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IFIN, Deloitte And BSR To Face Freezing Of Assets In IL&FS Scam Case

Other than the ban for five years, the former auditors of IL&FS Financial Services (IFIN), Deloitte Haskin & Sells and BSR & Associates are likely to face the freezing of their assets just as it was done by the National Company Law Tribunal for the top management of the bankrupt company.

The ministry of corporate affairs (MCA) has already moved an application before the tribunal to add the concerned auditors to the list of entities whose assets needs to be frozen as they are also part of the chargesheet filed in the matter by the Serious Fraud Investigation Office. However, an order to this effect was reserved by the NCLT on Friday.

On the other petition of the MCA seeking a five year ban on the auditors, the counsel for Deloitte Haskin & Sells argued that the NCLT does not have the requisite jurisdiction to do the same. The tribunal will hear the matter now on July 15.

Apart from the assets of the two audit firms, the petition also seeks to freeze the assets of the individual auditors of the team who worked on the IFIN accounts — Udayan Sen, Kalpesh Mehta, and Sampath Ganesh. The petition also seeks to freeze the assets of IFIN’s chartered accountant, AP Shah & Associates.

As is known, on December 3, 2018, the NCLT had ordered the freezing of assets of the top management of IL&FS, including Ramesh Bawa, Vaibhav Kapoor, and Hari Sankaran. The order was later challenged in the appellate tribunal following which on January 16, the NCLT modified it and allowed the respondents to withdraw up to Rs 2 lakh from their bank accounts per month.

In its application, the government has sought the “deemed removal” of the auditors of IL&FS under section 140 (5) of the Companies Act. Under this section, the tribunal can change the auditors of a company, if they have sufficient evidence that the auditors have directly or indirectly acted in a fraudulent manner and appoint new ones in lieu of them. Consequently, the auditors would also then be banned from auditing activities for a period of five years.