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2020 Supreme(Del) 1134
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Sahai Endlaw, Asha Menon, JJ.
Oaks Asset Management Private Limited (erstwhile Alpha Capital Advisors Private Limited) & Anr. - Appellant
Versus
Just Buy Live Enterprise Private Limited & Ors. - Respondent
First Appeal From Order (O S) (C O M M) No. 116 of 2020
Decided On : 23-09-2020
Bishwajit Dubey, Advocate, Gaurav Singhi, Advocate, Srideepa Bhattacharya, Advocate, Aman Singhania, Advocate, Bhavya Sethi, Advocate, Gyanika, Advocate, Uday Gupta, Advocate
The court emphasized the importance of conducting a comprehensive forensic audit and imposed specific timelines and limitations on inquiries, while relieving the respondents from bearing any expenses.
Headnote:
Arbitration - Forensic Audit - Section 9 of the Arbitration and Conciliation Act, 1996 - [Section 9 of the Arbitration and Conciliation Act, 1996] - The court allowed the appeal and directed the forensic audit to be conducted for the years 2015-2016 and 2016-2017, in addition to the years 2017-2018 and 2018-2019, with specific timelines and limitations on inquiries, and without the respondents bearing any expenses.
Fact of the Case:
The appeal challenged the dismissal of a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking clarification of an order for forensic audit of a company's accounts.
Finding of the Court:
The court allowed the appeal and directed the forensic audit to be conducted for additional years with specific timelines and limitations on inquiries, without the respondents bearing any expenses.
Issues: The main issue was the scope of the forensic audit and the respondents' obligation to bear expenses and cooperate with the audit.
Ratio Decidendi: The court held that the forensic audit should cover additional years and imposed specific timelines and limitations on inquiries, while relieving the respondents from bearing any expenses.
Final Decision: The appeal was allowed, and the court issued directions for the conduct of the forensic audit.
JUDGMENT
Rajiv Sahai Endlaw, J. - C.M. Appln. No.23663/2020 (Exemption from filing certified copy of the impugned order dated August 14, 2020, legible copies of dim documents, underlined documents and documents not having requisite font size)
1. Allowed, subject to just exceptions and as per extant rules.
2. The application is disposed of.
FAO (OS) (COMM) 116/2020
3. The appeal impugns the order, dated 14th August, 2020 of the Commercial Division of this Court, of dismissal of I.A.No. 6891/2020, filed by the appellants in disposed of O.M.P.(I) (COMM.) 228/2019 under Section 9 of the Arbitration and Conciliation Act, 1996 (Act), for clarification of the order dated 6 th February, 2020 disposing of the O.M.P.(I)(COMM.)228/2019.
4. The counsel for the respondent Nos. 1 and 2 and the counsel for the respondent No. 3 appear on advance notice.
5. We have heard the counsels, without going into the aspect of the maintainability of this appeal.
6. Though O.M.P.(I)(COMM.)228/2019 under Section 9 of the Act supra was filed claiming several reliefs but the counsel for the appellants/petitioners, when the said petition came up before the court on 6th February, 2020, confined the reliefs therein to appointment of an auditing firm as Forensic Auditor to conduct forensic audit of the accounts of the respondent No.1 company.
7. On the counsel for the appellants/petitioners so confining the reliefs, the counsel for the respondents stated that he had no objection if an independent auditor was appointed to conduct forensic audit of the accounts of respondent No.1 Company for the years 2017-2018 and 2018-2019 and the charges therefor were to be borne by the appellants/petitioners.
8. From a reading of the order dated 6th February, 2020 it appears that the counsel for the appellants/petitioners did not have any objection to the aforesaid and accordingly the petition was disposed of giving liberty to the appellants/petitioners to appoint one of the four named auditing firms, to conduct forensic audit of the accounts of respondent No.1 Company for the years 2017-2018 and 2018-2019.
9. Today, the counsels have informed that pursuant thereto the appellants/petitioners appointed an Auditor and forensic audit is going on and the respondents have provided all the requisite information, including passwords for all emails, to the auditor, for the purposes of the said audit.
10. The appellants/petitioners thereafter filed I.A.No.6891/2020 seeking that the audit should be also for the years 2015-2016 and 2016-2017, besides for the years 2017-2018 and 2018-2019 already ordered. The said application came up before the Commercial Division on 14th August, 2020, when recording that during the hearing on 6th February, 2020, the years 2017-2018 and 2018-2019 were mentioned and to which the respondents agreed, the O.M.P.(I)(COMM.)228/2019 was disposed of and the appellants/petitioners were in effect seeking review of the order, the application was dismissed.
11. The counsels for the respondents, on enquiry though have fairly stated that they have nothing to hide and have already cooperated to the maximum, have contended that the audit underway, in spite of all information having been provided, is extending endlessly and the respondents are being asked to bear certain expenses and which the respondents are not willing to bear. It is stated that the respondent No.1 Company has stopped all businesses and has no activity and its Directors, being respondents No. 2 and 3 are being put to unnecessary harassment during the course of the forensic audit.
12. However, on it being proposed to counsels for the respondents that the time-limit for the forensic audit as well as the number of inquiries which can be made from the respondents can be limited and directed to be specific and in writing, with the respondents being required to submit written answers and that the respondents will not have to bear any expenses, the counsels for the respondents have agreed.
13. In the circumsta
