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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether ad-interim protection should be granted pending final hearing in a challenge to the constitutional validity of section 140(5) of the Companies Act, 2013, the maintainability of proceedings under that provision after resignation of the auditor, and the consequent prosecution and criminal complaint based on the sanction order.
Analysis: The petition raised arguable questions on the meaning of the expression "action" in the second proviso to section 140(5), including whether it required reading down to mean prosecution, and whether proceedings under section 140(5) could continue after the auditor had resigned. The order also recorded a prima facie concern as to whether prosecution under section 447 could be initiated on the basis of an interim report and whether the sanctioning authority had adequate time to consider a voluminous record. The Court found that these issues required detailed consideration and that the petitions should be deferred for hearing.
Conclusion: Ad-interim relief was granted restraining further proceedings under section 140(5) of the Companies Act, 2013 in Company Petition No. 2062 of 2019 and restraining coercive action in Criminal Complaint No. 20 of 2019 until the next date.
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