2018 (3) TMI 1609 - Tri - Companies Law

Tribunal stays adoption of audited accounts at AGM due to discrepancies in entries

The Tribunal granted a stay on the adoption of the audited accounts at the Annual General Meeting due to discrepancies in audited accounts and ... Adoption of accounts at AGM - validity of auditors report - Held that:- Auditors have mixed up the entries and have prepared the audited report by taking into consideration pre transfer data. Accordingly, the adoption of the accounts at the AGM slated as per the schedule given in the aforesaid para is stayed till the next date of hearing. It is clarified that the stay order would not result in activation of the DIN pertaining to the Directors of the Respondent company as well as of the respondent No. I company. Resolutions, if any, passed in any of the other items shall be subject to the final outcome of the present application. Issues:1. Allegations of discrepancies in audited accounts and shareholding entries.Analysis:The case involves a dispute regarding audited accounts and shareholding entries of a company. The petitioner's counsel argued that the auditors appointed by the Tribunal have reflected outdated shareholding positions in the audited reports despite transfer of shares and dismissal of related petitions. The auditors failed to rectify discrepancies and prepared the accounts without essential supporting documents, as highlighted by deficiencies in the audit report.Furthermore, the auditors were criticized for not verifying bank balances, ownership documents, loan details, and lacking proper records of fixed assets, inventory, and transactions. The auditors' failure to maintain essential registers and incomplete secretarial books raised concerns about the accuracy and reliability of the audited accounts. The petitioner contended that due to these discrepancies and missing records, the audited accounts should not have been prepared.In response, the respondent's counsels argued that the entries in question were related to investments, not shareholding, and attempted to justify the auditors' actions. However, the finality of the Kolkata Bench's order and the pending petition for rectification of the member register indicated unresolved issues regarding shareholding. The Tribunal, prima facie, agreed with the petitioner's stance that the auditors had mixed up entries and relied on outdated data for the audited report, leading to a stay on the adoption of the accounts at the Annual General Meeting (AGM) until further hearings.The Tribunal clarified that the stay order would not affect the Directors Identification Number (DIN) status of the company's directors and the respondent company. Resolutions passed in other matters during the AGM would be subject to the final decision on the current application. The case was listed for further arguments on a specified date to address the discrepancies in the audited accounts effectively.