MD’s Appeal Against AA’s Direction for Rectification of Register Dismissed as Company Itself Chose Not to Contest

Case Details: Vyapar Mandir Palarivattom (P.) Ltd. vs. Usha O.K. - [2024] 168 taxmann.com 282 (NCLAT - Chennai)

Judiciary and Counsel Details

• Justice Sharad Kumar Sharma, Judicial Member & Jatindranath Swain, Technical Member
• Ms. Pallavi Parmar, Adv. for the Appellant. 
• Arshdeep Singh, Adv., Rony Oommen John & Piyush Swami, Advs. for the Respondent.

Facts of the Case

In the instant case, the respondents/petitioners had filed company petitions under section 59 of the Companies Act, 2013, principally praying for rectification of Register of Members of appellant company.

Respondents contended that they were entitled to hold certain equity shares which stood duly registered and transferred in their name. Further, a petition was filed with regard to the controversy pertaining to the transfer of shares, held by the Respondents in the Appellant Company.

NCLT by impugned order directed rectification of Register of Members of appellant company by re-entering total number of equity shares belonging to respondents in share register of company and further ordered to restore total shareholding of respondents.

Later, the appellant company filed Interlocutory Applications under rule 154 of NCLT Rules for rectification of respective orders. NCLT held that said rectification applications took shape of review and, thus, could not be entertained under the garb of rectification applications.

NCLAT Held

The NCLAT observed that since relief prayed against the order of rectification of the Register of Members of the appellant company, by re-entering names and configuration of shares, held by shareholders, under respective folio, could have been possible only when the company was contesting proceedings and in event of company itself having chosen not to contest company appeal, no such relief could be pressed for by company’s managing director i.e. another appellant, in absence of an effective contest by appellant company.

Therefore, the NCLAT held that the instant appeal would stand dismissed, but, it would be open for the managing director (appellant) to resort to appropriate proceedings, under section 59(2) of the Companies Act, 2013.

List of Cases Reviewed

• K.G.Lekha v Vyapar Mandir Palarivattom Pvt Ltd [2024] 168 taxmann.com 113 (NCLT- Kochi) [Para 23] affirmed