Section 58: Refusal of registration and appeal against refusal
This section is for regulating the refusal of registration of securities transfers and transmissions, and the appeal process against such refusals.
Penalty
(6) If a person contravenes the order of the Tribunal under this section, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
The section, clause by clause
What the section says
In plain terms
(1)If a private company limited by shares refuses, whether in pursuance of any power of the company under its articles or otherwise, to register the transfer of, or the transmission by operation of law of the right to, any securities or interest of a member in the company, it shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transfer or and the transferee or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.
If a private company limited by shares refuses to register a transfer of securities, it must send a notice of refusal to the transferor and transferee within 30 days, giving reasons for the refusal.
(2)Without prejudice to sub-section (1), the securities or other interest of any member in a public company shall be freely transferable:
Securities in a public company are freely transferable, and any contract related to transferring securities is enforceable.
provisoProvided that any contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract.
(3)The transferee may appeal to the Tribunal against the refusal within a period of thirty days from the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, was delivered to the company.
A transferee can appeal to the Tribunal against a refusal to register a transfer within 30 days of receiving the notice of refusal, or within 60 days if no notice was sent.
(4)If a public company without sufficient cause refuses to register the transfer of securities within a period of thirty days from the date on which the instrument of transfer or the intimation of transmission, as the case may be, is delivered to the company, the transferee may, within a period of sixty days of such refusal or where no intimation has been received from the company, within ninety days of the delivery of the instrument of transfer or intimation of transmission, appeal to the Tribunal.
If a public company refuses to register a transfer without sufficient cause, the transferee can appeal to the Tribunal within 60 days of the refusal, or within 90 days if no intimation was received.
(5)The Tribunal, while dealing with an appeal made under sub-section (3) or sub-section (4), may, after hearing the parties, either dismiss the appeal, or by order—
The Tribunal can dismiss an appeal, order the company to register the transfer within 10 days, or order rectification of the register and payment of damages.
(5)(a)direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within a period of ten days of the receipt of the order; or
(5)(b)direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved.
(6)If a person contravenes the order of the Tribunal under this section, he shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to three years and with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
If someone contravenes a Tribunal order under this section, they can be imprisoned for 1-3 years and fined 1-5 lakh rupees.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by Act 29 of 2020, s. 9, for sub-section (6) (w.e.f. 21-12-2020).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.