Monthly Archives: August 2020

Validity of Notice Under Section 30 of – Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction), Act

In Dr. Babu Ram Sharma v. IVth Additional Judge, Saharanpur and others, (2006) 2 ARC 239 and Noor Mohd. and another v. IVth Additional District Judge , Kanpur Nagar and others, (2006)  1 ARC 550, the Hon’ble Allahabad High Court again took the view that when the entire rent due till the date of notice had already been validly deposited under Section 30 of the Act, the notice of demand is bad in law, and therefore, since at the time of notice, tenants were not defaulter in payment of rent for four months or more, the suit filed on the ground of default was liable to be dismissed. It was held that the suit for eviction was not maintainable as at the time of notice, the tenant was not defaulter since he had already validly deposited the rent under section 30 of the Act. It was further held that under the circumstances, the suit was not maintainable under section 20(2) (a) of the Uttar Pradesh Regulation of (Letting, Rent and Eviction) Act, 1972.      The default contemplated under section 20 (2) (a) should be in regard to rent for a period of not less than four months. The provision does not say that even if the tenant is in arrears of rent for less than four months he would be liable to be evicted under it on the mere ground that default had continued for more than four months. Even Notice of demand will be invalid and could not be considered to be a notice of demand under the said provision if the tenant was not in arrears of rent for more than four months.  Nand Lal Keshari v. Shashi Bhushan Agarwal, 2020 (2) AWC 1787.

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Rights of A Nominee – of A Shareholder

It is quite apparent from a bare reading of the provisions of section 72(1) of the Companies Act, 2013 that every holder of securities has a right to nominate any person to whom his securities shall “vest” in the event of his death. In the case of joint-holders also, they have a right to nominate any person to whom “all the rights in the securities shall vest” in the event of death of all joint holders. Sub-section (3) of section 72 contains a non-obstante clause in respect of anything contained in any other law for the time being in force or any disposition, whether testamentary or otherwise, where a nomination is validly made in the prescribed manner, it purports to confer on any person “the right to vest” the securities of the company, all the rights in the securities shall vest in the nominee unless a nomination is varied or cancelled in the prescribed manner. It is prima facie apparent that vesting is absolute, and the provisions supersede by virtue of a non-obstante clause any other law for the time being in force. Prima facie shares vest in a nominee, and he becomes absolute owner of the securities on the strength of nomination. Rule 19(2) of the Companies (Share Capital and Debentures) Rules, 2014 framed under the Act, also indicates to the same effect. Under Rule 19(8), a nominee becomes entitled to receive the dividends or interests and other advantages to which he would have been entitled to if he were the registered holder of the securities; and after becoming a registered holder, he can participate in the meetings of the company. Aruna Oswal v. Pankaj Oswal, (2020) SCC Online SC 570.

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Petition for Oppression and Mismanagement – Object of Qualifying Percentage of Shares

 In J.P. Srivastava & Sons Pvt. Ltd. and Ors. v. M/s. Gwalior Sugar Co. Ltd. and Ors. AIR 2005 SC 83, the Hon’ble Supreme Court considered the object of prescribing a qualifying percentage of shares to entertain petition under sections 397 and 398 of the Companies Act, 1956. It was held that the object is to ensure that frivolous litigation is not indulged in by persons, who have no legal stake in the company. If the Court is satisfied that the petitioners represents the body of shareholders holding the requisite percentage, the Court may proceed with the matter. It was held as under:

“The object of prescribing a qualifying percentage of shares in petitioners and their supporters to file petitions under sections 397 and 398 of the Companies Act, 1956 is clearly to ensure that frivolous litigation is not indulged in by persons who have no real stake in the company. However, it is of interest that the English Companies Act contains no such limitation. What is required in these matters is a broad commonsense approach. If the Court is satisfied that the petitioners represent a body of shareholders holding the requisite percentage, it can assume that the involvement of the company in litigation is not lightly done and that it should pass orders to bring to an end the matters complained of and not reject it on a technical requirement. Substance must take precedence over form. Of course, there are some rules which are vital and go to the root of the matter which cannot be broken. There are others where non-compliance may be condoned or dispensed with. In the latter case, the rule is merely directory provided there is substantial compliance with the rules read as a whole and no prejudice is caused. (See Pratap Singh v. Shri Krishna Gupta (AIR 1956 SC 140). Aruna Oswal v. Pankaj Oswal, (2020) SCC Online SC 570.

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Will – Rule of Last Intention

A will may contain several clauses and the latter clause may be inconsistent with the earlier clause. In such a situation, the last intention of the testator is given effect to and it is on this basis that the latter clause is held to prevail over the earlier clause. This is regulated by the well known maxim ‘cum duo inter se pugnantia reperiuntur in testamento ultimum ratum est’ which means that if in a will there are two inconsistent provisions, the latter shall prevail over the earlier. (see Hammond, In re, Hammond v. Treharne, (1938) ALL ER 308).         It may, however, be pointed out that this rule of interpretation can be invoked only if different clauses cannot be reconciled. (See: Rameshwar Baksh Singh v. Balraj Kaur, AIR 1935 PC 187). M. S. Bhavani v. M.S. Raghu Nandan, (2020) 5 SCC 361.

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