9911796707
TMI Blog2019 (1) TMI 1575X X X X Extracts X X X X X X X X Extracts X X X X ..... of Infrastructure Leasing Financial Services Limited (R1), IL FS Financial Services Limited (R2) and IL FS Transportation Networks Limited (R3) for the past five financial years , viz. from Financial Year 2012-13 to Financial Year 2017-2018 - We further issue directions to Central Government to appoint such person/firm as the Chartered Accountants to recast the accounts/financial statements of all the three companies, i.e. Infrastructure Leasing Financial Services Limited (R1), IL FS Financial Services Limited (R2) and IL FS Transportation Networks Limited (R3) for the past five financial years, viz. from Financial Year 2012-13 to Financial Year 2017-2018. Petition disposed off. - CP 4506/2018 - - - Dated:- 1-1-2019 - Shri V P Singh, Member (J) AND Shri Ravikumar Duraisamy, Member (T) For the Petitioner : Mr. Sanjay Shorey, Director (Legal and Prosecution), MCA, Mr. Manmohan Juneja, Regional Director (Western Region), MCA, Mr. Vinod Sharma, ROC Mumbai, MCA, Mr. Meghav Gupta, Company Prosecutor, MCA, Mr. Neelambuj, Company Prosecutor, ROC Mumbai, MCA, For SEBI : Mr. Nishant Upadhyay a/w Mr. Nirav Parmar, i/b K. Ashar Co for SEBI For the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application in this regard is made by the Central Government, the Income Tax Authorities, the Securities and Exchange Board, any other statutory regulatory body or authority or any person concerned and an order is made by a court of competent jurisdiction or the Tribunal to the effect that- (i) the relevant earlier accounts were prepared in a fraudulent manner; or (ii) the affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements: Provided that the court or the Tribunal, as the case may be, shall give notice to the Central Government, the Income Tax Authorities, the Securities and Exchange Board or any other statutory regulatory body or authority concerned and shall take into consideration the representations, if any, made by that Government or the authorities, Securities and Exchange Board or the body or authority concerned before passing any order under this Section. (2) Without prejudice to the provisions contained in this Act, the accounts so revised or re-cast under sub-section (1) shall be final. First proviso to Section 130(1) provides that court or the Tribunal as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ICAI in its opinion dated 3.12.2018 demonstrates that the erstwhile statutory auditors have been negligent and have not verified crucial information/documents. Rosy financial statements of the said companies have been presented, and the severe mismatch between the cash flows and payment obligations, total lack of liquidity and glaring adverse financial ratio s of the said companies have been camouflaged. The Ld Sr. Counsels appearing on behalf of statutory auditors contends that it is not the work of the auditors to prepare the accounts. Role of the Auditor is only to audit the accounts prepared by the company. Director (Prosecution and Legal) has conceded this fact that auditors was not having any role in preparing the accounts. Normally accounts of the companies are prepared by the company and audit is done by the auditors. Ld. Counsel appearing on behalf of the erstwhile directors has also opposed the application on the ground that no such order under Section 130 of the Companies Act, 2013 can be passed at this stage without forming an opinion that accounts were being prepared in a fraudulent manner, and at this stage, enquiry/investigation is still pending. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further reported that EWT trust which was primarily meant for welfare of needy employees was thus used as a conduct to give shape to fraudulent motives of the key managerial persons of IL FS Limited. Copies of the financial statements for last 11 years are collectively placed as Annexure V. Less than 1% of total expenditure was made towards welfare of employees and the remaining was diverted towards enriching few selective employees. On perusal of Section 130 of the Companies Act, 2013, it is clear that before passing any order under this Section, it is not necessary to held that accounts were prepared in a fraudulent manner. Section 130(1) (i) (ii) lays down the following pre condition for passing an order for recasting and re-opening the accounts of a company: (i) The relevant earlier accounts were prepared in a fraudulent manner; or (ii) The affairs of the company were mismanaged during the relevant period, casting a doubt on the reliability of financial statements. At this stage, we cannot hold that alleged accounts of the companies were prepared in a fraudulent manner, because investigation is still pending. In our earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
