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Our Legal Correspondent

Chennai , Dec. 15

IN a case pertaining to transfer of a stage carriage permit standing in the name of a company to an individual, the Madras High Court has held that the legal heir of the managing director was entitled to register her objection to the proposed transfer of the permit by the Transport Authority in the enquiry under Section 82(i) of the Motor Vehicles Act, 1988.

M/s Drivers Conductors Bus Service (P) Ltd, Erode, had filed a writ petition challenging the authority of the Regional Transport Authority, Erode, in hearing the objection of Ms S. Eswari to the proposed transfer of the stage carriage permit. While disposing of the petition, Mr Justice D. Murugesan noted that for the purpose of adjudging the plea of the third respondent (Ms S. Eswari), it must be seen that even it was the admitted case of the directors of the company that the third respondent was also entitled to the proportionate share of the assets held by the deceased Managing Director (Mr S.R. Balasubramaniam), father of the third respondent, in the company.

As the company was facing a financial crisis, the majority of the board of directors decided to transfer the permit in favour of one Ms M. Thangamani (2nd respondent). Accordingly on June 25, 2003, the company filed a joint application for transfer of the permit with the first respondent (RTA).

The RTA issued notices to all concerned. Though notice was issued to the third respondent (Ms Eswari) as she was one of the objectors also claiming right to the permit through her deceased father, the petitioner (company) opposed the same on the ground that she did not have locus standi to object to the transfer of the permit, as in the matter of transfer of permit, the lease was only among the transferor, transferee and the RTA. But the RTA did not accept the contention of the petitioner.

Responding to a writ petition by the company, the High Court had admitted the petition and had also granted interim injunction restraining the RTA from hearing the third respondent in regard to transfer of the permit.

On behalf of the third respondent, Mr M.S. Krishnan, counsel, submitted that in view of the decision of the apex court that even the legal representative had a right over the permit, such right was devolved on her from her father.

Without reference to her, and without even conducting mandatory meeting, the brother of the third respondent and her mother were alone made as directors. Further, 4 new directors were appointed again without following the mandatory requirements. The decision of the board of directors to transfer the permit was not unanimous.

The petitioner contended that the third respondent had no locus standi to object to the transfer of the permit as she was not either a shareholder or a director of the transferor company.

While discussing the right of the third respondent to be heard by the RTA before effecting the transfer of the stage carriage permit, the judge said that there was a dispute pending as to the appointment of the managing director in place of Mr Balasubramaniam before the Company Law Board where the third respondent had not only sought for a direction to set aside all legal resolutions passed by the board meeting, but had also specifically sought for a direction to set aside the alleged board meeting dated May 19, 2003 resolving to transfer the permit.

The claim of the third respondent the she was the daughter of Mr Balasubramaniam, the then managing director, who held 50 per cent of the shares of the company was not disputed, the judge noted. Therefore, a right had devolved on her on the death of her father. It was also to be seen that after the demise of Mr Balasubramaniam, an agreement was reached between the directors and the legal heirs of Mr Balasubramaniam, including the 3rd respondent, whereby the heirs would be paid a sum of Rs 17 lakh in lieu of the value of the shares held by the deceased.

For all these reasons, the judge held that the third respondent was a person entitled to make objections as to the transfer of the permit on valid and available grounds. The third respondent had locus standi to maintain her objection before the RTA in the enquiry under Section 82(i) of the Motor Vehicles Act.

The writ petition failed.

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