The National Company Law Tribunal (NCLT) Hyderabad Bench’s order on Tuesday allowed YSR Congress Party (YSRCP) chief Y S Jagan Mohan Reddy to cancel the transfer of his and his wife Y S Bharathi’s shareholdings in Saraswati Power and Industries to his sister Y S Sharmila and their mother Y S Vijaya Lakshmi.
How is the order likely to affect the warring siblings and will it have a bearing on the political landscape of the state?
What does the order say?
The NCLT Bench, comprising judicial member Rajiv Bharadwaj and technical member Sanjay Puri, observed that the intended transfer of shareholdings had never happened. “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 stated.
What was Jagan’s plea and what did he seek?
On September 3 last year, Jagan had filed a plea seeking the cancellation of the transfer of shares, claiming that it was “illegal”.
The plea came months after Andhra Pradesh saw simultaneous Assembly and Lok Sabha elections, where one of the parties the YSRCP took on was the Congress, which is led by Sharmila in the state.
While Jagan was measured in his attacks on his sister during the campaign, Sharmila launched an all-out political and personal attack on the YSRCP chief throughout the campaign.
Following the YSRCP’s drubbing in the polls, Jagan wrote to his sister in August 2024 claiming she had undertaken “a series of actions without a shred of gratitude and accorded least regard to his well-being despite his disposition of love and affection towards her”.
According to the petition, Jagan, Bharathi, and Jagan and Sharmila’s mother Vijaya Lakshmi hold 74.26 lakh (29.88%), 41 lakh (16.3%) and 1.22 crore (48.99%) shares, respectively, in Saraswati Power and Industries, with the rest held by Classic Realty Pvt Ltd.
Jagan’s legal team claimed that the shares were not inherited and he chose to give it to his mother “out of love”. Jagan also contended that his sister, knowing that the assets attached by a court could not be transferred till cases against them were resolved, went ahead and illegally transferred them to her name. “Left with no option”, Jagan moved the NCLT to prove his bona fide.
The YSRCP chief’s petition sought the nullification of the transfer of Jagan’s 74.26 lakh and his wife’s 40.5 lakh shares to his mother Vijaya Lakshmi. It also sought to stop the transfer of 12 lakh shares from Classic Realty Private Ltd to former directors of Saraswati Power.
Jagan sought the rectification of the company’s register as well, to reflect the same.
What did Jagan accuse his sister of?
Stating that he and Sharmila entered into an MoU on August 31, 2019, in which he agreed to transfer his and Bharathi’s shareholdings to his mother through a gift deed, Jagan claimed that he made the move only out of “love and affection”.
The MoU also agreed that the transfer would be executed subject to resolution of cases connected to them, which are currently being probed by Central agencies, including the Enforcement Directorate (ED).
According to Jagan, he was “shocked” to find on July 16 that the board of Saraswati Power had transferred his and Bharathi’s entire shareholdings to Vijaya Lakshmi on July 6.
What does Sharmila say?
Sharmila has said she would challenge the NCLT order and has accused Jagan of trying to deny her a fair share of the family property. She also contended that Jagan had already given a gift deed to his mother through which he transferred all shares to her, and now that he suspects that Vijaya Lakshmi may transfer them to her, is trying to get them back by denying the gift deed.
What is the likely road ahead for the YSR family?
The order is likely to deepen the wedge between the siblings, who have grown apart since Sharmila floated the YSR Telangana Party (YSRTP) in 2021 with her mother by her side. As the order has stopped the transfer of shares to Vijaya Lakshmi too, Jagan also stands the risk of alienating his mother further.