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2026 Supreme(Online)(NCLT) 2844
NATIONAL COMPANY LAW TRIBUNAL
Ashok Kumar Bhardwaj, Judicial Member, Ravindra Chaturvedi, Technical Member
M.N. Pratap Reddy – Appellant
Versus
Sri Lakshmi Narasimha Mining Company (P) Ltd. – Respondent
C.A.Nos.125, 126/2025|I.A. (CA) No.11/2025, 76 & 77/2026|C.P. No.59/2014|T.P.No.66/2016
For the Appellants/Petitioners: D. Abhinav Rao
For the Respondents: M.S. Shyam Sundar, Joy Basu, Harsha
The tribunal held that in the interest of justice, parties should be granted the opportunity to implead additional parties and amend pleadings based on the findings of an independent audit report to ensure a comprehensive adjudication of allegations regarding corporate oppression, mismanagement, and siphoning of funds.
Headnote:(A) Companies Act, 1956 - Sections 397, 398, 402, 403 - Companies Act, 2013 - Section 166 - Oppression and mismanagement - Audit report - Impleadment of parties - Amendment of pleadings - Tribunals are required to consider the audit report submitted by independent auditors in the interest of justice - Opportunity for impleadment of additional parties and amendment of pleadings based on findings in the audit report should be provided to ensure a fair adjudication of allegations of siphoning of funds and breach of fiduciary duties. (Paras 2-4, 7)
Facts of the case:
The case involves allegations of oppression and mismanagement within a mining company. An independent audit report highlighted siphoning of funds, irregular salary payments to relatives, and non-disclosure of material financial transactions. The petitioners seek to implead additional parties and amend pleadings to include these findings.
Findings of Court:
The tribunal acknowledged the findings of the independent audit report, which suggested collusive acts and financial irregularities. The court permitted the impleadment of additional parties and requested the filing of responses to the audit report by the respondents to facilitate a merits-based hearing.
Issues: Whether the petitioners are entitled to amend their pleadings and implead additional respondents based on the findings of an independent audit report.
Ratio Decidendi: In the interest of justice and to ensure a comprehensive resolution of allegations concerning mismanagement and siphoning of funds, the court must allow the parties to bring relevant materials, including the independent audit report, on record and enable the impleadment of necessary parties for effective adjudication.
Result: Applications for impleadment and amendment of pleadings were considered; respondents directed to file responses, and the matter was listed for further proceedings.
| Table of Content |
|---|
| 1. procedural compliance with appellate orders regarding audit reports. (Para 1 , 2 , 3 , 4) |
| 2. evidentiary value of audit reports in proving corporate fraud. (Para 5 , 6 , 7) |
| 3. procedural directions for impleadment and response to allegations. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14) |
ORDER
C.A.Nos.125 & 126/2025:
1. Heard Ld. Sr. Counsels/Counsels for the parties.
2. Having considered the Company Appeal No.129/2019 which could arise out of Order dated 22.03.2019 passed by this Tribunal in T.P.No.66/2016, the Hon’ble NCLAT passed Order dated 24.04.2023. In terms of the Order, Hon’ble NCLAT reversed the Order passed by this Tribunal and viewed that it will be in the interests of justice, if final audit report submitted by M/s. Brahmayya and Co., Chartered Accountant, is made available to the parties and the report is considered before passing the final order.
3. While passing the Order, the Hon’ble NCLAT also viewed that the Appellants, who had preferred the Appeal before this Tribunal may also be given an opportunity to implead additional parties and bring additional pleadings on record.
4. Para Nos.49 to 51 of the NCLAT Order were read out in the Court today. Mr. D. Abhinav Rao, Ld. Counsel appearing for the Petitioners, referred to Volume-1 of the Audit report submitted by M/s. Brahmayya and Co., Chartered Accountants. He also drew the attention of the Bench to C.A.No.125/2025 preferred for amendment of pleadings, has also to C.A.No.126/2025, filed for impleadment of additional parties.
5. The Counsels for the Petitioners and Respondent Nos.2 to 4 submitted that the aforementioned audit report was made available to them and they have perused the same. Nevertheless, we opened the Audit Report today. Mr. D. Abhinav Rao, Ld. Counsel for the Petitioners, took us through summary of the report to espouse how the additional parties, namely Respondent Nos.6 to 13, are required to be impleaded. The clause 3.1.1 (at page nos.16 & 17 of the Vol-1) of the report reads as follows:
“3.1.1. Benefits received by the Family Members and Relative of Mr. B. Venkata Rami Reddy (“BVR”) from TISSPL.
Based on the information and explanation provided to us, we are of the opinion that Mr. B. Venkata Rami Reddy (“BVR”) had registered few of his family members and relatives as employees of TISSPL, having its registered office in Chennai, who were paid nonstandard salaries from which Mr. BVR received benefits indirectly.
a. The Petitioners have represented that the following are the family members and relatives of Mr. BVR, who received nonstandard salaries from TISSPL.
| Name | Relation with BVR | Occupation | Amount received from TISSPL per annum | PAN No. | Date of Birth |
|---|---|---|---|---|---|
| Mrs. G. Santhakumari | Wife | Housewife | Rs.25,00,000 | ANOPG0769P | 26.02.1955 |
| Mr. Srivastha | Son | Lived in Bengaluru | Rs25,00,000 | ||
| Miss. B.V. Vinuthna Reddy | Daughter | Working in private service in Bengaluru but drawn salary from Chennai based TISSPL also | Rs.25,00,000 | AOUPB3259E | 02.09.1986 |
| Mr. B. Mohan Reddy | Brother’s Son | Rice dealer | Rs.25,00,000 | AMOPR5238R | 09.08.1976 |
| Mr. B. Suresh Kumar Reddy | Borther’s Son | Unemployed | Rs.25,00,000 | AOUPB3258F | 04.04.1986 |
Based on the Income Tax Saral copies provided by the Petitioners/employees of the Company we noted that Ms. G. Santhakumari, Ms. B.V. Vinuthna Reddy, Mr. B. Mohan Reddy and Mr. B. Suresh Kumar Reddy had received as salary from TISSPL more than Rs.50,00,000 to each stated above as salary during the F.Y.2007-08 to F.Y.2010-11.
Further, on review of the Directors’ Report of TISSPL for the yar ended March 31, 2008, we have noted that the above family members and relatives of Mr. BVR were disclosed in the Report as per the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 (As amended) are given below:
| Sl. No. | Particulars | Salary paid during the year | Designation | Educational Qualification |
|---|---|---|---|---|
| 1 | Mrs. G. Santhakumari | Rs.6,25,000 | Manager | M.A. |
| 2 | Miss. B.V. Vinuthna Reddy | Rs.6,25 | ||
