Refusal of registration and appeal against refusal
Section 58 of the Companies Act, 2013 deals with refusal of registration and appeal against refusal. 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 t The Act came into force on 01 Apr 2014.
(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 transferor and the transferee or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.
(2) Without prejudice to sub-section (1), the securities or other interest of any member in a public company shall be freely transferable:
Provided 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.
(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.
(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--
(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
(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.
Section 58, The Companies Act, 2013 (Act 18 of 2013).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Mackintosh Burn Ltd. Director Deputy General Manager (finance) vs Sarkar and Chowdhury Enterprises PVT Ltd. Managing Director
Court's Decision & Legal Precedent
Although s.58(2) makes securities in a public company freely transferable, s.58(4) permits a public company to refuse registration of a transfer for 'sufficient cause', and that expression is not confined to cases where the transfer is illegal or otherwise impermissible in law: refusal may rest on a violation of law or on any other sufficient cause, and a conflict of interest (here, the transferee being controlled by a business competitor) can in a given situation be such a cause. Whether the cause shown is sufficient is for the Tribunal to decide on the facts, the aggrieved party having a right of appeal.
On this section: Reads s.58(4) as a limited restriction on the free transferability declared by s.58(2), settles the meaning of 'without sufficient cause' in s.58(4), and remits the refusal to the Tribunal to decide afresh whether the company's grounds were sufficient.
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Dr.s.krishna Sarma vs Kanthimathy Plantations Pvt.ltd.
Court's Decision & Legal Precedent
A private company's article conferring 'absolute and uncontrolled discretion' on the Board to decline registration of a transfer is a residuary power that applies to existing members as well as strangers, but it must be exercised subject to the statutory appellate provision and bona fide in the paramount interest of the company. Where the company gives reasons for refusal, the appellate forum is bound to examine those reasons on their merits and decide whether the power was exercised bona fide and on a right principle; it cannot simply endorse the Board's view in a one-line order.
On this section: Decided under s.111 of the Companies Act, 1956, the predecessor of s.58, and fixes the standard of scrutiny the appellate forum must apply to a private company's refusal to register a transfer, the same scrutiny now carried by s.58(1) and s.58(3).
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
2 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 2 instruments name this provision in its title or its text without being made under it.
Questions about Section 58
What have the courts held on Section 58 of the Companies Act?
Mackintosh Burn Ltd. Director Deputy General Manager (finance) vs Sarkar and Chowdhury Enterprises PVT Ltd. Managing Director (27 Mar 2018) is the leading judgment on this section among those set out below: Reads s.58(4) as a limited restriction on the free transferability declared by s.58(2), settles the meaning of 'without sufficient cause' in s.58(4), and remits the refusal to the Tribunal to decide afresh whether the company's grounds were sufficient. Another 1 judgment on this section is set out below, 1 of them from the Supreme Court. They run from 2010 to 2018.
How do I find court cases under Section 58 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 58, section 58 Companies Act, section 58 of the Companies Act. People searching for it also type companies act cap 58a and companies act 2013 section 58. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Mackintosh Burn Ltd. Director Deputy General Manager (finance) vs Sarkar and Chowdhury Enterprises PVT Ltd. Managing Director (27 Mar 2018).
What should I read with Section 58 of the Companies Act, and has it changed?
The rules and notifications made under it are where it actually bites, and there are 2: most recently S.O. 325(E)_S.O. 325(E)-Commencement Notification dt 22.01.2021 (2021), then Commencement notification (2018).
When did Section 58 of the Companies Act come into force?
Section 58 of the Companies Act, cited as Companies Act 58, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.