can inflict irreparable loss and injury. Administrator Pendente Lite is in the nature of a quatrinet action and negative precaution and he relied upon a decision reported in 2005 (2) WBLR (Cal) 311 (supra) in support of his contention and submitted that human mind is very flexible in nature.

Hence, according to his submission, the appeal should be dismissed and the order passed by the Hon'ble First Court should be affirmed.

Mr. Samaraditya Pal, Learned Senior Advocate appearing on behalf of the respondents No. 1 to 4 submitted before us that the proper approach should be to locate the focal points. For that purpose, the Court must consider the

vastness of the Estate, and the nature of the Estate. It is not like usual cases e.g., immovable properties like land and building; movables of usual type like motor cars, furnitures, cash, jewellery etc. but of a special type comprising antiques and coins of mourya age which are invaluable. Further, the shares of

various companies of M. P. Birla Group and through the said share-holdings controlling of substantial industrial units, constitutes the true nature and represent the most valuable constituent of the Estate. He also drew our attention to Clause 4 of the Will in question and submitted that the Will itself expressly refers to control.

According to Mr. Pal, the Indian Succession Act, 1925 (hereinafter referred to as the said Act of 1925) to be considered for the judicial exercise of discretion for appointing Administrator Pendente Lite on the ground of serious challenge to the Will, vastness of the Estate, nature of the Estate, Executor’s conduct and performance as Executor and when the Executor is the sole beneficiary, a general overall perspective of the Court regarding necessity of appointing Administrator Pendente Lite.

He further tried to contend that the cases which identify necessity as an important factor do not, however, lay down (and it cannot be so) that the categories or constitutes of necessity are closed. The overall concept of necessity must emerge from the above factors. Sometimes these factors may overlap and it is also not necessary that all these factors must be present cumulatively i.e. all must exist on their own strength. In the exercise of discretion in a given case one or more factors may suffice and in this context he relied upon a decision reported in 1948 (1) ALL E R 271 (Supra).

He further submitted that the said Act of 1925 has specially provided for Administrator Pendente Lite inspite of the fact that there are provisions relating to interim protection of property by general law of injunction or Receiver under Code of Civil Procedure. The predominant intention was to ensure that a

deceased’s Estate is protected by the Court, the only trustworthy institution, adequately, properly and more securely so that the ultimate wishes of the testator (who is no longer there) are fulfilled and the ultimate beneficiaries of his last wish are not deprived.

According to his further submission, the custody of the Court becomes more accentuated because under Section 211 of the said Act the Estate of the deceased vests in the Executor and he has power to intermediately deal with them i.e. before probate is granted. For an example, he can create Third party rights over the Estate; he may adopt policies which according to his subjective

assessment are good for the company, which may, however, turn out to be bad; he may arrange control to pass even without disposing of shares. Mr. Pal

submitted that it is true that he has not done so as of today. Section 247 of the said Act cannot wait in the wings for the mismanagement and mishandling of the complex Estate to happen. In fact, however, it has happened. He contended that RSL as an Executor has made no attempt to collect the assets is gross dereliction of his duties (Section 319 of the said Act) in, inter alia, not accounting for or taking charge of the invaluable items of artifacts, ancient coins, jewellery etc. at PDB’s residence at 17B, Gurusaday Road, Kolkata although, as he says, PDB handed over to him keys before leaving her home for the last time on her way to Belle Vue Clinic from where she never returned.

He further pointed out that the perception of threat is also a guiding factor when the destination of the Estate is, ex hypothesis unknown as of today since only the final decree in this probate suit (including all appellate stages) will determine. According to him, he may not act in his own interest when the sword of the Court in the form of application for Administrator Pendente Lite is hanging over the Executor. But it is reasonable to form the view when the sword is not there his acts and deeds may be guided by his self interest and not the interest of the Estate. This is so because the human mind can and is often too frail to According to the A factor

withstand temporal temptations which is life’s experience.

words of Justice Holmes, the life of the law is experience not logic.

which is relevant in this case in particular is the animosity between the parties at

a personal level.

Negative mental attitude which has descended to a sole

beneficiary cum Executor is most likely to have negative results for the Estate and in a given background Administrator Pendente Lite may be a matter of course, i.e. vastness of the Estate and its complexity and when the Executor is sole beneficiary and with regard thereto he drew our attention to the decision delivered by the Hon'ble First Court in this matter.

Mr. Pal further contended that Section 247 of the said Act applies when a suit is filed “touching the validity of the Will” and the final decision of course will be arrived at while pronouncing the final judgment in the probate suit after final hearing. The prima facie aspect will also be related to the aspect of necessity since in such a case the court will be prima facie satisfied that there is no will at all and the Executor is, therefore, prima facie in wrongful possession of the Estate.

He further submitted that merely because a person is appointed Executor, he must administer the Estate until probate is refused cannot be a rule. Undoubtedly, discretion is conferred upon the court. However, Mr. Pal placed his reliance upon a decision reported in AIR 1976 SC 232 (Swarn Singh & Anr. vs. State of Punjab & Ors.) and submitted that the impugned judgment has referred to any one factor viz. vastness of the Estate or the Executor being the sole beneficiary, the exercise of discretion cannot be faulted.

According to him, such discretion is not subjective but objective. Therefore, if the impugned judgment has referred to any one factor, then the exercise of discretion cannot be faulted.

He further pointed out that if the discretion exercised by the Hon'ble First Court is perverse i.e. non-existent and irrelevant factors, then only the Appellate Court will interfere with the exercise of such discretion and he relied upon the decisions reported in 1990 (Supp) SCC 727 (supra); 1997 (2) CLJ 409 (supra) and 1999 (1) CHN 10 (supra) in support of his contention.

He further placed his reliance upon the decision reported in (2006) 2 SCC 757 (supra) and contended that the Hon'ble Supreme Court has described RSL as accused No. 1 and he is so in law. According to him, it is difficult to conceive that the Court would permit a person accused of criminal breach of trust, when the allegations so made against RSL in the criminal complaint are found by the Hon'ble Supreme Court to disclose offence, to function in a fiduciary position akin to a trustee, to control and manage huge and vast Estate, comprising inter alia, manufacturing companies and valued at least Rs. 2500 crores.

He further drew our attention to the order passed by the Company Law Board (hereinafter referred to as “the CLB”) dated 28th June, 2006 and contended that the transmission of shares of PDB in different companies held not bonafide by the CLB.

He further placed his reliance upon the decisions reported in 13 CLJ 47 (supra); 10 CLJ 263 (supra) and AIR 1952 Cal 418 (supra) and submitted that on the basis of the principles laid down in the said decisions, the Hon'ble First Court found that the Estate is in medio and huge amounts invested in mutual investment companies of Lodha is a clear abuse and breach of fiduciary position in fact. According to Mr. Pal’s further point of submission, although no mismanagement has surfaced in the judgment, but mismanagement is not the only factor for appointment of Administrator Pendente Lite. According to him, the appellant has failed to prove that the judgment delivered by the Hon'ble First Court suffers on the ground of perversity.

He further submitted that the Estate admittedly consists of the following: a) Controlling block of shares in M. P. Birla Group of Companies, and power and control is the main assets. b) Immovable properties in important cities in substance owned and occupied by PDB although ostensibly in the name of companies namely, Punjab Producing & Trading (Kol); Baroda Agents (Mumbai); Punjab Produce (Delhi) and Baroda Agents (All). These are investment

companies which have no public holding and the codicil gives power to RSL as Executor to dispose of these properties. c) Invaluable ivory artifacts, gold coins of mourya dynasty, ivory inlaid furniture, paintings, jewellery etc.

d) Other assets mentioned in the affidavit of assets filed in the petition for probate. found. The inventory disclosed only those valuables which were This is quite apart from many others for which the Receiver

application was made, based on returns etc. filed before the concerned statutory authorities.

Mr. Pal further pointed out that it would be evident from the Administrator Pendente Lite petition of RDM which adopts the affidavit in support of the Caveat filed by RDM to be treated as part of the petition. The following are the brief facts from the Administrator Pendente Lite petition of RDM and the affidavit in support of Caveat of RDM: a) Serious challenge to the Will; b) Control and taking advantage of control; c) Criminal proceedings.

He further drew our attention to the decision reported in (2006) 2 SCC 757 (supra) and submitted that a prima facie case has been made out against RSL and others by the judgment of Hon'ble Supreme Court dated 3rd February, 2006. Rectification of Share Register of Investment Company in respect of the

shares held by PDB in the name of RSL, the Executor. Such transmission has been held to be malafide and the conduct found to be fraudulent by the order dated 28th June, 2006 of the CLB.

Mr. Pal further reproduced the facts of the inventory before us which is as follows: • A strong room regarding the existence of which RSL’s

representatives stated that RSL was not aware of the same, was discovered. • Three iron safes were found out of which the largest one in the strong room had to be broke open and was totally empty. • From another iron safe jewellery and gold ornaments were recovered. In the remaining iron safe nothing of significant value was found. • Immensely valuable and rare ancient/medieval gold coins and some firearms were recovered from the steel almirah in the strong room. • Various other valuable assets (including jewellery, household goods, personal effects, artifacts, works of art, art collections, ivory items, gold and silver utensils, paintings, sculptures, furniture including gold plated furniture and other items) were found.

According to him, neither had the above-named assets been disclosed by RSL in the affidavit of assets nor had RSL taken any step to collect the same for safe custody. He submitted that the grounds of necessity would depend on the true implication or concept of necessity in the context of appointment of Administrator Pendente Lite and necessity arises by reason of cumulative factors.

He further pointed out the reliability and credibility of Executor quaExecutor in the facts and circumstances of the given case and contended that RSL made false statement on oath regarding the date on which the shradh ceremony was held. The Joint Special Officers discovered the files at Gurusaday Road during their inventory while RSL denied that the files were with him. Pecuniary gains made by RSL by investing funds of M. P. Birla Group through

companies controlled by him. A fiduciary must not act in a manner that there is a conflict of interest and duty. Such persons loose their capacity to be impartial and fair.

According to Mr. Pal, RSL should not be allowed to be the Executor and he is a human being with all the frailties of human character. He submitted that it is an inflexible rule of Court of equity that a person in a fiduciary position, such as the respondent’s is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict. Mr. Pal submitted that this rule is, as has been said, founded upon principles of morality. It should be regarded rather as based on the

consideration that human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty and thus prejudicing those whom he was bound to protect and he relied upon a decision reported in 1896 AC 44 (supra).

Relying upon another decision reported in (2005) 2 WBLR 311 (supra), he submitted that so long RSL is in control, there is no dissent by people serving those companies and the concept of necessity has been spelt out and is relevant and might be a sole factor to be considered in Administrator Pendente Lite application and in this context he relied upon the decisions of (1948) 1 All E R 271 (supra); AIR 1933 Bombay 342 (supra) and AIR 1951 Madras 393 (supra). According to him, the vastness may require more than one person to administer the Estate. It can only fit into necessity and not waste or

mismanagement. The appellant proceeded on the wrong assumption of law that ‘necessity’ is restricted to one factor i.e. waste and mismanagement. The

principle of necessity is like a genus of which waste and mismanagement is a specie.

His further submission was on the question of lack of management where the test would be what a prudent Executor would do. The breaking open of the locks of the safes, almirahs and the invaluable things found therein have already been stated which would show that RSL as the Executor has failed to perform his duty to collect the assets of the Estate of considerable value. The vastness of the Estate has no nexus or relationship the appellant suggested. No authority has been cited and Mr. Pal further drew our attention to the decisions reported in (1948) 1 ALL ER 271 (supra); 126 ITR 748 (supra) AIR 1933 Bombay 342 (supra) and AIR 1951 Madras 393 (supra) in support of his contention.

He further submitted that during the inventory the antiques and ancient coins were found out by the Special Officers. The items of ivory are of immense value and the gross undervaluation of the Estate in the affidavit of assets assumes critical importance and clearly undermines the credibility, reliability and integrity of RSL qua Executor and no confidence can be placed upon RSL to continue to be in sole and exclusive charge of the Estate under the impugned Will. Admittedly, the Estate comprises PDB’s control through the shareholders and with such control one decides regarding the policies, accounts etc. If the Hon'ble Court controls, RSL has nothing to lose.

According to his further submission, the status of the companies has been preserved and the concerned companies are doing well under RSL as Executor. This submission regarding status has no relevance or any bearing on the question of appointment of Administrator Pendente Lite. If the Companies are doing well it is not because of RSL, but general buoyancy in the economy, and infrastructural demand, cement, cables etc. and RSL cannot claim any credit thereof. All have been done at the instance of professional executives since the Companies are managed by professional executives as admitted by RSL. He further submitted that the criminal case which is pending, is a negative factor against RSL’s continuance. His integrity is under criminal trial and relates to the very Will of PDB.

Mr. Pal further drew our attention to the biography written by Dr. Gaurishanker pointing out that Dr. Gaurishanker was the draftsman of the Will. In fact, in the said biography he himself stated that both MPB and PDB decided to dedicate their property to the Charity and took the decision at the temple of Tirupati. Subsequent thereto, when the instructions are consequences of undue influence, suspicious circumstances like unnatural Will etc., then Gaurishanker is irrelevant.

Mr. Pal further submitted that the Birlas have no personal interest and it is also clear that PDB had charities only in the mind till the death of MPB until RSL descended on the scene. According to him, the submission of the appellant that RSL should not be displaced because he has not betrayed any trust also cannot be accepted when a confident advisor etc. business matters takes advantage of proximity – it amounts to betrayal. Position of trust is admitted because RSL was in a fiduciary relationship even before when he comes as an Executor. He

further pointed out that the findings of the Special Officer’s are not against RSL as Executor which is a naïve submission. The Special Officers find invaluable articles belonging to the Estate not accounted for by RSL as an Executor or otherwise.

The argument has also been put forwarded by Mr. Pal to the argument of the appellant that the interim injunction would be a sufficient protection and, therefore, Administrator Pendente Lite should not have been appointed. If the

interim injunction were sufficient, then the concept of Administrator Pendente Lite would be redundant. Court grants interim injunction till a better appraisal on affidavits. He submitted that when RSL is in control it would be impossible to discern whether the injunction is violated because he will find many ways of circumventing the injunction. Diversification of policies would defeat the effect

of injunction would only bind him and not his stooges through whom he can flout the injunction.

In answering to the argument that there were no subsequent event after the filing of the Administrator Pendente Lite application, Mr. Pal submitted that the Special Officers’ discoveries were subsequent events and the impugned judgment proceeded not on the basis of wrong assumptions, but on the findings, those are as follows: a) Company proceedings before CLB were against companies and not RSL; b) Estate had not vested in charitable trust; c) There is no explanation regarding dividends; d) Source of funds for litigation expenses; and e) RSL does not have any mutual fund company.

The argument put forward by the appellant that no Administrator Pendente Lite could be appointed over companies because Administrator Pendente Lite is like Receiver and the Court does not appoint the Receiver over the companies, Mr. Pal answered that the impugned judgment does not appoint any

Administrator Pendente Lite over the companies as such and the management of the companies are not replaced or suspended. The Joint Administrators have been appointed in relation to the controlling shareholdings of PDB. The Hon’ble First Court being prima facie satisfied gave certain directions including inter alia that: a) The controlling shareholdings which PDB had, should be so utilized that all rights attaching to such controlling shares and all matters incidental to the same should be with the Administrators and not with the Executor. b) RSL will not act as a Chairman or director in the board of any of the companies on the strength of shareholding of PDB although RSL would be free to act as a director or Chairman, if he is entitled to do so by reason of his own personal qualifying shareholding. These

directions are essential in the special facts of this case which involves succeeding to the property which undoubtedly includes control. This is a unique situation calling for intervention of the

court pending the decision as to whether probate of this Will shall be granted or not. It is this feature of control which distinguishes the instant case with some other cases where bequests are made of specific movable properties or immovable properties. c) It is not essential that RSL must be present in the Board. RSL is admittedly a non-executive director in all the companies under PDB’s control and it is an admitted fact of the appellant that the

management of the concerned companies is being carried out by the professional managers/executives. d) In this circumstance, the Court appointed Administrators consisting of such persons whom the court could think proper to appoint and defining their powers cannot in any way be objected to by RSL. e) RSL has nothing to lose if Administrators are appointed for safeguarding the ultimate beneficiaries of the Will if probate is refused. f) His opposition to the appointment of Administrator may by itself constitute a ground for appointment of Administrator Pendente Lite and such opposition can only be motivated by a desperate but unreasonable companies. desire to exercise control over the concerned

Mr. Sarkar, Learned Senior Advocate appearing for KKB adopted the argument put forwarded by Mr. S. B. Mookherjee, Learned Senior Advocate and Mr. S. Pal, Learned Senior Advocate.

In reply, Mr. Mitra pointed out that the allegation of sale of mutual land (Soorah Jute Mills) are incorrect and unfounded and the same were discussed at the meeting of the Board of Directors on 25th July, 2001 (during PDB’s lifetime). In respect of the Birlas, the decision was taken to sell idle plant and machineries during the lifetime of PDB due to poor financial performance. The decision was

taken to sell the same in the meeting of the Board of Directors in the presence of PDB and finally approved the sell on 15th June, 2004 to M/s. Kalantry Textiles at a price of Rs. 12.85 crores.

The allegation was made that the cement worth Rs. 1 crore was stolen from Birla Corporation Ltd. and such loss of cement was worth Rs. 15 lakhs – that too during the lifetime of PDB. Total group turnover of Rs. 2000 crores – pilferage of cement worth Rs. 15 lakhs is insignificant. Action taken against suspected

persons, officers dismissed, FIR lodged and accused persons arrested. It is also submitted that the surplus fund of Birla Corporation Ltd. is invested in mutual funds while at the same time, the company was borrowing money from Banks and Financial Institutions.

Mr. Mitra further pointed out that the investment of mutual funds made for last many years and at least for last 5 years during the life time of PDB. This is not a new practice introduced by RSL, he submitted and there is no case that Birla Corporation Ltd. has suffered any loss out of investment in mutual funds. Thereafter, he pointed out that apart from Soorah Jute Mills and Birla Synthetics, other units of M. P. Birla Group of Companies have been closed down during the lifetime of PDB. Committee of the Directors was constituted when

PDB was present. The appointees were highly qualified and experienced, some of whom have left other Birla Groups to join M. P. Birla Group and no case has been made out or that they are in any way related to RSL.

According to him, pre-payment of loans is in interest of Companies, any other suggestion is absolutely absurd and no case has been made out so that the companies were prejudiced. Mr. Mitra submitted that the case of AIR 1933 Bom 342 (supra) in fact supports the case of the appellant and in the said decision, from the facts it is evident that the warrant appointment of

Administrator/Receiver is in the usual course. The said facts of the said case is totally different from the instant case and the Court cannot appoint an Administrator Pendente Lite on the abstract proposition that human mind is flexible.

He further drew our attention to the decision of AIR 1951 Madras 393 (supra) and pointed out that the factual matrix is totally different from the instant case. In the present case, PDB as a shareholder could not be treated as a co-owner of the assets even the companies in which she held substantial shares i.e. the five investment companies. The Hon'ble First Court in the ad-interim There is also no allegation that

judgment also held the same point of view.

dividends are not being realized nor any proof any kind of impropriety the dividends are being deposited in Bank Account opened in the name of the Executor.

He further contended before us that the decision of AIR (1948) 1 All E R 271 (supra) has no application to the facts and circumstances of the present

case.

The factors that a) the defendants were not in a position to collect the

income arising out of the Estate nor in a position to enforce the claim of the Estate, b) the Estate was in jeopardy, were considered by the Court of Appeal while appointing Administrator Pendente Lite. He further submitted that it is not the case of the Birlas that RSL is unwilling or not in a position to take control of the Estate and the income arising out of the Estate or that the income arising out of the Estate is of such nature as would require appointment of Administrator. On the other hand, the Birlas complained of haste in which RSL took possession of the ‘most valuable asset’ – viz. the controlling block of shares.

According to his further submission, in the decision of AIR 1952 Cal 418 (supra), a case of necessity was made out on existing facts which would be evident from paragraphs 24 to 29 of the judgment. Even, there is not an

allegation that amounts due to the Estate which are not being collected. There is no allegation of misuse of the funds of the Estate and/or inability of RSL to manage the Estate.

In an another decision reported in 126 ITR 748 (supra), according

to

him, it is not a case of appointment of Administrator and thus, the said case has no application in the facts and circumstances of this case. In the decision of AIR 1973 Cal 450 (supra), he pointed out that the said judgment has been cited by the Birlas in support of the proposition that the control is an asset. This is a judgment delivered in respect of the MRTP Act. The Act contains a definition of

‘inter connected undertaking’ vide Section 2(g). Paragraph 23 of the judgment makes it clear that reference to ‘control’ in this judgment is in view of the object and scheme of the aforesaid statute as also in view of the wide and comprehensive connotation given to the term ‘control’ under the said Act. Thus, the meaning of the word ‘control’ as enunciated in this judgment has no relevance to our case. Hence, this case has no application to the instant case.

He further drew our attention to the decision reported in AIR 1976 SC 232 (supra) and contended that this case is based on limits of judicial review under Article 226 of the Constitution of India where the order of domestic Tribunal is sought to be quashed by a writ of certiorari. As such, this judgment has no

relevance to the facts and circumstances of the present case.

According to his further submission, the case of AIR 2000 SC 2276 (supra) was cited for the proposition that subsequent events can be taken into consideration by the Appeal Court and the Hon'ble Supreme Court had taken the note of subsequent event which went to the root of the matter. The subsequent event discovered that the appellant was claiming to be adopted son of the original land holder and, accordingly, entitled to the possession of the disputed land, was in fact not so and that he had made such a claim on the basis of forged and fabricated documents. The Hon'ble Supreme Court did not hold that all subsequent events are to be taken note of.

In the decision of (1990) Suppl. SCC 727 (supra), he further pointed out that this case was cited for the proposition that the Appeal Court will not interfere with the exercise of discretion of the Court at the first instance unless such discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the Court has ignored the settled principles of law regulating grant or refusal of interlocutory injunction. In the present case,

according to him, the Hon'ble First Court exercised its discretion arbitrarily, perversely and ignoring settled principles of law which is evident inter alia from the fact that the Learned Judge after coming to the conclusion on facts that RSL as Executor was not found to have mismanaged the Estate, thereafter proceeded to appoint Administrator Pendente Lite in a probate proceeding over and/or in respect of the public limited companies on the sole logic that human mind is flexible and accordingly, what RSL might do in future is unknown. This is

nothing but surmise and conjecture which has vitiated the judgment under appeal, as such this judgment of the Hon'ble Supreme Court is of assistance to RSL. It may also be noted that this was a case of passing-off where the interim injunction was refused by the Hon'ble First Court and granted by the Appeal Court. The Hon'ble Supreme Court did not restore the Trial Courts’ order on the principle that the appeal court ought not to have interfered with the exercise of discretion by the Hon'ble First Court but after full re-assessment of the materials on record.

He further pointed out that the decisions reported in 1997 (2) CLJ 409 (supra); 1999 (1) CHN 10 (supra) and 1983 AC 191 (supra), these cases have also been cited for the same propositions as in the case of (1990) Suppl. SCC 727 (supra).

In the case of AIR 1966 Cal 512 (supra) the Court should not restrict the scope of enquiry to the petition alone but subsequent affidavits in the petition should also be taken note of. For this proposition, the Birlas have relied upon this case which is a decision on the practice and procedure of hearing petitions under Section 397/398 of the Companies Act has no application in the facts and circumstances of this case.

He further pointed out that the case reported in 1896 AC 44 (supra) has no application to the present case. This was relied upon for the proposition that human nature is such that a person in fiduciary position may be swayed by interest rather than duty, thus, “prejudicing those whom he was bound to protect”.

According to him, in the decision of AIR 1966 SC 81 (supra), the Hon'ble Supreme Court proceeded in the matter after coming to the conclusion that a specific finding on facts that there was no defect in the affidavit in support of the writ petition. The most important distinction between this judgment of the

Hon'ble Supreme Court and our case is that the Learned Judge without calling

upon the petitioner to file a proper affidavit proceeded on the basis of the defectively affirmed petition overlooking the apparent defects in the affirmation. In this case, KNT has affirmed the whole of the Administrator petition as true to his knowledge.

In the decision reported in 2006 (2) SCC 757 (supra), Mr. Mitra submitted that the Birlas have referred to para 3 of the said judgment and particularly to the words ‘undisputed facts’ as if to imply that it was not disputed by RSL before the Hon'ble Supreme Court that MPB and PDB had executed Mutual Wills in 1982. Hence, this submission is factually wrong. Firstly, RSL is not the

appellant in the Hon'ble Supreme Court and Notice was not ordered to be issued by the Court to him and neither did he appear through Counsel. Secondly, the ‘undisputed facts’ which have been referred to in the aforesaid paragraph of the judgment are simply a narration of facts as alleged in the complaint petition, quashing whereof was sought for, firstly in the High Court and thereafter in the Hon'ble Supreme Court.

In a petition under Section 482 of the Criminal Procedure Code which is in the nature of a demurer application, facts alleged are taken to be true and the basis of a quashing petition is that the facts alleged even if taken to be true do not disclose any offence as against the petitioner. Any other interpretation

would lead to an absurdity. If the contention of the Birlas is that it has not been disputed before the Hon'ble Supreme Court by the petitioner therein that in

1982, the couple had executed Mutual Wills and that the same is an admitted position, then the Birlas also have conceded that it is an equally admitted position that PDB had indeed executed her last Will in 1999 and bequeathed all her properties to RSL – it has been recorded in the same para of the judgment that PDB executed her last Will of 1999. On the other hand, the Birlas are

disputing this very execution which is the subject matter of these probate proceeding.

In paragraph 25 of the said judgment, the submissions of the Counsel of the petitioner before the Hon'ble Supreme Court is recorded that “the complainant’s case” is that “two alleged Wills allegedly made by the couple on 13th July, 1982 claiming the same to be mutual Wills”. Counsel for the Birlas next placed the part of the judgment where the Hon'ble Supreme Court lays down a concept of mutual Wills. There is no dispute as to the doctrine of mutual Wills. The case reported in 1993 (4) ALL E R 129 (Re: Dale) is only referred to in the said para without any approval. In the same para, the Hon'ble Supreme Court holds that mutuality of Wills depends on circumstances, inter alia that the last Will has been made by one of the testators without reference to revocation of previous Wills. In the present case by the Will of 1999, PDB expressly cancelled all previous Wills. Thus, satisfying the test laid down by the Hon'ble Supreme Court it can be argued by RSL that alleged Wills of 1982 are not mutual Wills and the later Will of 1999 of PDB revokes the earlier and contains a statement to this effect too.

Therefore, the position regarding the narration of the facts is also made clear in para 48 where the Hon'ble Court states that “at this stage” the Hon'ble Court is required to “read the complaint as it is” and that it suffices to state “at this stage of the matter” that the couple had executed mutual Wills in 1981 and 1982. If it was the Court’s intention to declare that the couple had indeed made mutual Wills, the Hon'ble Court would not have use the words “at this stage”. The statements in para 29 have also to be read in the same light as para 48. Para 50 of the judgment also makes it clear that no opinion has been expressed that all the aforesaid facts are observations of the Hon'ble Supreme Court and none of them should be treated as expression of opinion on the rightfulness of the claim made in the complaint.

According to Mr. Mitra’s further contention the decision reported in AIR 1981 SC 379 (supra) is for the purpose of protection under Article 20(3) of the Constitution of India where it is necessary that FIR is lodged or a formal complaint is made against the person and, in this context, the Hon'ble Supreme Court held that a person would be “accused” of an offence when a FIR or complaint is lodged against him.

He further drew our attention to the case of AIR 1983 ALL 90 (supra) and pointed out that the carbon copy of the alleged Wills of 1982 on the basis whereof the Birlas’ probate petitions have been filed should be treated as originals as

these were allegedly duly executed and attested for the above proposition, this case was cited. In the said judgment the testator had signed the carbon copy in the presence of the attesting witnesses and the phrase “true copy” had been appended by the testator after signing the copy.

Therefore, according to him, no such case has been made out by the Birlas. Their case is that KNT had received a sealed envelope with a direction to open the same on the death of both MPB and PDB. Then, why the alleged envelope given by PDB to KNT should contain copies and not the originals of these alleged Wills, is an unanswered question, also unbelievable. KNT surprisingly did not preserve the alleged envelope even though this was opened and the alleged Wills taken out after the disputes had started with RSL. Khitan & Co. also were unable to give inspection of the alleged envelope a few days after it was opened as it was allegedly ‘not preserved’, after having been allegedly preserved for 22 long years since 1982 which is an incredulous statement and destroys the very case of the Birlas which seeks to be established by them.

We have heard the Learned Advocates for the parties extensively. We have also scrutinized the facts of this case.

After analysing the facts of this case and after perusing the materials on record placed before us and the decisions cited before us on the question of appointment of Administrator Pendente Lite, the question arose that whether the

Respondents/Birlas in their pleadings have been able to make out a case that necessity rises in the facts and circumstances of this case to appoint an Administrator Pendente Lite.

After analysing the decisions cited before us we have to come to the conclusion that the test for necessity must be waste, mismanagement, misconduct, just and convenient which are the grounds for appointment of Administrator Pendente Lite. provides as follows: “Section 247 – Administration, pendente lite – Pending any suit touching the validity of the Will of a deceased person or for obtaining or revoking any probate or any grant of letters of administration the Court may appoint an administrator of the Estate of such deceased person, who shall have all the rights and powers of a general administrator, other than the right of distributing such Estate, and every such administrator shall be subject to the immediate control of the Court and shall act under its direction.” The words “may appoint” in Section 247 of the said Act indicate that the Court has discretion in the matter. That discretion is judicious and not Section 247 of the Indian Succession Act, 1925

arbitrary, to be exercised on established principles of law. The Court also found out a further principle that where there is no representative to collect the assets and there is a “bona fide” litigation in respect of the title to that representation, the appointment of a Receiver, Pendente Lite litigation is almost of course, but then the Court interferes not because of the contest but because there is no proper person to receive the assets (see Watkins vs. Brent).

The principle to appoint a Receiver as followed by the Court of Chancery also thought fit to be followed in the matter of appointment of an Administrator Pendente Lite. It has been specifically stated that the Court of probate would grant “administrator pendente lite” in all cases where the necessity for the grant is made out.

These principles are formally established in England. There cannot even be a suggestion of doubt as to their correctness. In our Court, they have been followed and adopted by Sir Asutosh Mookherjee, J. in Brindaban Chandra Shaha vs. Sureswar Shaha Paramanick (supra); in Bhuban Mohini Debi vs. Kiranbala Devi (supra) and in Promilabala vs. B. Jyotindra (20 CWN 576).

In Brindaban Chandra Shaha vs. Sureswar Shaha Paramanick (supra), His Lordship after referring Bellew vs. Bellew (supra) observed that “ … the Court of probate would grant administrator pendente lite in all cases where necessity for the grant is made out.” Therefore, the question is, what is the necessity and the test for it.

In the case of Borendranath Mitter & Surendranath Mitter vs. Arunendranath Mitter (supra) , the Court also specifically speaks about the same principle and further held that the reason of the thing seems to be this: that though a man makes a Will and appoints an executor, yet if the executor be under any incapacity or disability of acting as such, during his incapacity, in

many respects there is no executor and, therefore, for that time it is considered as a necessity.

We have also been able to find out that the Court of Chancery appoints the Receiver “where the property as is it were in medio”, in the enjoyment of no-one it is the common interest of all parties that the Court should prevent a scramble and a Receiver is readily appointed (see Kerr on Receiver, 9th Edn., page 6).

During the contest, touching the validity of the Will, there is a necessity when the deceased’s property is, “in medio”. Therefore, applying the principle of Court of Chancery for the appointment of a Receiver the Court may appoint an Administrator Pendente Lite (see AIR 1952 Cal 418 (supra)). decision, it is also held in paragraph 19 of the said decision that: “(19) – I do not for a moment suggest that it is an inflexible rule that whenever there is a suit pending, touching the validity of a Will, it is obligatory upon the Court to appoint an administrator ‘pendente lite’. We may take the following illustrations. A man makes a Will, & appoints an executor. He dies leaving rupees ten lakhs in the Imperial Bank of India & a dwelling house in Calcutta, say of the value of Rs. Ten lakhs. The executor named in the Will applies for probate. The Will is contested as a forgery. Assuming the contest to be ‘bona fide’ should the Court appoint an Administration ‘pendente lite’? The answer must be in the negative, because here it is not necessary to collect anything pending grant of administration to the executor or to give discharge to anybody. But suppose in that case, the man, instead of leaving a dwelling house, left a house yielding a monthly income of Rs. 3000/-, is there a necessity? The answer in the affirmative, for it is the duty of the Court to do its best to collect the assets & see that the persons who pay the money get the proper discharge. It is no longer necessary to show peril or danger to the estate.” In the said

We have also considered the decision reported in 13 CLJ 47 (supra) wherefrom we have been able to find out that no grant was made in the facts and circumstances of that case when the Court did not think fit to appoint an administrator pendente lite because the widow could legally give receipts for rent she would realise which she was entitled to do under the provisions of Land Registration Act, read with Section 60 of the Bengal Tenancy Act.

It appears that the Hon'ble First Court has specifically held the following: “… Going by the prayer portions of the applications made by the caveatrix I think prayer for appointment of the Administrator in terms of Prayer ‘B’ cannot be considered for if granted, that amount to taking over of management & control of separate juristic bodies by the Probate Court as it has no jurisdiction to do. However, the prayer for Administrator Pendente Lite, in terms of prayer (a) (hereinafter in short APL) can be considered.” Mr. Mitra submitted before us that the said two Prayers are identical. According to him, if Prayer (b) is refused, then Prayer (a) cannot be granted. We shall deal with that submission subsequently but before that we have to find out the grounds on which the Court came to the conclusion and appointed the administrator pendente lite in the matter.

It appears that His Lordship summarised the allegations and counterallegations in the Judgement and found out that the purported Will propounded by the Executor RSL is a manufactured and procured document. Similarly, the Codicil relied upon and propounded by the Executor is also manufactured and procured. The genuineness of the aforesaid two testamentary documents have

been seriously challenged. His Lordship also found that the said disposition is wholly unnatural. In our opinion, such finding can not be accepted at this stage when the probate proceeding is pending.

The allegation is also that the lady was not at all in the good health and condition and suffers from various ailments and used to travel abroad for medical treatment and within the clutch and influence of the executor. But that allegation has to be treated at this stage only as an allegation against the Will only and finally to be decided by the Court.

The other ground that there was a mutual Will was executed on 13th July, 1982 by MPB and PDB. In terms of the said Will, the lady did not have any right or capacity to publish any document subsequently after the death of her husband, but the suspicion comes in mind when it appears to us that the original mutual Wills were never produced before the Court. The envelope which was received by Tapuriah, was also not produced since it is allegedly missing. Only Copy of the Will was tried to be relied upon on the basis of which the application for probate of the mutual Wills have been filed. The question arose with regard to the genuineness of the said mutual Wills and the suit is also pending in respect thereof.

The alleged Executors appointed by PDB and her husband MPB had already applied for grant of probate of the said Wills of 1982 and the said Wills

have also been challenged before the Court by RSL and it is to be noted that the same is pending for adjudication for grant of probate and is a contentious cause.

The question also arose with regard to breach of trust and a suit has also been filed pending for adjudication before the Court. Those facts, in our

considered opinion, cannot create a ground or can be treated as a ground of necessity for appointment of administrator pendente lite.

It further appears from the allegations which have been narrated by the Hon'ble Judge that the Will and Codicil is a manufactured and procured document and the same is wholly unnatural and there is no reason to exclude any relation amongst the Members of the Birla family. comment on the genuineness or otherwise of the said Wills. We are unable to

Also the fact that cannot be brushed aside is that during her lifetime, PDB has acted as the owner of all the properties left by her husband as if she inherited those properties and at no point of time none of the Executors of MPB came forward or objected to or applied for probate of the said Will of MPB. It is also to be noted as pointed out by Mr. Mitra that the lady inherited those properties and acted accordingly, which would give an impression that there was no Will which was executed at the time of death of MPB and he did not leave any last Will and testament and also there is no document to show that ever during

the lifetime of PDB, any of the Birlas or their family members ever whispered about the said mutual Wills.

It further appears from the submissions as pointed out by Learned Counsel for the parties that in view of the execution of the two said mutual Wills, a separate suit for specific performance has been filed and the same is pending for adjudication. We have also informed that the said suit is ready for hearing.

The further allegation that has been made is that RSL deliberately suppressed the real value of the Estate and as it would be evident from the submissions made before us by the Learned Counsel appearing for the parties and the documents placed before us and/or relied upon by the parties including the applications so filed by the Birlas before the Court, it is submitted by Mr. Mitra that such valuation is being given only for the purpose of the Court Fees which has to be paid in respect of the application so filed by RSL for grant of probate and nothing else. Therefore, the purpose of giving such valuation is

nothing but for the purpose of giving Court fees only.

The further allegations have been made on behalf of the respondents that RSL took steps to rectify the respective share registers of the respective Companies mutating his name in place and stead of PDB as such Executor. Further emphasis has been made on the enormity of the Estate left behind by the said deceased and it would not be safe at all to keep all the properties in his

hands, before grant of probate of the said Will since he is not only acting as Executor but also started acting as the sole beneficiary under the said Will.

Mr. Mitra for the appellant further pointed out that after lapse of a long time, the respondents through KNT (Kashi Nath Tapuriah) filed the application for appointment of Administrator Pendente Lite on 16th December, 2004. He

further pointed out that all the allegations which have been made are dealt with properly in the application filed by RSL for dismissal of the said application for appointment of Administrator Pendente Lite. We have elaborately noted the same in the preceding paragraphs.

It has been further pointed out by Mr. Mitra that the Birlas chosen to abandon the points taken on the pleadings before the Hon'ble First Court which are also noted by us. Hence, after analysing and scrutinising the facts stated in the judgment passed by the Hon'ble First Court and the materials on record placed before us and going through the decisions cited before us, we are of the considered opinion that the respondents herein have not been able to make out a case of necessity for appointment of Administrator Pendente Lite on the ground of waste, mismanagement, misconduct of the Executor.

In the decision reported in AIR 1933 Bom 342 (supra) at page 346 the Court held that their appointment itself shows that the testator had confidence in them, and the Court gives effect to the expression of the confidence reposed in

parties by one who knew them best. It has also been held that the Court refuses to appoint an Administrator Pendente Lite where there is a person named in the Will as executor whose appointment is not questioned and who can discharge the functions of an administrator pendente lite.

We also cannot brush aside the opinion expressed by His Lordship when His Lordship has specifically came to the conclusion that “it is true at the present moment that mismanagement by Lodha has not surfaced the business of M. P. Birla Group of Companies and cannot be apparently put in perilous condition and not in serious jeopardy in the hands of Lodha.”

Even coming to such conclusion His Lordship held that wherefrom he is meeting the costs and expenses to contest the good number of litigations. It has to be taken into account that such question not even pleaded or urged before the Court by the Learned Counsel for the parties.

Therefore, with utmost respect to His Lordship, we hold that His Lordship came to the conclusion without any pleadings and documents. Therefore, in our opinion, such finding of His Lordship is nothing but a hypothetical assumption and has to be set aside and hence, cannot be created as a ground for appointment of Administrator Pendente Lite.

It further appears that His Lordship also relied upon the allegations that there is a criminal proceeding is pending against the Executor and he is one of the accused persons and he challenged the said criminal proceeding at the initial stage fought right upto the Hon'ble Supreme Court. Mr. Mitra has specifically pointed out that the application which has been filed before the Hon'ble Supreme Court was not filed by RSL.

It further appears that His Lordship held that RSL is facing trials and proceedings which were initiated for search and seizure in connection with these proceedings, therefore, it is difficult for the Court to allow such person to control and manage huge and vast Estate of the deceased. When he is facing criminal breach of trust, not qua-executor, whereas it has been pointed out before us by Mr. Mitra which we have to take note of that the criminal case referred to in the Petition (paragraph 44 appearing at page 130 vol. I of the Paper Book) have not been stated as a ground for appointment of Administrator Pendente Lite. His Lordship came to the conclusion that a tainted person should not be allowed to manage or handle the Estate and it is one of the instances of necessity.

Mr. Mitra alongwith Mr. Mukherjee and others further pointed out that the said criminal case was filed at the instance of the Birlas and the charges have not yet been framed and the State has not filed any criminal case against the appellant and the said criminal case has been filed at the instance of Birlas. The

said ground has not been taken by the Respondent as a ground for appointment of Administrator Pendente Lite.

It further appears that all these proceedings as well as the disciplinary proceedings before the Institute of Chartered Accountant having been instituted at the behest of BKB. So far as the criminal proceedings in Alipore Courts are concerned, the same was instituted by one R. P. Pansari, an employee of the Birla Group of Companies. None of these proceedings even started suo motu

either by the Institute or by the State which are all private complaints. Hence, these proceedings were instituted against RSL at the instance of Birlas.

It is further submitted by Mr. Mitra and Mr. Mukherjee submitted on the facts of this case. RSL cannot be treated as a tainted person. Accordingly, after assessing these facts and circumstances of the case and perusing the materials on record placed before us, we are of the considered opinion that the Hon'ble First Court should not have declared RSL as a tainted person.

Hence, with respect to His Lordship, we hold that such finding of His Lordship is contrary to law since the proceedings have not yet been over, nor decided by any competent Court of law and, therefore, at this stage such opinion by the Probate Court should not have been expressed on such materials and accordingly we disagree with the opinion of His Lordship and cannot at this stage

declare RSL as a tainted person. appointment of administrator.

Therefore, it cannot support the claim for

His Lordship further came to the conclusion that the Will of 1999 and the Codicil are seriously challenged inter alia on the ground of undue influences, undue influences and the same were executed in the suspicious circumstances and further lack of testamentary capacity of the testatrix and His Lordship particularised that these are not bare allegations.

Mr. Mitra and Mr. Mukherjee alongwith others appearing for the appellant pointed out before us that the Hon'ble First Court did not pass any order appointing Administrator over the valuable movable assets such as jewellery, ornaments, gold coins, shares and mutual funds held by PDB personally and allowed the Executor to remain in control and management of the same. The respondents argued that RSL had suppressed jewellery, ornaments, gold coins and other valuable assets but even then no order was passed against him.

Therefore, it was the contention of Mr. Mitra and Mr. Mukherjee that the Hon'ble First Court had confidence in RSL and after perusing the order so passed by the Hon'ble First Court we have been able to find out that His Lordship also came to the conclusion that there was no mismanagement of the Estate of the deceased in the hands of RSL excepting the fact that His Lordship appointed the Administrators over the controlling block of shares held by PDB

and further directed that the said shares should be transferred in their own names and be rectified in respect of the share registers of the Companies for recording their names.

To get themselves nominated on the Board of Directors and to dissolve the existing Boards, His Lordship further directed that RSL shall not act as a

Chairman and Director in any of the Companies on the strength of the share holding of PDB, since deceased.

We have also considered the order so passed by His Lordship at the time of moving the application at the ad-interim stage where His Lordship was pleased to pass injunction orders to protect and preserve the assets of the deceased in the hands of RSL. In our considered opinion, the powers as has been given to the Administrators to record their name in respect of the shares left by deceased in their own name and after rectifying the share Registers, all the voting rights have been given to them and further by virtue of the said order it has been directed that they will be the Directors of those Companies.

It further appears that an Officer of Court who has been appointed over the shares whether can have any voting right in the present circumstances and that too by such appointment in a probate proceeding. The only question is whether any material disclosed before the Court for appointment of Administrator Pendente Lite over the controlling block of shares of M. P. Birla Group of

Companies.

It also appears from the fact that there are four manufacturing

Companies in M. P. Birla Group in which shares are held by various investment and other Companies within the said Group. All these four manufacturing

Companies are listed Companies and the shares are held by the Members of public and none of the Companies are before the probate Court or parties to the application for appointment of Administrator Pendente Lite.

It is also a fact that no notice of this application was given to the public shareholders by issuing a general notice and, therefore, in our opinion, the submissions as made before us, a large number of Members of public will be affected by such appointment.

Therefore, we cannot have any doubt in our mind that without giving such notice to the shareholders in the probate proceedings, the Court has no power to appoint Administrator Pendente Lite over the said block of shares and after perusing the materials on record, we have not been able to find out any document which would suggest or can act in favour of such appointment on the controlling block of shares. Merely for the purpose of taking over the possession and control over the Companies the Probate Court, cannot appoint Administrator Pendente Lite to preserve such shares.

Hence, in our opinion, the order of injunction so passed at the ad-interim stage was enough to preserve the Estate. The Court can also direct the

appellant, RSL to furnish the accounts in respect of the dividends received on such shares to the parties and furthermore, injunction can also be passed by the Court directing RSL to open an account of dividends and to keep the dividend intact except for the purpose of maintenance of the assets of the deceased and he shall have no right to use the said money.

We have also considered the materials which were placed before us by the parties and from the pleadings, we have also been able to find out that the respondent did not make out such case before the Court with regard to the dividends so received from the said shares. We have also perused the order so passed by the Hon'ble First Court and after scrutinizing the said

judgment/order, it appears to us that the implication of taking over all the voting rights and right of control of the said thirty eight Companies mentioned in Annexure ‘J’ is nothing but to take over control of the Companies, in other words, to take over the management of the said Companies.

Hence, with utmost respect to His Lordship, we hold that the effect of the order is to dislodge the present Board/Management without considering the provisions of the Companies Act and, therefore, in our opinion, the said order is contrary to the provisions of the Companies Act.

Mr. Pal appearing on behalf of one of the respondents submitted that the Appeal Court may ignore the directions given by His Lordship to that effect. We

have also been able to find out that the methods for rectification of share register, appointment of Directors has been specifically stated under the

provisions of the Companies Act, 1956 and further to dissolve the Board of Directors which has to be done in accordance with the provisions of the Companies Act which has been laid down in Sections 397, 398 and 402 of the said Companies Act.

After considering and scrutinizing the facts and the materials on record, we hold that the order so passed by the Hon'ble First Court by appointing such Administrators directing to rectify the share Register and appointing them as Directors superceding the Board of Directors are not in accordance with law.

In our considered opinion, the probate Court has no jurisdiction to pass such order, accordingly we set aside the said order of appointment of Administrator Pendente Lite over the controlling block of shares of the said Companies of M. P. Birla Group and also the directions as given by His Lordship.

It is true that under Section 247 of the Indian Succession Act, no specific guidelines have been mentioned in the said Section and Courts, from time to time, have laid down the guidelines through Judgments. Such principles of law as has been stated before us cannot be disputed since we feel that it is settled law. The appointment of Administrator is analogous to that of an appointment of Receiver and after perusing and analysing the cases cited before us by the

Learned Counsel for the parties, we must come to the conclusion that the matter of appointment of administrator pendente lite under Section 247 of the said Act, the main criteria is nothing but necessity, necessity to preserve the Estate of the deceased.

It is an admitted fact that if all grounds go, even then if the Court finds that for preservation of the Estate, appointment of an Administrator Pendente Lite is necessary, then the Court would have power to appoint an Administrator and, in our opinion, case of necessity has to be established. After perusing and

analysing the decisions cited before us and relevant provisions of the said Act and the facts and circumstances of the present case we hold that there is no necessity to appoint the Administrator Pendente Lite.

In the instant case, after examining the materials on record placed before us, we have not been able to find out that a case of necessity has been made out by the petitioners. We have considered the decision of AIR 1956 Madras 409 (supra) and AIR 1995 KANT 258 (supra) wherefrom we found that there is no authority for the proposition that the Estate of the large part of the movable property, cash, jewellery etc. and the person in possession is a limited owner, a Receiver or an Administrator should be appointed. This is not the settled law.

The question that the conduct of the limited owner has been such that has to raise a reasonable apprehension. In the decision reported in 13 CLJ 34

(supra) the Court held that before appointment of Administrator Pendente Lite, the Court must satisfy that the appointment is necessary and proper. The

appointment cannot be claimed as a matter of course before the proceedings are contested.

In the decision reported in 13 CLJ 47 (supra), the Court expects a necessity to be shown for the appointment of an Administrator Pendente Lite and such case has been clearly made out in the petition. The Executor will not be displaced upon slight grounds and a strong case must be made out to warrant the appointment of a Receiver where the Executor is willing to act, where the circumstances exist and justify the appointment only, where the abuse of trust is manifest or apparent that there is serious waste and misappropriation of funds and then and then only relief can be granted. An Administrator Pendente Lite can be appointed when the mismanagement is shown in a single instance but from a habitual course of dealings involving the property in danger (see Woodroff on Receiver, 7th Edn., page 98).

In Mortimer on Probate, 2nd Edn., Page 378 it has been specifically stated that in the probate petition, the appointment of an Administrator Pendente Lite does not follow as a matter of course whenever litigation is pending. The applicant is required to show the same necessity for the grant that is necessary for the preservation of the Estate for receiving rents, payment of

interest or the dividends of shares as they become due and that no fit and proper person is in a possession to discharge these Offices.

Therefore, it is settled law that there must be some grounds and/or materials to be placed before the Court which can be treated as a tools in the hands of Court fulfilling the test of the necessity and then and then only the probate Court can exercise its discretion to appoint an Administrator.

Hence, we are of the considered opinion that there is no finding of waste and mismanagement or siphoning out of money, dilution of properties by the named Executor and we have also not been able to find out reason in the impugned judgment which can satisfy our conscience that why His Lordship was pleased to appoint Administrator Pendente Lite over a part of the Estate that is the controlling block of shares and allowed the Executor to manage the remaining part of the Estate e.g. valuable movable assets, jewellery, gold coins etc.

The Hon'ble First Court observed that the dividend income of the Estate and mode of utilisation has not been disclosed to the Court. This fact was never stated in the petition by the respondent, nor was even argued before us in course of their argument. Therefore, in our opinion, if any allegation is made against a

person, the person must get a chance to answer the same.

Hence, in this case, we have not been able to find out any such chance which was given to the appellant and, therefore, we cannot treat it as a ground which can be stated to be a necessity for appointment of Administrator Pendente Lite. The other grounds which have been stated by the Hon'ble Judge, have not been taken in the pleadings or argument ever put forward on behalf of the respondents before the Hon'ble First Court.

We also must keep it on record that whenever a person is appointed as an Executor, unless he relinquishes his right to such an Executor, his duty and obligation remains as Executor to take all necessary steps and we find from the facts that RSL took the control over the shares and transmissions of the said shares as Executor to the Estate. Therefore, it cannot be treated as a ground of necessity nor the Executor can be declared as unfit or that there can be an apprehension of mismanagement of the Estate.

We also find from the impugned judgment that His Lordship relied upon certain facts which according to His Lordship are admitted, but as we have found out from the records that cannot be treated as admitted facts.

We further want to point out that His Lordship although questioned that wherefrom RSL is meeting the costs and expenses contesting the good number of litigations, Mr. Mitra and Mr. Mukherjee pointed out that not a single penny has been spent by RSL from the Estate for litigation expenses and, furthermore,

there is no pleadings made out by the respondents before the Learned Trial Court.

Therefore, we have to come to the conclusion that the grounds which have been mentioned in the order, are not supported by pleadings or materials.

We have also considered the nature of the Estate, mostly are the controlling block of shares held by PDB at the time of her death which has also been disclosed in the affidavit of assets and there is no dispute in respect of such share of PDB by the respondents nor any allegation have been made that RSL failed to disclose the number of shares by the respondents, as an Executor RSL took the possession of the said shares and there is no allegation that he has failed to collect these assets.

We have also been able to find out from the facts and the materials on record placed before us that the Birlas by virtue of their majority share holding in two Companies of the M. P. Birla Group namely, Rameshwara Jute Mills Ltd. and Jute Investment Co. had taken over the control of the said Company in September, 2005 and further Indian Smelting & Refining Co. Ltd. also has been taken out of the fold of the M. P. Birla Group of Companies.

Hence, the respondents have failed to make out a case for appointment of Administrator Pendente Lite when no mismanagement has been found out by the

Hon'ble First Court and the business of the M. P. Birla Group of Companies as specifically held by His Lordship are not in “serious jeopardy” in the hands of RSL. We do not find that the respondents have been able to make out a case thereof.

After scrutinizing the facts and circumstances of the case and analysing the decisions cited before us and perusing the materials on record, we have to come to the conclusion that the vastness of the Estate is nothing but the controlling block of shares in the M. P. Birla Group of Companies, and in the facts and circumstances of the case, it does not call for an appointment of Administrator Pendente Lite when it is a settled law that the

Administrator/Receiver should not be appointed over running businesses and in the decision reported in AIR 1987 Cal 194 (State Bank of India vs. Jayashree Ceramics Pvt. Ltd.) the Court held as follows: “…… It has also been shown that the petition does not disclose any material to show that the securities are in imminent danger of being wasted or disposed of or are likely to be attached before judgment at the instance of any other third party creditor or the company is likely to be would up. If there is any apprehension of such threat to the securities, the plaintiff can get the relief by way of injunction but the appointment of Receiver whose main function will be to take possession of the securities, is likely to stop the running of the business of the defendant No. 1 company, which may not be at all just and convenient in the present facts and circumstances when the defendant No. 1 is still running the business. It cannot be expected that the learned Advocate who has already been appointed the Receiver by the Court’s order dated 4.8.86, will have the expertise to run the business of the type which is being run by the defendant No. 1 with its experience and expertise. The appointment of any other person as the Receiver who has not the requisite expertise will only lead the business to close down to the detriment of the interest of not only the creditors like the plaintiff but also of so many employees……”

On the question of unnatural Will, we have scrutinised the materials placed before us by the Learned Advocates for the parties and we cannot brush aside the fact that the relationship of PDB with other Members of the Birla family including her brother KNT cannot be said to be harmonious and we do not want to make any further observation at this stage in this appeal and we restrain ourselves from making any comment thereon but we must place it on record that we have considered the documents and/or the materials being a letter dated 19th September, 1985 by Ashoke Birla (appearing at page 684 of vol. 3 of the paper book); letter of YB dated 8th April, 1988 (appearing at page 1962 of vol. 6 of the paper book); handwritten notes of PDB (appearing at page 679 of vol. 3 of the paper book); letter of KNT dated 18th January, 1996 and 19th December, 1998 (appearing at pages 699 and 717 of vol. 3 of the paper book); the removal of KNT from the Trust/Societies and the particulars for which has also been adverted to by Mr. Mitra and Mr. Mukherjee, appearing at page 696 of Vol. 3 of the Paper Book.

The Hon'ble First Court also has come to conclusion that the Estate is “in medio”, but we find that no such pleading made out in the petition and, in our considered opinion, the Court cannot travel beyond the pleadings which has

been specifically stated by the Apex Court and the Court cannot make out a third case which has not been made out by the parties.

Therefore, on that question also, after considering the facts and circumstances of the case and the materials on record placed before us, we have to come to the conclusion, with utmost respect to His Lordship, that His Lordship has mis-appreciated the fact and held that the Estate is “in medio”. Such conclusion of His Lordship, in our opinion, cannot be sustainable in the eye of law in the facts and circumstances of this case.

The further question that whether the Court has jurisdiction to apply discretion in the facts and circumstances of this case, it is needless to mention here that the Court will apply its discretion providing that the case is being made out by the parties calling for such discretion in a case where the case of necessity for appointment of Administrator Pendente Lite has been made out.

Hence, we are unable to find out such situation in this matter and unable to uphold the decision of His Lordship and according to us, the Court has not appreciated the facts of the case properly and has not exercised its discretion properly in appointing the Administrator Pendente Lite.

Hence, we pass an order of injunction restraining the appellant not to deal with and not to transfer any of the assets and properties of the Estate of PDB, in any manner whatsoever, and further, in our opinion, the order so passed by the Hon'ble First Court at the ad-interim stage is enough to preserve the Estate of PDB. We direct the Executor, RSL to give a details of the dividends so collected

in respect of the shares of PDB and the accounts, therefor, to be furnished to the parties. We also direct RSL to maintain an account in respect of the dividend so received on the shares of PDB and to retain the same in a separate account and no amount to be spent out of the said fund by RSL excepting for preservation of the Estate.

In the cross-appeals, we do not find that a case has been made out by Mr. S. B. Mookherjee’s client nor we have been able to find out that there is any mismanagement on the part of the appellant.

For the reasons stated hereinabove, both the appeals and the crossobjections are disposed of accordingly.

(PINAKI CHANDRA GHOSE, J.) I agree.

(TAPAN KUMAR DUTT, J.)

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