National Company Law Appellate Tribunal
Las Goldair Handling (Bagdogra) ... vs Goldair Handling S.A. And Anr on 22 March, 2024
1
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COMPANY APPEAL (AT) NO.28 OF 2024
&
IA NO.672 OF 2024
(Arising out of the judgement and order dated 23rd November, 2023 passed by
the National Company Law Tribunal, Kolkata Bench II, Kolkata in CP No.278
of 2023)
In the matter of:
LAS Goldair Handling (Bagdogra) Pvt Ltd,
C/o Bagdogra Airport, Arrival Hall, Bagdogra,
District Darjeeling, West Bengal 734421 Appellant
Vs
1. Goldair Handling S.A.
Being the distinctive title of Goldair
Aviation Handling SA, a company incorporated
Under the Greek Laws and having its
Registered address at Athens International Airport
EI Venizelos
Building 24, 1st Floor, Spata 19019, Greece.
2. LAS Ground Force Pvt Ltd,
301, 3rd Floor, Bhavya Plaza, Bhavya Commercial Building,
Khar, 5th Road, Khar (West),
Mumbai 400052 Respondents
For Appellant:Mr. Ratnanko Banerji, Sr. Advocate, Mr. Siddhartha Sharma,
Mr. Arjun Asthana, Ms Shalini Basu, Advocatexs.
For Respondent: Major R.P. Singh, Sr. Advocate, Mr Abhijeet Sinha, Sr.
Advocate, Mr. Abhirup Dasgupta, Ms Faranaaz Karbhari, Ms M Dutta, Mr
Hemant Kothari, Mr Ishaan Duggal, Ms Ruchi Goyal, Ms Heena Kochar,
Advocates for R1.
Mr. Krishnendu Dutta, Sr. Advocate, Mr. Sidhartha Sharma, Mr. Arjun
Asthana, Ms Shalini Basu, Advocates for R2.
With
COMPANY APPEAL (AT) NO.29 OF 2024
&
IA NO.677 OF 2024
2
(Arising out of the judgement and order dated 23rd November, 2023 passed by
the National Company Law Tribunal, Kolkata Bench II, Kolkata in CP No.278
of 2023)
In the matter of:
LAS Ground Force Pvt Ltd,
301, 3rd Floor, Bhavya Plaza, Bhavya Commercial Building,
Khar, 5th Road, Khar (West),
Mumbai 400052 Appellant
Vs
1. Goldair Handling S.A.
Being the distinctive title of Goldair
Aviation Handling SA, a company incorporated
Under the Greek Laws and having its
Registered address at Athens International Airport
EI Venizelos
Building 24, 1st Floor, Spata 19019, Greece.
2. LAS Goldair Handling (Bagdogra) Pvt Ltd,
C/o Bagdogra Airport, Arrival Hall, Bagdogra,
District Darjeeling, West Bengal 734421 Respondents
For Appellant: Mr. Krishnendu Dutta, Sr. Advocate, Mr. Sidhartha Sharma,
Mr. Arjun Asthana, Ms Shalini Basu, Advocates
For Respondent: Major R.P. Singh, Sr. Advocate, Mr Abhijeet Sinha, Sr.
Advocate, Mr. Abhirup Dasgupta, Ms Faranaaz Karbhari, Ms M Dutta, Mr
Hemant Kothari, Mr Ishaan Duggal, Ms Ruchi Goyal, Ms Heena Kochar,
Advocates for R1.
Mr. Sidhartha Sharma, Mr. Arjun Asthana, Ms Shalini Basu, Advocates for
R2.
JUDGEMENT
JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) This appeal is filed against an interim order dated 23.11.2023 passed by the National Company Law Tribunal, Division Bench, Court II, Kolkata in Company Petition No.278/KB/2023 stating interalia the said order was passed without proper consideration of the facts and non-application of mind. The Learned counsel for the appellant submitted the Respondent No.1 has breached the shareholders' agreement and exclusivity agreement and had 3 engaged itself in rival competitive business against the interest of the Joint Venture and though the Respondent No.1 was always given access to the appellant's books of accounts despite that an interim order was passed without recording proper reasons. It is argued the impugned order of directing an independent forensic audit into the affairs of the Appellant company would rather harm the reputation of the appellant company.
2. It is submitted the Respondent No.1 and Respondent No.2 are the shareholders in Appellant company i.e. LAS Goldair Handling (Bagdogra) Pvt Ltd, a Special Purpose Vehicle created to bid for a tender floated by Airport Authority of India (AAI) to carry out ground handling service at Bagdogra airport and for participating in the bidding process of concession for ground handling services at AAI owned airports.
3. A letter of intent to award was awarded to the Appellant herein for a concession for ground handling services at the Airport and on 8th November, 2021 a Concession Agreement was entered into between AAI being the Authority and the Appellant, SPV being the concessionaire, with right to provide ground handling services for a period of 10 years.
4. The company petition was filed for Oppression and Mismanagement by Respondent No.1 alleging the appellant had denied to the Respondent No.1 the inspection of the books of accounts; had not called for an EOGM; had purchased loan without its consent and had failed to comply with statutory compliances.
5. The learned counsel for the Appellant has referred to the Rejoinder Affidavit filed in support of this appeal to say there have been a dispute 4 between the Appellant and Respondents qua the exclusivity agreement as well as insufficient investment made by Respondent No.1 and for this reason two letters viz letters dated 13.7.2023 and 12.08.2023 were sent by the appellant to Respondent No.1. Further the appellant refers to a letter dated 12.12.2023 wherein it noted the Respondent No.1 had violated the 'Exclusivity Clauses' and had rather given an independent bid for ground handling service at Nagpur Airport and has been awarded such contract.
6. Be that as it may, the crux of the argument made by the Learned Counsel for the appellant is the impugned order is devoid of reasoning. It is alleged no reason is mentioned by the Ld. NCLT to direct an independent forensic audit into the affairs of the appellant since its inception in 2021, despite the fact the accounts till 31.03.2022 were settled as per the minutes filed and one Mukesh Choksi & Company has been appointed as an Auditor. Qua the necessity of reasoning to an order the Learned counsel for the appellant has referred to Secretary and Curator, Victoria Memorial Hall Vs Howrah Ganatantrik Nagrik Samity and others (2010)3 Supreme Court Cases 732 which read as under:-
"40. It is a settled legal proposition that not only administrative but also judicial order must be supported by reasons, recorded in it. Thus, while deciding an issue, the Court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of an order and exercise of judicial power by a judicial forum is to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration justice - delivery system, to make known that there had been proper and due application of mind to the issue before the Court and also as an essential requisite of principles of natural justice. "The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before Courts, and which is the only 5 indication to know about the manner and quality of exercise undertaken, as also the fact that the Court concerned had really applied its mind."(Vide State of Orissa V. Dhaniram Luhar and State of Rajasthan V. Sohan Lal)."
41. Reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, it becomes lifeless. Reasons substitute subjectivity by objectivity. Absence of reasons renders the order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. [Vide Raj Kishore Jha Vs. State of Bihar & Ors.; Vishnu Dev Sharma Vs. State of Uttar Pradesh & Ors. Steel Authority of India Ltd. Vs. Sales Tax Officer, Rourkela I Circle & Ors. State of Uttaranchal & Anr. Vs. Sunil Kumar Singh Negi; U.P.S.R.T.C. Vs. Jagdish Prasad Gupta; Ram Phal Vs. State of Haryana & Ors.; Mohammed Yusuf Vs. Faij Mohammad & Ors.; and State of Himachal Pradesh Vs. Sada Ram & Anr.]".
7. He further referred to Company Appeal (AT) No.296/2019 decided on 27.05.2021 by this Tribunal holding as follows:-
"15. There is nothing in the order to justify the directions for conducting forensic audit of accounts of the Comkpany that too for more than 15 years. The Adjudicating Authority must record reasons in support of conclusions. However, in the impugned order no reasons are mentioned for the said directions. The order is cryptic and non-speaking, therefore, it cannot be sustained."
8. Thus it is argued that there is nothing on record to reveal the Tribunal had applied has applied its mind to direct forensic audit and such order be set aside and matter be remanded back for hearing the application afresh.
9. Before proceeding further it would be appropriate to refer to paras 6, 7, 8, 9 and 10 of the impugned order:-
6. Further, it is claimed that during the course of the partnership between the Petitioner and Respondent No.2 concerning the Respondent No.1 SPV, from June 2021 onwards, multiple issues/problems have arisen in terms of the management of the Respondent No.1 SPV, which is completely/entirely run by the 6 Respondent No. 2 including all statutory compliance related obligations. The issues that cropped up between the parties are multifarious and numerated as below: -
a. The petitioner has been denied Inspection of Accounts, Records etc. of the Respondent No.1 SPV by the Petitioner being a Shareholder thereof; Inspection of Accounts, Records etc. of the Respondent No.1 SPV by Mr. Andreas Fotakis in his capacity as a director thereof,; Appointment of External Auditor to examine the books of accounts of the Respondent No I SPV as well as the accounting practices and the internal control procedures implemented by it Access to records of the Respondent No. 1 SPV, appointment of Statutory Auditor and other connected/ ancillary issues.
b. Requisition of an extra-ordinary general meeting sought by the Petitioner was denied by the respondent no. 2.
c. The grounds on which the Petitioner intends to move the instant application are, inter as follows i. Failure to provide/comply with urgent and critical requisitions made by the Petitioner. ii. Prevention of and obstruction to the Petitioner's right to appoint an external auditor to examine the accounts, accounting practices and internal control procedures of Respondent No. 1 SPV;
iii. Prevention/obstruction of the Petitioner's statutory right to call for an EGM under section 100 of the Act.
iv. Statutory violations committed by the Respondent No.2 under the Act.
v. Questionable Appointment of the alleged statutory auditor, Mukesh M. Choksi & Co. as well as unclear role of BDMV & Co., alleged associate of the purported statutory auditor.
vi. Non-Compliances, Missing documentation, lack of proper compliance control systems and violation of section 173(3) of the Act.
vii. Related Party Transactions viii. Discrepancies Audit Report dated 29th August 2023 issued by the Independent Auditor.
7. It is evident that when the matter came up on 17/10/2023, Ld. Senior Counsel for both parties were present. It was 7 directed that a reply affidavit will have to be filed within two weeks from the date on which the matter was reserved for interim relief and it is evident that the matter was reserved for order on 17/10/2023.
8. We find that no Reply Affidavit has been filed and since the matter was reserved for order only for the interim relief, we proceed accordingly based on the documents available before us.
9. In view of the averment made by the petitioner, we are directing for an independent forensic audit into the affairs of the Respondent No. 1 Company since its inception in 2021.
10. Further, we direct that till the final adjudication of this Company Petition, The Respondent No. I shall be barred to proceed with finalizing the purported Audited Profit and Loss Balance Sheet of the Respondent No. 1 for the Financial Year 2022-23."
10. Admittedly on 17th October, 2023 the arguments were heard by the Ld. NCLT and the matter was reserved for orders on interim relief. The appellant was directed to file reply affidavit. Admittedly the appellant neither filed its reply affidavit nor documents as are now filed before us. It is in these circumstances we need to examine if the impugned order was wrong. Admittedly if the reply affidavit and documents were not filed before the Ld. NCLT then there was nothing before the Ld. Tribunal except to proceed on submissions made in the petition or in an application for interim relief. Such submissions have been duly noted in the impugned order. Para 9 of the impugned order rather says it is only in view of the averments made by the petitioner in its petition the interim order is passed.
11. In Archer Power System Pvt Ltd Vs. Cascade Energy Pvt Ltd & Others, Company Appeal (AT) No.213 of 2017 this Tribunal held:- 8
"39. The other issue raised by the appellant is that the NCLT, Chennai has erroneously passed the Impugned Order dated 18- 07-2017 directing the Status Quo Ante and the impugned order dated 14-06- 2017 directing forensic audit before deciding the issue of maintainability. We heard the contentions of the parties and we are of the view that the question of maintainability need not to be decided as preliminary issue which can be decided along with main petition. Thus the NCLT under Rule 11 of National Company Law Tribunal Rules, 2016 has the inherent powers to pass such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal. Therefore, the orders passed by NCLT are not questionable on the grounds contended by the Appellant. Also, we are of the opinion that maintainability is a mixed question of facts and law and conducting a forensic audit could produce the important facts that may be required by the NCLT in order to decide the preliminary issue.
41. From the bare perusal of the impugned order we are of the view that the Tribunal have the power to make interim orders which it think fit for regulating the conduct of the company's affairs. There are allegations of siphoning of funds, breach of agreements and failure to maintain proper books of accounts thus it was required on the part of the Tribunal to conduct a forensic audit by an independent auditor in order to proceed further with the petition. We are of the opinion that imposition of forensic audit and calling for the report of Forensic Audit before the Tribunal is a measure to help the Tribunal to appreciate the issue on the basis of an independent report so as to ensure that the case is processed with due regard to rights and obligations of contesting parties would be in the interest of justice. Similarly the status quo as made is only with a view to regulate the conduct of the company's affairs during the pendency of the case so that no contesting party takes an advantage during the period detrimental to the other party. The status quo restored as on 27.4.2017 (date of petition) as directed by the NCLT Chennai till the matter is under consideration cannot be found faulted with."
12. In view of the above we find no infirmity in the impugned order before us, specially in view of the fact only oral submissions were made before the Ld. NCLT as alleged, without support of any documents or reply. Even otherwise conduct of forensic audit does not determine the rights and 9 liabilities of the parties but merely would enable the Ld. Tribunal to appreciate the issues involved. The issues raised in the petition before Ld. NCLT are allegations of siphoning of funds, grave lapses in the appointment of statutory auditors, lack of approval of petition on reserved matter, non-maintenance of proper books of accounts and hence this conduct of forensic audit will only come to the aid of the Tribunal to adjudicate the petition. There is further an allegation the appellants had taken loan without the approval of the Respondent No.1 despite it being a reserved item and admitting its fault the appellant hurriedly paid off the said loan vide DD dated 10.11.2023 after filing of the petition. Further the credentials of Mahesh Choksi and Co viz the auditor is also questioned by Respondent No.1 in view of Mukesh Maneklal Choksi Vs Union of India 2020 SCC Online NCLAT 93, decided on 17.02.2020.
13. Thus in view of the allegations of serious lapses and non-compliance in the financial statements, no proper disclosure of related party transactions, non-reporting, non-disclosure and non-compliance of statutory compliances, as alleged in the petition before Ld. NCLT, the interim order passed by the Ld. NCLT is justified and we see no reason to interfere in the impugned order. Accordingly, appeal being devoid of merits is dismissed. All pending applications are also disposed of.
Company Appeal (AT) No.29/2024 In view of the above judgement, the Company Appeal (AT) No.29/2024 is also disposed off on same reasoning.
(Justice Yogesh Khanna) Member (Judicial) (Mr Arun Baroka) Member (Technical) Dated:22-03-2024 bm