Company Must Approach ROC First Before Coming To NCLT For Rectification Of Register of Members: NCLT Kochi

The National Company Law Tribunal (NCLT) at Kochi, has held that a company cannot bypass the Registrar of Companies (ROC) and directly approach the tribunal to correct its shareholding records under the Companies Act, 2013, ruling that such attempts undermine statutory disclosures and penal provisions.

Dismissing an appeal filed by Nuventure Connect Private Limited, the coram of Judicial Member Vinay Goel observed,

"The aggrieved person or a shareholder would be able to file an appeal against any impugned decision of the ROC or the Company itself. Whereas the Company can file an appeal only against the orders of ROC. So, if the company intends to rectify its register, first it will rectify its own records and then submit the same before ROC and in case ROC declines to entertain such rectification or modification, the Company can approach NCLT"

The appeal was filed under Section 59 read with Section 88 of the Companies Act. The company sought rectification of its Register of Members to record Thankam Ancheri Rappai as the holder of 3,000 equity shares of Rs 10 each.

Nuventure Connect claimed that the shares were transferred by its promoter-director, Tinu Pulinthara Cleatus, through a Share Transfer Deed. It stated that the board approved the transfer and issued a share certificate. However, it admitted that the transferee's name was never entered in the Register of Members.

Opposing the plea, the Registrar of Companies pointed out that official filings continued to show the shares in the names of the original promoters. There was no record of Rappai as a member.

The ROC also questioned the alleged consideration for the transfer. It submitted that the amount of Rs 30 thousand was paid nearly eight months before the stated transfer date. Several transactions followed, making it unclear whether the payment was linked to the share transfer at all.

On examining the record, the tribunal found serious inconsistencies in Form SH-4, the statutory share transfer form. It noted that the date of execution appeared to have been altered. While the original date seemed to be January 30, 2016, it was later changed to April 30, 2019.

In view of this, the NCLT held that the Limitation Act would apply. It observed that the aggrieved party ought to have approached the tribunal within three years.

It further held that even in private companies where the transferor and transferee are not in dispute, it cannot mechanically order rectification. The NCLT must independently examine the genuineness of the documents placed before it.

Referring to Sections 88, 92 and 94 of the Companies Act, the bench emphasized that maintaining the Register of Members and making correct disclosures in annual returns is a statutory duty of the company. Failure to comply attracts penalties.

The tribunal also rejected the company's attempt to seek retrospective rectification from the date of the alleged transfer. It held that such relief is not permissible under Section 59.

The bench observed that the company had approached the Tribunal “to circumvent the provisions of Section 92 and to bypass the penal provisions of the Companies Act, 2013,” adding that “such a type of practice is liable to be snubbed.”

Ultimately, the NCLT noted that the company had failed to show that it had first approached the ROC seeking rectification or that the ROC had refused such a request. In the absence of this mandatory step, the appeal was not maintainable.

Accordingly, the tribunal dismissed the appeal.