Tribunal appoints Mukund M. Chitale & Co. as Statutory Auditor for IL&FS Financial Services Ltd

The Tribunal allowed the application, appointing Mukund M. Chitale & Co. as the Statutory Auditor for IL&FS Financial Services Ltd for the financial year 2018-19. The appointment was validated under the First Proviso to Section 140(5) of the Companies Act, 2013, with the authorization of the Union of India. Compliance with the orders of the High Court and Supreme Court was ensured, addressing all legal and procedural concerns.

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Issues Involved:
1. Appointment of Statutory Auditor for IL&FS Financial Services Ltd (IFIN) under Section 140(5) of the Companies Act, 2013.
2. Maintainability of the Company Petition No.2062/2019.
3. Compliance with interim orders from the Hon'ble High Court of Bombay and the Hon'ble Supreme Court of India.
4. Jurisdiction and authority under Section 140(5) of the Companies Act, 2013.
5. Contempt of court allegations regarding the appointment process.

Issue-wise Detailed Analysis:

1. Appointment of Statutory Auditor for IL&FS Financial Services Ltd (IFIN) under Section 140(5) of the Companies Act, 2013:
The applicant sought the appointment of Mukund M. Chitale & Co. as the Statutory Auditor for IFIN for the Financial Year 2018-19 onwards, under the First Proviso to Section 140(5) of the Companies Act, 2013. This request was based on the resignation of BSR & Associates LLP, the previous auditors, and the need to fill the resultant vacancy. The Hon'ble Supreme Court had granted liberty to move an application for such an appointment, recognizing the necessity to avoid prejudice to the company's interests.

2. Maintainability of the Company Petition No.2062/2019:
The Tribunal had previously upheld the maintainability of Company Petition No.2062/2019, despite challenges from some respondents. This decision was affirmed via an order dated 9.8.2019. The respondents subsequently appealed to the Hon'ble NCLAT, which allowed the Tribunal to proceed with the petition but restrained it from passing any orders against the appellants during the pendency of the appeals.

3. Compliance with interim orders from the Hon'ble High Court of Bombay and the Hon'ble Supreme Court of India:
The Hon'ble High Court of Bombay, via an interim order dated 4.9.2019, restrained further proceedings under Section 140(5) against the petitioners and prohibited coercive action. The Hon'ble Supreme Court, in its order dated 26.9.2019, acknowledged the need for a fresh appointment of auditors and granted liberty to move an appropriate application before the NCLT. The Tribunal noted that compliance with these orders did not constitute contempt, as the steps taken were within the scope of the liberty granted by the Supreme Court.

4. Jurisdiction and authority under Section 140(5) of the Companies Act, 2013:
The Tribunal emphasized that under the First Proviso to Section 140(5), only the Union of India is authorized to appoint or change the auditor. The company's initial appointment of Mukund M. Chitale & Co. was invalidated due to the lack of Union of India's sanction. The Tribunal clarified that the Union of India had the authority to appoint the auditor, and the company's actions were corrected to align with legal provisions.

5. Contempt of court allegations regarding the appointment process:
The respondents argued that any order appointing a new auditor would violate the interim orders of the Hon'ble High Court and the Hon'ble Supreme Court. However, the Tribunal found that the Supreme Court's order explicitly allowed for the appointment process to continue, provided it was done promptly and in accordance with the law. Therefore, the Tribunal concluded that there was no contempt of court in proceeding with the appointment.

Conclusion:
The Tribunal allowed MA 3254/2019 in CP 2062/140(5)/2019, thereby appointing Mukund M. Chitale & Co. as the Statutory Auditor for IL&FS Financial Services Ltd for FY 2018-19. The appointment was validated under the First Proviso to Section 140(5) of the Companies Act, 2013, as authorized by the Union of India. The Tribunal ensured compliance with the orders of the Hon'ble High Court and the Hon'ble Supreme Court, thereby addressing all legal and procedural concerns.

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