Paul Jospeh Vs Union of India (NCLAT Chennai)
The appeal before the National Company Law Appellate Tribunal, Chennai Bench, arose from an order dated 03.01.2024 which modified an earlier direction dated 11.03.2020 concerning investigation into the affairs of a company. The earlier order had directed investigation by the Serious Fraud Investigation Office (SFIO) pursuant to an application filed by an administrator appointed by the NCLT. By the impugned order, the Tribunal modified only the mode of investigation by directing the Central Government to appoint an Inspector instead of SFIO, while expressly keeping all other directions of the 11.03.2020 order intact.
The appellant challenged the modification on the ground that it amounted to a review or recall of the earlier order, passed without notice and in violation of principles of natural justice. It was argued that the appellant was not made a party to the proceedings seeking modification and that the change in the investigating agency adversely affected legal rights.
The background showed that the company was incorporated in 1928 and became subject to a petition alleging oppression and mismanagement. The matter was transferred to the NCLT Kochi Bench, where reliefs were sought including restoration of membership, setting aside sale of properties, and appointment of an interim administrator. By an order dated 28.08.2018, elections to the Board were directed, and a retired High Court Judge was appointed as administrator. While discharging his functions, the administrator filed an interlocutory application seeking investigation into alleged statutory and Articles of Association violations, prosecution of offenders, and action under the Companies Act. Acting on this, the NCLT on 11.03.2020 directed SFIO to investigate.
