MEMORIAL ON BEHALF OF THE DEFENDENT

IN THE HON’BLE CIVIL COURT

OF THE MATTER

RAHUL……………………………………..DEFENDENT

Vs

PREETI……………………………………....PLANTIFF
 TABLE OF CONTENTS

1.INDEX OF AUTHORITIES............................................................................................................................................ iv

2.STATEMENT OF JURISDICTION............................................................................................................................... viii

3.STATEMENT OF FACTS............................................................................................................................................... ix

4.ISSUES INVOLVED..................................................................................................................................................... xiii

5.SUMMARY OF ARGUMENTS................................................................................................................................... xiv

6.BODY OF ARGUMENTS..................................................................................................................1

[I] THE HIGH COURT HAS RIGHTLY EXERCISED ITS JURISDICTION UNDER SECTION 10F WHILE
HEARING AN APPEAL AGAINST SECTION 111.............................................................................1

[A.] The High Court had jurisdiction as there is a question of law..........................................1

[B.] The Refusal of the Company to transfer the shares is arbitrary........................................4

[C.] The High Court had jurisdiction to hear and decide the appeal as it did..........................7

[II] THE HIGH COURT COULD HAVE DECIDED VARIOUS ASPECTS OF THE PRESENT DISPUTE AS

§ 10 OF CODE OF CIVIL PROCEDURE DOES NOT APPLY..............................................................8

[A.] Company Proceedings are not ‘suit’ under § 10 of Code of Civil Procedure...................8

[B.] Alternatively, if Company proceedings are considered to be a ‘suit’, even then all the
elements of § 10 are not fulfilled..............................................................................................9

[III] THE HIGH COURT COULD HAVE INTERPRETED A WILL WHILE EXERCISING JURISDICTION
UNDER SECTION 10F..................................................................................................................12

[A.] The interpretation of will is a question of law................................................................13

[B.] It arises out of the order of Company Law Board...........................................................13

[C.] Additionally, Section 111 empowers the court to decide any dispute relating to title....14

IV. THE SUCCESSION CERTIFICATE WAS OPERATIVE, AND COULD HAVE BEEN RELIED UPON BY
THE HIGH COURT........................................................................................................................15

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 [A.] There is no statutory provision to invalidate the certificate upon death of a joint-holder.
................................................................................................................................................15

[B.] Prior authorities holding a succession certificate to become inoperative upon death
cannot be relied upon.............................................................................................................17

[V] BY VIRTUE OF THE SETTLEMENT DEED, THE PROBATE PROCEEDINGS INSTITUTED BY

QUEEN KIM STAND LAPSED.......................................................................................................19

[A.] Queen Kim no longer pressed her claim under the probate proceedings........................19

[B.] Application of Order XXIII, Rule 3 of the Code of Civil Procedure causes the
proceedings to lapse...............................................................................................................21

PRAYER..........................................................................................................................................24

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 INDEX OF AUTHORITIES
CASES

1. Adhish Chandra v. Hindustan Gas and Industries Ltd, AIR 1985 Cal 154.

2. Ammonia Supplies Corpn. Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd., (1998) 7
SCC 105.

3. Aspi Jal and another v Khushroo Rustom Dadyburjor, AIR 2013 SC 1712.

4. Bachan Singh v. Dhian Das, (1973) 2 SCC 109.

5. Bajaj Auto Ltd. v. N.K. Firodia, (1971) 41 Comp Cas 1.

6. Bal Gangadhar Tilak v. Sahwarbau, 26 Bom 792.

7. Balabai v. Ganesh Shankar Pandit, (1904) ILR 27 Bom 105.

8. Bhagat Singh v. Piar Bus Service Ltd., [1960] 30 Comp Cas 300.

9. Bhura v. Kashi Ram, (1994) 2 SCC 111.

10. Bipin Behari v. Jogindra Chandra, AIR 1917 Cal 248.

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STATUTES

1. Code of Civil Procedure, 1908.

2. The Companies Act, 1956.

3. The Indian Succession Act, 1925.

BOOKS

1. A. RAMAIYA, GUIDE TO THE COMPANIES ACT (17th edn., 2011).

2. D.N. SEN, INDIAN SUCCESSION ACT, 1925 (5th edn., 2008).
3. FRANCIS BEAUFORT PALMER, PALMER’S COMPANY LAW (Geoffrey Morse et al. eds., 25th
edn., 2014).
4. GOPALAKRISHNAN, LAW OF WILLS (7th edn., 2009).

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 STATEMENT OF JURISDICTION

CIVIL APPEAL NO. / 2015

The Appellants have approached this Honourable Court under Article 136 of the Constitution of
India, 1950. Subsequently, the leave has been granted by the Court. The Respondents humbly
submit to the jurisdiction of this Honourable Court.

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 STATEMENT OF FACTS

The Betrothals
The Democratic Republic of Ebony is a fully democratic State with twenty different provinces.
One of the provinces of Republic was Scion headed by King Igusthus. He had three daughters,
the eldest being Princess Khloe, followed by Princess Kourtney and then Princess Kim. All three
sisters were married one after another to King Big Bilzerian, head of the royal family of the
province of Thelesalonica. Consequently, they had four children. From Queen Khloe were born
Prince Dumas and Princess Dumagoli. From Queen Kourtney were born Prince Drago and
Prince Drakshin. Marriage with Queen Kim resulted in the birth of Prince Ray. Prince Ray was
given up on adoption to King Dueta of the royal family of Thalai who was issueless himself.
Princess Dumagoli was married into the Royal Family of Dakshin and gave birth to Princess
Duma. Prince Ray married Princess Carlen of the Province of Malay, who gave birth to Prince
Wild Bilzerian and Princess North Bilzerian.

The Formation of the Company

After the demise of King Big Bilzerian, the management and administration of the estate of the
Royal Family of Thelesalonica came under the control of King Dumas, King Drago and King
Drakshin. In the year 1981, all the brothers decided to bring up a business by establishing a
Company to which their former residence would be leased and would be converted into a
Heritage Hotel wherein the general public would be allowed to visit the Royal Fort and stay as
their guest. Thus, the family property was leased to the Company which was named “Royal
Retreat Group of Hotels Resorts and Palaces Pvt. Ltd.”.

Will and Succession Disputes

Amidst all this, owing to serious differences arising between King Ray and Queen Carlen, the
marriage ended in an irretrievable breakdown. In the year 1997, King Ray succumbed to ill-
health. After his death, Prince Wild Bilzerian and Princess North Bilzerian filed a case for
Succession before the District Court seeking one-third share in the estate of King Ray along with
Queen Kim. In the same year, King Dumas filed an Impleadment Application and objected to
the succession certificate.

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 Orders of the Court and Appeals thereof
The High Court of Thelesalonica gave an Interim Order that both the groups before the Court i.e.
her grandchildren as well as her step sons were her legal heirs. Aggrieved by the same both the
grandchildren filed a Review Petition.

The Company yet again refused to transfer the shares in favour of any party. As a result, the
parties, dividing themselves into two groups, one comprising of the step sons and the other
comprising of the grandchildren, moved Applications before the Company Law Board under
Section 111 of the Companies Act, 1956 praying for the transfer of shares in favour of the
respective Applicants. Subsequently, in the year 2011 a Civil Suit was filed against Prince Wild
and Princess North, being a Suit for Declaration and Permanent Injunction, praying for a
declaration that the alleged Will of the Late Queen Kim dated May 10, 2009 was forged and
fabricated.

The Company Law Board held that it cannot, while exercising summary jurisdiction, decide
complicated questions of fact and law which arise before it. The parties then approached the
Hon’ble High Court wherein the Court held that succession certificate was prima facie proof of
title of the Prince and Princess and accordingly ordered for transfer of the assets and shares of
late King Ray in their favor.

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 ISSUES INVOLVED
I.

WHETHER THE HIGH COURT HAD RIGHTLY EXERCISED ITS JURISDICTION UNDER SECTION 10F
WHILE HEARING AN APPEAL AGAINST SECTION 111 OF THE COMPANIES ACT?

II.

WHETHER THE HIGH COURT COULD HAVE HEARD AND DECIDED VARIOUS ASPECTS AND
DISPUTES PENDING ADJUDICATION IN THE COURTS BELOW WHICH WERE IN THE NATURE OF

CIVIL DISPUTES?

III.

WHETHER THE HIGH COURT COULD HAVE INTERPRETED A WILL WHILE EXERCISING JURISDICTION
UNDER SECTION 10F?

IV.

CAN A JOINT SUCCESSION CERTIFICATE BE RELIED UPON WHEREIN ONE OF THE MEMBERS TO THE
VERY SAME CERTIFICATE HAD EXPIRED?

V.

CAN PROBATE PROCEEDINGS BE TERMED AS LAPSED ON THE BASIS OF SETTLEMENT ENTERED

INTO BETWEEN SOME OF THE PARTIES?

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 SUMMARY OF ARGUMENTS

[I] The High Court has rightly exercised its jurisdiction under Section 10F while hearing
an appeal against Section 111.

As per Section 10F of the Companies Act, 1956, an appeal to the High Court lies on a question
of law arising out of the order of the Company Law Board. It is submitted that the denial of the
Company Law Board to maintain the petition, on the ground that there are complicated questions
involved, itself gives rise to a question of law. Furthermore, a question of law is said to arise out
of the order of the Company Law Board when it has failed to consider the material facts of the
presence of the will of King Ray, the succession certificate and the will of Queen Kim. In
addition, the Company Law Board has also failed to provide remedy against the arbitrary refusal
of the Company to register the transfer of shares which goes beyond its Articles of Association.
Therefore, the High Court has the jurisdiction to hear and decide the matter before it where the
Company Law Board has erred in exercising its jurisdiction.

[II] The High Court could have heard and decided various aspects and disputes
pending adjudication in the courts below which were in the nature of civil
disputes.

Section 10 of the Code of Civil Procedure Code, 1908 says that a court shall not proceed with the
trial of a suit to which the Code applies when all of the following conditions are fulfilled: one,
there is a previously instituted suit which is still pending adjudication; two, the matter in issue in
the subsequent suit is directly and substantially the same as in the previously instituted suit;
three, both suits are either between the same parties or their privies; and four, the courts before
which suits have been filed are of competent jurisdiction.

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 [III]The High Court could have interpreted a will while exercising jurisdiction under
Section 10F.

It is submitted that the High Court had the jurisdiction to decide a will under an appeal under
Section 10F. It has been held by the courts that the interpretation of a legal document, in the
present case a Will, is a question of law. The Company Law Board refused to exercise
jurisdiction in pursuance of the presence of disputes regarding the title of the shares of King Ray
which were placed before it. The will of King Ray, being a part to the dispute, as well as the
basis of the right of Queen Kim to claim the shares, therefore, could be said to be raised before
the Company Law Board and dealt with by it. Therefore, it arises out of the order of the
Company Law Board. Hence, the High Court could have interpreted the will of King Ray.
Furthermore, Section 111(7) empowers the court to decide any disputes relating to title and
hence, the power conferred by the statute is wide and extensive in this regard. It is further
submitted that the interpretation of the High Court of the Will of King Ray was correct in law.

[IV] The succession certificate was operative, and could have been relied upon by the
High Court.

The event of death of Queen Kim cannot be said to have any effect upon the validity of the
succession certificate. First, there is no statutory provision which would invalidate the certificate
upon death of a joint-holder of a certificate. Section 381 makes the succession certificate valid
and conclusive only subject to the provisions of Part X. But none of the provisions which defeat
the validity of the certificate are attracted in the situation of death of a joint certificate-holder.
Further, the Act has express provisions providing for continuance in validity of a probate and a
letter of administration after the death of a joint-holder. A corresponding provision must be said
to be implied with respect to a grant of succession certificate. Secondly, it is admitted that an
alternate view was taken by the Court in Sukumar Deb Roy v. Parbati Bala. However, the
reasoning employed in the case is erroneous in law as well as in policy. In any case, the facts of
that case were wholly distinct and are inapplicable to the instant case. Thus, it cannot be relied
upon and the certificate continues to be operative.

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 [V] By virtue of the Settlement Deed, the probate proceedings instituted by Queen
Kim stand lapsed.

The probate proceedings stand lapsed by virtue of the settlement deed on two accounts. First,
Queen Kim no longer pressed her claim under the probate. She was the sole dominus litis in the
petition, thus, the matter and the choice to not assert her right under the will must be left to her
charge. Her choice to not assert such a claim is apparent from the fact that she settled the
ongoing disputes with her grandchildren by way of the Settlement Deed and further bequeathed
all her properties in their favour. There is no method prescribed under law to compel a person to
pursue proceedings which he or she chooses to discontinue. Further, the proceedings will lapse in
default of appearance under Order IX, Rule 3 of the Code of Civil Procedure. Secondly, Order
XXIII, Rule 3 of the Code of Civil Procedure recognizes the compromise of pending proceedings
by an agreement. The Settlement deed, in the instant case, is lawful and would draw the probate
proceedings to a close. Even if the Rule 3 is assumed to be inapplicable, the abandonment of
claim by Queen Kim without the leave of the court under Order XXIII, Rule 1 results in a lapse
of the proceedings.

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 BODY OF ARGUMENTS

[I] THE HIGH COURT HAS RIGHTLY EXERCISED ITS JURISDICTION UNDER SECTION 10F
WHILE HEARING AN APPEAL AGAINST SECTION 111.

1. It is submitted that in the present case, the High Court had decided the Company Appeal within
the bounds of its jurisdiction under Section 10F as: The jurisdiction of the High Court arises as
there is a question of law which arises out of the order of the Company Law Board [A.]; The
refusal of the Company to transfer the shares is arbitrary [B.]; The High Court had jurisdiction to
hear and decide the appeal as it did [C.].

[A.] The High Court had jurisdiction as there is a question of law.

2. An appeal to the High Court under Section 10F lies only on a question of law that arises out of
the order of the Company Law Board.1 It is submitted the there was a question of law that arose
out of the order given by the Company Law Board as: [i] first, the issue of non-maintainability of
petition is a question of law arising out of the order; and [ii] secondly, the failure of the Company
Law Board to consider material facts is a question of law arising out of the order.

[i] The issue of non-maintainability of petition is a question of law arising out of the order.
3. Section 111 of the Companies Act, 1956 provides discretionary powers to the Company Law
Board.2 The Board, on examination of the facts may refuse to adjudicate upon certain matters.
However, the powers of the Board under this section are wide and extensive, even though the
jurisdiction conferred is summary.3 Hence, the Company Law Board can adjudicate on

1
 complicated questions itself. It need not relegate the suit to a civil court whenever any
complicated questions appear to be present.

4. Furthermore, in the event Company Law Board chooses to exercise discretion to refuse relief,
such discretion to refuse relief by denying exercise of powers under the aforesaid section cannot
be exercised by the Board arbitrarily.4 In the present case, the Board has passed the order
refusing to grant relief on the ground that it does not have jurisdiction since there are disputed
questions of title involved.5 However, it has been held on various occasions that the Company
Law Board cannot refuse to exercise jurisdiction merely by stating that the matter involves
complicated questions of law and fact. 6 The Board has to examine whether the complicated
questions are in fact present, or only prima facie appear to be.7 The mere presence of a dispute
regarding title would not, in every situation, mean that the Company Law Board will not have
jurisdiction to deal with it. If that would be considered as the position then it leaves a chance for
the jurisdiction of the Board to be ousted by presenting trivial matters as involving complex
questions.8

5. In the instant situation, the disputes regarding the title of shares of King Ray have been held by
the Company Law Board to be complicated questions, and on the same grounds, the Board has
decided to not rule on the merits of the case.9 This gives rise to the issue whether the scope of the

2
 [ii] The failure of the Company Law Board to consider material facts is a question of law
arising out of the order.
6. A question of law arises when the Company Law Board has passed an order without correctly
appreciating the facts that are present. 11 In such cases, the question of fact itself becomes a
question of law.12 When a dispute can be resolved by assessing documentary proof presented
before it, and there is no prima facie necessity for a detailed investigation into the matter, the
Company Law Board has jurisdiction to adjudicate on the matter. In the event the Board has
overlooked certain material facts, or has passed an order without keeping the same into
consideration, and assuming that there are complicated questions present, the finding of fact is
appealable before the High Court as a question of law.13

[B.] The Refusal of the Company to transfer the shares is arbitrary.

7. It is submitted that the Company has refused the transfer of shares in the favour of Prince Wild
and Princess North Bilzerian without reasonable justification for the same as: [i] The power to
refuse is not present in the Articles of Association; [ii] Even if it is present, has been exercised
arbitrarily and in violation of the Articles of Association.

[i] The power to refuse is not present in the Articles of Association.

8. A private company has power to restrict the transfer of shares in accordance with its Articles
of Association.18 In cases where the Articles of Association of the company confer powers on the
directors to refuse registration of the shares, the court has held that such a power should be
exercised reasonably.19 However, the directors have no inherent power to refuse the transfer of
shares or the registration thereof.20 Such a power has to flow from a source and is exercisable
only when it is either specified or traceable in the Articles of Association of the Company.21

3
 [A.] Company Proceedings are not ‘suit’ under § 10 of Code of Civil Procedure.
9. Company proceedings are not ‘suit’ as mentioned in Section 10.44 Order 4, Rule 1 of the Code of
45
Civil Procedure defines a suit as a civil proceeding instituted by the presentation of a plaint.
There is no plaint presented in Company proceedings. Thus, such proceedings cannot be said to
be ‘suit’ for the purposes of Civil Procedure Code, 1908. This view has been upheld by various
High Courts from time to time.46

[B.] Alternatively, if Company proceedings are considered to be a ‘suit’, even then all
the elements of § 10 are not fulfilled.
10. Even if company proceedings are considered to be suit, still the High Court was not bound to
stay such proceedings under Section 10 because all the elements of Section 10 are not fulfilled
as: (i) first, only three of the previously instituted suits are pending adjudication; (ii) secondly,
matter in issue in these three suits is not directly and substantially the same as that in the present
suit.

4
 [i] Only three of the previously instituted suits are still pending adjudication.
11. First, the Succession Case No. 413 of 199849 can be said to have been concluded on the issuance
of the Succession Certificate by the District Court of Thelesalonica to Princess North Bilzerian,
Prince Wild Bilzerian and Queen Kim.50
12. Secondly, the probate proceedings for King Ray’s Will stand lapsed due to the grant of
succession certificate. This is because Queen Kim, being the sole dominus litis chose not to press
her claim under the said probate proceeding and instead chose to enter into a Settlement Deed
with Prince Wild Bilzerian and Princess North Bilzerian and subsequently bequeathed all her
property to them. Moreover, the moment Order IX Rule 3 of Code of Civil Procedure is applied,
the proceedings stand lapsed.51

[ii] The matter in issue in these three suits is not directly and substantially the same as that in
the present suit.
13. It is submitted that the “matter in issue” 62 (subject matter) of the pending suits and the current
suit is “directly and substantially”63 the same. Subject matter refers to a “bundle of facts” 64 that
are required to be proved to “entitle the plaintiff to the relief claimed by him” 65. The issue in the
current suit revolves around the dispute between the parties regarding transfer of shares of King
Ray. For these shares to be transferred, the parties are required to show the existence of a proof
[II] THE HIGH COURT COULD HAVE INTERPRETED A WILL WHILE EXERCISING
JURISDICTION UNDER SECTION 10F.

14. Section 10F allows an appeal to the High Court on any question of law that arises out of the
order of Company Law Board. The High Court, while hearing an appeal under Section 10F could
have interpreted the will of King Ray as: The interpretation of a will is a question of law and not
of fact [A.]; It arises out of the order of the Company Law Board [B.]. Additionally, Section 111
gives the court jurisdiction to decide any disputes relating to title [C].

[A.] The interpretation of will is a question of law.

15. It has been held by the Court in several cases that where a document of title, in the present case,
a will, is the foundation of the rights of the parties, the construction of such a document and its
interpretation is a question of law.87

5
6
 .

IV. THE SUCCESSION CERTIFICATE WAS OPERATIVE, AND COULD HAVE BEEN RELIED UPON BY
THE HIGH COURT.

16. It is submitted that the succession certificate dated May 8, 2009 obtained jointly by Queen Kim
with North and Wild Bilzerian113 was rightly relied upon by the High Court of Thelesalonica to
decide the transmission of shares of King Ray in the company. 114 The event of death of Queen
Kim had no effect whatsoever on the validity of the succession certificate. This is because there
is no statutory provision to invalidate the certificate upon death of a joint-holder [A.] and Prior
authorities which have held a succession certificate to become inoperative upon death cannot be
relied upon [B.].

[A.] There is no statutory provision to invalidate the certificate upon death of a

joint- holder.
17. Section 381 of the Indian Succession Act states the effect of the certificate once it is granted. It
makes the succession certificate granted by the District Judge conclusive as against the persons
owing the debts or liable for the securities specified in the certificate. 115 “Subject to the
provisions of this part” is the only phrase in the abovementioned section which limits the
conclusiveness of the certificate. Admittedly, there are certain specific provisions in Part X
concerning succession certificates which explicitly defeat the validity of a certificate. However,
none of these are attracted in the situation of death of a joint certificate-holder.

7
 [B.] Prior authorities which have held a succession certificate to become inoperative
upon death cannot be relied upon.
18. Admittedly, the Calcutta High Court on one occasion has taken an alternate view in respect of the
validity of a certificate on a joint-holder’s death in the case of Sukumar Deb Roy v. Parbati
Bala.123 However, it is submitted that [i] The reasoning employed in Sukumar Deb case is not
sound in law and [ii] In any case, the facts of that case were wholly distinct and are inapplicable
to the instant case.

[i] The reasoning employed in Sukumar Deb case is not sound in law
19. The decision is based on the premise that the authority vested in multiple persons by a
succession certificate can only be exercised jointly, and in case one dies, it would become
inoperative because of the inability of the remaining certificate holders to exercise their powers.
However, it is submitted that there is no inability cast upon the remaining certificate holders due
to the death of a joint certificate holder.

8
 PRAYER

Wherefore in light of the issues raised, arguments advanced and authorities cited, it is humbly
prayed that this Honourable Court may be pleased to adjudge and declare that:

1. The High Court had rightly exercised its jurisdiction under Section 10F while hearing an
Appeal against Section 111 of The Companies Act.
2. The High Court could have heard and decided various aspects and disputes pending
adjudication in the courts below which were in the nature of civil disputes.
3. The High Court could have interpreted a will while exercising jurisdiction under Section
10F.
4. The High Court rightly relied upon the joint succession certificate even after one of the
members to the same certificate had expired.
5. Probate proceedings stand lapsed on the basis of settlement dated May 8, 2009 entered
into between some of the parties.

And pass any other order that this Honourable Court may deem fit in the interests of justice,
equity, and good conscience.

All of which is humbly prayed,

1612 R,

Counsel for the Respondents

.
9