Sandeep Chandrasenan and Anr v. Usha Krishnakumar and Ors
A person shown by the company's own documents to be a transferee of shares, whose alleged signatures on transfer forms are said to be fabricated, is at least a proper party to a company petition in which the transfers are used as a defence, even though no relief is claimed against them; refusing to hear them offends natural justice.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-10-16
Shareholders who filed a mismanagement petition before the NCLT in Kochi were met with the company's plea that their shares had been transferred. When the company produced transfer forms naming Sandeep Chandrasenan and another as transferees, the shareholders sought to add them as parties. The NCLT refused, but the High Court held the transferees should be heard.
What happened
Respondents 1 to 3 and 5 to 8 were shareholders in the fourth respondent company. Respondents 1 to 3 filed CP(C/Act)/28/KOB/2022 alleging mismanagement. The company's counter-statement said the shares of respondents 2 and 3 had been transferred to third parties, so respondents 1 to 3 filed IA(C/Act)/170/KOB/2023 for production of the original, stamped share transfer forms. By order of 5 December 2025 (Ext. P2) the NCLT held that the respondents relying on a plea of transfer must place documentary proof on record, and the company produced SH-4 forms with an affidavit filed on 29 December 2025 which showed a transfer by the third respondent in favour of the petitioners. On 21 January 2026 respondents 1 to 3 applied to implead the petitioners (IA(C/Act)/12/KOB/2026). The petitioners said they never signed the forms, which were fabricated, and entered appearance on 22 January 2026. By order of 2 April 2026 (Ext. P1) the NCLT dismissed the application, holding that a party can be impleaded only if it is a necessary or proper party by reference to the pleadings and reliefs, that no prayer was made against the petitioners, that no amendment was sought and that the application was delayed. The petitioners challenged that by writ, relying on Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction Co., (2021) 9 SCC 657, for the use of Article 226.
Questions before the court
- Was the NCLT right to refuse impleadment of the alleged share transferees, and is a writ the proper way to challenge it?
Why the court ruled this way
The need to implead the petitioners arose only after the company produced the share transfer forms, and the respondents had been justified in seeking impleadment of the transferees once their details became known; not considering that prayer amounted to a violation of natural justice (paragraph 10). The company had itself told the NCLT in Ext. P2 that the applicants had no shares and that the shares were transferred to third parties, including the present petitioners (paragraph 10). Under Order I Rule 10 of the Code of Civil Procedure, impleadment is permitted where a right to relief exists against the party or where its presence is necessary for effective adjudication (paragraph 11). For an effective adjudication of the preliminary objection raised by respondents 4 to 9, the petitioners were proper parties, even though no prayers were made against them, and the NCLT went wrong in refusing impleadment (paragraph 12). The petitioners were interested parties, in view of the alleged fraud committed upon them, and so entitled to challenge Ext. P1 (paragraph 15).
Controlling point
The NCLT erred in refusing to implead the petitioners, and Ext. P1 required to be set aside.
Order and next steps
The writ petition was allowed, Ext. P1 was set aside, and IA(C/Act)/12/KOB/2026 in CP(C/Act)/28/KOB/2022 on the file of the NCLT, Kochi Bench was allowed.
Practical implications
A person named as a transferee on documents produced in a company proceeding who says the transfer papers are forged should apply promptly to be heard, explaining when the documents first came to light.
Limits of this ruling
- The Court only held that the petitioners should be heard as proper parties; it did not decide whether the share transfers were genuine or the signatures fabricated.
Law and judgment source
- Companies Act, 2013
- Code of Civil Procedure, 1908, Order I Rule 10
- Constitution of India, Article 226
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Source checked: 2026-10-16 · Judgment paragraphs: paragraphs 1–15 · Later case history: not verified. Verify appeals, stays and subsequent orders before reliance.
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