2022 (6) TMI 541 - AT - Insolvency and Bankruptcy

Violation of principles of natural justice - tangible / substantial reasons were assigned by the Tribunal or not - homo sapien - HELD THAT - No wonder, an impugned order, bereft of reasons, may be a valid one from the point of view of an Authority / Tribunal, who had passed the same but to the affected, the same is not a valid one, as it infringes the right, thereby causing hardship and prejudice to him - the principles of Natural Justice are not the edicts of a Statute. It is to be remembered that absence of furnishing reasons will give an individual a sense of feeling of injustice, whether it be an Administrative/ Judicial / Quasi-Judicial Forum which passes it as opined by this Tribunal. The Respondent Company shall not conduct statutory meeting etc., were passed by the Tribunal in a non-speaking manner and without assigning qualitative and quantitative reasons - the matter is remitted to the National Company Law Tribunal, Division Bench II, Chennai to pass a de novo orders in so far as it relates to the aspect of appointing an independent forensic auditor to conduct the forensic audit on the affairs of the 1st Respondent Company from 01.02.2018 and for issuance of directions in regard to the conduct of statutory meeting, by providing adequate opportunities to both sides to argue the matter and after Hearing the parties, the Tribunal (National Company Law Tribunal, Division Bench II, Chennai), also following the Principles of Natural Justice, is to assign reasons for arriving at its just fair conclusion in granting the reliefs or otherwise in the subject matter in issue. Application closed.

Summary

Issues involved: Validity of order passed by National Company Law Tribunal, Division Bench II, Chennai regarding appointment of forensic auditor and directions on conducting statutory meetings.

Analysis:
1. Validity of the Impugned Order:
The Appellate Tribunal heard arguments from both sides regarding the impugned order dated 23.02.2022 passed by the National Company Law Tribunal, Division Bench II, Chennai. The order appointed an independent forensic auditor to conduct a forensic audit on the affairs of the 1st Respondent Company and issued directions prohibiting the Respondent Company from conducting statutory meetings without specific conditions. The Appellant's Senior Counsel argued that the order lacked valid reasons, making it legally infirm. The Appellate Tribunal concurred that the order was passed in a non-speaking manner without adequate reasons, violating the principles of fair play and natural justice. The absence of reasons in the order was deemed a significant flaw, rendering it vulnerable to legal scrutiny. Consequently, the Appellate Tribunal set aside the impugned order without delving into the merits of the case to uphold the cause of justice.

2. Importance of Reasons in Orders:
The Appellate Tribunal emphasized the critical role of reasons in judicial orders, considering them the heart and soul of any decision. Providing reasons in an order facilitates a qualitative and quantitative assessment of its validity and legality by superior forums. The absence of reasons not only undermines the principles of natural justice but also creates a sense of injustice for the affected parties. The Appellate Tribunal stressed that the principles of natural justice, though uncodified, are fundamental to ensuring fairness and preventing prejudice in administrative, judicial, or quasi-judicial proceedings.

3. Remittance of the Matter:
While setting aside the impugned order, the Appellate Tribunal remitted the matter back to the National Company Law Tribunal, Division Bench II, Chennai for fresh consideration. The Tribunal instructed the lower bench to pass de novo orders regarding the appointment of a forensic auditor and issuance of directions on conducting statutory meetings. Both parties were granted adequate opportunities to present their arguments, ensuring a fair hearing following the principles of natural justice. The National Company Law Tribunal was directed to provide reasoned orders within a specified timeframe, allowing for a comprehensive evaluation of the matter.

4. Disposition of Other Relief:
The Appellate Tribunal decided to leave the other relief granted by the National Company Law Tribunal, Division Bench II, Chennai in CP/82(CHE)/2021 undisturbed. Additionally, the connected interim application for stay was closed, indicating a specific resolution on this aspect of the case.

In conclusion, the Appellate Tribunal's decision highlighted the significance of providing valid reasons in judicial orders to uphold principles of fairness and natural justice. By setting aside the impugned order and remitting the matter for fresh consideration with clear instructions, the Tribunal aimed to ensure a just and equitable resolution while safeguarding the rights of the parties involved.