Rectification Of Register Cannot Be Granted Without Proof Of Share Ownership: NCLT Ahmedabad Dismisses Symphony’s Appeal Over Alleged Fraudulent Transfers
Pranav B Prem
The National Company Law Tribunal (NCLT), Ahmedabad, has held that a company cannot seek rectification of its register of members to undo fraudulent share transfers unless it can prove ownership by producing the original shareholders’ titles or any supporting documentary evidence.
The Bench of Judicial Member Chitra Hankare and Technical Member V. G. Venkata Chalapathy, in an order dated December 3, 2025, dismissed the company appeal filed by Symphony Limited seeking restoration of 50,500 equity shares belonging to 14 original shareholders that were allegedly transferred fraudulently between March 2010 and March 2016 by its Registrar and Share Transfer Agent, Sharepro Services India Pvt. Ltd. The company had asserted that the RTA had illicitly transferred shares to unrelated individuals and siphoned off dividend proceeds.
The tribunal noted that while Symphony relied on a SEBI investigation report and an audit conducted by Ernst & Young (EY), it failed to produce any documentary proof of share ownership such as physical certificates, registers, or transaction records. It also recorded that none of the original shareholders appeared before the tribunal to contest the alleged transfers. The order stated that “the application has been submitted merely to regularise the list which is not admissible,” holding that rectification cannot be granted in the absence of evidence demonstrating title.
Symphony had further contended that SEBI’s ex-parte interim order dated March 22, 2016 had recorded prima facie findings of “fraudulent practices,” including issuing and transferring shares to persons connected to the RTA. In response, the company had commissioned EY to examine transactions from March 2010 to March 2016, which allegedly confirmed fraudulent transfers and identified 15 suspicious transactions. Symphony thereafter sought deletion of the names of the transferees and reinstatement of the names of the original shareholders.
However, the tribunal underscored that Symphony had not made Sharepro Services a party to the proceedings despite the allegations centering entirely on the RTA's role. Upon examining the Articles of Association, the tribunal observed that the company could not evade responsibility for maintaining the register of members, noting that “the provision contained in the Articles of Association makes the onus of any dereliction or such fraud stated to have been committed by the third party on the applicant.” It further observed that Symphony did not furnish any board-approved resolution authorising the share transfers and did not show any loss arising from the alleged transactions in its financial statements for FY 2021–2022 and 2022–2023.
The tribunal recorded that Symphony had also not provided the status of the FIR it had lodged before the Economic Offences Wing. Additionally, the tribunal found that the company could not substantiate its allegation that bonus shares would have aggregated to 34,000 shares for the original shareholders had the alleged fraudulent activities not occurred. The tribunal also noted that the reply filed by SEBI did not exonerate Sharepro Services but did not confirm the applicant’s ownership claims either.
After evaluating the evidence, the tribunal concluded that the company was seeking rectification without establishing title to the disputed shares. It noted that it cannot regularise a transaction where the foundation of ownership remains unproven. It observed that “this court does have the power to regularise a fraudulent transaction as a parallel entity which had an agency arrangement has committed the fraud and the applicant may have to only make good if the fraudulent proceeds of the crime is not realised to the respondents if any claim is made,” but emphasised that the exercise of such power requires supporting material, which was absent.
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Since Symphony Limited could not establish ownership of the said shares and no original shareholders appeared or produced proofs supporting their claims, the tribunal dismissed the appeal. The order directed that a copy of its decision be forwarded to the Economic Offences Wing to examine the company’s role in the transactions. It further instructed the Registrar of Companies to investigate Symphony’s registers for the period from 2014 to 2016 and take appropriate action in case of violations.
Appearance
For Applicant: Advocate Sachin Vasavada
For Respondent: Advocate Sunny Gohil for Sutar, Advocate Dharmishta Raval for SEBI
Cause Title: Symphony Limited v Swapnil Suryakant Sutar and Ors
Case No: Appeal/32/(AHM)2023
Coram: Judicial Member Chitra Hankare, Technical Member V. G. Venkata Chalapathy
