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TMI Blog2019 (9) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... V.P. Singh, Mr. Aditya Mehta, Mr. Aditya Jalan, Raghav Seth, Ms. Anshula Laroiya, Mr. Samarth Luthra, Ms. Vanya Chhabra i/b. AZB Partners, Advocate for petitioner in WP/4144/2019. Mr. Mukul Rohatgi, Senior Advocate a/w. Mr. Darius J. Khambata, Senior Advocate, Mr. Zal Andhyarujina, Mr. V.P. Singh, Mr. Aditya Jalan, Mr. Raghav Seth, Ms. Anshula Laroiya, Mr. Samarth Luthra, Ms. Vanya Chhabra i/b. AZB Partners, Advocate for petitioners in WP/4145/2019. Mr. Aspi Chinoy, Senior Advocate a/w. Mr. Ashish Mehta, Mr. Animesh Bisht, Mr. Aditya Sikka, Ms. Saloni Kapadia, Ms. Drishti Das i/b. Cyril Amarchand Mangaldas for respondent No.1. Mr. H.S. Venegaonkar a/w. Mr.Ajay L. Bhise I/b. Mr Pradeep Yadav for respondent No.2 in Cri. WP/4144/2019. Mr. F. R. Shaikh, APP for State. P. C. : 1. Heard Mr. Mukul Rohatgi, learned senior counsel for the Petitioners in Writ Petition No.4145 of 2019, Mr. Seervai, learned senior counsel appearing on behalf of the Petitioner in Writ Petition No.4144 of 2019, Mr. Aspi Chinoy, learned senior counsel appearing on behalf of Respondent No.1 and Mr. Venegaonkar, learned counsel appearing on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiaries. On 13th May 2019, IFIN issued a notice upon BSR under section 140(1) of the Companies Act, 2013 [for short the Act ] for removal as auditors. On 24th May 2019, BSR furnished a written reply to notice dated 13th May 2019. On 28th May 2019, Respondent No.2 placed its second interim report with the Ministry of Corporate Affairs (Respondent No.1). On next day, i.e., on 29th May 2019, the Ministry of Corporate Affairs issued a sanction order directing the initiation of (i) an action under section 140(5) of the Act (ii) prosecution under sections 143 and 147 of the Act and (iii) prosecution under sections 417, 420 read with 120 of the Indian Penal Code, 1860. On 30th May 2019, Respondent No. 2 filed criminal complaint bearing No. 20 of 2019 in the Court of the learned Additional Sessions Judge-cum-Special Judge (Companies Act) at Greater Mumbai. On 10th June 2019, Respondent No.1 filed Company Petition bearing C.P. No. 2062 of 2019 before the NCLT under the provisions of section 140(5) of the Act against the BSR, among others, seeking inter alia the removal of BSR as a statutory auditor of IFIN. Respondent No. 1 also sought a direction that BSR shall not be eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned senior counsel Mr. Rohatgi, sub-section (5) of section 140 of the Act provides for three consequences, first removal of the auditor; second debarring such auditor for the five years; and lastly action under section 447 of the Act. 6. Mr. Rohatgi further submitted that under second proviso to sub-section (5) of Section 140 of the Act, on a plain reading, the auditor will be liable for action under section 447 of the Act and in the submission of Mr. Rohatgi this would be in breach of Article 21 of the Constitution of India. 7. Mr. Chinoy, learned senior counsel appearing on behalf of Respondent No.1 per contra submitted that the word action referred to in second proviso to sub-section (5) of section 140 of the Act means prosecution under section 447 in accordance with law and therefore there is no merit in the contention of the Petitioners. 8. In our prima facie opinion, even if contention of Mr. Chinoy is accepted at this stage, in that case also the word action in the second proviso to sub-section (5) of section 140 of the Act, would be required to be read down as prosecution . 9. The second limb of argument of learned senior coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which deals with the investigation into the affairs of the company by Special Fraud Investigation Office. Sub-sections (11) to (15) of section 212 of the Act read thus : 212. Investigation into affairs of Company by Serious Fraud Investigation Office (11) The Central Government if so directs, the Serious Fraud Investigation Office shall submit an interim report to the Central Government. (12) On completion of the investigation, the Serious Fraud Investigation Office shall submit the investigation report to the Central Government. (13) Notwithstanding anything contained in this Act or in any other law for the time being in force, a copy of the investigation report may be obtained by any person concerned by making an application in this regard to the court. (14) On receipt of the investigation report, the Central Government may, after examination of the report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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