TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 333
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Luthra, Ms. Vanya Chhabra i/b. AZB & Partners, Advocate for petitioners in WP/4145/2019. Mr. Aspi Chinoy, Senior Advocate a/w. Mr. Ashish Mehta, Mr. Animesh Bisht, Mr. Aditya Sikka, Ms. Saloni Kapadia, Ms. Drishti Das i/b. Cyril Amarchand Mangaldas for respondent No.1. Mr. H.S. Venegaonkar a/w. Mr.Ajay L. Bhise I/b. Mr Pradeep Yadav for respondent No.2 in Cri. WP/4144/2019. Mr. F. R. Shaikh, APP for State. P. C. : 1. Heard Mr. Mukul Rohatgi, learned senior counsel for the Petitioners in Writ Petition No.4145 of 2019, Mr. Seervai, learned senior counsel appearing on behalf of the Petitioner in Writ Petition No.4144 of 2019, Mr. Aspi Chinoy, learned senior counsel appearing on behalf of Respondent No.1 and Mr. Venegaonkar, learned couns....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Criminal Complaint bearing CC No. 20/2019 titled SFIO v. IL&GD Ltd. & Ors. Initiated by the Respondent No.2 in the court of Ld. Additional Sessions judge-cum-Special (Companies Act) at Greater Mumbai, to quash & set aside the same." 3. The brief facts giving rise to the filing of present writ petitions are as thus : In November 2017, BSR was appointed as joint statutory auditor of IFIN along with Deloitte for the financial year 2017-18. Deloitte had been the sole auditors of IFIN for ten years, i.e., for the period 2007-08 to 2016-17. On 28th May 2018, the statutory auditors of IFIN, for the period 2017-18, including the BSR rendered their audit report on the financial statements of IFIN. On 30th September 2018, Respondent No.1 vid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the requisite filing before the other authorities. On 14th July 2019, BSR filed an application baring No.2505 of 2019 before the NCLT challenging the maintainability of the company petition filed by Respondent No.1 under section 140(5) of the Act on various grounds including but not limited to the fact that BSR is not a statutory auditor of IFIN with effect from June 19, 2019. On 9th August 2019, the NCLT pronounced the impugned order whereby application filed by BSR challenging the maintainability of company petition under section 140(5) of the Act, was dismissed. 4. The Petitioners, in short, are challenging the constitutional validity of sub-section (5) of Section 140 of the Companies Act, 2013. The Petitioners are also challenging the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....three consequences, first removal of the auditor; second debarring such auditor for the five years; and lastly action under section 447 of the Act. 6. Mr. Rohatgi further submitted that under second proviso to sub-section (5) of Section 140 of the Act, on a plain reading, the auditor will be liable for action under section 447 of the Act and in the submission of Mr. Rohatgi this would be in breach of Article 21 of the Constitution of India. 7. Mr. Chinoy, learned senior counsel appearing on behalf of Respondent No.1 per contra submitted that the word "action" referred to in second proviso to sub-section (5) of section 140 of the Act means "prosecution" under section 447 in accordance with law and therefore there is no merit in the content....
X X X X Extracts X X X X
X X X X Extracts X X X X
....auditor has acted in fraudulent manner or abetted or colluded in any fraud, direct the company to change its auditor. 11. In the present case, the Petitioner-auditor has resigned with effect from 19th June 2019. According to the Petitioner, once resignation is given, then, there is no question of invoking procedure under sub-section (5) of section 140 of the Act. Per contra, Mr. Chinoy, learned senior counsel appearing on behalf of Respondent No. 1 submitted that the resignation by the auditor simplicitor will not absolve him and still the proceedings under sub-section (5) of section 140 of the Act can be continued. In our opinion, this issue requires consideration especially in the light of provisions of sub-section (4B) of section 132 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company. (15) Notwithstanding anything contained in this Act or in any other law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973." 13. A composite reading of these provisions prima facie indicates that the prosecution can be initiated only after final report, equated with a report under the provisions of section 173 of the Code of Criminal Procedure, 1973, is made. Learned senior counsel Mr. Rohatgi inviting our attention to the....