Kerala High Court set aside NCLT’s refusal to implead transferees in a share transfer dispute, holding that their presence was essential for fair adjudication under principles of natural justice.
Kerala HC Sets Aside NCLT Order Denying Impleadment
The Kerala High Court quashed an NCLT order rejecting the application of alleged share transferees to be impleaded in proceedings concerning a disputed transfer. The Court held that the transferees’ rights were directly affected, and their exclusion from the proceeding violated the principles of natural justice and effective adjudication.
The dispute arose over conflicting claims regarding the validity of share transfer documents, with signatures under contest. The NCLT had previously denied impleadment, treating the transferees as mere claimants without legal standing. The High Court rejected this view, stating that where title to shares is contested, persons claiming ownership must be heard to ensure a complete and just determination.
“Adjudication on share entitlement without noticing competing claims would result in grave injustice.”
This decision underscores the importance of inclusive proceedings in corporate disputes involving ownership. Practitioners should ensure that all stakeholders with a tangible interest in shares or corporate actions are formally brought on record, especially where documentation is disputed. The ruling aligns with the broader equitable framework under the Companies Act, 2013.