Rectification of share register cannot replace FEMA compliance when share cancellation depends on unresolved regulatory breaches.

Rectification of the register of members under section 59 of the Companies Act, 2013 cannot be used to secure cancellation of shares where the relief is tied to an unresolved FEMA contravention. The Tribunal noted that the allotment dispute involved alleged breach of FEMA pricing and reporting requirements, and that the company had not first complied with the Reserve Bank's directions, the applicable compounding process, or the procedures in its memorandum and articles for altering share capital. On those facts, the petition was not maintainable and was rejected.

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Issues: Whether the company's petition for rectification of the register of members under section 59 of the Companies Act, 2013 was maintainable without first complying with the Reserve Bank of India's directions and the applicable FEMA regime.

Analysis: The relief sought was not a simple rectification of an erroneous entry in the register, but cancellation of shares allotted in alleged breach of FEMA pricing and reporting requirements. The Reserve Bank had required the company either to unwind the excess allotment or to bring in additional funds and then seek compounding. The Tribunal found that the company had not placed the full material before it, had not first taken the steps required by the Reserve Bank, and had not acted in accordance with its memorandum and articles of association or the procedure governing share capital alterations. On these facts, the petition under section 59 could not be used as a substitute for compliance with the regulatory scheme governing the allotment and cancellation of shares.

Conclusion: The petition was not maintainable and was rejected.

Ratio Decidendi: Rectification of the register of members cannot be granted under section 59 of the Companies Act, 2013 where the requested cancellation of shares is inseparable from an unresolved FEMA contravention and the company has not first complied with the applicable regulatory and corporate procedures.

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