Thursday, November 21, 2024
Home Business MCA Updates NCLAT: No debar for Auditor under Companies Act

NCLAT: No debar for Auditor under Companies Act

The National Company Law Appellate Tribunal (NCLAT) passed a judgement recently wherein an Auditor cannot be debarred for 5 years under the Companies Act, 2013 if there is no substantial evidence proving their fraudulent intentions.

In the case of Mukesh Maneklal Choksi vs the Union of India and Zen Shaving Ltd, the ruling of National Company Law Tribunal (NCLT) had passed the judgement for the removal of the Statutory Auditor of a company following a plea by the Ministry of Corporate Affairs (MCA).

Zen Shaving Ltd had introduced a public offer and thereby issued a prospectus to raise public funds. The appellant, Mukesh Maneklal Choksi, was appointed as an Auditor by the company. An Auditor issues an audit report on behalf of the company. When complaints were raised against the company and an investigation ensued, it was alleged that there were irregularities in the statutory compliances which included non-listing of the company in the Pune Stock Exchange and non-issuance of financial statement.

The Auditor was debarred for 5 years by NCLT under Section 140 (5) of the Companies Act, 2013 and ordered to refund the entire renumeration which he had received, despite there being insufficient evidence to prove the claim of fraudulent intention against him. To appeal against this judgement, the appellant knocked the doors of the National Company Law Appellate Tribunal (NCLAT).

The jury, comprising of Justice Jarat Kumar Jain, passed the judgement stating, that though it was the duty of the Auditor to take account of all the frauds committed by the company and its directors, and bring it forward, the Auditor cannot be barred as there isn’t sufficient evidence claiming a fraudulent intention from his side.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Conscious Chemist’s Journey on Shark Tank India: A Dive into Entrepreneurial Resilience

Conscious Chemist, a brand under the legal entity Era Botanics Private Limited, is making waves in the beauty and personal care industry. This...

Shark Tank India Season 3: Meet the 12 Esteemed Judges

In the eagerly awaited Shark Tank India Season 3, a stellar panel of judges has been assembled, comprising some of the most accomplished individuals in the business world. Among them are prominent figures like Ritesh Aggarwal, Aman Gupta, Anupam Mittal, Namita Thapar, Vineeta Singh, and Peyush Bansal. What's particularly striking about this lineup is the youthfulness of Ritesh Aggarwal, who, despite his age, has already made a significant mark in the entrepreneurial landscape. As the show unfolds, viewers can look forward to witnessing the dynamic interactions and insightful judgments of these esteemed judges.

ProjectX Raises $204 K in Seed Funding Round with Google as Investor

Kalyani, West Bengal, India - In a major development for the technology sector, ProjectX (Rrs Projectx Cloud Technologies Private Limited), an innovative...

KPI Green Energy’s Post IPO Funding Round Raises $36 Million

KPI Green Energy, a prominent operator of renewable solar power plants, recently closed a significant funding round. The Post IPO funding round,...

Recent Comments