Tribunal Clarifies Jurisdiction Limitations, Directing Disputes Over Share Certificates to Civil Courts
In a significant judgment delivered on December 23, 2025, the National Company Law Appellate Tribunal (NCLAT) in Chennai dismissed an appeal by Mohan Ram Prasad Devineni against M/s. Biochemical & Synthetic Products Private Limited. The appellant sought the issuance of valid share certificates under Section 59 of the Companies Act, 2013, which the Tribunal found to be beyond the scope of the provision.
The bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member), underscored that Section 59 is strictly confined to the rectification of the register of members, and does not extend to the issuance of share certificates. The Tribunal reaffirmed that the issuance of share certificates must be pursued through civil courts, as it is not a relief covered under the Companies Act, thereby not subject to the jurisdictional bar of Section 430.
The appellant's application was originally dismissed by the NCLT Hyderabad on grounds of non-maintainability, a decision the NCLAT upheld, emphasizing the necessity of possessing a valid share certificate before invoking Section 59. The Tribunal noted that the appellant had withdrawn from arbitration proceedings concerning the same issue, which adversely affected the maintainability of his case under Section 59.
Furthermore, the NCLAT highlighted the procedural requirements under the Companies (Share Capital and Debentures) Rules, 2014, which were not met by the share certificate in question. The Tribunal reiterated that without adherence to these mandatory provisions, a share certificate cannot be deemed valid.
This judgment delineates the boundaries of Section 59, directing parties with similar disputes towards arbitration or civil litigation, where comprehensive fact-finding is possible. The Tribunal's decision underscores the necessity for companies and stakeholders to adhere strictly to legislative frameworks governing share issuance and rectification.
Bottom Line:
Section 59 of the Companies Act, 2013 is limited to rectification of the register of members and cannot be invoked for issuance of a valid share certificate. The absence of a validly executed share certificate precludes an applicant from seeking rectification under Section 59.
Statutory provision(s): Companies Act, 2013 Section 59, Section 430; Companies (Share Capital and Debentures) Rules, 2014 Rule 8; Arbitration and Conciliation Act, 1996 Sections 11(5), 11(9), 11(12)(a).
