NCLAT: NCLT decision to implead IL&FS auditors appears bad in law

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NCLAT: NCLT decision to implead IL&FS auditors appears bad in law

“Prima facie, they (NCLT) don't have jurisdiction in the facts and circumstances of the case,” an NCLAT Bench headed by chairperson SJ Mukhopadhaya observed.

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The National Company Law Appellate Tribunal (NCLAT) on Wednesday observed that the NCLT Mumbai’s decision to implead IL&FS auditors as parties in the operational mismanagement case appears to be bad in law.

“Prima facie, they (NCLT) don’t have jurisdiction in the facts and circumstances of the case,” an NCLAT Bench headed by chairperson SJ Mukhopadhaya observed.

The appellate tribunal will again hear the case on October 25.

On July 18, the NCLT impleaded Deloitte Haskins & Sells LLP, BSR & Associates LLP and their partners in the IL&FS case on a plea filed by the Ministry of Corporate Affairs (MCA). Based on finding of the Serious Fraud Investigation Office, the ministry alleged that the auditors had concealed information from investors and creditors.

The auditors said the tribunal overstepped its jurisdiction by impleading them, and the government action against the alleged fraud can only be initiated at the session’s court.

On his part, Sanjay Shorey, director (prosecution), MCA, argued that the government moved the tribunal as it has powers to order attachment of the auditors’ assets.

IL&FS group was taken over by the government in October 2018 for oppression and miss-management under the Companies Act. The IL&FS group had an outstanding debt of Rs 94,246 crore as on October 8, 2018.

Source- Financial Express.