IL&FS Auditors Get A Reprieve After The National Company Law Tribunal Stays Its Previous Order To Prosecute Them

Auditors of fraud tainted IL&FS gained a reprieve after the National Company Law Tribunal (NCLT) stayed its July 18 order to implead Deloitte Haskin & Sells as well as BSR & Associates recently.

Accordingly, the NCLT has given the audit companies, time until July 28 to file an appeal.

Earlier, the legal counsel of Deloitte Haskin & Sells had moved the NCLT seeking a four-week stay on its earlier order to implead the auditors of IL&FS Financial Services (IFIN) in proceedings against IL&FS for operational mismanagement.

On July 18, the NCLT had passed an order to implead 23 additional respondents, including the auditors of IFIN, namely Kalpesh Mehta and Udayan Sen of Deloitte as well as Sampath Ganesh of BSR, in response to an application filed by the Ministry of Corporate Affairs.

In June, the government had filed an application to freeze assets of additional respondents.

These applications were filed by the Ministry of Corporate Affairs based on the findings of the Serious Fraud Investigation Office (SFIO).

On May 30, the SFIO had filed a criminal complaint based on its probe into IL&FS and the SFIO’s Investigations showed that the auditors were hand in glove with the former IL&FS management in concealing material facts and information from investors as well as creditors.

Based on these SFIO findings, the Ministry of Company Affairs also filed an application seeking to ban the two audit firms from conducting auditing activities for five years.

The NCLT heard arguments and reserved its order in the matter.

The IL&FS matter will come up for hearing at the NCLT on August 6.