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Issues: (i) Whether an order directing investigation into the affairs of a company under Section 213(b) of the Companies Act, 2013 could be sustained without recording reasons and satisfaction on the statutory preconditions; (ii) whether the Tribunal's failure to first consider the earlier order requiring the applicant to establish locus vitiated the impugned order.
Issue (i): Whether an order directing investigation into the affairs of a company under Section 213(b) of the Companies Act, 2013 could be sustained without recording reasons and satisfaction on the statutory preconditions.
Analysis: The statutory power to order investigation under Section 213(b) is conditional upon the Tribunal being satisfied that the circumstances warrant such a direction. Because an investigation order has serious consequences, the Tribunal was required to apply its mind to the material and record reasons showing why the statutory threshold was met. The impugned order did not disclose any such reasoning or satisfaction.
Conclusion: The investigation order was unsustainable for want of reasons and due satisfaction under Section 213(b).
Issue (ii): Whether the Tribunal's failure to first consider the earlier order requiring the applicant to establish locus vitiated the impugned order.
Analysis: An earlier order had directed the applicant to establish locus by affidavit before the application could be examined on merits. The impugned order proceeded to allow the application without first addressing that foundational objection. This omission amounted to a procedural error and reflected non-application of mind to a material preliminary issue already pending before the Tribunal.
Conclusion: The impugned order was procedurally vitiated for not first determining the issue of locus.
Final Conclusion: The order directing investigation was quashed and the matter was sent back for fresh consideration in accordance with law after addressing the preliminary objection and recording due reasons.
Ratio Decidendi: An order under Section 213(b) of the Companies Act, 2013 directing investigation must be supported by recorded satisfaction and reasons, and failure to decide a material preliminary objection before proceeding on merits vitiates the order.
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