NCLAT Allows NCLT To Decide Deceased Depositor's Claim Without Awaiting Probate

Holding that issues relating to repayment and retention of deposits made by a deceased depositor fall within the jurisdiction of the National Company Law Tribunal, the National Company Law Appellate Tribunal (NCLAT), Chennai, has allowed an appeal by a claimant and remanded the matter for fresh consideration without awaiting the outcome of pending probate proceedings.

A bench of Judicial member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain clarified that questions concerning the existence, maturity, and retention of the deposit must be independently examined by the NCLT under the Companies Act.

Explaining the scope of adjudication, the tribunal observed: “the said proceedings of whether there is a deposit made by late Dr. M.A.M. Ramaswamy Chettiar to the Respondent No.1 company, what is the amount of such deposit and how much interest has accrued on it, whether the said deposit is still being held by the Respondent No.1 company in contravention of Section 73(4) and Section 74(1) of the Companies Act, 2013, and whether the said deposit along with interest accrued thereon will be permitted to be retained by the Respondent-1 company or else, where it should be deposited for safe keeping is to be decided by the Ld. NCLT because this aspect will come under the jurisdiction of Ld. NCLT, being a subject matter of Companies Act, 2013 and not that of Hon'ble High Court of Madras, who will decide who will inherit it.”

The present appeal was filed by the Chettinad Charitable Trust, a claimant to the estate of the deceased depositor, challenging an order of the NCLT directing it to approach the NCLAT for directions in view of an earlier remand order dated September 6, 2022, pursuant to which the matter had been adjourned sine die.

The dispute originates from proceedings initiated by Late Dr.M.A.M. Ramaswamy Chettiar before the Company Law Board seeking repayment of deposits made in Chettinad Coal Washeries Private Limited under the Companies Act. After his death, rival claims over his estate led to pending probate proceedings before the Madras High Court, along with disputes over substitution in the company petition.

The NCLAT clarified that its earlier order was limited to the issue of substitution of the deceased petitioner and did not bar adjudication of deposit-related issues. It observed that proceedings relating to the deposit need not await the outcome of pending probate proceedings.

Relying on the Supreme Court's ruling in Binapani Kar Chowdhury v. Sri Satyabrata Basu, the tribunal noted that beneficiaries are entitled to initiate proceedings for protection of the estate even before probate is granted.

The tribunal further observed that if the deposit is directed to be returned and placed to the credit of the probate proceedings, it would not prejudice any claimant, as the asset would remain safeguarded pending final adjudication.

Allowing the appeal, the NCLAT remanded the matter back to the NCLT for consideration on merits.