Kanorias, the founder of Srei, are likely to challenge the initial report from the BDO India, the transaction auditor of two insolvent group firms, which alleged that there were certain transactions which are fraudulent in nature. The total impact of these alleged fraudulent transaction amounts to around Rs 3,025.73 crore.
The Reserve Bank of India-appointed administrator for the Srei firms, Srei Infrastructure Finance (SIFL) and its wholly owned subsidiary Srei Equipment Finance (SEFL), has received the initial report from BDO, indicating that there were certain transactions which were fraudulent in nature, according to Section 66 of the Insolvency and Bankruptcy Code (IBC).
On the basis the investigation and observations of the transaction auditor, the administrator, Rajneesh Sharma, filed an application in respect of disbursements made to certain entities, referred to as the Power Trust group of entities, before the Kolkata bench of the National Company Law Tribunal (NCLT) under Section 60(5) and Section 66 of the Code on June 10, 2022 against Power Trust, Kanoria Foundation and its trustees, and certain other entities, SEFL said in a stock exchange filing on June 13.
Sources close to Kanorias alleged that the methodology being adopted by BDO seems to be suspicious due to the haste and opaque approach.
“The moot question is why the due process of law and principles of natural justice cannot be followed but the reports have to be submitted surreptitiously,” the sources said, adding the administrator “strangely” sent out a communication to the stock exchanges mentioning that some power companies had fraudulently availed of loans based on the initial transaction audit report.
“Again protracted legal battle will begin with BDO, which will derail the resolution process…Earlier also the actions taken by the auditors have been smacking of opaque processes and therefore embroiled in legal battles,” the sources said.