2023 (6) TMI 1350 - HC - Companies Law

Jurisdiction of the National Financial Reporting Authority (NFRA) established inter alia under Section 132(1) of the Companies Act 2013 - HELD THAT - The direction is that all Petitioners must coordinate between themselves to present their arguments on one day together on the jurisdictional issue. It seems unworkable to expect the Authority to hear the same argument on jurisdiction repeatedly. How the submissions are to be divided between the parties and their counsel is a matter left to them but the scheduling by the Authority should ideally be in such a way that the jurisdictional point is on one day when all counsel for all matters can be heard. Thereafter a different schedule can be set for the facts for the individual cases that follow thereafter if necessary i.e. if the authority finds that it does have jurisdiction. Petition disposed off.

Summary

Issues involved:
The jurisdiction of the National Financial Reporting Authority (NFRA) u/s 132(1) of the Companies Act, 2013.

Summary:

Issue 1: Jurisdiction of NFRA
The Writ Petitions challenge the jurisdiction of NFRA established u/s 132(1) of the Companies Act, 2013. The NFRA, regulating auditors for corporate entities, has called for audit documents from individuals and entities. The argument presented questions NFRA's jurisdiction over matters predating its establishment. A principal prayer seeks NFRA to decide the jurisdictional challenge as a preliminary issue and allow legal representation for technical legal arguments.

Issue 2: Legal Representation
Mr. Singh, ASG, confirms no difficulty in allowing legal representation, stating that the Authority will decide all issues, including jurisdiction. It is deemed logical that the issue of jurisdiction be decided first, as further decisions hinge on this determination. The Petitioners in Writ Petition No. 1399 of 2023 face a show cause notice, with the compliance date extended due to the pending Writ Petitions.

Issue 3: Coordination for Arguments
An order is issued for all Petitioners to coordinate and present their arguments on jurisdiction together on one day to avoid repetitive hearings. The Authority is expected to schedule hearings efficiently, focusing on the jurisdictional point initially. No further directions are deemed necessary, and all contentions are kept open for consideration.

Issue 4: Disposal of Petitions
The Petitions are disposed of without any order as to costs. The order on jurisdiction is not expected to be passed first unless in favor of the present Petitioners, in which case it will be the sole order. All pending Interim Applications are disposed of accordingly, and all interim orders stand vacated.