Principle of natural justice mandates that parties must be adequately represented in adjudicatory proceedings; denial of representation may void decisions.

ORDER

(Hybrid Mode)

17.11.2025:

Oral Judgment : Justice Sharad Kumar Sharma, Member (Judicial):

1. The Appellants herein are aggrieved by the impugned order of 30.11.2022 that, has been passed by the Ld. NCLT, Bengaluru Bench in IA No. 499 / 2020, which was preferred in CP (IB) No. 243 / BB / 2018.

2. The consequential effect of the same had been that, the application preferred by the Respondent, under Section 43 of I & B Code, 2016, has been alleged to be erroneously allowed and consequentially it has resulted into issuing a direction against the Appellants herein, to respectively restore certain amount, as referred to in the operative portion of the impugned order, determined to be payable by each of the Appellants.

3. The Ld. Counsel for the Appellant has pressed upon the Appeal on a very limited conspicuous, submitting that though they had filed their counter affidavit prior to the date on which the Company Appeal was being heard by the Ld. Tribunal, but the counsel who was suppose to represent the cause of the Appellant was not present on the said date, owing to the fact that because of Covid-19 situation initially she was engaged in an independent practice and thereafter she has quit the same and has joined the Law Firm, due to which, on the date when the effective hearing of the Company Petition was held by the Ld. Tribunal, the Appellants were not heard, as they remained unrepresented.

4. We called upon the Respondent Counsel to answer the exclusive ground taken by the Appellant in the instant Company Appeal.

5. The Ld. Counsel for the Respondent has drawn the attention of this Tribunal to the contents of Para 13 & 14 of the impugned order to object the argument extended by the Ld. Counsel for the Appellants contending thereof that, as a matter of fact, the Appellants were heard, on the aspect of delay, as well as they were also heard before the Auditor.

6. In fact, hearing of the Appellant at the stage of submission of the transaction Audit Report or even at the stage when the Auditors were supposed to submit their Audit Report in itself would not be taken to be sufficient and effective hearing to have been provided to the Appellants for the reason being that, when an adjudication is being taken upon on the basis of the transaction reflected in Audit Report for the purposes of determining the aspect of preferential transaction under Section 43 of I & B Code, 2016, the Appellants who had already submitted his pleading by filing the counter before the Ld. Tribunal were supposed to be represented by their counsel, and be heard and addressed by the counsel on the merits of the application, or even in response to the arguments raised by the Applicant to the application under of I & B Code, 2016.

7. However, the Counsel’s inability to appear on date of hearing as already expressed above, was owing to counsel’s personal inconvenience and the same cannot be attributed to the Appellants, and thus under the settled principles of cannot be attributed to the Appellants above and under the certain principles of audi alteram partem, no party to the proceedings can be condemned unheard.

8. The governing principles of audi altarem partem is basically envisage that the fundamental rule of natural justice is to be followed to ensure to enable a party to the proceedings to effectively represent its cause in order to attach a fairness to the proceedings between the parties which is the basic element which is required to be considered and ensure before determining the right or liabilities to the party to the proceedings.

9. It has been settled that the functions of the