Ashok Ramchandra Panchal Vs Veer Fabricators Private Limted (NCLT Ahmedabad)
The appeal was filed under Section 59 of the Companies Act, 2013 seeking rectification of the Register of Members of Respondent No. 1 Company. The appellants sought restoration of their names as share-holders, removal of Respondent Nos. 2 and 3 from the register, damages of ₹50,00,000, and other con-sequential reliefs.
According to the appellants, they held 10,000 equity shares constituting 100% shareholding of the company from 06.08.2021, with their names recorded in the Register of Members and reflected in the annual report for FY 2020-21. They narrated the changes in directors and shareholding from incorpora-tion onwards and contended that there had been no legal or valid change in the company’s shareholding after 06.08.2021. They asserted that Respondent Nos. 2 and 3 were only directors and had never be-come shareholders through any valid transfer. They further submitted that they had not executed any share transfer forms or transfer deeds, that the original share certificates remained in their possession, and that the respondents had unlawfully caused their names to be removed from the Register of Mem-bers. The appellants relied upon Section 56 of the Companies Act, 2013, Clause 19 of the Articles of As-sociation, and the decision in Suhas Chakma vs. South Asia Human Rights Documentation Centre (P.) Ltd., NCLT-New Delhi.
The Registrar of Companies submitted copies of the shareholder list as on 31.03.2022 and the compa-ny’s master data, stating that no prosecution, complaints, compounding proceedings or other matters were pending against the company.
Respondent No. 2 contended that the appeal was premature and not maintainable, stating that the ap-pellants had not approached the Registrar of Companies before filing the appeal and had failed to im-plead the RoC. It was further submitted that the RoC’s records reflected Respondent Nos. 2 and 3 as shareholders and that the dispute involved contested questions of fact not suitable for adjudication un-der Section 59. Reliance was placed on Chalasani Udaya Shankar and others vs. M/s. Lexus Tech-nologies Pvt. Ltd. and others.
After examining the record, the Tribunal observed that while the appellants appeared as shareholders in the records for 31.03.2021, the respondents appeared as shareholders in the records for 31.03.2022. It found that neither side had produced documents explaining how the share transfers were effected, whether through sale, gift, inheritance or restructuring, nor any evidence of consideration, approvals or relevant board meetings. The Tribunal also noted that the MGT-7 for 31.03.2022 showed no details of share transfers despite recording the respondents as shareholders. It further observed that the original share certificates continued to remain with the appellants and that the RoC had not explained how the transfers had been effected.
Holding that an inquiry by the Registrar of Companies was necessary, the Tribunal directed the RoC to conduct an inquiry under Section 206(4) of the Companies Act, 2013 to examine whether the share transfers were effected in compliance with Section 56 and to determine the shareholding position as on the date of filing of the application. Since the inquiry was yet to be conducted, the Tribunal declined to grant rectification of the register at that stage. The appeal was partly allowed and disposed of.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
The present Appeal has been filed under Section 59 of the Companies Act, 2013 seeking rectification of the Register of Members of Respondent No.1 Company. The relief(s) prayed for:
a. May be pleased to direct Respondent no. 1 to rectify the register of members and further direct Respondent no. 1 to restore the name of the Appellants and remove the names of the Respondent no. 2 and Respondent no. 3 as shareholders/members of the Respondent no. 1
b. May be pleased to direct Respondents to jointly and severally pay damages to the tune of Rs. 50,00,000/ – (Rupees Fifty lacs) to the Appellants for omitting name of Appellants from the register of members without sufficient cause and in completely illegal fraudulent and unlawful manner;
c) May be pleased to grant any other /further relief(s) as may be deemed fit in the interest of justice.
Submissions of the Appellants
2. Respondent No. 1 was incorporated on 22.04.2019 under the provisions of Companies Act, 2013. The case of the Appellants is that they were holding 10,000 equity shares constituting 100% sharehold-ing of Respondent No.1 Company since 06.08.2021. Their names were duly entered in the Register of Members and were reflected as shareholders in the Annual Report for FY 202021. The original sub-scribers of the MoA and AoA of the Respondent No. 1 as well as Original promoters, Directors and Shareholders of Respondent No. 1 were as under:
| Promoter/Director/Shareholder | Shares | Shareholding (in %) |
| Harsh Ashokbhai Pnachal | 3,500 | 35% |
| Pankit Hemangbhai Panchal | 3,500 | 35% |
| Abhishek Ashishkumar Panchal |
3,000 | 30% |
| Total | 10,000 | 100% |
3. On 4.10.2019 Mr. Abhishek Ashish Panchal has resigned as Director of Respondent No. 1 and Appel-lant No. 1 was appointed as Executive Additional Director of the Respondent no. 1. Form DIR-12 was duly filed before the ROC. On 10.10.2019 Mr. Pankit Hemangbhai Panchal resigned as Director of Re-spondent no. 1 Form DIR-12 was duly filed before ROC. On 10.10.2019 Mr. Abhishek Ashish Panchal and Mr. Pankit Hemangbhai Panchal also indicated their desire to liquidate their entire shareholding in Respondent No. 1 and Appellant No. 2. However, appellants remained as Directors holding 5000 shares of Rs. 10 each of Respondent No. 1. On 03.07.2020, Respondent no. 2 was introduced as additional executive director of Respondent No. 1 Form DIR-12 filed ROC. On 05.08.2021, Appellant No. 2 re-signed as Director and Mr. Amrish Panchal was appointed as Director of Respondent No. 1 on 06.08.2021 Form DIR-12 filed with ROC.
| Shareholder | Shares | Shareholding (%) |
| Harsh Ashokbhai Panchal | 5000 | 50% |
| Shri Ashok Ramchandra
Panchal |
5000 | 50% |
| Total | 10,000 | 100% |
| Director | Date of assuming office | |
| Mr. Meet Bharatbhai Patel | 03.07.2020 | |
| Mr. Amrish Ramanbhai
Panchal |
06.08.2021 | |
There is no legal and valid change in the shareholding of the Respondent No. 1 since 06.08.2021.
4. The Appellants contend that Respondent Nos. 2 and 3 were only Directors of Respondent No.1 and were not shareholders. According to the Appellants, at no point of time did they execute any share transfer form, transfer deed or any other document transferring their shares in favour of Respondent Nos. 2 and 3.
5 . It is further the case of the Appellants that the original share certificates continued to remain in their possession and were never delivered either to Respondent No.1 or to Respondent Nos.2 and
6. The Appellants have alleged that Respondent Nos. 2 and 3 illegally and unauthorised manner got the shares transferred in their favour and caused deletion of the names of the Appellants from the Register of Members of Respondent No.1 Company.
7 . The Appellants have relied upon Section 56 of the Companies Act, 2013 and Clause 19 of the Articles of Association of Respondent No.1 to contend that a transfer of shares cannot be registered without a duly executed instrument of transfer and compliance with the prescribed procedure. The Appellants also submitted that there is no litigation pending before any other forum
8. The Appellants relied upon the judgment of Suhas Chakma vs. South Asia Human Rights Docu-mentationCentre(P.) Ltd., NCLT-New Delhi.
Reply of ROC
9. ROC submitted in its reply list of Shareholders as on 31.03.2022 and copy of Master Data of Compa-ny. It is also submitted that as per records available with this ,office, no prosecution, complaints, com-pounding and no matters are pending against the company.
Reply of Respondent No. 2
The Appeal is liable to be dismissed as premature and not maintainable. The Appellants did not ap-proach the Registrar of Companies prior to invoking Section 59 and have also failed to implead” the RoC, which is stated to be a necessary and proper party. The RoC report dated 22.08.2025 records that the entire shareholding of Respondent No.1 Company stands in the names of Respondent Nos. 2 and 3 and that the transfers were duly registered. The statutory records therefore support the existing sharehold-ing position. The disputes raised by the Appellants involve contested factual allegations which cannot be adjudicated in a summary rectification proceeding under Section 59.
Accordingly, the Appeal suffers from material irregularities, lacks bona fides, and deserves to be dis-missed with costs. The Respondent No. 2 had also filed written submission and relied upon the judg-ment of Hon’ble Supreme Court of India in Chalasani Udaya Shankar and others vs. M/s. Lexus Technologies Pvt. Ltd. and others.
10.In response to the reply filed by the R-2, the Appellant has filed its Affidavit-in-rejoinder denying the allegations levied by the R-2 with a prayer to allow this appeal.
11. We have heard Ld. Counsels for both the sides and perused the material available on record. Perused the written submissions filed by both the parties.
a. This application is filed on 21.09.2023 and as per records of ROC as on 31st March 2021, the applicants were holding 50% of shares each, while as on 31st March 2022, the respondents hold 50% of the shares each. From this it is apparent that the share transfers were affected in the name of the respondent/ s, as per record while the original shares are still with the applicant/ s as submitted.
b. Both the parties have not brought in to record how the share transfer was affected and share consideration made as they were only 2 shareholders who are applicant/s who are replaced by the 2 respondents. If the share transfer has happened through sale, gift, inheritance or restructuring has not been proved or produced in the submissions of both parties. No documentation are produced by either parties. Since the transfer is effected not by demat, but physical, the shares are with the applicants.
c. Even though the ROC has submitted the relevant data, it has not given as to how the share transfer was effected. Hence we would direct the ROC to conduct an inquiry under Section 206(4) of the Companies Act. This becomes more essential as apparently the parties have filed an FIR before the Police on the dispute. Even though the applicant/ s have not approached ROC, mere fact that they are eligible to file an appeal before this tribunal is sufficient and maintainable.
d. The Applicant has submitted the relevant MGT 7 for the year ended 31.03.2021(where their names figure as shareholders) and MGT 7 (41-54) for the year ended 31.3.2022 (Page 55-69). We observe from the MGT filed for 31.3.2022 that the details of share trans-fers made are shown as blank, however, the names of respondents appear as new shareholders. The same is also not denied by the respondent nor any financial consideration for the shares, relevant board meetings, approvals are placed on record to accept authenticity of the inclusion of new names, depriv-ing the applicant/ s. Hence, the prayers made by the applicant for rectifying register of ROC cannot be granted at this stage.
e. From ROC submission we find the following data:
Percentage of holding Number of Equity Shares as on March 31,2021
1. Harsh Ashokbhai Panchal 5,000 (50%)
2. Ashok Ramchandra Panchal 5,000 (50%) List of shareholders as on 31.03.2022
3. Meet Bharatbhai Patel 5,000 (50.00)
4. Amrish Ramanbhai Panchal 5,000 (50.00)
Since the ROC has powers to decide the matter on share transfer effect, its authenticity, we order the ROC to conduct an investigation as to whether the company R 1 has affect-ed the transfers in compliance of Sec 56 of Companies Act after conducting an enquiry under Sec 206(4) of the Companies Act 2013. In view of the same we
pass the following order:
ORDER
1. Appeal 60(AHM) 2023 is partly allowed.
2. The ROC is directed to conduct an enquiry of the Company under Section 206(4) of the Co. Act, 2013 and decide the shareholding of the petitioner as of date of filing this application and pass appropriate orders.
3. The appeal stands disposed of.
