AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 353
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....with Registrar of Companies. 1. Respondent No. 2 is Zen Shaving Ltd.; Public limited company got registered in Mumbai on 7 March 1995. It is stated that Respondent No. 1 submitted the Audit report of Respondent No. 2 of the financial year 2014 - 15 and 2015 - 16. 2. That on the basis of multiple complaints made by one Mr Jagdip H Vaishnav, relating to the alleging siphoning of the investor's money, the Ministry of corporate affairs ordered the inspection of Respondent No.2 under Section 206 (5) of the Companies act 2013. The sum and substance of the allegations raised in the complaints are as follows; (i) Shares are not listed on the Pune Stock Exchange. (ii) They are siphoning of investors' money. (iii) The company has not issued a financial statement after 1995. (iv) Company changes registered office frequently (v) No company representative attends calls given by ROC Mumbai (vi) Investors are complaining about serious irregularities but do not get any response from Regulators, Investigating Agencies. Under inspection, the Inspecting Officer has submitted an inspection report dated 10th may 2018 and supplementary....
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....stion No- 10: Who are the persons, capable of giving information about the public issue, its utilisation and day to day affairs of the company, also mention their address etc.,? Answer No 10:- According to the best of my knowledge ShriArvindGoyal, Director, Shri Jayesh Sampat, director, and ShriVithal Das AnannatPrabhuthe director of the company are capable of giving information about the public issue and day to day affairs/financial affairs of the company. Question No- 11:- When was the last AGM of the Company was held, its agenda and where it is held? Answer No 11:- I do not Know. Question No- 12:- Have you attended the AGMs of the company during your tenure as a Statutory Auditor of the Company? Answer No 12:- I never attended any AGM of the Company. Question No- 13:- Whether any Income Tax raids are conducted and the documents seized by the IT Departments? Answer No 13:- I do not know. Question No- 14:-Do you know an order has been issued to carry out the Inspection u/s 206 read with section 207 of the Companies Act, 2013? Answer No 14:- Yes, this aspect came to my knowledge on receipt of summon dated 09.03....
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....r papers etc., of the Company? Answer No 28:-ShriArvindGoyal, Director of the Company has coordinated the audit work. Question No- 29:- Where you have audited the Books of Accounts and Statutory Registers, Papers etc., of the Company? Answer No29:-I have not audited the books of accounts of the company. However, I have signed the auditor report of the company for the relevant period. Question No- 30:- What is/was your role as an auditor, mention in brief your duties and responsibilities in the company under inspection? Answer No 30:- I have to check the Accounts, Statutory Registers, Papers etc., but the records essential for audit purpose was not produced before me. I have been informed that there is no activity carried out by the company he simply produced before me profit and loss account and the balance sheet. I have certified the Balance Sheet and Profit and Loss Account for the financial year 2014-15 & 2015-16. I have been informed that the company has not done any activity. 4. The inspecting Officer in his inspection report dated 10.5.2018 and supplementary report dated 13.8.2018 has submitted his Inspection Report wherein it i....
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....It is contended that after the Inspection, the Inspecting Officer has submitted a Report dated 10.05.2018 and a Supplementary Inspection Report Dt.13.08.2018. 7. It is further stated that as per provision Under Section 207 (3) of the Companies Act, 2013, the Investigating Officer vested with the powers of Civil Court for directing a production of Books of Account of the company under inspection and further to summon, enforce the attendance of the person and examination under oath. Inspecting officer issued summons to all the Directors of the R2 Company in addition to the summons to R1, who were the Statuary Auditors of the R2 company for the Financial Years 2014-15 and 2015-16. 8. Ld.RoC has emphasized the statement of StatutoryAuditor wherein he has stated that he has not Audited Books of Account of the company however he has signed Auditor Report of the company for the relevant period. 9. Ld. RoC, has further emphasised the Statutory Provision under section 141(3)(b) which provides that; The following person shall not be eligible for appointment as an Auditor of the company namely; (d) a person who, or his relative or partner- (i) is holding an....
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....Auditor of the Respondent No 2 Company has miserably failed to fulfil the statutory duty entrusted to him as per the provisions of the Companies Act, 2013. The said fact is also evident from the crux of the statement given by the R1, recorded under section 207 (3)(b) of the Companies Act, 2013, which have been summarised above. 12. Relying on the statement on oath of R-1, it is clear that the R1 Mr.Mukesh M Choksihas failed to exercise his duty of Statutory Auditor, and he has certified the Profit & Loss Account and Balance Sheet of the company without even examining any of the records/ Books of the Account of the R2 Company. 13. It is recorded that family members of R1 are shareholders of the R2 Company, whereas Section 141(3)(d) provides that Chartered Accountant is ineligible to become an Auditor of the company, whose relative or partner is holding any security or interest in the company. 14. It is amply clear that family members of the statutory auditor of R1 are shareholders of R2 company,and R1 has issued Audit certificate of the company, without even examining any Books of Account of the R-2Company, which is clear cut violation of the statutory provision of Section ....
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....duced before him. He has certified the Balance Sheet and Profit and loss account for the F.Y. 2014-15 and 2015-16. He has been informed that the company has not done any activity during this period. He has further stated that he has not audited the books of accounts of the company and has signed the auditor's report of the company for the relevant period. He has also accepted that he has not called for any books of accounts and statutory registers from the company for audit purpose and the same is with Mr Arvind Goyal Babulal, Director of the Company and that he is not aware of where Mr Arvind Goyal Babulal is keeping them. He has also accepted this fact that there was no internal audit system in the company. He has accepted that he has submitted his consent letter dated 12.3.2014 for being appointed as statutory auditor of the company. The Statutory Auditor R1 has also accepted that he does not have any working papers for auditing the accounts of the company for the F.Y. 2014-15 and 2015-16 whereas as per ICAI Guidelines, he is supposed to maintain the working papers for at least five years. The Respondent No 1, Statutory Auditor has admitted in his statement that he has not audit....
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....e permitted at any cost. It is not irrelevant to mention following observation regarding the role of Statutory Auditor of a company by the Hon'ble Bombay High Court in Price Waterhouse and Co. and Ors. Vs Securities and Exchange Board of India and Ors., 2010 SCC OnLineBom1197 : "It is however required to be noted that normally an investor would like to invest his money in the shares of a Company on the basis of reflection of Company's financial health as disclosed in the balancesheet of the Company and he may consider that it is safe to invest money in a particular company, if the balancesheets have been certified by reputed Chartered Accountants, and it reflects that the financial position of the Company is sound. An investor is likely to be guided by the audited balancesheet of the Company and would presume that the facts incorporated in the balancesheet are true and correct. Considering the said aspect, even though the petitioners may not have direct association in the share market activities, yet the statutory duty regarding auditing the accounts of the Company and preparation of balancesheets may have a direct bearing in connection with the interest of the investo....