Money & Banking

Now, govt wants to freeze accounts of IL&FS auditors, 21 others

Press Trust of India Mumbai | Updated on August 06, 2019

IL&FS has been allowed two weeks to state the next course of action with regard to 55 ‘red’ entities

Ministry of Corporate Affairs moves NCLT

In more trouble for the auditors of the crippled IL&FS —Deloitte and BSR — the Corporate Affairs Ministry on Tuesday moved the NCLT seeking to freeze their bank accounts along with those of 21 others who are impleaded in the main petition in the one of the largest fraud cases.

This comes even as the NCLT is yet to pronounce its verdict on the Ministry plea seeking to ban these auditors for their omissions and commissions in the case for five years.

Ministry counsel said he wants their accounts frozen as an interim measure till the tribunal delivers on its demand to ban these auditors for five years.

Seeking to restrain their activities by freezing their accounts, Ministry counsel Sanjay Shorey said the tribunal can allow these individuals to withdraw a certain amount say ₹1-2 lakh every month based on their requirement like it had done in case of IL&FS’ former directors.

He explained that the move is based on the fact that the Ministry doesn’t have the powers to halt the operations of these statutory auditors Deloitte Haskins & Sells, and BSR Associates, which is an associate of KPMG, and they should be allowed to access money to meet only operational expenses till the order of their ban is passed.

But the tribunal did not offer any interim relief saying these auditors have moved the NCLAT challenging the tribunal order to implead them and prosecute them at the appellate tribunal, which will hear the matter on August 19.

“Hence, we will only hear your arguments and not pass any order today,” the tribunal bench comprising VP Singh and Rajesh Sharma added and adjourned the matter to August 28.

To this, Shorey pointed out that the tribunal has the powers to give an interim relief to attach the accounts, otherwise the coffers will be empty by the time the NCLAT verdict comes in.

“Moreover, the objective is to ensure that if fraud has indeed taken place, there should be something realisable from the parties to the fraud,” he added.

It can be noted that after NCLT had stayed its own order to prosecute the auditors on July 25 for four weeks to allow the auditors to appeal in NCLAT, the auditors approached the appellate tribunal. The NCLAT would hear the pleas of auditors on August 19.

Published on August 06, 2019

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