Substituted service and known proceedings defeat natural justice challenge to investigation direction under Companies Act

Substituted service by newspaper publication, coupled with the parties' knowledge of the proceedings, was treated as effective notice, so the objection of violation of natural justice failed. The challenge that the investigation direction under Section 213(b) of the Companies Act, 2013 was passed ex parte was not accepted, because the record showed attempted normal service, substituted service, and sufficient opportunity to respond. The investigation stage was regarded as a fact-finding exercise, and no interference was considered warranted at the threshold when the appellants could still raise their defences before the investigating agency.

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Issues: Whether the order directing investigation under Section 213(b) of the Companies Act, 2013 was liable to be set aside on the ground that it was passed ex parte in violation of natural justice and without effective notice to the appellants.

Analysis: The record showed that notices were first attempted through normal mode and, upon failure, substituted service by newspaper publication was directed and complied with. The Tribunal also recorded that the appellants had knowledge of the proceedings and had been in contact regarding possible settlement. In these circumstances, the claim of complete absence of notice or hearing was not accepted. The challenge was confined to alleged breach of natural justice, but the findings below showed effective service and sufficient opportunity. The investigation ordered under Section 213(b) was treated as a fact-finding stage, and no interference was considered warranted at that stage, especially when the appellants could still raise their defences before the investigating agency.

Conclusion: The order was not held to be ex parte in the legal sense, and the objection based on natural justice failed. The appeal was dismissed, leaving the investigation order intact.

Final Conclusion: The impugned direction for investigation stood affirmed, and no appellate interference was made out on the ground of lack of notice or hearing.

Ratio Decidendi: Where substituted service has been effected and knowledge of the proceedings is attributable to the party, an objection of violation of natural justice will not succeed, and an order directing investigation under Section 213(b) will not be interfered with at the threshold merely because the party chose not to participate.

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