December 24, 2025 : The National Company Law Appellate Tribunal, Chennai Bench, has held that the power under Section 59 of the Companies Act, 2013 is strictly limited to rectification of errors in the register of members and does not extend to directing a company to issue fresh or valid share certificates. Dismissing an appeal filed by a former employee, the appellate tribunal affirmed the order of the National Company Law Tribunal, Hyderabad Bench, which had rejected the petition as not maintainable.
The appeal was filed by Mohan Ram Prasad Devineni, a former employee of Biochemical & Synthetic Products Private Limited, who claimed entitlement to 12.5 percent equity in the company as sweat equity under his employment agreement. Alleging that the company failed to recognise his shareholding, Devineni sought rectification of the register of members under Section 59 along with a direction to issue share certificates in his favour.
Before the NCLT, Devineni argued that the company’s refusal to issue share certificates effectively denied him ownership rights. He relied on Rule 70(5) of the NCLT Rules, 2016, and also pointed to the withdrawal of earlier arbitration proceedings to contend that his petition under Section 59 was maintainable.
The NCLT, Hyderabad, however, rejected the plea, holding that the reliefs sought fell outside the scope of Section 59. Challenging this decision, Devineni approached the appellate tribunal.
Upholding the NCLT’s reasoning, the NCLAT Bench comprising Justice Sharad Kumar Sharma and Jatindranath Swain observed that Section 59 is “exclusively limited to the rectification of the register of members” and presupposes the existence of a validly issued share certificate. The provision, the Bench held, only permits correction of an existing entry or omission and cannot be used to create new rights or compel issuance of share certificates in the first instance.
The appellate tribunal noted that Devineni himself had admitted that the share certificate relied upon by him was defective, incomplete, unnumbered, and lacking essential particulars. In the absence of a valid share certificate, the Bench held that no proceedings for rectification could be sustained under Section 59.
Rejecting the reliance on Rule 70(5) of the NCLT Rules, the tribunal clarified that the rule is procedural and cannot enlarge or override the substantive jurisdiction conferred by Section 59 of the Companies Act. It further held that withdrawal of arbitration proceedings could not, by itself, vest jurisdiction in the NCLT to grant reliefs falling outside the statutory framework.
Concluding that the dispute essentially related to issuance of a valid share certificate and involved disputed questions of fact, the NCLAT held that the petition under Section 59 was misconceived. Finding no error in the order of the NCLT, Hyderabad, the appellate tribunal dismissed the appeal and affirmed that the proceedings were rightly rejected as not maintainable.
Cause Title: Mohan Ram Prasad Devineni v. Biochemical & Synthetic Products Private Limited and Anr.
Case Number: Company Appeal (AT) (CH) No. 58 of 2025
