# Refusal of Registration of Transfer (Section 58)
## Background: Transferability of Shares
- Shares are movable property and transferable in the manner prescribed by the Articles.
- The right to transfer is absolute and inherent to ownership. Articles cannot make shares wholly non-transferable.
- Public company shares: freely transferable.
- Private company shares: must restrict transferability under Section 2(68)(i) — typically through a pre-emption clause.
## Section 58 Framework — Refusal & Appeal
### Private Company
| Step | Action |
|---|---|
| Refusal | Company must send notice of refusal with reasons to transferor and transferee |
| Appeal | Aggrieved party may appeal to Tribunal within 30/60 days |
### Public Company
| Step | Action |
|---|---|
| Refusal | Cannot refuse without sufficient cause |
| Appeal | Aggrieved party may appeal to Tribunal within 60/90 days |
## Order of the Tribunal [Section 58(5)]
After hearing the parties, the Tribunal may either:
- (a) Dismiss the appeal, OR
- (b) Direct that:
- The transfer or transmission be registered by the company within 10 days of receipt of the order; or
- Rectification of the register, and direct the company to pay damages sustained by the aggrieved party.
## Penalty for Contravention of Tribunal's Order [Section 58(6)]
| Punishment | Minimum | Maximum |
|---|---|---|
| Imprisonment | 1 year | 3 years |
| Fine | ₹1 lakh | ₹5 lakh |
Both imprisonment AND fine are mandatory.
## Visual Summary
```
Refusal to transfer
├── Private Company
│ ├── Send notice with reasons
│ └── Appeal to Tribunal in 30/60 days
└── Public Company
├── Cannot refuse without sufficient cause
└── Appeal to Tribunal in 60/90 days
Tribunal Options:
├── Dismiss appeal, OR
├── Order transfer within 10 days, OR
└── Order rectification + damages
Contravention → Imprisonment 1–3 yrs + Fine ₹1–5 lakh
```