The Bombay High Court (HC) on Thursday allowed an interim relief granted to former auditors of IL&FS, Deloitte Haskin & Sells and BSR & Associates, to continue till November 19.
The Bombay High Court (HC) on Thursday allowed an interim relief granted to former auditors of IL&FS, Deloitte Haskin & Sells and BSR & Associates, to continue till November 19. Under the interim relief, the firms can’t be prosecuted in the IL&FS proceedings until further orders.
The interim relief was granted in response to petitions filed by the two audit firms in the Bombay HC seeking to challenge the constitutionality of the Section 140 (5) of the Companies Act. Section 140 deals with removal and resignation of auditors, and subsection 5 deals with the removal and subsequent ban of auditors who have been involved in frauds.
The government had in June moved the National Company Law Tribunal (NCLT) seeking to ban Deloitte and BSR following the allegations made by the Serious Fraud Investigation Office (SFIO) regarding the involvement of the two firms in the downfall of infrastructure major, IL&FS. The Bombay HC will hear the auditors’ petitions next on November 19. The court also allowed an amendment in BSR’s petition.
The court on Thursday also allowed an amendment to BSR’s petition, which opposed the appointment of Mukund M Chitale & Co as the new auditors of the IL&FS Group. The NCLT had last month allowed the chartered accountancy firm to be appointed as statutory auditors for the beleaguered infrastructure group.
The financial dealings of the IL&FS group came into scrutiny after the firm defaulted on short-term and long-term debt obligations to the tune of Rs. 1 lakh crore last year. Following the defaults, the former board was removed and replaced by a government appointed one in October 2018.
The group, led by Uday Kotak, aims to address 50% of its mammoth debt by March 2020.