Civil Courts Have No Jurisdiction Over Share Register Rectification Despite Pending Civil Suits: NCLAT Reiterates

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has recently reiterated that civil courts have no jurisdiction over disputes relating to rectification of a company's register of members, holding that such powers vest exclusively with the National Company Law Tribunal under the Companies Act, 2013.

A bench of Judicial Member Justice Yogesh Khanna and Technical Member Indevar Pandey held that the NCLT had taken an incorrect view by refusing to decide a rectification petition merely because related issues were pending before a civil court.

The Appellate Tribunal observed, “Thus considering Girish Kumar Sanghi (Supra) we are in no doubt it is only the Ld. NCLT who also has the power to look into the disputes interse the parties qua rectification of register and the impugned order so far as it says such issues fall within the jurisdiction of Civil Court and cannot be looked into by the Ld. NCLT till the Ld. Trial Court takes a view in this regard, to our mind is wholly an incorrect approach”

The dispute is between Shiv Raj Singh and Kempty Konstructions Pvt. Ltd. Singh alleged that his chartered accountant, Kamal Jain, misused his position and unlawfully transferred 998 out of Singh's 1,000 shares to himself and others. He said the transfers were made without statutory compliance, based on photocopies of an unproven memorandum of understanding, and by misuse of his digital signature, resulting in loss of control over the company.

The NCLT had earlier declined relief, noting that the case involved disputed facts, allegations of fraud, and questions about the authenticity of documents. Since several of these issues were already pending before a trial court pursuant to directions of the Delhi High Court, the tribunal held that those questions needed to be decided first before rectification could be considered.

The Appellate Tribunal disagreed. Referring to Section 430 of the Companies Act, it reiterated that civil courts are expressly barred from matters the tribunal is empowered to decide. The bench said, “Thus we set aside the impugned order on this ground alone and remand the matter to the Ld. NCLT requesting it to decide it on merits without waiting for judgement of any Civil Court per Section 430 of the Companies Act, 2013.”

Accordingly, the NCLAT directed the NCLT to hear the rectification petition afresh and decide it on its merits, without waiting for the outcome of any civil court proceedings.

Case Title: Shiv Raj Singh v. Kempty Konstructions Pvt. Ltd and Ors Case Number

Citation: 2026 LLBiz NCLAT 8

Case Number: Company Appeal (AT) No.403/2024

For the Appellant: Senior Advocate Krishnendu Dutta with Advocates Rakesh Wadhwa, Esha Kadian, Priyanshi Agrawal,

For Respondent: CA Kamal Jain, Advocate Sarthak Jain.