NCLT Must Decide Deceased Depositor Claim Despite Succession Dispute | NCLAT

Case Details: Dr. M.A.M. Ramaswamy Chettiar of Chettinad Charitable Trust vs. Chettinad Coal Washeries (P.) Ltd. [2026] 185 taxmann.com 192 (NCLAT–Chennai)

Judiciary and Counsel Details

• Sharad Kumar Sharma, Judicial Member & Jatindranath Swain, Technical Member
• S. Ravi, Sr. Adv. & Ms S. Indumathi Ravi, Adv. for the Appellant.

Facts of the Case

In the instant case, the original petitioner, an individual depositor, filed CA No. 1/2014 before the Company Law Board under Sections 73(4) and 74(1) of the Companies Act, 2013 seeking repayment of a deposit from the respondent company, a private company. The proceedings were subsequently transferred to the NCLT and renumbered as TCP No. 1/2016.

During the pendency of the petition, the petitioner passed away. Thereafter, a respondent individual sought substitution on the basis of an adoption deed, while the appellant trust claimed substitution relying on arrangements under a will, which allegedly transferred movable assets, including the subject deposit.

NCLAT Held

The NCLT allowed the substitution application of the trust and rejected that of the respondent individual. On appeal by the respondent company and the respondent individual, the NCLAT set aside the order of substitution and remitted the matter, directing that the issue of substitution be considered only after the conclusion of testamentary proceedings. Since a testamentary suit for grant of letters of administration based on the registered will was pending before the High Court, no legally recognised heir was available to prosecute TCP No. 1/2016. Consequently, the NCLT adjourned the petition sine die.

Subsequently, the appellant trust sought amendment of the affidavit of assets in the pending probate proceedings to include the subject deposit. The Single Judge allowed the amendment, and the Division Bench affirmed the same, clarifying that the probate court would determine the rightful legatee.

The appellant thereafter contended that the deposit had matured in March 2023 and filed IA (CA) No. 93(CHE)/2024 before the NCLT seeking a direction to the respondent company to deposit or return the amount, claimed to be Rs. 66.32 crores along with accrued interest, to the credit of the probate proceedings. It was argued that retention of the deposit was in violation of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, and that there was a risk of dissipation of funds since the respondent individual and his spouse held 99% of the shareholding in the respondent company. The NCLT, relying on the earlier order of the NCLAT and noting that the main petition had been adjourned sine die, declined to adjudicate the interlocutory application and directed the applicant to approach the NCLAT.

On appeal, the NCLAT observed that where a depositor had filed a petition under Sections 73(4) and 74(1) for repayment of deposits and died during its pendency, and where a dispute existed regarding substitution of the deceased petitioner pending testamentary proceedings, the NCLT was still required to determine whether a deposit had in fact been made by the deceased, the amount of such deposit, and the interest accrued thereon. It was further required to examine whether the company was continuing to retain the deposit in contravention of the provisions of the Companies Act, 2013, and whether such deposit, along with accrued interest, ought to be returned or secured by deposit with an appropriate authority.

The NCLAT further held that any or all parties claiming to be beneficiaries of the estate of the deceased petitioner would be entitled to pursue proceedings for protection of the estate, in view of the decision of the Supreme Court in Binapani Kar Chowdhury v. Sri Satyabrata Basu, wherein it was held that the right of a beneficiary to initiate proceedings for protection of the estate prior to grant of probate is not barred under Section 213 of the Indian Succession Act, 1925.

It was also observed that if the NCLT were to conclude that the deposit had been made by the deceased petitioner and was liable to be repaid, directing the deposit of such amount into the probate proceedings would not prejudice any claimant, as the asset would remain safeguarded pending final adjudication.

Accordingly, the NCLAT held that the NCLT ought to adjudicate both the interlocutory application and the main proceedings on merits and determine the fate of the deposit. The NCLT was directed to pass appropriate orders on the interlocutory application independently, without being influenced by any observations made by the NCLAT.

List of Cases Referred to

• Dr M.A.M Ramaswamy v. Chettinad Coal Washeries (P.) Ltd. [CA No. 1 of 2014, dated 28-10-2014] (para 1)
• Binapani Kar Chowdhury v. Sri Satyabrata Basu [2006] 10 SCC 442 (para 15).