Transfer of shares in Saraswati never consummated: NCLT on Jagan’s plea against Sharmila

Hyderabad: Although former Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy had agreed to gift the shares held by him and his wife in Saraswati Power and Industries Pvt Ltd, to his mother and sister Sharmila, the actual transfer of shares was never consummated, the NCLT Hyderabad bench has opined.

The National Company Law Tribunal, Hyderabad bench on Tuesday allowed a petition filed by Reddy seeking a direction to cancel the "illegal transfer" of shares held by him and his wife Bharathi in Saraswati Power to Sharmila and their mother Vijayamma.

The bench comprising judicial member Rajiv Bharadwaj and technical member Sanjay Puri, in its order directed Saraswati Power to rectify its Register of Members by reinstating the names of Jagan, Bharati and Vijayamma as the shareholders and inform the same to the Registrar of Companies (RoC) through appropriate filing.

Jagan, Bharati and Vijayamma hold about 74.26 lakh (29.88 per cent), 41 lakh ( 16.30 per cent) and 1.22 crore shares (48.99 per cent), respectively, in Saraswati Power, while the rest is with Classic Realty Pvt. Ltd.

In the petition, Jagan said he entered into an MoU with Sharmila, wherein he said "out of love and affection," he would transfer his and his wife's shares of Saraswati Power and Industries through a gift deed to his estranged sister, subject to pending cases in respect of some properties, including attachments by the Enforcement Directorate.

"While the gift deeds appear to have been formally executed, the intended transfers were never consummated in law due to the non-delivery of the original share certificates by the donors—an essential prerequisite for effecting a valid transfer of shares. In the absence of such delivery, the Company was precluded from lawfully registering the shares in the names of the alleged transferees," the order said.

Later Jagan, however, expressed his desire to revoke the MoU, saying both siblings are no longer on the best of terms.

After differences cropped up with his brother, Sharmila joined the Congress in 2023 and was made the president of its Andhra Pradesh unit. She unsuccessfully contested from Kadapa Lok Sabha constituency in the May general elections in 2024.