The Apex Court has ruled that an inheritance dispute is obviously a civil matter that cannot be resolved through procedures under Section 241/242 of the Companies Act, 2013.
It was specifically stated in the judgement that:
"With regard to the dispute as to right, title, and interest in the securities, the finding of the civil Court is going to be final and conclusive and binding on parties."
In the instant case titled Aruna Oswal v. Pankaj Oswal the issue that was raised before the Court for clarification was:
Whether it is possible to maintain a corporate petition under Sections 241 and 242 of the Act when the ownership of the shares in the petition is the subject of a current partition suit?
With regard to this issue, because of the existing legal issue, the NCLT should not have entertained the corporation's petition, according to the Supreme Court. It was also determined that the issue of Respondent No. 1's right, as well as the effect of nomination in favour of the Appellant, must be decided in a civil matter.
Sangramsinh P. Gaekwad and Ors. v. Shantadevi P. Gaekwad, which held that adjudication of the question of share ownership is eminently a civil dispute and not contemplated under Section 397 of the Companies Act, 1956, was relied on. The Supreme Court dismissed the company petition but allowed Respondent No. 1 to file a new company petition if necessary after the existing partition dispute was resolved.
The Court categorically held that:
"By way of inheritance of 1/4thshareholding so as to constitute 10% of the holding, which right cannot be decided in proceedings under section 241/242 of the Act".
Because of the current civil dispute and the respondent's microscopic ownership of 0.03% of the firm, the NCLT proceedings filed under Sections 241 and 242 of the Companies Act should not have been heard, the Apex Court concluded. The respondent should have waited for the right, title and interest judgement in the civil litigation touching his shares in question, the Apex Court observed, given the facts and circumstances of the case.