Khandelia Oil and General Mills Pvt. Ltd. & Ors vs Pankaj Khandelia & Anr

Having heard learned counsel for the parties and having perused the orders passed by the learned Third Member of the National Company Law Tribunal (NCLT) dated 02.02.2017, 03.02.2017 and, in particular, 27.02.2017, before he heard the counsel for the parties fully and then delivered his judgment on 02.06.2017, we are of the view that the point raised by the appellants, which has found favour with the National Company Law Appellate Tribunal, (NCLAT) on breach of various aspects of natural justice, has also to be considered on the touchstone of prejudice caused to the parties.

This is clear from many of our recent judgments, stating that natural justice is not a formula which invalidates proceedings regardless of prejudice caused to the parties. (See Haryana Financial Corporation and Another v. Kailash Chandra Ahuja (2008) 9 SCC 31, paragraphs 36 to 43)

Thus, on the facts of this case, we are satisfied that in the proceedings before the learned Third Member, counsel for both parties, including that of the respondents, were present throughout and had their full say on all points, as has been set out in the elaborate judgment of the learned Third Member dated 02.06.2017.

In this view of the matter, and also having regard to the fact that at no stage before the learned Third Member was any such point of breach of natural justice raised, the NCLAT judgment must be set aside.

The appeals are allowed.

It is now open for both the parties to argue the appeal as well as cross objections on merits before the NCLAT against the three judgments of the NCLT.

We make it clear that the respondents will be allowed to amend their memo of appeal to include all points including points against the decision of the learned Third Member of the NCLT. This amendment, if carried out within a period of four weeks from today, will stand allowed and the amended appeal, together with cross objections, if any, thereto be decided on merits.