The National Company Law Tribunal today rejected Deloitte's and BSR's applications challenging the tribunal's jurisdiction to ban them from business for five years for their omissions and commissions in the IL&FS Group collapse.
This is the second setback for these foreign audit firms as earlier the tribunal had allowed the corporate affairs ministry to prosecute them along with 21 others in the same case, though its implementation has been stayed after they sought time to challenge the order at the National Company Law Appellate Tribunal.
-
Indian Markets Turning Corner After Two Tough Years, Says Sandeep Tandon -
NDTV Profit Ignite 2026: Experts See Opportunity In Equities, Stay Bullish For Long-Term -
Buy Right, Sit Tight Does Not Work for Individual Stocks, Says Dinshaw Irani -
'Worst Is Behind': Quant MF Sees Market Bottom, Flags 'Extreme Euphoria' In Midcaps -
India's Mutual Fund Industry Could Become A $1 Trillion Opportunity, Say Fund Managers -
'Foreign Investors Are Baraatis': Raamdeo Agrawal's Take On LTCG Tax -
Stay Invested Through Market Cycles: Raamdeo Agrawal at NDTV Profit Ignite -
Ramesh Damani Remains Bullish On India For Next 20-30 Years, Sees Bargains Amid Market Weakness -
CAS Came After A Long Consultation Process: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFIT IGNITE -
Aim To Cut FPI Onboarding Time From Mth To Five Days: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFI
The ministry had in June moved NCLT seeking a five-year ban on the two auditors.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The tribunal today said it will hear the ministry's application seeking a five-year ban on these auditors afresh on Sept. 5.
The auditors had challenged the jurisdiction of the NCLT to ban them under Sec 140(5) of Company's Act.
They had challenged the jurisdiction of the NCLT to ban them, saying section 140(5) of the Companies Act pertains to auditors who are still auditing the company in question while they have already resigned as auditors of IL&FS companies and thus cannot be banned under the given provisions.
While Deloitte had stopped auditing IL&FS Group, which owes over Rs 95,000 crore to lenders and other financial institutions, by the end of FY18, BSR was the statutory auditor of IL&FS Financial Services and resigned only in June this year—nine months after the company was sent to the bankruptcy court.
The BSR counsel Darius Khambata and Deloitte's counsel Janak Dwarakadas had also argued that before banning them, the tribunal must pass a final order in the matter establishing that fraud was indeed committed by the auditors.
The ministry move to ban them came after the Serious Fraud Investigation Office in its investigation found them guilty of painting a rosy picture of IFIN despite being aware of the poor financial health of the company.
The counsels of the audit firms had argued that merely an investigation by SFIO is not sufficient basis to ban them.
The SFIO, in its report alleged that these auditors were aware that IFIN was lending to defaulting companies through group companies so that they could suppress their NPAs and not provide for the bad debt.
Meanwhile, NCLT approved the appointment of other auditors to recast accounts of IL&FS and its subsidiaries.
The ministry had on Thursday proposed Borkar & Mazumdar & Co and MM Chitale & Co for IL&FS and IFIN respectively; and GM Kapadia & Co and CNK & Associates for IL&FS Transportation Networks to recast account of IL&FS and its subsidiaries.
Terming today's ruling unfortunate, Deloitte in a statement said ity “will review the order and decide on the future course of action shortly”.
“We remain committed to high standards of audit quality and ethical conduct in our professional practice. We have faith in the country's regulatory and judicial processes and will continue to cooperate fully with the authorities,” a Deloitte spokesperson was quoted as saying in the statement.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
