The Bombay High Court on Wednesday stayed the proceedings against Deloitte Haskins & Sells and BSR & Associates, former auditors of IL&FS Financial Services, before the National Company Law Tribunal on the issue of banning them for five years.
NCLT had earlier dismissed the plea by former auditors of IL&FS arm, challenging the tribunal’s jurisdiction to decide on the government’s demand for a five-year ban on them from practicing audit work under the Companies Act, 2013. A bench of Justice Ranjit More and Justice N J Jamadar also stayed proceedings against BSR Associates in the criminal complaint filed before the special court in Mumbai. The bench has granted stay for two weeks.
On June 8, the Ministry of Corporate Affairs (MCA) had filed a petition with the NCLT seeking to ban Deloitte and BSR for five years under Section 140 (5) of the Companies Act. The petition followed a criminal complaint filed by the Serious Fraud Investigation Office (SFIO) based on its investigation into financial affairs of debt-ridden IL&FS Group. In its plea to the NCLT, the MCA stated that investigation by the SFIO revealed that “the auditors knowingly did not report the true state of affairs of the company”.
Following MCA’s petition, legal counsel for Deloitte and BSR filed pleas challenging tribunal’s jurisdiction to ban the auditors under Section 140 (5). IL&FS Financial Services is among 348 subsidiaries of IL&FS group, which owes over Rs 95,000 crore to lenders.