7 August 2019: The National Company Law Tribunal (NCLT) adjourned the hearing on the matter of freezing the assets of the former auditors of IL&FS, Deloitte Haskin & Sells and BSR & Associates, to August 28.
The tribunal on Tuesday heard the arguments of the ministry of corporate affairs for freezing the assets of Deloitte and BSR, following the impleadment of the two audit firms in the NCLT proceedings.
The ministry had on June 8 filed two applications – one for impleadment of the audit firms in the NCLT proceedings of IL&FS, and the second, for the freezing their assets following the impleadment order. On July 18, the NCLT passed an order to implead 23 additional respondents, including the auditors of IFIN, Kalpesh Mehta, Sampath Ganesh and Udayan Sen, in the IL&FS proceedings.
However, the tribunal on July 25 put a 10-day stay on its own impleadment order, allowing the auditors time to file an appeal with the National Company Law Appellate Tribunal (NCLAT). The NCLAT will hear the matter on August 19. The Mumbai bench of NCLT on Tuesday said that if the impleadment order is upheld by the appellate tribunal, the matter of the asset freeze will then be heard.
These applications for impleadment and asset freeze of the auditors were filed by the ministry of corporate affairs based on the findings of the Serious Fraud Investigation Office (SFIO) in the IL&FS fraud case.
The SFIO had on May 28 filed a criminal complaint based on its probe into the affairs of IL&FS fraud case. The report found that the auditors appeared to be hand-in-glove with the former top management of the group in concealing material facts and information from investors and creditors.
Following the SFIO findings, the corporate affairs ministry has also filed an application seeking to ban the two audit firms from conducting auditing activities for five years. The NCLT over the last month has heard arguments and reserved the order in the matter.
The financial affairs of the IL&FS group came into scrutiny last year after the group defaulted on short-term and long-term debt obligation worth `91,000 crore.