Delhi High Court Orders Interim Restraint On Transfer Of Late Oberoi Group Chairman's Company Shares In Daughter's Suit Against Family Members
In an interim order passed last week, the Delhi High Court has restrained the transfer of Oberoi group's former chairman late PRS Oberoi's shares in EIH Limited–which runs the Oberoi and Trident hotel chain–and its two holding companies, except one specific class of shares, after Oberoi's daughter moved a lawsuit seeking an injunction on the said transfer. A single-judge bench of...
In an interim order passed last week, the Delhi High Court has restrained the transfer of Oberoi group's former chairman late PRS Oberoi's shares in EIH Limited–which runs the Oberoi and Trident hotel chain–and its two holding companies, except one specific class of shares, after Oberoi's daughter moved a lawsuit seeking an injunction on the said transfer.
A single-judge bench of Justice Navin Chawla passed the interim order on September 12 while hearing the late hotelier's daughter–Anastasia Mirjana Jojic Oberoi's application for interim relief filed in the main lawsuit.
Anastasia, her mother and another person–plaintiffs in the suit– have sought to propound an October 25, 2021 "Will" (along with Codicil of August 27, 2022) of the late hotelier who passed away in November last year. For context, a codicil allows an individual to modify/make changes to their will.
The plaintiffs have claimed that as per the terms of this Will, "half of the shares held by" PRS Oberoi in defendant no. 7–Oberoi Hotels Pvt Ltd and defendant no. 8–Oberoi Properties Pvt. Ltd., were to devolve on defendant no.3–Natasha Devi Oberoi (the later hotelier's other daughter and an executor of the will) and on 'AO Trust' of which Anastasia Oberoi is a "trustee and the sole beneficiary".
The plaintiffs further claimed that "instead of exploring the option of transfer of the shares" held by the late hotelier in the two holding companies to Anastasia, the executors–defendant 1 Rajaraman Shankar, defendant 2 Daniel Lee Faruggia and defendant 3–Natasha Devi Oberoi, at the "behest" of defendant nos. 5 and 6–PRS Oberoi's son Vikramjit Singh Oberoi and nephew Arjun Singh Oberoi respectively–are "exploring the option" of selling these shares to the latter, at a price which would be determined by them.
This, the plaintiffs argued would defeat the rights of Anastasia, the AO Trust, and another trust–the Ashiana Trust, who were named to be the "ultimate beneficiaries" under the 2021 Will. Anastasia had also claimed that half of the shares were "bequeathed" by her father in her favour indirectly through the trust. The plaintiffs prayed that "status quo" with respect to PRS Oberoi's shares in the two companies be maintained while the defendants file their responses.
Defendants restrained from transferring PRS Oberoi's shares in two companies, except one specific class of shares
After hearing the contentions of the parties, the high court said, "Having considered the above submissions, in my view, the interest of justice and the interest of plaintiffs can be protected by restraining the defendant nos.1 to 3, and defendant nos.4(EIH Limited), 7 and 8 from transferring or transmitting any shares in defendant no.4, defendant no. 7, and/or defendant no. 8 held by the Testator, except one Class-A share in defendant nos. 7 and 8 each to the defendant no.1".
After this 'one Class A share' is transferred, Shankar shall exercise his voting right only for the purposes of ensuring statutory compliances and filing of statutory reports, the high court said. It further clarified that with respect to other agenda items, Shankar shall not be deemed to be present in such general meetings while exercising his rights as a Class-A shareholder.
This was ordered after the companies submitted that there are certain statutory compliances–that require completion–and the same cannot be done in the absence of a shareholder holding Class-A shares in the two companies. It was suggested that the one class A Share in the two companies be transferred to Shankar will exercise the right only to attend meetings and ensure statutory compliance.
Observing that the subject matter of the suit "needed protection", the high court further restrained Shankar, Faruggia, Natasha, Vikramjit and Arjun from interfering with Anastasia and her mother's possession and enjoyment of the "land and building" located in Bijwasan village in Kapashera i.e., Villa Aashiana. It further restrained these defendants from creating any third-party rights in the immovable properties owned by the late hotelier including Villa Aashiana.
Sufficient material demonstrating prima facie reliability of 2021 Will
The court passed the order after noting that there was "sufficient material placed on record by the plaintiffs to demonstrate the prima facie reliability of the Will and the Codicil" of PRS Oberoi "propounded" by them.
The high court further observed that the issues raised by the parties can be determined after responses are filed by the defendants to the lawsuit as well as the interim relief application.
It further said that the plaintiffs had made out a prima facie case, the balance of convenience was in their favour and they would grave irreparable harm in case the shares in question were alienated during the pendency of the Suit and before the defendants file their response.
Meanwhile, the order notes, that Vikramjit and Arjun have contested the genuineness of the Will/Codicil propounded by the plaintiffs. The duo also contended that the late hotelier "did not have any right, title or interest in the shares held by him" in the two holding companies.
Apart from questioning the maintainability of the lawsuit, Vikramjit and Arjun have contended that in terms of the settlement arrived at between PRS Oberoi and his father the shares of the two companies were held by Oberoi "in trust" for Vikramjit and Arjun. They said that these shares were to "devolve" upon them after Oberoi's death. They claimed that to give effect to this "oral understanding", PRS Oberoi had also executed a Will on March 20, 1992.
They also contended that as per clauses mentioned in the AOA of the two companies, there is a "restriction on the transfer of the shares except before offering the same to the existing shareholders" the only exception being where the transfer is to a blood relative of the deceased shareholder or to an existing member.
They submitted that as per the 2021 Will, the transfer of PRS Oberoi's shares to a trust cannot be given effect without first giving a right of pre-emption to Vikramjit and Arjun who are the other shareholders in the two holding companies. They claimed that Oberoi's intent could not have been that the shares held by him would be transferred to a Trust contrary to the Articles of the Association of the two companies and that the plaintiff's intent was to stall the companies' functioning.
Meanwhile, the executors submitted that they had acted strictly in accordance with the subject's Will. Referring to a July 23 email, they submitted that as the shares held by PRS Oberoi in the two companies could not be transferred to a Trust, an opinion was taken from legal experts; Anastasia's opinion was sought but she "insisted on acting alone and contrary to the legal advice". They claimed that as per the terms of the will, the decision of a majority of trustees is final, who had decided that the subject shares cannot be transferred to a trust.
Defendants cannot give partial acceptance to 2021 Will
However, after perusing through provisions of the Articles of Association of the two holding companies, the high court said, "The effect of Clause 7 of the Articles of Association of the defendant no.7, and equally Clause 31 of the Articles of Association of the defendant no. 8, on the bequest, shall also need consideration once, at least, prima facie opinion is formed by this Court on the Will/Codicil propounded by the plaintiffs and/or the Will/Oral family settlement propounded by the defendant nos. 5 and 6. that the "effect" of these provisions on the "bequest" (property etc., that a person gives to another after their death) would need consideration"
With respect to the argument that Natasha has accepted the decision of the remaining Trustees, the court said that as the Will is disputed by the defendant nos. 5 and 6, the shares in the two companies cannot be transferred in her favour till this dispute is "at least prima facie decided". It said that Vikramjit and Arjun cannot give a partial acceptance to the (2021) Will as far as the bequest to Natasha is concerned while challenging the remaining bequest under the same Will.
Notably the plaintiff 2 and PRS Oberoi's wife Mirjana Jojic Oberoi has moved an application to place on record a CD containing "videographic evidence" that she has contended is pertinent for "fair adjudication" of the suit, which was shared with her by her late husband. The court took on record the CD, which the plaintiff has said contains the video recording of PRS Oberoi with Faruggia attesting to the validity of the 2021 Will that gives the reasons for the bequest to his two daughters.
Before parting the court said, "Needless to state, any and all observations made hereinabove are only prima facie in nature and have been made for the purposes of passing this ad interim Order. They shall not be considered as a final opinion of this Court or, in any manner, affect the rights or contentions of the parties at a later stage".
Issuing summons in the main lawsuit, the high court listed the matter in December.
Case title: ANASTASIA MIRJANA JOJIC OBEROI & ORS. v/s RAJARAMAN SHANKAR & ORS.
Citation: 2024 LiveLaw (Del) 1022
Counsel for the plaintiffs: Senior advocates Sandeep Sethi, Arvind Nigam, Arun Kathpalia, Jayant Mehta along with advocates Aadil Singh Boparai, Swapnil Gupta, Shivambika Sinha, Nimita Kaul, Srishti Khanna, U.Banerjee, Saurabh Dev Karan Singh, Gurveer Lally, Abhinav Mishra, Vaibhav Mendiratta
Counsel for Defendants 1-3: Shankh Sengupta, Ribi V.Garg, Shreyash Sharma
Counsel for Defendants 5 and 6: Senior advocates Neeraj Kishan Kaul, Amit Sibal along with advocates Aseem Chaturvedi, Aakash Bajaj, Shivank Diddi, Preorna Banerjee, Sania Abbasi
Counsel for Defendants 7 and 8: Senior advocate Rajiv Nayar and advocate Aman Gupta.