In significant relief to BSR & Associates and Deloitte Haskins and Sells, the Supreme Court on Tuesday refused to stay the order by the Bombay High Court that quashed all prosecution against the two firms in the IL&FS case.
The order was passed by a Bench comprising Chief Justice SA Bobde and Justices MR Shah and AS Bopanna.
The Bombay High Court, in its order on April 21, had dismissed a plea by the Ministry of Corporate Affairs to ban the two auditing firms for a five-year period.
The MCA had sought the ban on grounds that the two auditors failed to catch the financial fraud at IL&FS. The High Court had also quashed all prosecution against the two which was pending with the National Company Law Tribunal and a special city court in the case.
While doing so, the special court had also given an eight-weeks time-frame to the MCA to file an appeal against its order.
BSR and Affiliates, which is a part of KPMG India, and Deloitte, had in October last year moved the Bombay High Court challenging the Centre’s petition in the NCLT.
They had stated that Section 140(5) of the Companies Act can not be invoked against the ex-statutory auditors.
The audit firms had said since they had already resigned as the chartered accountants of IL&FS, hence proceedings under section 140(5) do not survive.