Titus Babu vs Sintex Industries Limited

(Arising out of Impugned Order dated 06.03.2026 passed by National Company Law Tribunal, Division Bench, Court - 1, Ahmedabad in Comp. Appeal No. 31 of 2025) IN THE MATTER OF: Titus Babu, Illathumepurathu Bungalow, Venmony P 0, Alappuzha District, PIN - 689509, Kerala ... Appellant

VERSUS

Sintex Industries Limited, KALOL, Lower Ground Floor Acropolis Mall, Nr. Thaltej Metro Station Entry Gate, Thaltej, S.G Highway, Ahmedabad - 380054, Gujarat, India ... Respondent

Present: For Appellant Mr. George Mathai, Advocate.

For Respondent Mr. Raheel Patel, Mr. Himanshu Satija, Mr. Anshul Rao, Mr. Suyash Shrivastava, Advocates.

JUDGEMENT

( 21 .08.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal is filed by the Appellant i.e., Titus Babu under Section

421 of the Companies Act, 2013 ("Companies Act 2013") arising out of

Impugned Order dated 06.03.2026 passed by the National Company Law

Page 1 of 25 Tribunal, ("The Tribunal") Bench Court -1, Ahmedabad in Comp. Appeal No.

31 of 2025.

Sintex Industries Limited (SIL), who is the Corporate Debtor, is the

Respondent herein.

2. The Appellant submitted that he had purchased 1,35,000 equity shares of

SIL during the period from 31 October 2017 to 30 January 2023, prior to the

delisting of the Company's equity shares on 30 March 2023 pursuant to the capital

reduction process undertaken under the approved Resolution Plan. The Appellant

stated that upon discovering that his entire shareholding had been cancelled, he

immediately addressed an email dated 10 April 2023 to SIL seeking clarification

regarding the cancellation of his shares, to which SIL responded on 11 April 2023

confirming that the said shares stood cancelled. The Appellant further contended

that he lodged a complaint before his Depository Participant, Geojit, on 31 March

2023, and eventually received a reply on 11 June 2024 stating that the cancellation

of his 1,35,000 shares was a consequence of the capital reduction process.

3. The Appellant submitted that, with a view to protecting his legal rights, he

approached several statutory and regulatory authorities including NSDL, NSE

and RBI. The Appellant stated that NSDL, by its communication dated 9 August

2024, advised him to approach SIL and its Registrar and Transfer Agent for

further clarification. The Appellant contended that NSE, by its reply dated 3 April

2023, advised him to approach the Tribunal, whereas RBI, by its communication

dated 19 June 2024, directed him to seek relief before SEBI. The Appellant

Page 2 of 25 further submitted that SIL, through its communication dated 13 June 2024,

reiterated that his 1,35,000 equity shares had been cancelled. Thereafter, the

Appellant filed a complaint on the Share Samadhan Portal on 5 August 2024 and

even became a Gold Member by paying the prescribed membership fee. However,

the said complaint was closed on 4 November 2025 solely on the ground that SIL

had already been delisted pursuant to the Resolution Plan. The Appellant further

stated that he also lodged complaints before the SEBI SCORES and SMART

ODR Portal on 23 October 2025, but was merely advised to approach the

Tribunal, thereby leaving his grievance unresolved despite exhausting every

available administrative remedy.

4. The Appellant contended that despite making repeated representations

before various authorities, none of them discharged their statutory obligation to

fairly resolve the dispute concerning the cancellation of his shares and his

membership rights. The Appellant stated that, having exhausted all alternative

remedies, he filed Company Appeal No. 31 of 2025 before the Tribunal, , seeking

recognition and enforcement of his rights as a Member of SIL since 2017. The

Appellant submitted that the Tribunal, by the impugned order dated 06.03.2026,

dismissed the appeal as not maintainable and rejected all the reliefs sought

without properly examining the statutory rights asserted by the Appellant. Being

aggrieved by the said order, the Appellant has preferred the present Appeal before

this Appellate Tribunal.

Page 3 of 25

5. The Appellant submitted that he has been a Member of SIL since the year

2017 and not merely a shareholder. The Appellant contended that this distinction

between a "Member" and a "Shareholder" is fundamental to the controversy

involved in the present Appeal. The Appellant stated that before the Tribunal he

had specifically pleaded that he was a Member of SIL and had reiterated the same

in his Rejoinder. However, the Tribunal failed to examine this specific contention

and erroneously proceeded on the assumption that the cancellation of the

Appellant's shares under the Resolution Plan automatically extinguished his

membership rights.

6. The Appellant submitted that the Resolution Plan approved by the Tribunal

on 10.02.2023 expressly provides in Paragraph 4(iv) that the approved Resolution

Plan shall be binding upon the Corporate Debtor, its employees, members,

creditors, guarantors and other stakeholders. The Appellant contended that since

he admittedly falls within the category of a Member, the Resolution Plan was

required to be implemented in a manner that protected and recognised his rights.

The Appellant further submitted that the Resolution Order nowhere provides that

the liquidation value of all Members of SIL stood reduced to NIL. Rather, only

the promoter group shareholders/members were assigned NIL liquidation value.

The Appellant therefore contended that the Resolution Plan can never extinguish

the rights of public Members such as the Appellant. The Appellant further stated

that although payments under the Resolution Plan were made to employees,

creditors, guarantors and other stakeholders, no payment whatsoever was made

Page 4 of 25 to the Members/ Shareholders of SIL, despite Members being specifically

recognised under Paragraph 4(iv) of the approved Resolution Plan.

7. The Appellant submitted that the list of equity shareholders as on

31.03.2023 does not conform to the approved Resolution Plan and is

consequently invalid and liable to be rejected. The Appellant further contended

that SIL deliberately used the expressions "Member" and "Shareholder"

interchangeably in the Annual Returns to justify differential treatment and to

favour a particular class of persons.

8. The Appellant submitted that, in terms of BSE Notice No. 20230303-49

and NSE Circular No. 0282/2023 dated 03.03.2023, the equity shares of SIL stood

delisted with effect from 10.03.2023. The Appellant contended that although he

acquired a substantial portion of his shares during the period 01.01.2023 to

10.03.2023, the Company submitted the shareholding pattern only up to

31.12.2022, thereby completely omitting the transactions undertaken during the

crucial period immediately preceding delisting. The Appellant stated that the

omission of these transactions resulted in his beneficial ownership never being

reflected in the Register of Members, despite his continuous status as a Member

since 2017.

9. The Appellant submitted that he has never challenged the approved

Resolution Plan. The Appellant contended that his grievance is confined solely to

the implementation of the Resolution Plan in so far as it concerns his statutory

rights as a registered Member of SIL. The Appellant further stated that the

Page 5 of 25 judgments relied upon by the Tribunal relate to challenges against approved

Resolution Plans or disputes concerning creditors, and therefore have no

application to a case involving the independent statutory rights of a Member

under the Companies Act, 2013.

10. The Appellant submitted that his rights as a registered Member have never

been extinguished. The Appellant contended that he is not seeking restoration of

an extinguished shareholding but is seeking recognition and enforcement of his

continuing membership rights arising under the Companies Act, 2013. The

Appellant further stated that the Tribunal erroneously concluded that no case of

omission from the Register of Members had been established. The Appellant

submitted that the Company deliberately omitted his name from the Register of

Members and failed to carry forward his name in the subsequent Annual Returns

despite his beneficial ownership of 1,35,000 equity shares.

11. The Appellant submitted that the Tribunal incorrectly treated the dispute as

one arising exclusively under Section 59 of the Companies Act, 2013. The

Appellant contended that he had specifically invoked Sections 2(55)(ii) & (iii),

59, 88(1)(a), 88(2), 88(3), 378B(1)(d), (e), (i), (j) & (k), 378ZB(2) and Rule 5(3)

of the Companies (Management and Administration) Rules, 2014, all of which

collectively establish the statutory rights of a Member, the obligation of the

Company to maintain a proper Register of Members, and the legal consequences

flowing from wrongful omission of a Member's name. The Appellant contended

that the Tribunal failed to examine these statutory provisions especially Section

Page 6 of 25 59 of the Companies Act, 2013 specifically provides a remedy where the name of

a person has been wrongfully omitted from the Register of Members or where

there has been a failure to record the fact that a person has become a Member.

The Appellant contended that his case squarely falls within the ambit of Section

59 of the Companies Act, 2013 since the Company either failed to properly enter

his name in the Register of Members or subsequently omitted it without sufficient

cause.

12. The Appellant further submitted that Section 2(55)(iii) of the Companies

Act, 2013 recognises as a Member every person holding shares whose name

appears as a beneficial owner in the records of the depository. The Appellant

stated that his shares were held in dematerialised form and duly reflected in the

records of the depository, thereby conferring upon him the status of a Member.

The Appellant also relied upon judicial precedents to contend that a person who

has acquired the right of membership may continue to be recognised as a Member

even if his name is not reflected in the Register maintained by the Company.

13. The Appellant submitted that Section 88 of the Companies Act, 2013

imposes a mandatory obligation upon every company to maintain a proper

Register of Members and further provides that the register maintained by the

depository shall be deemed to be the Register of Members for the purposes of the

Companies Act, 2013. The Appellant further contended that Rule 5(3) of the

Companies (Management and Administration) Rules, 2014 mandates

consequential entries in the Register of Members within seven days of any

Page 7 of 25 reduction, cancellation or reconstitution of shares. However, despite the

cancellation of the Appellant's shares pursuant to the capital reduction, the

Company neither made the necessary statutory entries nor issued any fresh shares

or compensation to the Appellant.

14. The Appellant submitted that the reliefs sought by him are not confined to

mere rectification of the Register of Members but concern the recognition,

declaration and enforcement of his statutory membership rights, which squarely

fall within the jurisdiction of the Tribunal. The Appellant further contended that

the statutory framework of the Insolvency and Bankruptcy Code, 2016 (the Code)

does not prohibit a Member from establishing his independent statutory rights

and that any interpretation resulting in the complete denial of those rights, in the

absence of an express provision in the Resolution Plan, is contrary to law.

15. The Appellant submitted that the finding of the Tribunal that no surviving

rights remained with the Appellant is legally unsustainable. The Appellant

contended that his membership rights continue to subsist and remain enforceable

notwithstanding the cancellation of the existing shareholding. The Appellant

further submitted that the finding regarding lack of jurisdiction is equally

erroneous because the present dispute extends beyond rectification and concerns

the adjudication of substantive statutory rights under the Companies Act, 2013.

Consequently, the Appellant contended that the dismissal of Company Appeal

No. 31 (AHM) of 2025 as not maintainable and the rejection of all reliefs sought

by him are arbitrary, unreasonable and contrary to the material placed on record.

Page 8 of 25

16. Concluding the arguments, the Appellant requested this Appellate Tribunal

to allow his appeal and dismiss the Impugned order.

17. Per contra, the Respondent denied all the averments made by the Appellant

as misleading and baseless. The Respondent submitted that the Appeal is entirely

misconceived, as it is premised on the erroneous belief that the Appellant

continues to enjoy enforceable rights as a shareholder and member of SIL despite

the complete extinguishment of the pre-resolution equity share capital under the

approved Resolution Plan. The Respondent contended that the entire equity share

capital comprising 59,92,49,762 equity shares stood lawfully cancelled in

accordance with the Resolution Plan approved by the Adjudicating Authority on

10 February 2023, and consequently no legal right, title or interest survived in

favour of the Appellant. It was further submitted that the Appellant's contention

is contrary to the statutory framework of the Code, particularly Sections 31 and

32A, and runs contrary to the settled principles governing corporate insolvency

resolution.

18. The Respondent submitted that the approval of the Resolution Plan under

Section 31(1) of the Code renders the Plan binding upon every stakeholder

connected with the Corporate Debtor, including shareholders, members, creditors

and guarantors. The Respondent stated that, being an erstwhile shareholder, the

Appellant cannot seek exemption from the consequences flowing from the

approved Resolution Plan, which has already attained finality and stands

Page 9 of 25 completely implemented. It was contended that the Hon'ble Supreme Court in

Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co.

Ltd.(2021)9 SCC 657 and Committee of Creditors of Essar Steel India Ltd. v.

Satish Kumar Gupta (2020)8 SCC 531 has unequivocally recognised that an

approved Resolution Plan binds every stakeholder, extinguishes all claims not

incorporated therein, and enables the Successful Resolution Applicant to acquire

the Corporate Debtor on a "clean slate." The Respondent therefore submitted that

the Appellant is precluded from reopening or questioning the legal consequences

of the approved Resolution Plan.

19. The Respondent further submitted that the Resolution Plan specifically

contemplated the cancellation of the entire existing equity share capital without

payment of any consideration by way of capital reduction, followed by the

issuance of fresh securities in accordance with the terms of the Plan. It was stated

that, upon implementation of the Resolution Plan, the Appellant's shareholding

stood completely extinguished and, with it, every consequential right arising from

such shareholding also came to an end. The Respondent contended that the

Appellant cannot claim restoration of shares, rectification of records,

compensation, or any other consequential relief, since no legal right survived after

the cancellation of the equity shares.

20. The Respondent submitted that the attempt to invoke Section 59 of the

Companies Act, 2013 is legally untenable. The Respondent contended that the

Register of Members faithfully records the cancellation of the Appellant's shares

Page 10 of 25 in accordance with the Resolution Plan and therefore discloses no error

warranting rectification. It was further submitted that the Appellant's monetary

claim of approximately Rs. 82.3 crores (claimed as approximately ₹110 crores

with interest) are wholly foreign to proceedings under Section 59 of the

Companies Act, 2013, which neither contemplates adjudication of damages nor

confers jurisdiction to award compensation.

21. The Respondent further submitted that the distinction sought to be drawn

by the Appellant between a "member" and a "shareholder" has no legal basis, as

both expressions are interchangeably as by virtue of Section 2(55) of the

Companies Act, 2013, membership is inseparably linked to ownership of shares,

while Section 88 of the Companies Act, 2013 requires maintenance of only one

Register of Members and does not envisage any independent register of

shareholders. The Respondent therefore contended that once the Appellant's

shares stood extinguished pursuant to the Resolution Plan, his status as a member

simultaneously came to an end, leaving no independent membership rights

capable of enforcement.

22. The Respondent further submitted that the present proceedings are nothing

but an indirect attempt to challenge the Resolution Plan and the Approval Order

dated 10 February 2023 after both have attained finality. It was stated that

following the approval of the Resolution Plan, the cancellation of shares was duly

implemented, the company was delisted and appropriate public disclosures were

made. The Respondent contended that if the Appellant was aggrieved by the

Page 11 of 25 approval of the Resolution Plan, the only statutory remedy available was an

appeal under Section 61 of the Code, which was required to be filed within the

prescribed limitation period. Having failed to avail the remedy provided under

the Code, the Appellant cannot now circumvent the statutory scheme by resorting

to proceedings under Section 59 of the Companies Act, 2013. Such proceedings,

it was submitted, constitute a collateral attack on a concluded insolvency

resolution and amount to a clear abuse of the judicial process, which, if permitted,

would seriously undermine the certainty and finality intended under the IBC.

23. Without prejudice to the foregoing submissions, the Respondent stated that

the Appellant is not entitled to any relief even on the merits of the case. The

Respondent submitted that the distribution mechanism prescribed under Sections

30(2)(b) and 53 of the Code makes it abundantly clear that even dissenting

financial creditors cannot receive more than the liquidation value payable to

them, whereas equity shareholders become entitled to any distribution only if

surplus assets remain after satisfying the claims of every class of creditor. It was

contended that, in the present case, the financial creditors themselves did not

recover their dues in full and the liquidation value attributable to the equity

shareholders was admittedly nil. Consequently, the cancellation of the

Appellant's shares without payment of any consideration was entirely consistent

with the scheme and object of the Code. The Respondent further submitted that,

having neither objected to the Resolution Plan during the CIRP nor challenged

the Approval Order within the statutory period, the Appellant cannot now seek to

Page 12 of 25 create a monetary claim by invoking rectification proceedings under the

Companies Act, 2013.

24. Concluding his arguments, the Respondent requested this Appellate

Tribunal to dismiss the present appeal.

Findings

25. The Appellant claims to have purchased 1,35,000 equity shares of SIL, in

tranches, between 31.10.2017 and 30.01.2023, through his demat account

maintained with Geojit Financial Services Limited.

26. We note that SIL underwent CIRP under the Code and the Resolution Plan

submitted by the Successful Resolution Applicant was approved by the NCLT,

Ahmedabad, by order dated 10.02.2023 in IA 275 of 2022 in CP (IB) No.

848/NCLT/AHM/2019, under Section 31 of the Code ("Approval Order"). Clause

6.1 of the Resolution Plan records that the existing equity shareholders would not

be paid any amount, the liquidation value of the Corporate Debtor being

inadequate to make any payment to such persons. Paragraph 4(iv) of the Approval

Order makes the Plan binding on the Corporate Debtor and its employees,

members, creditors, guarantors and other stakeholders; paragraph 4(viii) of the

approved order extinguishes, from the date of the order, all claims against the

Corporate Debtor except those provided for in the Plan.

27. We are conscious of the fact that on implementation of the Resolution Plan,

the entire pre-existing issued equity share capital of SIL i.e 59,92,49,762 equity

Page 13 of 25 shares of Re. 1/- each -- stood cancelled and extinguished without payment of

any consideration, and the shares were delisted from the BSE and the NSE in

March 2023, vide BSE Notice No. 20230303-49 and NSE Circular No.

0282/2023.

28. From pleadings before us, we note that on being informed by SIL (by

communications dated 11.04.2023 and 13.06.2024) that his shares stood

cancelled pursuant to this capital reduction, the Appellant raised the matter,

between 2023 and 2025, with the Depository Participant (Geojit), NSDL, NSE,

the RBI, and thereafter with the SEBI SCORES/SMART ODR portal and a

private grievance-redressal platform, without success. Further on 09.12.2025, the

Appellant filed Comp. Appeal No. 31 of 2025 before the NCLT, Ahmedabad,

under Section 59 of the Companies Act 2013 read with Sections 2(55), 88(1) and

378 B (1), 378 ZB (2) of the Act and Rule 5(3) of the Companies (Management

and Administration) Rules, 2014 -- praying, inter alia, for: (a) compensation of

Rs. 82.3 crore, computed as his proportionate share of the Rs. 3,651.32 crore

infused by the Resolution Applicant, Reliance Industries Limited ("RIL"); (b)

interest thereon @ 10% p.a. from 10.02.2023; (c) issuance of fresh equity shares

equivalent to his extinguished 1,35,000 shares; (d) damages for mental suffering;

and (e) a consolidated sum of approximately Rs. 110 crores.

29. We also take into consideration that SIL contested the petition by its reply

dated 20.02.2026, contending that it was not maintainable as it sought, in

substance, to reopen the approved Resolution Plan; that the extinguishment of the

Page 14 of 25 entire pre-CIRP equity capital, without consideration, was uniform and covered

the Appellant's holding; and that Section 59 of the Companies Act, 2013 does not

empower revival of extinguished share capital or an award of compensation of

the nature claimed.

30. By the Impugned Order, the Tribunal held that the omission of the

Appellant's name from the Register of Members was not "without sufficient

cause"; that the Resolution Plan, once approved under Section 31 of the Code,

bound the Appellant as a member/stakeholder; that Section 59 of the Companies

Act, 2013 did not permit revival of extinguished capital or grant of the reliefs

claimed and that the appeal was accordingly not maintainable. All reliefs were

rejected.

31. The Appellant tries to impress us with the arguments that the Tribunal erred

in law and in fact, and that principles of natural justice were violated. The

Appellant contended that paragraph 4(iv) of the Approval Order rendered the

liquidation value "NIL" only for shareholders forming part of the promoter group,

and that the Appellant, being a non-promoter Member, stands outside that

extinguishment. Reliance is placed by the Appellant on the shareholding figures

disclosed in SIL's Annual Returns for FY 2022-23 and FY 2024-25 -- showing

31+1 and 25+1 "Public Shareholders"/"Members" respectively, including 25

secured financial creditors to contend that certain persons were preferentially

retained as members/shareholders while the Appellant's rights were treated as

Page 15 of 25 extinguished, and that the terms "Shareholder" and "Member" have been used

inconsistently to SIL's advantage.

32. The Appellant also contended that the Section 59 is not confined to clerical

correction and that Section 88 of the Companies Act, 2013 casts a continuing

statutory duty on SIL to maintain an accurate Register of Members and the

proposition of the Appellant is that membership, once acquired, is not lightly

divested. Sections 378B(1)(d), (e), (i), (j), (k) and 378ZB (2) of the of the

Companies Act, 2013, and Rule 5(3) of the Companies (Management and

Administration) Rules, 2014, are invoked in support of the reliefs claimed by the

Appellant.

33. It is the case of the Appellant that the ratio of case of Committee of

Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta and Ghanashyam

Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., relied upon

by the Tribunal, concern the rights of creditors and have no bearing on a claim

founded on membership rights. The Appellant reiterated that the Appellant does

not challenge the Resolution Plan but seeks only its "execution" qua his rights as

a registered Member, and that the compensation of Rs. 82.3 crore, computed at

0.023% of the funds infused by RIL, together with interest, represents a just and

reasonable relief.

34. On the other hand, Supporting the Impugned Order, the Respondent

submitted that the Resolution Plan, having been approved under Section 31 of the

Code, is binding on the Corporate Debtor and all its stakeholders, including

Page 16 of 25 members, and that Section 238 of the Code gives it overriding effect over

anything inconsistent in the Act. The Respondent further submitted that

cancellation of the entire pre-existing equity share capital, without consideration,

was a uniform incident of the approved Plan and did not single out the Appellant;

the shareholding disclosed in the post-implementation Annual Returns pertains to

the restructured capital issued under the Plan and has no continuity with the

extinguished pre-CIRP holding.

35. The Respondent that the present appeal is a disguised attempt to reopen a

Resolution Plan that has attained finality, and that the reliefs of compensation,

interest, fresh share issuance, and damages for mental suffering all fall outside

the summary, rectificatory scope of Section 59.

36. Having heard the parties and perused the record including the Impugned

Order, the pleadings before the Tribunal, the Resolution Plan and Approval Order,

and the judgements cited, the following Issues arise for determination:

(i) Whether the omission of the Appellant's name from the Register of

Members of SIL was "without sufficient cause" within the meaning of Section

59(1) of the Companies Act 2013?

(ii) Whether the Appellant possesses any surviving membership or enforceable

right in SIL, distinct from his extinguished pre-CIRP shareholding, by virtue of

the terminology used in the Approval Order and SIL's post-implementation

Annual Returns?

Page 17 of 25

(iii) Whether Sections 2(55), 88, 378B and 378ZB of the Companies Act 2013,

Rule 5(3) of the Companies (Management and Administration) Rules, 2014,

assist the Appellant?

(iv) Whether the reliefs of compensation, interest, issuance of fresh equity

shares and damages for mental suffering are grantable in proceedings under

Section 59 of the Companies Act 2013?

(v) Whether there is any violation of natural justice or other infirmity vitiating

the Impugned Order?

37. Now we will deal all issues hereinafter:

Issue No (I) Whether the omission of the Appellant's name from the Register

of Members of SIL was "without sufficient cause" within the meaning of

Section 59(1) of the Companies Act 2013.

38. We note that Section 59 of the Companies Act, 2013 is a narrow, summary

and rectificatory provision, intended solely to correct clerical or procedural

errors, wrongful entries or omissions in the Register of Members. It is not a

substitute for a suit and cannot be invoked to adjudicate seriously disputed

questions, to revive or restore extinguished equity share capital, to compel

issuance of fresh shares pursuant to a concluded insolvency resolution, or to

award monetary compensation, interest or damages. The Register of Members

correctly reflects the extinguishment effected under the Resolution Plan, and

there is no "error" to rectify. The relief claimed by the Appellant, Rs. 82.3 crores

Page 18 of 25 (approx. Rs. 110 crores with interest), is speculative, wholly alien to Section 59,

of the Companies Act, 2013 and cannot be granted in a rectification proceeding.

39. We would reiterate that Section 59(1) of the Companies Act, 2013 affords

a remedy where a name is entered, or omitted, "without sufficient cause". The

material on record is unambiguous: the Appellant's shares stood cancelled and his

shareholding stood extinguished as an incident of Clause 6.1 of the Resolution

Plan and paragraphs 4(iv) and 4(viii) of the Approval Order, applied uniformly to

the entire pre-existing equity share capital of SIL. An omission that flows, as a

matter of law, from a Resolution Plan duly approved under Section 31 of the Code

cannot be said to be "without sufficient cause"; the cause is the Approval Order

itself, which the Appellant does not and, by virtue of Sections 31 and 238 of the

Code, cannot collaterally challenge in these proceedings. No infirmity is found in

the conclusion of the Tribunal on this aspect.

Issue No (II) Whether the Appellant possesses any surviving membership or

enforceable right in SIL, distinct from his extinguished pre-CIRP

shareholding, by virtue of the terminology used in the Approval Order and

SIL's post-implementation Annual Returns?

40. The distinction sought to be drawn by the Appellant between a

"Shareholder of the promoter group" (whose liquidation value alone is said to

have been made NIL) and a "Member" simpliciter (whose rights allegedly

survive) does not bear scrutiny. Under Section 2(55) of the Companies Act 2013,

a person becomes a member of a company having share capital by holding shares

Page 19 of 25 and having his name entered in the register (or as a beneficial owner under the

Depositories Act, 1996); for such a company, "member" and "shareholder" are

not two distinct legal categories but two descriptions of the same status. Clause

6.1 of the Resolution Plan speaks of "existing equity shareholders" not being paid

any amount; paragraph 4(iv) of the Approval Order makes the Plan binding on,

inter alia, "members". Read together, these provisions cover every person who

held equity shares of SIL prior to implementation of the Resolution Plan,

including the Appellant and do not carve out a residual class of "Members" whose

shareholding survives extinguishment while only "promoter-group Shareholders"

are affected. Therefore, we find that the appeal proceeds on a premise that is not

borne out by the record.

41. We also note that the figures relied upon by the Appellant from SIL's

Annual Returns for FY 2022-23 and FY 2024-25, do not assist the Appellant.

Those returns, as argued by the Appellant record the shareholding pattern after

implementation of the Plan, reflecting the restructured capital issued under it,

including equity allotted to erstwhile secured financial creditors as part of the

approved restructuring and not a continuation of the pre-CIRP shareholder base

of over four lakh members that stood extinguished. The Appellant has placed no

material to show that he was allotted, or was entitled to be allotted, any shares

under the approved Plan; the numerical coincidence in a return filed for a period

ending 31.03.2023 (contemporaneous with implementation) is not, without more,

Page 20 of 25 evidence of continuity of his own, extinguished, pre-CIRP holding. No case of

discriminatory retention of the Appellant's specific shareholding is made out.

Issue No (III) Whether Sections 2(55), 88, 378B and 378ZB of the Companies

Act 2013, Rule 5(3) of the Companies (Management and Administration)

Rules, 2014, assist the Appellant?

42. We observe that Sections 2(55) and 88 of the Companies Act 2023 are

definitional and administrative in character. They identify who is a member and

cast a duty to maintain the register, but do not, by themselves, confer a right that

survives a statutory extinguishment of share capital validly effected under an

approved Resolution Plan under the Code.

43. Moreover, it can be said that under the Companies Act, 2013, in a company

limited by shares the expressions "member" and "shareholder" are legally

synonymous and interchangeable. Section 2(55) defines a "member" to include

every person holding shares and whose name is entered as a beneficial owner in

the records of a depository, and Section 88 mandates a single Register of

Members, there being no separate register of "shareholders". Membership flows

from, and is inseparable from, shareholding. Consequently, once the equity shares

stood extinguished under the Resolution Plan, the Appellant ceased to be both a

shareholder and a member; no independent or abstract "membership" right

survives the extinguishment of shareholding.

44. We also note that Sections 378B and 378ZB of the Companies Act 2013

occur in Chapter XXIA, which governs "Producer Companies" as defined in

Page 21 of 25 Section 378A(l) bodies corporate formed for the objects specified in Section

378B and registered as such. There is no averment, and no material on record,

that SIL is or was ever registered as a Producer Company. The invocation of

Sections 378B (1) and 378ZB (2) -- which govern the objects and patronage-

linked share capital of Producer Companies -- is misconceived and has no

bearing on the rights of a shareholder of an ordinary company such as SIL. The

same holds for Rule 5(3) of the Companies (Management and Administration)

Rules, 2014, which merely prescribes a seven-day period for making entries

consequent upon a reduction of capital approved by the Board or committee, a

procedural timeline that creates no substantive entitlement independent of the

underlying corporate action, here the Court-sanctioned Resolution Plan. Thus, we

are of view that the Appellant has not been able to make out any case.

Issue No (IV) Whether the reliefs of compensation, interest, issuance of fresh

equity shares and damages for mental suffering are grantable in proceedings

under Section 59 of the Companies Act 2013?

45. We note that Section 59(2) of the Companies Act 2013 confines the power

of the Tribunal, on an appeal for rectification, to dismissing the appeal, directing

registration of a transfer or transmission, or directing rectification together with

damages "sustained by the party aggrieved" that is, damages flowing from the

wrongful entry or omission itself, such as loss occasioned by delay in recording

a valid transfer. It does not contemplate a free-standing claim for compensation

computed as a proportion of funds infused by a resolution applicant into the

Page 22 of 25 corporate debtor, nor a direction for issuance of fresh equity share capital, nor

damages for mental suffering. The jurisdiction under Section 59 of the Companies

Act 2013, though it may extend to questions incidental and peripheral to

rectification, remains anchored to rectification and does not become a vehicle for

adjudicating substantive monetary claims of the magnitude sought here.

46. Independently, and more fundamentally, the reliefs claimed are barred by

the binding and overriding effect of the approved Resolution Plan. Section 31 of

the Code renders the Plan binding on the Corporate Debtor and all its

stakeholders, including members; Section 238 gives the Code overriding effect

over anything inconsistent contained in any other law, including the Companies

Act, 2013. It is well settled that once a Resolution Plan is approved, it cannot

thereafter be reopened at the instance of any stakeholder, and that claims not

provided for in the Plan stand extinguished so that the successful resolution

applicant may take over the corporate debtor on a clean slate in terms of Ratio of

case , Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta,

(2020) 8 SCC 531, and Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset

Reconstruction Co. Ltd., (2021) 9 SCC 657. The Appellant's own case is that his

shares, along with the entire pre-existing equity capital of SIL, were extinguished

under the Plan; a claim for compensation, interest and fresh shares in lieu of that

extinguished holding is, in substance, inconsistent with the approved Resolution

Plan and is barred by this settled position, irrespective of whether it is founded

on Section 59 of the Companies Act 2013 or otherwise.

Page 23 of 25

Issue No (V) Whether there is any violation of natural justice or other

infirmity vitiating the Impugned Order?

47. The Appellant was represented by counsel throughout, filed a rejoinder to

SIL's reply, and has not identified any specific procedural opportunity that was

denied to him. The Impugned Order records and deals with the rival contentions,

the Resolution Plan, the Approval Order and the relevant statutory provisions.

The grievance, on a fair reading of the grounds of appeal, is against the conclusion

reached on merits and not against the process by which it was reached. No

violation of natural justice is made out.

Conclusions

48. We may conclude noting the undisputed fact that Section 238 accords the

Code primacy over all other laws inconsistent with it, including the Companies

Act, 2013, so that no company-law remedy may be deployed to unsettle a

concluded resolution. Section 32A of the Code reinforces the clean-slate principle

by providing that the liabilities of SIL for the pre-resolution period cease upon

approval and implementation of the Plan and the resultant change in management

and control. Any attempt to resurrect pre-resolution shareholders' rights through

company law remedies is impermissible.

49. For the reasons recorded above, we find no error of law, fact or jurisdiction

in the Impugned Order. We hold that the Tribunal correctly held that the Appellant

has no surviving membership or enforceable right in SIL independent of his

Page 24 of 25 extinguished pre-CIRP shareholding, that the appeal under Section 59 of the

Companies Act 2013 was not maintainable, and that the reliefs claimed were

beyond the scope of that provision and, in any event, barred by the binding and

overriding effect of the approved Resolution Plan under Sections 31 and 238 of

the Code.

50. In view of the above detailed discussions, the appeal fails and stands

rejected. No order as to cost. IA, if any, stand closed.

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sim

Page 25 of 25