IL&FS: MCA to move NCLT to appoint Statutory Auditor within two days

The Ministry of Corporate Affairs (MCA) will move an application before the Mumbai Bench of NCLT within two days to appoint Statutory Auditor for IL&FS Financial Service Limited (IFIN), advocate Sanjay Shorey, Director of Legal Prosecution of MCA informed NCLT on Friday..The NCLT Bench of judges V P Singh and Rajesh Sharma has been hearing the petition filed by the MCA seeking a five-year ban on BSR & Associates and Deloitte Haskins, former auditors of IL&FS..The MCA took this step after the Supreme Court, on Thursday granted liberty to the Central Government to move an application before NCLT seeking the appointment of Statutory Auditor for IL&FS in order to fill up the vacancy created by the resignation of auditors BSR & Associates (a KPMG arm). Deloitte Haskins & Sells, had stopped being an auditor after Fiscal Year 2018..“We see no reason why steps in that behalf could not be taken with promptitude so that the interest of the company is not prejudiced on any count,” the Supreme Court had observed..With this, a Division Bench of Justices UU Lalit and Indira Banerjee of the Supreme Court had disposed of an SLP filed by MCA challenging the September 4 order of the Bombay High Court which had granted interim relief to former auditors and had stayed proceedings of NCLT Mumbai Bench. The MCA had filed an application under Section140 (5) of the Companies Act, 2013, before the NCLT Mumbai seeking a five-year ban on auditors. The Supreme Court directed the High Court to expeditiously dispose of the writ plea of BSR & Associates..“However, we are of the view that the controversy in question and the issues that have been raised before the High Court need to be considered at an early date,” the Apex Court noted on Thursday..Moreover, a Division Bench of Justices Ranjit More and NJ Jamadar of the High Court had also directed that no coercive action shall be taken against BSR & Associates in the criminal complaint filed by the Serious Fraud Investigation Office (SFIO) against IL&FS before the trial court till further orders..The Bombay High Court will hear the case from October 3, while the Mumbai Bench of NCLT has posted hearing in pleas related to IL&FS matter for November 25..The MCA had earlier sought an appointment of Statutory Auditor from NCLT on June 10. In light of this, Solicitor General Tushar Mehta, appearing for the MCA submitted before the Supreme Court on September 26, that after the resignation of the BSR and Deloitte as its auditors, IL&FS passed a resolution on July 11, this year appointing M/s. Mukund M. Chitale & Co. Chartered Accountants as Statutory Auditors to fill up the vacancy..Mehta had further submitted that M/s Mukund M. Chitale & Co. had, however, expressed their inability to take up the assignment, which would, in turn, mean that fresh appointment is required..The Serious Fraud Investigation Office (SFIO) probe had revealed that auditors colluded with IFIN executives and concealed information about the wrongdoings of the management despite having full knowledge of the affairs at IL&FS..Following the SFIO findings, the MCA, under Section 140(5) of Companies Act, 2013, had moved an application seeking the removal of the auditors, and a five-year ban for allegedly conniving with the management of IFIN..The Sessions Court of Mumbai on June 6 had admitted the charge sheet filed by the SFIO against 30 entities in the IFIN fraud case. The charge sheet, filed on May 30, named several members of the former top management of IL&FS including Former CEO and Managing Director Ramesh Bawa and former Vice-President of IFIN Hari Sankaran..Moreover, MCA, on August 27 had moved NCLT Mumbai Bench for freezing assets of former auditors of IL & FS following their impleadment in NCLT proceedings in the IL & FS fraud case..The financial transactions of the IL&FS group came under the scrutiny of the SFIO last year after the group defaulted on debt worth Rs. 91,000 crore..Along with Solicitor General Tushar Mehta, advocates Gauri Rasgotra, L Vishwanathan, George Varghese, Aditya Sikka, Karan Khanna of Cyril Amarchand Mangaldas had appeared for MCA before the Supreme Court..Senior Counsel Mukul Rohatgi and Darius Khambatta, briefed by AZB & Partners team VP Singh, Anannya Ghosh, Aditya Mehta, Aditya Jalan, Raghav Seth, Anshula Laroiya, Aman Sharma, Vanya Chhabra, and Devanshi Singh appeared for BSR & Associates..[Read Supreme Court Order]