Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 204

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ajai Das Mehrotra, Member (Technical)
IndusInd Bank Limited – Appellant
Versus
Neetu R. Menda – Respondent
I.A. No. 3862 of 2025|CP. No. 4770/(MB)/2018|M.A. No. 2404/2019

Advocates:
For the Appellants/Petitioners:Mr. Siddharth Ranade, Mr. Prakshal Jain, Mr. Arnav Doshi, Mr. Gyanendra Kumar, Sr. Advocate, Mr. Abhijit Mittal, Mr. Anukalp Jain, Ms. Niharika Sinha, Ms. Sugandh Virmani
For the Respondents:Mr. Gyanendra Kumar, Sr. Advocate, Mr. Abhijit Mittal, Mr. Anukalp Jain, Ms. Niharika Sinha, Ms. Sugandh Virmani

Company and registrar liable to rectify share register or compensate shareholder for negligently issuing duplicates to third party without notice or due verification, violating procedures; NCLT jurisdiction upheld in clear fraud cases without civil suit relegation.

Headnote:(A) Companies Act, 2013 - Sections 46, 56, 59 - Rectification of register of members - Issuance of duplicate share certificates to third party transferee without notice to registered shareholder or original certificates - Failure to follow prescribed procedures including SEBI guidelines and obtaining indemnity from registered holder - Gross negligence by company and registrar in verifying documents, discrepancies in consideration amounts, inconsistent loss explanations, delayed lodgement of transfer deed beyond 60 days - Registered shareholder retained possession of original certificates till dematerialisation attempt - NCLT directed rectification of register or payment of market value damages with costs; NCLAT upheld as open-and-shut fraud case where victim shareholder entitled to remedy without relegation to civil court u/s 430. (Paras 27-46)

(B) SEBI Circular dated 09.05.2001 - Para 23 - Duplicate certificates issuable only to registered holder or legal heirs; issuance to others on alternative documents renders issuer solely responsible - Mandatory notice to last registered holder on third-party loss claims; newspaper advertisement insufficient if not reaching shareholder. (Paras 35-37)

(C) Limitation - Cause of action arises on discovery of fraud when shareholder informed of duplicate issuance during dematerialisation request; petition filed shortly thereafter within time. (Para 26)

(D) Jurisdiction - Summary proceedings under Section 59 competent for rectification despite fraud allegations if established on facts without need for detailed evidence; civil court barred u/s 430. (Paras 44-45)

Facts of the case:
Registered shareholder holding 5000 equity shares sought rectification after company rejected dematerialisation request citing duplicate certificates issued in 2015 to third-party transferee based on 2003 transfer deed lodged in 2015 without original certificates, following procedures with discrepancies including mismatched consideration, incomplete indemnity, inconsistent loss stories, no notice to shareholder despite address update, and advertisement in inaccessible newspaper.

Findings of Court:
Company and registrar negligent in issuing duplicates without due diligence, violating statutory and regulatory norms; shareholder proved continued possession of originals establishing fraud; direction to restore shares or compensate upheld.

Issues: Whether petition under Section 59 maintainable despite fraud allegations; sufficiency of procedures followed for duplicate issuance and transfer; limitation; jurisdiction vis-a-vis civil courts; power to award damages.

Ratio Decidendi: In fraud cases where registered shareholder victim retains originals, NCLT/NCLAT can rectify register under Section 59 without trial if negligence and violations clear; company/registrar liable for procedural lapses; dematerialised status no bar to rectification.

Result: Appeal dismissed; NCLT order upheld with additional costs of Rs.1,00,000/- on appellant bank.

Table of Content
1. appeal against nclt order restoring shares (Para 1)
2. factual sequence of share ownership and demat request (Para 2)
3. nclt finding negligence in issuing duplicate shares (Para 3 , 21)
4. appellants argue summary jurisdiction and limitation (Para 4 , 5 , 6 , 7 , 9 , 22)
5. respondent highlights procedural lapses and fraud (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20)
6. court rejects limitation; notices sent wrongly (Para 23 , 24 , 25 , 26)
7. section 59 empowers rectification and damages (Para 27 , 28 , 29 , 30 , 31)
8. discrepancies in transfer deed and documents (Para 32 , 33 , 34)
9. sebi guidelines mandate indemnity from holder (Para 35 , 36 , 37 , 38)
10. company negligent; failed to inform shareholder (Para 39 , 40 , 41)
11. precedents affirm nclt rectification in fraud cases (Para 42 , 43 , 44 , 45)
12. appeal dismissed; nclt order upheld with costs (Para 46)

JUDGMENT

(Hybrid Mode)

[Per: Ajai Das Mehrotra, Member (Technical)]

The present appeal has been filed by Appellant No. 1, IndusInd Bank Ltd. and Appellant No. 2, Link Intime India Pvt. Ltd., the Registrar and Transfer Agent of the shares of Appellant No. 1, against the impugned order dated 22.12.2023 whereby the Ld. NCLT has allowed the petition filed by Ms.

Neetu R Menda who is the sole Respondent in the present appeal.

2. The brief facts of this case as noted in the impugned order are as under:

i. CP No. 4770/MB/2018 was filed by Ms. Nitu R Menda under Section 59 of the Companies Act, 2013 seeking directions to the Appellants to restore the name of the petitioner in the register of members as the lawful owner of 5000 fully paid up equity shares of Rs. 10/- each of Appellant No. 1 company (IndusInd Bank Ltd.).

ii. The Appellants had filed MA No. 2404/2019 challenging the maintainability of aforesaid company petition.

iii. The Respondent herein was holding 5000 equity shares bearing distinctive nos. 179891484 to 179896483 under folio number 00916735 of the face value of Rs. 10/- each aggregating of Rs. 50,000/- in Appellant No.1, which is a scheduled commercial private sector bank.

iv. Pursuant to the SEBI Notification issued on 08.06.2018 mandating dematerialization of physical shares held by the investors in any listed company before 05.12.2018, the Respondent made a request by submitting Dematerialisation Request Form (DRF) dated 31.08.2018 to JM Financial Services Limited, a depository participant where Respondent holds Demat Account in her name and also surrendered the original share certificate. The said DRF was forwarded to Appellant No.2, the Registrar and Transfer Agent (RTA) of Appellant No. I vide letter dated 06.09.2018.

v. The dematerialisation request was rejected by Appellant No.2 on the reason that duplicate share certificate was stated to be issued and the said shares were transferred on 17.04.2015 to one Mr. Navin Amrutlal Chohan. The Respondent wrote to Appellant No.1 vide her letter dated 15.10.2018 stating that she had not transacted with the 5000 equity shares and sought rectification of the Register of Members.

vi. The Appellant No.1 stated that in the year 2015 it had received a request from Mr. Navin Amrutlal Chohan along with transfer deed dated 04.12.2003, the same being re-validated under Section 108 (1D) of Companies Act, 1956 for one-month w.e.f. 29.12.2014 by the Assistant Registrar of Companies, Maharashtra, Mumbai. Based on the re-validated transfer deed, the purchase challan issued by Acumen Shares Services Private Limited dated 03.12.2003, First Information Report filed with the police, indemnity bond, copy of paper advertisement, surety documents and other identification documents, duplicate share was issued to Mr. Navin Amrutlal Chohan on 17.04.2015. Mr. Navin Amrutlal Chohan also got the shares dematerialized on 27.04.2015.

vii. The Respondent claims that she never transferred shares to anyone much less to Navin A. Chohan nor parted with the possession of the shares and the act of issuance of duplicate shares and tr

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2026 Supreme(Online)(NCLAT) 204

NATIONAL COMPANY LAW APPELLATE TRIBUNALAjai Das Mehrotra, Member (Technical)IndusInd Bank Limited – AppellantVersusNeetu R. Menda – RespondentI.A. No. 3862 of 2025|CP. No. 4770/(MB)/2018|M.A. No. 2404/2019

Company and registrar liable to rectify share register or compensate shareholder for negligently issuing duplicates to third party without notice or due verification, violating procedures; NCLT jurisdiction upheld in clear fraud cases without civil suit relegation.

Cases Referred (1)

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Ajai Das Mehrotra, Member (Technical)
IndusInd Bank Limited – Appellant
Versus
Neetu R. Menda – Respondent
I.A. No. 3862 of 2025|CP. No. 4770/(MB)/2018|M.A. No. 2404/2019