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7. Sri. Masoom K. Shah, learned counsel appearing in one of the appeals, for the appellant while adopting the submissions of Sri. Parmeshwar, points out a defect in the constitution of the NCLAT insofar as it being comprised of two Technical Members and one Judicial Member. Reliance is placed on Union of India v. Madras Bar Association3 (2010-MBA) (paragraph 120 (xii)) to contend that a Constitution Bench of this Court deprecated the practice of a majority of Technical Members sitting in a Bench of the NCLT or the NCLAT, which substitutes the High Court. In anticipation, to preempt that contention, it is pointed out that there cannot be raised a ground of acquiescence, insofar as the defect going to the root of jurisdiction by reason of the illegal composition, as has been held in State of M.P. v. B.R. Thakare4. Sri Shah also points out from the valuation report and the documents pertaining to (2010) 11 SCC 1 (2002) 10 SCC 338 Civil Appeal No. 7655 of 2025 etc. various associates of the agency which carried out the valuation that it has an inextricable link and connection with the Internal Auditor of BTL. The one who signed the valuation report itself is in the Board of the internal auditor, thus, throwing a cloud of absence of impartiality on the valuer, coupled with a bias in favour of the majority shareholders revealing a collusion in arriving at a lower value of shares for the exit of the individual members from the public; which does not augur well on the facts of the case especially on the minority shareholders being given a raw deal and forced out of their shareholding.

11. The fact that the valuer was a sister concern of BTL’s Internal Auditor does not bring forth any conflict of interest or validate the contention of lack of independence. The Internal Auditor as is mandated by the guidelines issued by the Institute of Chartered Accountants of India (ICAI) is an independent agency appointed by the Company for the purpose of carrying out audit, as per the mandate of the Act of 2013. The mere fact that the signatory of the report valuing the shares of BTL was in the Board of Directors of BTL’s Internal Auditor does not create any conflict or relation insofar as the affairs of BTL. The Internal Auditor acts as an independent agency and so did the valuer on accepted accounting norms. It is reiterated that the same was affirmed by an independent agency and it also was affirmed as a fair and true valuation by two other agencies having no connection with BTL or the Internal Auditor as was sought for by the Custodian who is a party in Civil Appeal No. 2864 of 2021. The valuation and fairness report being on the same date only denotes the day of issuance and is no reflection of the time taken for evaluation. Civil Appeal No. 7655 of 2025 etc.

33. On the finding that there was no statutory mandate for a valuation report for the reduction of a share capital, we could reject the arguments raised of a related agency having been employed for valuation, but we proceed to consider the ground of a Civil Appeal No. 7655 of 2025 etc. perceivable bias raised. The specific argument is that the valuer was an associate/affiliate of the internal auditor of the company. It was buttressed by reference to documents, including the valuation report displaying the same logo, having common partners/directors and the internal auditor having a controlling interest in the valuer. There was a contention by the respondent that no allegation of mala fide or bias can be raised without making the entity against whom such an allegation is raised, a party to the lis. We are not persuaded to reject the contention only on that ground since here the lis was initiated by the company for the purpose of obtaining a confirmation of the special resolution, which is strictly not adversarial in nature, but in which the stakeholders are entitled to raise their objections and argue against such confirmation. Hence, when an objection is raised as to the independence or lack of it, of a valuer, it is for the Tribunal to look into it and if satisfied implead that entity or otherwise reject it in limine; which later procedure was adopted in the present case.

34. Before us, the learned Senior Counsel appearing for the respondent company had produced the Basic Principles Governing Internal Audit which mandates that the internal auditor shall be free from undue influence and shall resist any undue Civil Appeal No. 7655 of 2025 etc. pressure or interference in establishing the scope of the assignments or the manner in which the audit is conducted and reported. The internal auditor in the nature of an in-house vigilance machinery, is mandated by the Act of 2013, under Section 138 read with The Companies (Accounts) Rules, 2014. Rule 13 of the said Rules by its Explanation also permits an employee to be appointed as an internal auditor, which in the present case has not been resorted to. Though, distinguished from statutory audits under Chapter X, the internal auditor, here an outside agency, merely by their appointment by the company cannot be said to be related in any manner to the company. Appointment as an internal auditor, does not bring in a bias with respect to the activities of the company which would essentially go against the scope and spirit of an audit carried out of the accounts of the company as an in- house verification, which is also a statutory requirement, available for scrutiny before a statutory auditor. It has been held in N.K. Bajpai v. Union of India13 that bias should be demonstrably real and present to vitiate an action. Where it is shown that there exists a real danger of bias the action would attract judicial chastisement (2012) 4 SCC 653 Civil Appeal No. 7655 of 2025 etc. while, if it is only a mere probability or even a preponderance of probability it cannot affect the action adversely, was the law declared. We do not find even a probability that the internal auditor would act in a biased manner, leave alone the valuation agency which is an affiliate of the former.