National Company Law Tribunal echoes government’s decision to ban Deloitte, BSR

Mumbai: In a major setback to the auditors, the National Company Law Tribunal (NCLT) on Friday rejected Deloitte's and BSR's applications challenging the tribunal's jurisdiction to ban them from business for five years for their omissions and commissions in the ILFS Group scam. This is the second setback for these foreign audit firms as earlier the tribunal had allowed the corporate

affairs ministry to prosecute them along with 21 others in the same case, though the implementation of the same has been stayed after they sought time to challenge the order at the appellate tribunal NCLAT, reports PTI. The ministry had in June moved NLCT seeking a five-year on them on these auditors in the IL&FS saga. However, the tribunal said it will hear the ministry's application seeking a five-year ban on these auditors afresh on September 5.

The auditors—the local arm of the England-based Deloitte Haskins & Sells, which is one of the big four accounting firms, and BSR & Associates, which is the local affiliate of another big four, the US-based KPMG—had challenged the jurisdiction of the NCLT to ban them under Section140(5) of Company's Act. They had challenged the jurisdiction of the NCLT to ban them, saying section 140(5) of the Companies Act pertains to auditors who are still auditing the company in question while they have already resigned from the service and thus cannot be banned under the given provisions. It can be noted that while Deloitte had stopped auditing IL&FS Group, which owes over Rs 95,000 crore to lenders and other financial institutions, by the end of FY 2018, BSR was the statutory auditor of IL&FS Financial Services (IFIN) and resigned only in June this year-nine months after the company was sent to the bankruptcy court.

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