Legal heirs of deceased shareholder whose shares remain registered in his name are entitled to file oppression-mismanagement petition under Sections 241-242 and transmission, as NCLT has summary jurisdiction to prima facie assess disputed gift deed validity despite non-effectuation.

JUDGEMENT

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

The present Appeal is filed under Section 421 of the Companies Act, 2013 assailing an impugned interim order dated 13.02.2026 passed by the Ld. National Company Law Tribunal, New Delhi in CP No. 49/241-242/PB/2023, whereby it is held that Respondent Nos. 1 and 2 (i.e.Petitioner Nos. 1 and 2 before the NCLT) are “entitled to transmission” of 55,97,768 equity shares standing in the name of Late Shri KJS Ahluwalia.

2. The impugned order arises out of a Company Petition filed under Sections 241–242 of the Companies Act, 2013 alleging oppression and mismanagement in M/s KJS Cement (I) Limited. The Petitioners before the Ld. NCLT, Delhi sought to invoke jurisdiction under Section 244 by claiming eligibility on the footing of an asserted 31.84% shareholding, including (i) 21% shares admittedly standing in the name of Late Shri KJS Ahluwalia, and (ii) additional shares allegedly routed through Respondent Nos. 3–10 companies. It is argued the claim of eligibility itself was fundamentally flawed, in as much as on the date of filing of the Petition, Petitioner Nos. 1 and 2 were not reflected as members in the Register of Members or in the records of the Depository in respect of the said 21% shareholding, nor had any valid transmission been effected in their favour. Further, no waiver application under the proviso to Section 244 was moved or allowed.

3. The Appellant raised a preliminary objections of maintainability on the grounds inter alia:

a. the Petitioners did not satisfy the mandatory threshold under Section 244 at the time of filing;

b. the alleged authorization of Respondent Nos. 3–10 Companies was defective and based on fabricated/back-dated Board Resolutions;

c. the legal heirs had not obtained valid transmission of shares; d. the shares in question were held in dematerialised form, and under law, transmission must be effected through the Depository Participant and not by direction to the Company;

e. the title to the shares was seriously disputed in view of a Gift Deed

4. The Appellant had raised an objection of threshold saying the Petition was not maintainable ab initio, since the Respondents did not satisfy the mandatory eligibility criteria under Section 244 on the date of institution. Crucially, Respondents Nos. 1 and 2 were not members on the face of the record, in respect of the 55,97,768 shares (standing in the deceased shareholder’s name), and no waiver application under the proviso to Section 244 was moved. It was argued the Ld. NCLT, however, erroneously conflated “entitlement to transmission” with “existing membership”, thereby directing transmission of 21% shareholding, effectively manufactured eligibility post-filing. The Tribunal failed to appreciate jurisdiction cannot be assumed on the basis of a hypothetical or future transmission, and eligibility cannot be created through an interlocutory direction.

5. It is further urged the reliance placed on decision reported as 1990 (1) SCC 536, titled “M/s World Wide Agencies Ltd. v. Margarat T. Desor” was misplaced, as the said judgment did not involve rival title claims or a subsisting registered instrument transferring title. It was argued the Gift Deed dated 27.09.2017 stood executed during the lifetime of Late Shri KJS Ahluwalia and was never declared void or invalid by any competent court. The Ld. NCLT, without setting aside the said Gift Deed, proceeded to grant transmission in favour of the alleged legal heirs, thereby indirectly nullifying a registered instrument without trial or adjudication.

6. It was ar