The Apex Court has denied intervening in the order passed by the High Court of Bombay that gave relief to BSR & Associates LLP, a KPMG network firm, in the IL&FS Financial Services (IFIN) Case.

The Ministry of Corporate Affairs had approached the SC after the Bombay HC granted a stay on National Company Law Tribunal (NCLT) proceedings against the auditors until further orders. The Govt is seeking a five-year ban on audit firms KPMG & Deloitte for their alleged roles in the IL&FS failure.

The Division Bench of Justices UU Lalit & Indira Banerjee said, “We are of the view that the controversy in question & the issues that have been raised before the high court need to be considered at an early date".

The Bench added, “We, therefore, direct the petitioners (Govt) before us to put in their affidavits…and direct that the original writ petitioners (BSR & Associates) shall file their affidavits in rejoinder…The parties have assured us that they will not seek any adjournment on any count & shall be ready to go ahead with the final hearing on 03.10.2019.”

The Top Court further said that these directions are passed, so that the matter could be taken up for final disposal by the high court in Oct.

Earlier this month, a Division Bench of the Bombay HC stayed proceedings in NCLT against both firms. Earlier, NCLT had ruled that it had Jurisdiction to ban both Deloitte Haskins & Sells & BSR for five years each for their alleged roles in the I-FIN case.

Investigations by the ministry’s probe agency had alleged a fraud case & estimated that the fraud involved a sum of more than Rs 90,000 crore.

The Govt. also told the SC that IL&FS Financial Services had passed a resolution to appoint Mukund M Chitale & Co as the statutory auditors, but the audit firm had shown its failure to take up the assignment. In such a situation, the board will have to propose the name of a new auditor that will be approved by NCLT.

The SC order stated that “We see no reason why steps in that behalf could not be undertaken with promptitude so that the interest of the company is not prejudiced on any count".

Tushar Mehta, Solicitor General of India, is representing the Govt. along with L Vishwanathan of Cyril Amarchand Mangaldas. BSR & its partners are being represented by Senior Advocate Mukul Rohatgi & Darius Khambata & VP Singh of AZB & Partners.

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