NCLT Order Lacked Reasons or Analysis Despite ‘Analysis and Findings’ Heading: NCLAT Sets Aside Order [Read Order]

The National Company Law Appellate Tribunal (NCLAT) set aside an order of the National Company Law Tribunal (NCLT), Kolkata Bench, which had appointed an independent scrutinizer to examine the results of the 2024-25 elections of the Calcutta Cricket & Football Club.

The appellate tribunal found that the NCLT’s order lacked judicial reasoning and had been passed in breach of the principles of natural justice and Rule 37 of the NCLT Rules, 2016.

The Calcutta Cricket & Football Club, a Section 8 company with 1,880 members, conducted its annual elections on 30 September 2024. Respondents in the appeal, who were club members and participants in the election, filed an application before the NCLT on 3 December 2024 seeking preservation and scrutiny of the election records, alleging irregularities.

The NCLT heard the matter on 9 December 2024, granted one week to the club to file a reply, but reserved orders on the same day. On 3 January 2025, the NCLT passed an order appointing an independent scrutinizer and directing preservation of election materials.

The appellant’s counsel argued that the order did not contain any reasons or analysis despite a heading “Analysis and findings,” and merely recorded the applicant’s belief without the tribunal forming its own satisfaction. They submitted that reserving orders on the same day as granting time to reply rendered the opportunity meaningless, violating Rule 37 and the principles of natural justice.

The respondents argued that participation in the election did not prevent them from questioning its conduct, and that the absence of a senior advocate as scrutinizer in this election, unlike previous years, raised concerns. They stated that the request was to preserve ballot materials to ensure transparency in the pending company petition, and that the appellant’s counsel had been heard with written submissions filed.

The bench comprising Justice Rakesh Kumar, Member (Judicial), and Dr. Alok Srivastava, Member (Technical), observed that the NCLT order did not contain any independent findings or reasoning, and that recording only the applicant’s “reasons to believe” was not a substitute for judicial analysis. It further observed that granting time to reply but reserving orders the same day was contrary to Rule 37 and denied the appellant a meaningful opportunity to be heard.

Based on these findings, the NCLAT set aside the NCLT’s order dated 3 January 2025. It also directed that the appellant take custody of the election materials deposited in the NCLT. The interim order passed earlier in the appeal was discharged, and no costs were imposed.

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