Rekha Prabhahar vs Elv Supply Chain Solutions & ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) COMPANY APPEAL (AT) (CH) NO.7/2025 (IA Nos. 88 & 89/2025) IN THE MATTER OF: MRS. REKHA PRABHAHAR Wife of Mr. Prabhahar F-1, SKB, Supreme Flats No. 12, Venkateswara Nagar, 2nd Cross Street, 3rd Main Road, Velachery, Chennai - 600042 ...APPELLANT VERSUS M/S. ELV SUPPLY CHAIN SOLUTIONS & Services Pvt. Ltd. No. 946/554, Poonamallee High Road, Arumbakkam, Chennai - 600 106 ...RESPONDENT NO.1

MR. BALAJI SUBRAMANIAN F-6, C Block, Salma Royal Residency Muthu Kumarappa Street Saligramam, Chennai - 600 093 ...RESPONDENT NO.2

MR. RAMESH KUMAR MALLELA No. 39/19, 6th Lane, Sastry Nagar, Adyar, Behind Telephone Exchange, Chennai - 600 020 ...RESPONDENT NO.3 Present : For Appellant : Mr. P.S. Suman, Advocate For Respondents : Ms. Durga Bhatt, Advocate for R2

JUDGMENT

(Hybrid Mode) [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

Comp. App. (AT) (CH) No.7/2025 Page 1 of 7 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.

2. 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

Comp. App. (AT) (CH) No.7/2025 Page 2 of 7 file the reply/counter was closed by an order of 17.01.2024. This order passed

as against the Appellant has attained finality.

3. 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.

Comp. App. (AT) (CH) No.7/2025 Page 3 of 7

"16. In the light of above discussions, we appoint Mr.Ramesh Kumar Mallela (Mobile No. 93819 31353, E Mail ID: rk@charteredramesh.com) as Forensic Auditor, who is directed to conduct the forensic audit of the books / records / documents and assets of the Company who will submit his report within a period of two months. Till then the Respondents are restrained from alienating, mortgaging, encumbering or otherwise transferring the title or interest in any immovable properties of the Company including entering into any agreement with Respondent No. 3 and from convening / holding Board meetings / General Body meetings. We also direct Respondent No. 1 and 2 to render all assistance and provide the books and accounts of the Company to the Forensic Auditor to conduct the forensic audit. The fee and the expenses for the Forensic Auditor shall be borne by the Petitioner."

4. 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

Comp. App. (AT) (CH) No.7/2025 Page 4 of 7 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.

5. 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.

6. 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

Comp. App. (AT) (CH) No.7/2025 Page 5 of 7 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".

7. 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.

" It is also informed that in that petition, Forensic Auditor has been appointed who has submitted his report. Ld. Counsel submits that the Petitioner herein intends to file objection on the report of the Forensic Auditor.

In the present petition, in an interim relief, the Petitioner has prayed for an appointment of a Forensic Auditor. Since the company is the same in both the petitions and already a Forensic Auditor has been appointed and his

Comp. App. (AT) (CH) No.7/2025 Page 6 of 7 report has been received, we are not inclined to appoint another forensic auditor."

8. 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.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical)

30.04.2025 GKJ/MS/MS

Comp. App. (AT) (CH) No.7/2025 Page 7 of 7