NCLT allows Jagan's plea to cancel transfer of Saraswati Power shares

Jagan had sought the NCLT to cancel, annul and nullify the transfer of shares held by him and his wife in the company and sought reinstating their names in Saraswati Power and Industries Pvt. Ltd.

In a relief to YS Jagan Mohan Reddy, the NCLT on Tuesday allowed a petition filed by the former Andhra Pradesh Chief Minister seeking a direction to cancel the "illegal transfer" of shares held by him and his wife in a company to his sister YS Sharmila and their mother.

In the petition filed on September 3, 2024, Jagan had sought the National Company Law Tribunal (NCLT) Hyderabad bench to cancel, annul and nullify the transfer of shares held by him and his wife Bharathi in the company and sought reinstating their names in Saraswati Power and Industries Pvt. Ltd. 

 

"Jagan Mohan Reddy's petition has been allowed. We are waiting for the order copy. There are some directions also. The petition filed by Jagan Mohan Reddy contending that the transfer of shares in Saraswati Power has been allowed," the YSRCP chief's counsel Y Suryanarayana told PTI.

When contacted, K Devi Prasanna Kumar, Sharmila's advocate said they will file an appeal against the order either in Appellate Tribunal or High Court.

Jagan, Bharati and his mother 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.

The former CM had moved the tribunal on the issue after his relations with Sharmila strained. She is presently the chief of the Andhra Pradesh Congress unit. 

 

In the petition, Jagan said he entered into a memorandum of understanding (MoU) with Sharmila wherein he said "out of love and affection," he would transfer shares held by him and his wife in the company through a gift deed to his estranged sister, subject to pending cases in respect of some properties, including attachments by the Enforcement Directorate.

The former CM said he intended to transfer the shares (Jagan's own property) in addition to Rs 200 crore that he, directly or through their mother, gave to his sister during the past decade.

Jagan, in a letter to his sister, opined that the share transfer without fulfilling the legal obligations and clearance from court would potentially have adverse implications.

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

 

"It is humbly submitted that to the utter shock and surprise of the petitioners, respondent No. 1 (Saraswati Power and Industries) company wide board resolution has transferred the entire shareholding of petitioners No. 1 and 2 (Jagan and Bharathi, respectively) in favour of respondent No. 2 (Sharmila) and the entire shareholding of petitioner number three (Classic Realty, owned by the family), herein in favour of respondent No. 3 (Vijayamma)," Jagan alleged in his petition.

The YSRCP chief said Sharmila, without gratitude and regard to the well-being of her brother, conducted a series of actions that deeply hurt him and that she also made several untrue and false statements publicly.

Due to actions by his sister, there is "no love left between the two siblings", and he decided not to proceed with his expression of intent to transfer the shares/properties as envisaged under the MoU and gift deed.

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