NCLAT Stays NCLT Order Appointing Administrator For Maruti Suzuki Dealer Indus Motors

The National Company Law Appellate Tribunal (NCLAT) at Chennai on Monday stayed the operation of an order of the NCLT Kochi appointing an administrator to oversee the affairs of Indus Motor Company Pvt. Ltd., a major Maruti Suzuki dealership group in Kerala, observing that the direction lacked adequate reasoning.

A coram of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain passed the interim order while hearing a batch of appeals challenging the NCLT's order.

"So far as the impugned order of 03.09.2025 is concerned, looking to the backdrop of the grounds taken by the Appellants in the four connected Company Appeals, where they have commonly challenged the impugned order of 03.09.2025, we feel that at this interim stage, the impugned order dated 03.09.2025, deserves to be stayed so far as it relates to the appointment of the administrator to look into the affairs of the company and the terms and conditions which have been detailed therein in para 286 of the impugned order.", the tribunal ordered.

The appeals arose from a common order dated September 3, 2025 passed by the NCLT Kochi Bench in a company petition alleging oppression and mismanagement in Indus Motor Company Pvt Ltd.

The petition had been filed by minority shareholders collectively holding about 20% stake in the company, who alleged that the majority shareholders controlling around 59.83% of the company had mismanaged its affairs and diverted company funds. They sought, among other reliefs, a forensic audit of the company's accounts from FY 2011-12 onwards, an investigation by the Central Government into its affairs, compensation for losses allegedly caused to the company, and disqualification of the majority shareholders from management.

While the petition was pending, the NCLT passed an order directing certain majority shareholders to refund Rs 2.37 crore with interest to the company and to return remuneration and other monetary benefits received during periods of alleged disqualification.

The tribunal also directed the Ministry of Corporate Affairs to investigate the affairs of the company and appointed former Kerala High Court judge Justice S. Siri Jagan as administrator to oversee the company.

Aggrieved by the order, the company and its directors and shareholders filed the present batch of appeals before the NCLAT.

The appellants contended that the impugned order was bad in law as the NCLT had issued several directions without recording findings establishing a pattern of acts amounting to oppression or mismanagement.

The NCLAT held that when a court adjudicates the rights of parties, whether at an interlocutory stage or at the stage of final disposal, it must record findings based on the evidence and provide reasons for the conclusions reached.

“Any conclusion which is derived by the Tribunal or the Court, without assigning reasons, cannot be read in the eyes of law, for the reason being that once such an order is put to test at an Appellate forum, it is always the disclosure of the mind of the Tribunal based upon consideration of material which is to be considered by the Appellate Tribunal as to how and under what logic the Tribunal has recorded its finding and proceeded to pass the order,” it said.

The Tribunal observed that the sole reason recorded by the NCLT for appointing an administrator was that the direction would protect the interests of the company and its stakeholders.

“There is nothing on record to show as to how and in what manner the Tribunal had arrived at the said conclusion, and upon consideration of which material,” it said.

The appellate tribunal noted that the NCLT had not explained how the appointment of an administrator would safeguard the interests of the company or its stakeholders.

Accordingly, the Tribunal stayed the operation of the NCLT order insofar as it appointed an administrator to oversee the affairs of the company.

However, it clarified that it was not interfering with the direction for investigation by the central government into the affairs of the company.

For Appellants: Senior Advocates PS Raman, Satish Parasaran, Advocates R.Venkatavaradan, Alishan Naqvee, Rupal Bhatia and Saurav Chaudhary.

For Respondents: Senior Advocate PH Arvind Pandian and Advocates Shruti Khanijow, Amee Rana, Prasidhi Agrawal, Darshit Sidhabhatti, Rahul Balaji and Medha Sachdev