TaxTMI 
TaxTMI 
2025 (11) TMI 965
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....ndent. 3. Brief facts of the case are, appellant, Urrshila Kerkar was a promoter and Whole Time Director of Cox & Kings Limited (hereinafter be called as 'the company'). In 2019, SEBI received complaints against the said company alleging that the company was defaulting in repayment of commercial papers and interest on debentures from June 26, 2019. When SEBI took up the matter with the company, the company informed that it had utilized the cash balance towards the other obligations. In October 2019, the company announced that Corporate Insolvency Resolution Process ('CIRP' for short) was initiated under IBC, 2016 Insolvency and Bankruptcy Code, 2016 and a Resolution Professional ('RP' for short) was appointed by NCLT, Mumbai National Company Law Tribunal, Mumbai. RP appointed M/s. BDO India LLP as Transaction Auditor to ascertain whether the company had entered into fraudulent transactions. On August 27, 2021, the RP informed the exchanges that the Transaction Audit Report submitted by BDO India LLP had disclosed that the erstwhile management of the company had undertaken certain fraudulent transactions having an estimated impact of INR 21,682.32 crore on the company. The RP had....
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....e no reference to the pleadings in the matter. • That the appellant is seeking cross-examination on generic disclaimers contained in the Transaction Audit Report and a request for the cross-examination is a roving enquiry or a fishing expedition. • That the reliance placed on the Transaction Audit Report by SEBI is a pure question of law, independent of the reasons for cross-examination and it does not entitle the appellant to get cross-examination as a matter of right. • That no oral statements were recorded during investigation and no such statements have been relied upon in the investigation or in the show cause notice, which warrants cross examination. 6. Shri Sood appearing for the appellant submitted that: • The cross-examination of the signatory of the Transaction Audit Report is necessary due to heavy reliance placed on the Transaction Audit Report in the investigation report and also the show cause notice. Investigation report prepared by SEBI reveals that it substantially mirrors the contents of the Transaction Audit Report. The investigating officer at paragraph No. 7 of the investigation report acknowledges that the....
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....n correctly and filed her reply. Long after filing the reply, appellant has come up with these applications only in order to delay the adjudication; • If the investigating officers of SEBI were to be routinely subjected to cross examination on the basis of investigation reports prepared by them, then it would lead to diversion of time and resources without any discernible purpose and it becomes another dilatory tactic for the noticees in every case. • All the relevant documents including the investigation report and Transaction Audit Report have been made available to the appellant and no case has been made out for cross examination. 9. We have carefully considered the rival contentions and perused the records. 10. The point that arises for our consideration is whether appellant's applications seeking cross-examination merit consideration? 11. Undisputed facts of the case are, after CIRP proceedings were initiated, the RP appointed BDO India LLP as Transaction Auditor. It is appellant's case that SEBI's investigating officer has not applied his mind independently but simply reproduced the figures and findings mentioned in the Transaction Audit Rep....
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....e. Nothing is brought on record to show that SEBI had taken any action in that behalf. The alleged manipulated figures have surfaced pursuant to Transaction Audit Report. The said audit firm which was appointed to carry out the Transaction Audit was appointed by the RP during the CIRP. The figures contained in the Transaction Audit Report precisely cross-match with the figures mentioned in the report prepared by SEBI's investigating officer. Thus, it is clear that there was no independent application of mind by the SEBI's investigating officer. Obviously, the figures mentioned in the said report must be at variance with the company's statutory audit report. Appellant was a promoter of Cox & Kings. She is alleged of manipulation in financial figures. Therefore, in our view, she is entitled to question and contest the veracity of the figures in the Transaction Audit Report. In order to do the same, the author of the report is required to be cross-examined. 15. We are conscious of the fact that the proceedings of this Tribunal are to be guided by adhering to the principles of natural justice and the provisions of Code of Civil Procedure do not apply. 16. In Bareli Electricity Su....