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TMI Blog2022 (4) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Adjudicating Authority seeking direction for co-operation. This Tribunal is of the considered view that the circular dated 06.03.2020 relied upon by the Appellants provides only for the procedure of filing the Forms. The circular does not anywhere specify that the Financial Statement are not to be signed by the Directors as required in the Companies Act, 2013. The emails and the communications on record evidence that the RP and the statutory auditor had prepared all the information as demanded time and again by the Appellants, requesting them to sign the Financial Statements in order to enable the RP to proceed in accordance with law. There are no illegality in the well reasoned order of the Adjudicating Authority as it is not a fit case, in the interest of justice and to avoid any further delay in this time bound proceedings, in remitting the matter to the Adjudicating Authority - appeal dismissed. - Company Appeal ( AT ) ( Insolvency ) No. 452 of 2021 - - - Dated:- 18-4-2022 - [ Justice Anant Bijay Singh ] Member ( Judicial ) And [ Ms. Shreesha Merla ] Member ( Technical ) For the Appellant : Ms. Henna George and Ms. Purti Gupta, Advocates For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to sign the financial statement as prepared by the RP without due justification and clarity. 3. It is further submitted that the Adjudicating Authority disposed of the Application without giving opportunity to the Appellants to file reply placing on record their objections, while directing the Appellants to cooperate and provide the signed copy of the Financial Statement for Year 2019-20 within a period of two weeks from the date of receipt of the impugned order copy. It is submitted that the RP acts and executes in the name and on behalf of the Corporate Debtorall deeds, receipts and other documents and hence the RP is competent to sign the Balance Sheet prepared by him and the Appellant should not be coerced to sign the Financial Statement as they are already suspended from the management by the Corporate Debtor company. 4. It is further contended that the draft Balance Sheet prepared by the RP had serious discrepancies and hence the Appellants sought clarification vide email dated 04.03.2021 but there was no reply. Learned Counsel appearing for the Appellants draw our attention to the General Circular No. 08/2020 dated 06.03.2020 relating to filing of Form in the Registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee consecutive years i.e. on 25.09.2017 and the same auditors continued for 2019-20. The material on record establishes that the 3rd quarter statement for financial year 2019-20 was audited by the same Auditor and signed by the Appellants. It is an admitted fact that the draft review report quarterly ending 2019-20 was already shared with the Appellants. Material on record establishes that the RP had sent repeated requests to the Appellant herein to sign the Financial Statements by emails on 22.01.2021, 15.02.2021, 19.02.2021, 20.02.2021 and 26.02.2021, but received no response. It is the case of the RP that after 20 days of receiving the drafts and report, the Appellants on 04.03.2021 declined that they are not in agreement of the financial statement and refused to sign. They had objected in the presence of the Statutory Auditor which is only to delay the proceedings and demanding for comparatives of the provisional directions and financial statements for the 3rd financial year 2019-20 and all the documents which were already available with them. 9. At the outset, we address to the contention of the Appellants that it is the RP who has to sign the Financial Statement and not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a consolidated financial statement of the company and of all the subsidiaries and associate companies in the same form and manner as that of its own and in accordance with applicable accounting standards, which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under sub-section (2): Provided that the company shall also attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiary or subsidiaries and associate company or companies in such form as may be prescribed: Provided further that the Central Government may provide for the consolidation of accounts of companies in such manner as may be prescribed. (4) The provisions of this Act applicable to the preparation, adoption and audit of the financial statements of a holding company shall, mutatis mutandis, apply to the consolidated financial statements referred to in sub-section (3). (5) Without prejudice to sub-section (1), where the financial statements of a company do not comply with the accounting standards referred to in sub-section (1), the company shall dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnual return referred to in sub-section (3) of section 92 has been placed; (b) number of meetings of the Board; (c) Directors Responsibility Statement; (ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government; (d) a statement on declaration given by independent directors under sub-section (6) of section 149; (e) in case of a company covered under sub-section (1) of section 178, company s policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178; (f) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made- (i) by the auditor in his report; and (ii) by the company secretary in practice in his secretarial audit report; (g) particulars of loans, guarantees or investments under section 186; (h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form; (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may prescribe an abridged Board s report, for the purpose of compliance with this section by One Person Company or small company. (4) The report of the Board of Directors to be attached to the financial statement under this section shall, in case of a One Person Company, mean a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report. (5) The Directors Responsibility Statement referred to in clause (c) of sub-section (3) shall state that- (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Statutory Auditor (who is the same auditor who had audited the Financial Statements/Accounts for the past three years of the Corporate Debtor company). Section 19(2) of the Code clearly specified that the personnel of the Corporate Debtor, as promotors or any other persons are required to assist the RP failing which an Application can be filed before the Adjudicating Authority seeking direction for co-operation. This Tribunal is of the considered view that the circular dated 06.03.2020 relied upon by the Appellants provides only for the procedure of filing the Forms. The circular does not anywhere specify that the Financial Statement are not to be signed by the Directors as required in the Companies Act, 2013. The emails and the communications on record evidence that the RP and the statutory auditor had prepared all the information as demanded time and again by the Appellants, requesting them to sign the Financial Statements in order to enable the RP to proceed in accordance with law. The impugned order dated 01.06.2021, whereby two weeks time was granted to the Appellants herein to co-operate and sign the Financial Statements was not complied with causing further delay. We do no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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