Bombay High Court Gives Relief To Former Auditors Of IL&FS; All Set To Hear Their Challenge Against NCLT Order

The Bombay High Court has continued giving interim relief to former auditors of the IL&FS Group.

The court has opposed against any “coercive action” and agreed to hear their challenge against a National Companies Law Tribunal (NCLT) order on November 19.

Earlier, the NCLT had held that it had jurisdiction to hear a plea made by the Ministry of Corporate Affairs (MCA) for a five-year ban on the former auditors of IL&FS, namely BSR Associates, N Sampath Ganesh, Deloitte Haskins and Sells LLP, Kalpesh Mehta and Udayan Sen, under the Companies Act.

Incidentally, the MCA acted after the Serious Fraud Investigation Office (SFIO) which probed into the affairs of the IL&FS group submitted its report.

The court also allowed former IL&FS auditors to amend their petitions, challenging the October 18 NCLT order, appointing Mukund M Chitale & Company as the new statutory auditors.

The central government’s special counsel Aspi Chinoy stated that the government would file a reply to the amended plea. He said that the matter had been expedited by the Supreme Court with no adjournments to be sought by either party.

Incidentally, IL&FS former auditor BSR Associates had challenged the constitutional validity of provisions of the Companies Act being invoked by MCA. In June, MCA had petitioned the NCLT bench in Mumbai to seek a ban on Deloitte and BSR for five years under Section 140(5) of the Companies Act.

The Bombay High Court had earlier stayed proceedings before the NCLT and directed that “no coercive action shall be taken” against the auditors in criminal complaint filed by the SFIO in Mumbai.

The court will also consider whether the SFIO report was interim or final and whether adequate time was given before MCA approached the NCLT.