On 2 September 2025, the Supreme Court delivered judgment in appeals arising from orders of the NCLT, Allahabad, and the NCLAT, New Delhi, concerning a family dispute over control of a paper trading company incorporated in 2006.
The Appellant, one of the original promoters and majority shareholder, alleged that her resignation and transfer of shares to her mother-in-law in December 2010 were procured by coercion and fraud. The NCLT (04.09.2018) accepted her claim, holding the board meetings invalid for lack of notice and quorum, declaring the share transfers and gift deed void, and restoring her as Executive Director and shareholder. The Tribunal also held that the Registrar of Companies had no authority to validate defective transfer forms.On appeal, the NCLAT (02.06.2023) reversed the decision, ruling that questions of fraud, coercion, and validity of the gift deed fell within the exclusive jurisdiction of civil courts under the Specific Relief Act, 1963, and were outside the scope of the NCLT’s summary jurisdiction.
Before the Supreme Court, the Appellant contended that her petition was maintainable as fraud could not extinguish membership, and that the NCLT’s wide powers under Section 242 of the Companies Act, 2013 extended to adjudicating such disputes. The Respondents argued that the Appellant had no locus under Section 399 of the 1956 Act, and that only a civil court could examine the gift deed and transfer of shares.The Supreme Court held that the petition was maintainable since the Appellant continued to be a member, and that the NCLT had jurisdiction to adjudicate issues central to oppression and mismanagement claims. It found that the gift deed contravened the Articles of Association, the transfer forms bore signs of manipulation, and the board meetings were invalid. Holding that the NCLAT erred in setting aside the NCLT’s findings, the Court restored the NCLT’s order, reinstating the Appellant as Executive Director and shareholder, set aside the NCLAT judgment, and directed the parties to bear their own costs.
Appearances:
For Appellant: Senior Advocate Dhruv Mehta and AOR Ankur Mittal.
For Respondents: Senior Advocates S. Niranjan Reddy, Gopal Sankaranarayanan, AORs Ashutosh Jha, Sansriti Pathak, Advocates Ashutosh Gupta, Gaurav Rana, Oleander D Singh, Shivam Tomar, Meha Ashok Agarwal, Shourya Dasgupta, Trisha Chandra, and Aman Prasad.
