Rectification versus Regularisation: NCLT’s Approach to Suspicious Share Transfers and Statutory Non-Compliance

An appeal is made under Section 59 read with Section 88 of the Companies Act, 2013. The appellants in the present case are Nuventure Connect Private Limited prayed for an order seeking rectification of register of members by inserting the name of Ms. Thankam Ancheri Rappai as the rightful owner of 3,000 equity shares of Nuventure Connect Private Limited.This relief was sought in accordance with the compliance framework governing the register of members Companies Act 2013, which mandates accurate and transparent maintenance of shareholder records.

By a Share Transfer Deed dated April 30, 2019, it has been assumed that these shares have purportedly been transferred by Mr. Tinu Pulinthara Cleatus - one of the original promoters and Managing Director - to Ms. Thankam Ancheri Rappai. The Company states that this was indeed a bonafide administrative mistake hence not formally ratified through the Board meeting post passing the circular resolution.

Facts of the Case

• The company was promoted by Tinu Pulinthara Cleatus (9,900 shares) and Pulinthara Xavier John (100 shares). The alleged transfer took place of 3,000 shares which is equal to 30% shareholding in the company.
• The Appellant stated that the transfer was approved via a board resolution by circulation dated April 30th, 2019 and a share certificate was issued.
• NEFT supposedly made a payment of ₹30,000 on August 3, 2018—about eight months before the delivery of the conveyance deed.
• The ROC observed that though the shares were transferred at their face value of ₹30,000. The net worth of the company was more than ₹5.18 crores due to which 30% shares come to about ₹1.55 crores. The Appellant submitted that private transfers in closely held companies are not hit by any provision for scrutiny of valuation.
• The transfer was never shown in the Annual Returns, Form MGT-7/7A or the Income-tax Returns for many years thereby causing a continuous omission in the statutory filings.

Issues before the Tribunal

1. Whether the Register of Members could be rectified retrospectively under Section 59 of the Companies Act, 2013.
2. Whether the documents presented, specifically the Securities Transfer Form (SH-4), were genuine and free from tampering.
3. Whether the appeal was maintainable under Section 59, given that the company filed an appeal against its own internal omission without a prior adverse order from the ROC.

The NCLT Kochi Bench dismissed the appeal based on the following findings:

• The Tribunal observed at Annexure A5 (Form SH-4) visible tampering with naked eyes as month and year digits have been altered presented before it (e.g. 1 has been changed to 4 and 6 has been changed to 9) purportedly from the date January 30, 2016, to make it April 30, 2019. The court ruled that relief could not be granted based on a document that is under such suspicious circumstances.
• The Tribunal observed that for years, the transferee never made any claim whatsoever as a shareholder nor even inquired about dividends and notices of Annual General Meetings not being received by her. An eight-month gap between payment and execution further lessened the credibility of the transaction.
• Penal Provisions: The Tribunal observed that if retrospective rectification is allowed, it will enable the company to bypass penal provisions prescribed under Section 92 for not filing correct annual returns.
• Legal Definition of "Appeal": The court emphasized that the word "appeal" in Section 59 implies a proceeding to reconsider a decision by a higher authority. For a company to file an appeal, it must first attempt to rectify its records and show that the ROC declined to entertain the request. Since there was no evidence that the ROC had refused any such request, the appeal was deemed not maintainable.
• Role of the Tribunal: The court clarified that it is not a "rubber stamp" for documents; it must proactively scrutinize evidence to ensure transparency and fairness in corporate affairs.

The Tribunal concluded that the discrepancies indicated potential manipulation and a lack of transparency, leading to the final dismissal of the case.

Source: The case is Company Appeal (C/Act)/05/KOB/2025, titled M/s. Nuventure Connect Private Limited vs. Registrar of Companies (ROC), Ernakulam.