Supreme Court Restores NCLT Order, Holds Tribunal Had Jurisdiction to Set Aside Fraudulent Share Transfer and Find Oppression

A bench of Justice Dipankar Datta and Justice K. Vinod Chandran heard appeals arising from two NCLAT orders which had set aside the National Company Law Tribunal’s judgment that had nullified a purported gift of shares and reinstated the petitioner as director and member. The appeals challenged whether the NCLT had jurisdiction to adjudicate the validity of a gift deed and related allegations of fraud, coercion and mismanagement under Sections 397–399 of the Companies Act, 1956.

The Court allowed the civil appeals, set aside the common NCLAT judgment and restored the NCLT order dated 4.9.2018. It held that the NCLT possessed jurisdiction to adjudicate matters incidental and integral to complaints of oppression and mismanagement, including the validity of the gift deed and share transfers, and concluded that the appellant had proved oppression and mismanagement. The Court found the gift deed and the share transfer forms unreliable and the board meetings of 15.12.2010 and 17.12.2010 invalid for want of notice and quorum, and therefore upheld the NCLT’s directions restoring the appellant as Executive Director and declaring her ownership of 39,500 shares. The Court, in its reasoning, observed: The Court further noted that “probity is lacking which is prejudicial to the appellant.”

Background The dispute concerned Satori Global Ltd. (formerly Sargam Exim Pvt. Ltd.), incorporated in 2006. The appellant, Mrs. Shailja Krishna, initially held 98% of the issued shares. In December 2010 she was said to have resigned as director and, on 17.12.2010, executed a gift deed purportedly transferring her entire shareholding to her mother‑in‑law. Subsequent board resolutions converted the company into a public company and fresh share entries were shown in the transferee’s name. The appellant alleged coercion, forgery and fraudulent manipulation of share transfer forms and lodged police complaints; FIRs were registered. She filed a company petition under Sections 397 & 398 of the Companies Act, 1956 before the Company Law Board/NCLT seeking relief for oppression and rectification of the register. The NCLT found overwriting and manipulation in transfer documents, held the gift deed and transfers void, restored the appellant as Executive Director and ordered return of share certificates. On appeal the NCLAT set aside the NCLT, holding that questions of fraud and forgery required a civil trial and that NCLT lacked jurisdiction in exercise of its summary powers.

The Supreme Court reviewed precedent including Radharamanan v. Chandrasekara Raja, Kamal Kumar Dutta v. Ruby General Hospital Ltd., and Tata Consultancy Services v. Cyrus Investments and held that tribunals empowered under Sections 397–398 must be able to grant reliefs incidental to ending oppression and mismanagement. Applying established tests for oppression, the Court found a series of acts—invalid board meetings for want of notice and quorum, suspect transfer documents, and contradictory conduct by respondents—amounted to oppression and mismanagement. While the Court set aside the transfers and board actions, it declined to adjudicate the separate question whether the Registrar of Companies validly extended transfer periods because the RoC was not a party. The appeals were allowed and the NCLT order restored; parties were directed to bear their own costs.

Case Details: Case No.: Civil Appeal Nos. 6377-6378 of 2023 (2025 INSC 1065) Case Title: MRS. SHAILJA KRISHNA … APPELLANT VS. SATORI GLOBAL LIMITED & ORS. Appearances: For the Petitioner(s): Mr. Dhruv Mehta (Senior Counsel) For the Respondent(s): Mr. Niranjan Reddy (Senior Counsel) for Satori Global Limited; Mr. Gopal Sankarnarayanan (Senior Counsel) for the fourth respondent.