Rectification of register follows void allotment; equitable relief can include directing repayment and removing entries.

Where an allotment of shares is declared null and void, consequential rectification of the register of members follows as a matter of course; a tribunal exercising equitable jurisdiction in oppression and mismanagement proceedings may set aside allotment and direct rectification as necessary to give effect to that nullification. A pledgee whose sole legal interest is repayment is not prejudicially affected by removal from the register if the tribunal directs repayment, and absence of formal impleadment does not vitiate the order where the pledgee's monetary interest is protected.

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Issues: (i) Whether the deletion of the petitioner's name from the register of members by the Company Law Board without impleading or hearing the petitioner violated principles of natural justice; (ii) Whether the Company Law Board in proceedings under Sections 397 and 398 of the Companies Act, 1956 could set aside allotment and direct rectification of the register of members (i.e., whether rectification was confined to proceedings under Section 111 of the Companies Act, 1956).

Issue (i): Whether the deletion of the petitioner's name from the register of members without hearing violated natural justice.

Analysis: The petitioner claimed a right as a shareholder recorded in the register; respondents and the CLB treated the petitioner as a pledgee whose interest was to secure repayment of an inter-corporate deposit. The CLB found the allotment to the pledgor null and void and, exercising equitable jurisdiction, ordered repayment to protect the pledgee's monetary interest. The petitioner had produced documents and had representation in proceedings but did not secure formal impleadment; the Court examined whether any legal right of the petitioner was adversely affected by the CLB order and whether the petitioner's interest required a separate hearing for substantial prejudice to arise.

Conclusion: The Court held against the petitioner on this issue. The deletion did not amount to a violation of principles of natural justice because the petitioner's legal right was limited to repayment as a pledgee and that right was protected by the CLB's direction for repayment; no prejudicial adverse legal right of the petitioner remained that required separate hearing.

Issue (ii): Whether rectification of the register of members could be consequentially directed by the CLB in proceedings under Sections 397 and 398, or was permissible only under Section 111.

Analysis: The Court reviewed authorities and the statutory scheme, observing that where an allotment or issue of shares is set aside the consequent entry in the register must fall as a matter of course. The Court noted precedents holding that consequential amendment of the register follows a finding that an allotment is null and void and that the CLB's wide powers under Sections 397 and 398 and Section 402 permit equitable relief necessary to do substantial justice, including ordering rectification when allotment is set aside. The Court also considered the nature of the petitioner's recorded membership (entered to enable exercise of pledge rights) and company articles that restricted transfers.

Conclusion: The Court held against the petitioner on this issue. The CLB lawfully set aside the allotment and consequentially directed rectification of the register of members in proceedings under Sections 397 and 398; compliance with Section 111 procedure was not required once the allotment was declared null and void and the register thus became non est.

Final Conclusion: The petitioner's writ petition seeking to quash the CLB order was dismissed; the CLB's order protecting the pledgee's monetary interest and directing rectification of the register as a consequence of setting aside the allotment was upheld.

Ratio Decidendi: Where an allotment or issue of shares is declared null and void, consequential rectification of the register of members follows as a matter of course and a tribunal exercising wide equitable powers under Sections 397 and 398 and Section 402 of the Companies Act, 1956 may direct such rectification; a pledgee whose sole legal interest is repayment is not prejudicially affected where the tribunal directs repayment, and absence of separate impleadment does not vitiate the order.

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