Due to the order's enigmatic and silent nature, there is nothing in it to support the instructions for a forensic audit of the Company's financial records. the ruling rendered by the NCLAT New Delhi (principal bench) in its decision in Company Appeal (AT) No. 296 of 2019 between Vijaya Sai Poultries Pvt. Ltd. and Vemulapalli Sai Pramella & Ors.
In the instant case titled Vijaya Sai Poultries Pvt. Ltd. Vs. Vemulapalli Sai Pramella & Ors the issue raised for clarification before the NCLAT was:
Whether the forensic audit was valid or not?
With regard to this issue, NCLAT held that the letter of abdication, the share move deeds, and the manufacturer's claim are all uncertain. The application does not specify how Mr Naveen Kishore diverted funds from the Appellant Company or when he purchased 50 residences for the benefit of his relatives using Company assets. In fact, there is no mention of how or when the Respondents learned that Mr Naveen Kishore had participated in false deal exchanges anywhere in the application. Additionally, the Respondents are not required to record any archives supporting the aforementioned charges.
According to the guidelines established by the Hon. Supreme Court in the matter of Kranti Associates, it was determined that the order has no justification for the directives to carry out a forensic audit of the Company's accounts for a period of more than 15 years. The Adjudicating Authority is required to document the justifications for its decisions. However, the Impugned Order makes no mention of the reasons behind the aforementioned orders. The order cannot be maintained because it is non-speaking and cryptic.
The NCLAT categorically stated that,
“Further, Mr Naveen Kishore manipulated 7 Company Appeal (AT) No. 296 of 2019 the financial statements with ulterior motives and failed to conduct board meetings from time to time. Ld. Tribunal having considered the matter from all angles is justified in passing the Impugned Order directing that a forensic audit be conducted of the accounts of the Appellant Company. There is no merit in this Appeal and is hence, liable to be dismissed.”