58. Refusal of registration and appeal against refusal
(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 subsection
(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.