Mrs. Rekha Prabhahar vs M/s. ELV Supply Chain Solutions & Services Pvt. Ltd. & Ors.

[Per: Justice Sharad Kumar Sharma, Member (Judicial)]

In this Company Appeal instituted before this Appellate Tribunal on 02.09.2024, the Appellant has questioned the propriety of the Impugned Order dated 21.06.2024. By virtue of the Impugned Order as rendered by the learned NCLT, Chennai, in CP/15(CHE)/2023, being a proceeding held under Sections 241, 242 & 59 of the Companies Act, 2013, the learned Adjudicating Authority has passed the Impugned Order solely with an objective of giving a suitable direction so as to protect the interest of the Company and its shareholders, qua the declaration of the rights as against the alleged acts of Respondent No.2/ Appellant herein, which were alleged to be oppressive and prejudicial to the interests of Respondent No.1 company.

In the said Company Petition filed before Ld. NCLT, the Petitioner/Respondent No.2 herein had contended that the administrator may be appointed in order to take charge of the records/assets of the Company, and that the Appellant herein be directed to give access to all the Books of Accounts etc, to the Respondent No.2/Petitioner, and not to do any act in breach of Memorandum of Association or Article of Association and to desist from related party transactions, and that the Appellant herein may be directed to convene the Board’s Meeting within 15 days and to appoint an Auditor, to audit the accounts of Respondent No.1 Company. Despite, the notices of the petition being circulated upon, and time being granted to file an objection, the Respondent No.2 to the Company Petition i.e., the Appellant herein, had not paid any heed to the order of invitation of objection nor has paid the cost in terms of the order passed by the Tribunal dated 01.11.2023. Thus, the right to file the reply/counter was closed by an order of 17.01.2024. This order passed as against the Appellant has attained finality.

Primarily, the short question that would be the subject matter of consideration in this Company Appeal would be that, whether the learned Adjudicating Authority after finding that, there happens to be an intricate dispute with regards to the shareholding and management of the Respondent No.1 Company, whose activities is alleged to be controlled by Appellant/Respondent No.2, coupled with the fact that allegedly no board meeting was held from the financial year 2017-2018, there was a unilateral appointment of Auditor, without there being prior consent of the Petitioner/Respondent No.2 herein and the Petitioner was demied the access to the records of Respondent No.1 company can arrive at a conclusion as to “whether there happens to be any act inscribing an element of oppression and mismanagement.” Owing to the aforesaid peculiar facts and circumstances, which were brought on record before the learned NCLT, the learned NCLT upon satisfaction recorded, that none of the parties would adversely suffer in an event if a Forensic Auditor is appointed to conduct the audit into the books/records/documents, and into the details of the assets of the Company, who would be thereafter submitting the report within a period of 2 months. Accordingly by the Impugned Order under challenge i.e., Order dated 21.06.2024, following directions were given.

It is this order issued by way of direction, which has been subjected to challenge by the Appellant in the instant Company Appeal apprehension otherwise with no basis and to create an obstacle to somehow defer and delay the process of conducting the forensic audit, so that, the books of accounts of Respondent No. 1 company may not be desiccated in the forensic audit and the report may not be placed on record before the learned Adjudicating Authority. She has contended that the Impugned Order which is under challenge for the reasons attributed in the Company Appeal is bad in the eyes of law and that the instant Company Appeal may be kept pending before this Appellate Tribunal till the Respondents file their Counter to the Appeal. We are of the view that the directions issued by the learned Tribunal for conducting a forensic audit are not detrimental to the interest of either of the parties to the Company Petition, as it would facilitate arriving at a definite conclusion with regards to the veracity of the books of accounts, which would be the subject matter of consideration in the proceedings under Sections 241, 242 and 59 of the Companies Act, 2013, which as on today remains pending before the learned Adjudicating Authority.

Today, when the matter was taken up, the learned counsel for the Respondent No.2 had placed before this Appellate Tribunal the orders, that is, an order of 19.03.2025, which was passed by the Tribunal in CP/15(CHE)/2023 Balaji Subramanian Vs. M/s. ELV Supply Chain Solutions & Services Private Limited & Anr., in which the learned NCLT had observed that despite of various opportunities having being provided to the Appellant/Respondent No.2, in the aforesaid Company Petition, the objection was not filed, and even the cost which was imposed by the learned Tribunal for not complying with its orders was not deposited and therefore, the opportunity to file the reply to the Company Petition was closed by an order of 17.01.2024.

It was further informed to this Tribunal that, in the proceeding, which was held on 19.03.2025, the learned Tribunal had observed, that the order dated 21.06.2024 appointing a Forensic Auditor has been complied as the forensic auditor had submitted its report. In the proceedings thus held on the said date, the Appellant herself has prayed for the grant of the following reliefs “to permit to file the reply/counter and objection to the forensic report which was directed to be filed within two weeks”.

In yet another proceeding, which was held on 26.03.2025 i.e., the proceedings in CP(CA)/23(CHE)/2025, Mrs. Rekha Prabhahar Vs. M/s. ELV Supply Chain Solutions & Services Private Limited & Anr., which has been filed by the Appellant herein, which are also being held under Sections 241 & 242 of the Companies Act, 2013, a specific finding has been recorded that, a forensic auditor has already been appointed and he has submitted his report, to which the petitioner of the Company Petition, (CP)(CA)/23(CHE)/2025, i.e., the Appellant herein had sought time to file reply/objection to the forensic auditors report. The relevant observation is extracted here under.

Owing to the fact that, as of now, the forensic auditor has already been appointed, and upon conduct of Audit, he has already submitted his report, to which the petitioner i.e., the Appellant herein, has sought time to file an objection, to the forensic audit report, under these circumstances, for all practical purposes, owing to the observations made in the order dated 26.03.2025, no cause of action as of now survives for the Appellant, as of now, as against the Impugned Order of appointing the forensic auditor. Hence, the Company Appeal (AT) (CH) No.7/2025 for all practical purpose for the cause agitated has become infructuous and the same is accordingly ‘dismissed’ as having been rendered infructuous.