NCLAT on Bhagyodayam Probe Order

New Delhi, Oct 14 (PTI) The NCLAT has set aside an appeal against an NCLT order, which through a modified order directed probe agency SFIO to appoint an inspector to investigate the affairs of Kerala-based company Bhagyodayam.

On January 3, 2024, the Kochi bench of the National Company Law Tribunal (NCLT) had modified an earlier order of March 11, 2020, in which an SFIO probe was directed against Bhagyodayam.

Acting on a plea seeking modification of the order, NCLT had said, " The central government shall appoint an inspector to investigate the affairs of Bhagyodayam Company”, instead of SFIO, Chennai. The remaining part of the order shall remain unaltered.

These changes were challenged by Paul Jospeh before the Chennai-bench of the National Company Law Appellate Tribunal (NCLAT).

The appellant, against whom the investigation was supposed to be carried in pursuance to the impugned order of January 4, 2024, contended that the new order suffers from the 'legal vices' because it will amount to be an order in the shape of a review without the issuance of any prior notice to him.

He submitted that the entire action of modifying the March 2020 order would be in violation of the Principles of Natural Justice.

However, rejecting it, NCLAT said 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 January 3, 2024.

Normally, the investigations are not interfered by the courts of law because it's only a process, which only facilitates in coming to the conclusions with regard to the set of allegations, it said.

"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 be made responsible to investigate is a prerogative of the NCLT, which cannot be said to have been rendered in exceeding its jurisdiction nor it's the case of the Appellant," it said.

Moreover, counsel representing Bhagyodayam, which is now run by an administrator, informed NCLAT during the course of the arguments, that the petitioner has also approached the High Court of Kerala against the same order by filing a writ, which is pending for consideration there.

"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," said NCLAT.