Paul Joseph vs Union Of India Represented Through ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI (APPELLATE JURISDICTION) Company Appeal (AT) (CH) No.16/2024 In the matter of : Paul Jospeh, Valiyaparambil House, Pulikkappully, NKS Road, Pachalam P.O., Kochi - 682 012 ...Appellant V Union of India through Serious Fraud Investigation Organisation, No.29, Rajaji Salai Road, Chennai - 600 001 Represented by Senior Assistant Director, N.M. Mahesh Kumar.

Bhagyodayam Company, Chathiath, Cochin 682 012, Ernakulam District. Represented by its Administrator, Jinan K R ...Respondents

Present: For Appellant : Mr. Aditya B Shenoy & Mr. Aditya A Shenoy, Advocates For Respondents : Mr. Avinash Krishnan Ravi, Advocate for R1 Mr. MA Shaji, Advocate For Mr. Philip Mathew, Advocate for R2 JUDGMENT

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

The Appellant herein, who is an opposite party to the proceedings of

IA(C/Act)/182/KOB/2023, as preferred in IA(C/Act)/29/KOB/2020 in

TCP/21/KOB/2019, challenges the impugned order that has been passed on

03.01.2024, by virtue of which the consequential effect had been that the earlier

Comp App (AT) (CH) No.16/2024 Page 1 of 7 order that has been passed on 11.03.2020, directing the investigation to be carried

by the Serious Fraud Investigation Office, that was being sought to be modified.

While considering the modification application, the Tribunal has passed an order

directing thereby that the Central Government, to appoint an inspector to

investigate the affairs of M/s. Bhagyodayam Company (instead of the Serious

Fraud Investigation Officer). The Tribunal further directed that, so far as the

other part of the order dated 11.03.2020 is concerned, the same would remain

unaltered.

2. The Appellant as against whom the investigation was supposed to be

carried in pursuance to the impugned order of 03.01.2024 to be read with order

of 11.03.2020, had questioned the impugned order on the ground that, the

impugned order suffers from the legal vices because it will amount to be order in

the shape of the review, and that to without the issuance of any prior notice to the

Appellant, and hence the Appellant pleads that the entire action of modifying the

earlier order of 11.03.2020 would be in violation of Principles of Natural Justice

and apart from that the order would be bad because the same ought to have been

passed only after making the Appellant as a party to the proceedings.

3. The few facts that emerge for consideration are that Respondent No.2

stood incorporated, as per the provisions of the Companies Act, 1913 as back as

in 1928. However, the Company Petition was preferred being Company Petition

No.29/2017 before the Learned NCLT, Chennai, alleging an act of oppression

and mismanagement, as against the Board of Directors of Respondent No.2

Comp App (AT) (CH) No.16/2024 Page 2 of 7 Company, which, since the constitution of an independent bench at Kochi, the

same was transferred and the Company Petition No.29/2017, was renumbered as

TCP No.21/KOB/2019. In the Company Petition, which was instituted primarily

the relief which was sought for was to set aside the action taken by the Board of

Directors of the Respondent No.2 Company of an act of removing the petitioners

of the Company Petition from their membership, the sale of the properties, and

also an action of an appointment of the interim administrator to manage the affairs

of the company for a period of six months. The direction issued by an order

passed on 28.08.2018 was to conduct the election of Board of Directors of

company within six months.

4. For the purposes to carry out the direction of the order dated 28.08.2018,

a retired High Court Judge was appointed as an administrator, who was expected

to carry out the functions as contained in the order dated 28.08.2018. After the

assumption of office, as the administrator, the administrator had preferred an

interlocutory application IA No.29/2020 before the NCLT Bench of Kochi, where

the Company Petition was transferred, praying for an investigation to be carried,

with the alleged allegation of instances of non-compliances and violation of the

provisions of the Companies Act, which were backed by the non-compliance of

the provisions of the Articles of Association of the Company. Simultaneously,

the direction was also sought by the administrator for the Registrar of Companies

to prosecute the offenders and for taking of an action in Section 439(2) of the

Companies Act, 2013.

Comp App (AT) (CH) No.16/2024 Page 3 of 7

5. Based upon the request made by the administrator i.e., the retired High

Court Judge Justice Mr. Narayana Kurup, the Learned NCLT, Kochi Bench, has

passed on IA No.29/KOB/2020 in TCP No.29/KOB/2019, by virtue of the said

order, that was passed on 11.03.2020, the Learned NCLT has proceeded to issue

directions to the Serious Fraud Investigation Officer to investigate into the affairs

complained of by the Administrator and to submit a report. However, this order

of 11.03.2020, which remained unchallenged by the Appellant herein, before any

superior forum, which has been sought to be modified by filing of an IA

No.182/KOB/2023, which has been decided by the impugned order.

6. During the intervening period, the administrator thus appointed by an

order of 28.08.2018 demitted his office, on the basis of a resignation. The

grievance as it has been agitated by the Appellant is limited qua the part of the

order, where the Tribunal, while exercising its powers under Rule 11 & 32 of the

NCLT Rules, had modified the order of 11.03.2020, whereby the directions were

issued for transfer of investigation to be made by the Central Government to any

inspector to investigate it into the affairs of the Appellant instead of the same

being conducted by the Serious Fraud Investigation Officer as it was directed by

the earlier order of 11.03.2020.

7. The question would be that, whether such type of order, which has only

the effect of modifying the earlier order of 11.03.2020, with the change of the

investigating officer or an investigating agency, who was expected to conduct the

investigation, as it was recommended by the administrator, who was appointed

Comp App (AT) (CH) No.16/2024 Page 4 of 7 by the Learned NCLT. The said order cannot be said to be an order in the shape

of the recall of an earlier order, as recall will entail completely vanishing the

effect of the earlier order, altogether, substituting the earlier existing order by

giving it a new expression in order to meet an object already prescribed by earlier

order, if it is not contrary to the one, which was already given in the earlier order,

which in the instant case happens to be that of 11.03.2020 it will not be recall,

because the principle effect of earlier order continues. If the order of 11.03.2020

or the impugned order of 03.01.2024 are taken into consideration, in fact, the aim,

objective and purpose of both orders happen to be the same, on the basis of the

recommendation made by the administrator on 22.01.2019. Thus, the nature of

the order that was passed on 03.01.2024 is neither the recall nor the review of the

earlier order because it was simpliciter having an effect of changing of the

investigating officer or an agency who was to carry out the investigation into the

affairs, which was complained of by the administrator vide its communication of

22.01.2019. Hence, the nature of the impugned order which has been passed, it

does not change the implication or expand its objective of the principal order of

11.03.2020, and that to particularly when the Appellant cannot have any

grievances as against the impugned order of 03.01.2024, when he has not put a

challenge to the earlier order of 11.03.2020, where the investigation was directed

to be handed over to a Serious Fraud Investigation Officer, its only the

investigating agency, which was being altered by the modification made by the

impugned order of 03.01.2024. Since the impugned order of 03.01.2024 in itself

Comp App (AT) (CH) No.16/2024 Page 5 of 7 does not have any independent existence in itself, as it has to be read only in

modification to the earlier order of 11.03.2020, which has attained finality.

8. The Appellant would be estopped to put a challenge to the impugned

order of 03.01.2024 on the ground that, the order does not takes the shape of a

review or a recall, which is not satisfied as none of the elements of review or

recall is existing in the impugned order of 03.01.2024, because of non-alteration

of the object ordered to be carried by earlier order, by the order of 03.01.2024,

the earlier order does not looses it legal existence.

9. Even otherwise, it is a settled law that once the investigation has been

directed for any act, by the satisfaction, which has been recorded by the Court or

an Officer, which herein would be the NCLT, which has passed an earlier order

of 11.03.2020. The investigation is not required to be interrupted on this premise

merely because of the modification if permitted to be carried by the order of

03.01.2024. Normally, the investigations are not interfered by the courts of law

because its only a process, which only facilitate in coming down to the

conclusions with regard to the set of allegations, which has been in complaint of

in the instance case by the administrator who had filed an application before the

Learned NCLT on 22.01.2019. Since the impugned order, its only effect is that

there is only a change of agency of an investigation, and it does not affect any of

the rights of the Appellant in any manner whatsoever. The adoption of machinery

who could made responsible to investigate is a prerogative of the NCLT, which

Comp App (AT) (CH) No.16/2024 Page 6 of 7 cannot be said to have been rendered in exceeding its jurisdiction nor it's the case

of the Appellant.

10. The Respondent No.2, during the course of the arguments, has

submitted that as against the same order, he has preferred a Writ Petition Original

Petition Civil No.458/2024 which is pending consideration before the Hon'ble

High Court of Kerala, pendency of Writ Petition by Respondent No.2, will not

carry any impediment, which has been preferred at the behest of the Respondent

No.2 as against the same order, which has to be independently decided. Hence,

for the aforesaid reasons the impugned order does not require to be interfered by

this Appellate Tribunal, for the reason that the consequential effect of the

impugned order would be only to enable the authority to come to a logical

conclusion after conclusion of investigation with regard to the set of allegations

found to be levelled by the administrator, which will be taken as to be a fact-

finding investigation before taking any punitive action in accordance with law.

Thus, the Appeal lacks merit and the same is accordingly dismissed.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical) 13/10/2025 VG/MS/AK

Comp App (AT) (CH) No.16/2024 Page 7 of 7