NEW DELHI: The best court docket on Wednesday put aside the Bombay High Court verdict which had quashed the SFIO probe towards audit corporations BSR & Associates and Deloitte Haskins & Sells, each former auditors of IL&FS Financial Services, over alleged monetary irregularities,
Allowing the enchantment of the Serious Fraud Investigation Office (SFIO) and the Center towards the top court docket verdict, the highest court docket additionally upheld the validity of phase 140(5) of the Companies Act, 2013.
The provision offers with elimination and resignation of auditors and imposes a five-year ban on an auditing company this is confirmed to have “acted in a fraudulent manner”, or to have “abetted or colluded in any fraud”.
“The challenge to the constitutional validity of section 140(5) of the Companies Act, 2013 fails and it is observed and held that section 140(5) is neither discriminatory, arbitrary and/or violative of Articles 14, 19(1)( g) of the Constitution of India, as alleged,” a bench of justices MR Shah and MM Sundresh stated in its 103-page judgment.
It put aside the High Court judgment which had quashed the court cases towards the audit corporations beneath phase 140(5) of the Act at the flooring that the auditors had resigned. “The application/proceedings under section 140(5) of the Act, 2013 is held to be maintainable even after the resignation of the concerned auditors and now the NCLT (National Company Law Tribunal) therefore to pass a final order on such application after holding inquiry in accordance with law…,” it stated.
Allowing the enchantment of the Serious Fraud Investigation Office (SFIO) and the Center towards the top court docket verdict, the highest court docket additionally upheld the validity of phase 140(5) of the Companies Act, 2013.
The provision offers with elimination and resignation of auditors and imposes a five-year ban on an auditing company this is confirmed to have “acted in a fraudulent manner”, or to have “abetted or colluded in any fraud”.
“The challenge to the constitutional validity of section 140(5) of the Companies Act, 2013 fails and it is observed and held that section 140(5) is neither discriminatory, arbitrary and/or violative of Articles 14, 19(1)( g) of the Constitution of India, as alleged,” a bench of justices MR Shah and MM Sundresh stated in its 103-page judgment.
It put aside the High Court judgment which had quashed the court cases towards the audit corporations beneath phase 140(5) of the Act at the flooring that the auditors had resigned. “The application/proceedings under section 140(5) of the Act, 2013 is held to be maintainable even after the resignation of the concerned auditors and now the NCLT (National Company Law Tribunal) therefore to pass a final order on such application after holding inquiry in accordance with law…,” it stated.