Section 58 of CA 2013 : Section 58: Refusal Of Registration And Appeal Against Refusal

Explanation using Example

Imagine Sarah owns shares in a private company, XYZ Pvt. Ltd. She decides to sell her shares to John. They execute a share transfer instrument, and John submits this to XYZ Pvt. Ltd. for registration of the transfer. However, the company refuses to register the transfer citing a restriction in its articles of association and sends a notice of refusal to Sarah and John within 30 days, as required by Section 58(1) of the Companies Act, 2013.

John, unhappy with the refusal, decides to appeal against the company's decision. He files an appeal to the National Company Law Tribunal (NCLT) within 30 days of receiving the refusal notice, in line with Section 58(3).

The NCLT hears the case and finds that the company's refusal was unjustified. It orders XYZ Pvt. Ltd. to register the transfer of shares from Sarah to John as per Section 58(5)(a) and to do so within 10 days of receiving the order.

If XYZ Pvt. Ltd. still refuses to comply with the NCLT's order, the responsible person within the company could face imprisonment and fines as stipulated under Section 58(6) for not adhering to the tribunal's decision.