Rectification of Register of Members: Expanding National Company Law Tribunal’s Jurisdiction

1. Introduction 

The Companies Act, 2013 (“Act”) has substantially expanded the National Company Law Tribunal’s (“NCLT”) power. Even a cursory analysis of the provisions reveals the expansive scope of the jurisdiction exercised by NCLTs today. The restrictions imposed by the judgement of Ammonia Supplies Corporation (PT) Limited v. Modern Plastic Containers (P) Limited (“Ammonia”) on NCLT’s predecessor, Company Law Board (“CLB”), have been expunged and now NCLT exercises exclusive jurisdiction. This article analyzes the changing jurisprudence and rectification of the register of members.  

2. Legislative and Judicial History  

Section 58 and Section 59 of the Act deal with the situation in which (i) a company refuses to register the transfer of shares and (ii) a member’s name has, without “sufficient cause”, been omitted/added in the register. Section 58 and Section 59 originated in Section 111 and Section 111-A of the Companies Act, 1956 (“1956 Act”).  

The extent of CLB’s jurisdiction under Section 111 of the 1956 Act had been widely debated and there were conflicting decisions. In a few matters, CLB used to exercise jurisdiction on grounds of fraud, misrepresentation, and statutory violations. At the same time, there have been cases wherein CLB recused itself on grounds that it exercises only summary jurisdiction and cannot enter into a fact-finding exercise.  

Please click here to read the full article by Kumar Kislay and Angad Baxi, published in BW Legal.