NCLT Rejects Appellant’s Claim for Relief Under Sections 58 & 59 as He Failed to Prove Payment Towards Share Subscription

Case Details: K. Narayanan v. Kerala Furniture Consortium (P) Ltd. - [2025] 172 taxmann.com 673 (NCLT-Kochi)

Judiciary and Counsel Details

• Ramalingam Sudhakar, President & Ravichandran Ramasamy, Technical Member
• Yogindunath S., PCS for the Appellant.
• Cyriac Tom for the Respondent.

Facts of the Case

In the instant case, the appellant was appointed as Resident Director in the respondent company. The appellant claimed that he had invested a certain amount in the company and sought relief under sections 58 and 59 of the Companies Act, 2013.

It was noted that the appellant’s claim for relief under sections 58 and 59 was contradictory. The allegation pertained to failure to issue shares after receipt of consideration of money by the appellant and which did not fall in the ambit of transfer or transmission or rectification of share register due to any omission or default of the company.

Further, it was noted that the appellant had failed to provide concrete evidence of any payment towards a share subscription, and the respondent’s audited financial statements/bank accounts did not reflect any investment made by the appellant.

NCLT Held

The NCLT observed that there was no evidence of payment of consideration towards share subscription. Furthermore, the appellant was appointed as a Resident Director based on administrative experience rather than being part of a cluster of manufacturers, which was the primary requirement for being a shareholder in the respondent company.

The NCLT held that salary payments for the appellant’s role as Project Coordinator under the National Innovation Council were handled separately, and no evidence supported the claim of adjustment towards share subscription.

Further, the NCLT held that the appeal appeared to be a disguised attempt to recover money, and such recovery measures should be pursued through appropriate civil remedies rather than misusing a forum designated for relief under the Companies Act.

Thus, due to a lack of substantiated evidence and contradictions in the appellant’s claims, the company appeal filed by the appellant was liable to be dismissed as not maintainable.

List of Cases Reviewed

• Ammonia Supplies Corpn. (P) Ltd. v. Modern Plastic Containers (P) Ltd., ((1998) 7 SCC 105)
• IFB Agro Industries Ltd. v. SICGIL India Ltd., (2023) 4 SCC 209
• Chalasani Udaya Shankar and others v. M/s. Lexus Technologies Pvt. Ltd. and Others (Civil Appeal Nos. 5735-5736 of 2023) [Para 23] ; followed.

List of Cases Referred to

• Ammonia Supplies Corpn. (P) Ltd. v. Modern Plastic Containers (P) Ltd. (1998) 7 SCC 105 (para 20)
• IFB Agro Industries Ltd. v. SICGIL India Ltd. (2023) 4 SCC 209 (para 21).