HC stays NCLT order against IL&FS auditor BSR

MUMBAI: In a relief to BSR Associates and its employers including N Sampath Ganesh - former auditors of IL&FS, the Bombay high court on Wednesday stayed an order of the

National Company Law Tribunal

(

NCLT

), which had said that it has jurisdiction to hear a plea made by ministry of corporate affairs (MCA) seeking their five-year ban as auditors, under the Companies Act.


The HC bench Justices Ranjit More and NJ Jamadar also stayed criminal proceedings before sessions court in a complaint filed by Serious Fraud Investigation Office (SFIO). The stay would only operate for BSR. The stay is for four weeks. The HC will hear the matter next on October 3. The HC bench in its order said "the petition raises arguable points'' which require "detailed deliberations and consideration'' and also warrant a response from the Central government.

The ministry's action was after the SFIO investigated into affairs of IL&FS group and submitted its report.

Senior counsel and former attorney general for India

Mukul Rohatgi

, appearing for BSR argued that the MCA action was "unwarranted''. He argued that it was based on an "interim'' and not a final report of the SFIO. The SFIO filed a 32,000-page report and action was taken immediately on the next day, he argued adding, " It is not normal."

BSR challenged the constitutional validity of provisions of the Companies Act being invoked by MCA. In June MCA had petitioned NCLT in Mumbai to seek a ban on Deloitte and BSR for five years under section 140 (5) of the Companies Act.

Aspi Chinoy special counsel for Union of India pointed out that Deloitte, the other ex-auditor of IL&FS had moved the NCLAT in appeal and Appellate Tribunal has allowed NCLT to conduct proceedings but not to pass any order till the appellate tribunal decides. Similarly, BSR should have approached NCLAT, which would be the competent court to decide on the issue, he said.

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