NCLAT Delhi Dismisses Finolex Share Dispute Appeals, Says Subsequent Events Pleadable By Amendment

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 21 July upheld an order permitting amendments to a long pending company petition in the Finolex group share transfer dispute, holding that subsequent developments arising during the pendency of proceedings can be brought on record while leaving the question of limitation open for determination at the final hearing.

A Bench comprising Officiating Chairperson Justice Yogesh Khanna and Technical Member Barun Mitra dismissed the appeals filed by Prakash P. Chhabria and Orbit Electricals against the Mumbai Bench of the National Company Law Tribunal's (NCLT) order allowing amendments to the 2016 company petition. It observed:

“...considering the subsequent developments, we see no reason to say that the placing of amendments on record would be illegal exercise of power especially when the issue of limitation is kept open.”

The dispute between brothers Prakash P. Chhabria and Deepak Kishan Chhabria centred on the transfer of 1,00,300 shares of Finolex Industries Ltd., which were allegedly gifted by family patriarch Prahlad Parasram Chhabria to Prakash. The transfer was approved at a Board meeting held on 31 March 2016, which Deepak attended. He later challenged the validity of that meeting and the resolutions passed at it.

Deepak filed the company petition in 2016 challenging the legality of the Board meeting and the subsequent resolutions. Although the petition invoked Sections 58 and 59 of the Companies Act, 2013 (which govern refusal and rectification of the register of members), he did not seek rectification of the register of members within the statutory limitation period, which expired in 2019.

In January 2026, Deepak sought to amend the petition to seek rectification of the register of members, deletion of Prakash's name from the register, return of the share certificates, and to challenge amendments to the Articles of Association approved at extraordinary general meetings held in 2019 and 2021. The NCLT allowed the amendments but expressly kept the issue of limitation open for consideration at the final hearing of the company petition.

Before the NCLAT, Prakash and Orbit Electricals argued that the prayer for rectification of the register was barred by limitation. They did not oppose the amendments relating to subsequent events, including the resolutions passed at the 2019 and 2021 extraordinary general meetings amending the Articles of Association. Deepak contended that the original petition had already invoked Sections 58 and 59 of the Companies Act and that the amendment merely sought consequential relief.

The Appellate Tribunal held that the NCLT had not decided the merits of the proposed amendments but had only permitted them to be brought on record while keeping the limitation issue open. It also held that the events of 2019 and 2021 were subsequent developments that occurred during the pendency of the proceedings and could therefore be incorporated through amendment.

The Bench further observed that if the Board meeting of 31 March 2016 were ultimately held to be illegal, the subsequent resolutions would also fail, making the proposed amendments necessary for complete adjudication. It stated:

“Now the law, even otherwise, is well settled if subsequent developments and proceedings have arisen during the pendency of the matter, necessitating the consequential pleadings, the amendments can be brought on record. If the necessary factual foundation in the amended claim was already present in the plaint and the amendments merely add an alternative legal basis for relief, it may be allowed.”

Accordingly, the NCLAT dismissed the appeals and clarified that the issue of limitation will be decided independently at the final hearing of the company petition, without being influenced by its observations.

For Appellants: Senior Advocates Abhishek Manu Singhvi, Krishnendu Datta with Advocates Ankur Saighal, Shivam Shukla, Uday Aditya Jetley, Yash Tandon

For Respondents: Senior Advocate Ramji Srinivasan with Advocates Amit Jajoo, Malak Bhatt, Nausher Kohli, Vatsala Pant, Vedant Chhajed, Aman Marwah, Somya Saxena, Prithviraj Dey, Shefali and S Munde for R1 and 2.