NCLT Upholds Decision on Share Transfer Dispute

The NCLT rejected the appeal, ordering the Appellants to pay costs to Respondent No.2. The tribunal found inconsistencies in the Appellants' claims regarding the share transfer, doubted the validity of the gift deed, and noted the lack of compliance with required procedures under the Companies Act. It upheld its jurisdiction to decide on the title of shares, deemed the transfer fraudulent, and ordered the rectification of the register to reinstate OP1 as the shareholder of the disputed shares. The appellate tribunal affirmed the NCLT's decision.

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Issues Involved:
1. Validity of the share transfer.
2. Compliance with Section 108 of the Companies Act, 1956.
3. Jurisdiction of the NCLT to decide the title of shares.
4. Alleged fraudulent transfer of shares.
5. Evidence of the gift deed and transfer forms.
6. Rectification of the Register of members under the Companies Act.

Detailed Analysis:

1. Validity of the Share Transfer:
The Appellants claimed that shares were transferred to Appellant No.1 as a gift from OP1. They argued that the transfer was valid and followed due procedure. However, the initial response from the Appellants indicated that the shares were transferred as part of a "normal process" and family arrangement, without mentioning any gift deed. Subsequent claims introduced the existence of a gift deed, which was not initially mentioned. The NCLT found inconsistencies in the Appellants' claims and doubted the veracity of the gift deed.

2. Compliance with Section 108 of the Companies Act, 1956:
The Appellants argued that the NCLT should not have delved into the title of the shares and should have only examined compliance with Section 108 of the Companies Act, 1956. The NCLT, however, found that the Appellants failed to provide evidence of compliance with the required procedures under Section 108 for the transfer of shares. The NCLT noted the absence of share transfer forms and other necessary documents, which the Appellants claimed were lost.

3. Jurisdiction of the NCLT to Decide the Title of Shares:
The Appellants contended that the NCLT did not have the jurisdiction to decide on the title of the shares and that such matters should be addressed in a civil suit. However, the NCLT and the appellate tribunal referred to the judgment in "Ammonia Supplies Corporation (P) Ltd. vs. Modern Plastic Containers Pvt. Ltd.," which clarified that the NCLT has the jurisdiction to decide on matters related to the rectification of the register of members, including incidental questions.

4. Alleged Fraudulent Transfer of Shares:
The Respondents (original Petitioners) argued that the transfer of shares was fraudulent and that OP1 never signed any transfer deed. They claimed that the Appellants, who were managing the company, used their position to effect the transfer without OP1's consent. The NCLT found merit in the Respondents' arguments and noted the suspicious circumstances surrounding the alleged transfer, including the loss of documents and the shifting stands of the Appellants.

5. Evidence of the Gift Deed and Transfer Forms:
The Appellants initially did not mention the existence of a gift deed but later introduced it as evidence. The NCLT scrutinized the gift deed and found it unconvincing. The tribunal noted that the gift deed was written by Appellant No.2 and questioned why OP1 did not write it himself. Additionally, the affidavits provided by the Appellants to support the gift claim were found to be dubious, with one affidavit being backdated.

6. Rectification of the Register of Members:
The NCLT concluded that the Appellants failed to justify the transfer of shares and the omission of OP1's name from the register of members. The tribunal ordered the rectification of the register to reinstate OP1 as the shareholder of the disputed shares. The appellate tribunal upheld the NCLT's decision, emphasizing that the NCLT has exclusive jurisdiction under Section 59 of the Companies Act, 2013, to determine matters related to the rectification of the register of members.

Order:
The appeal was rejected, and each of the Appellants was ordered to pay costs of Rs. 50,000 to Respondent No.2 (OP1).

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