NCLT stays its own order to prosecute IL&FS auditors for four weeks

The National Company Law Tribunal on Thursday stayed its order allowing the government to prosecute the three partners of Deloitte and BSR Associates for their alleged culpability in the IL&FS fraud following a plea to allow them to appeal at the tribunal. 

Staying its own order of July 18, the Mumbai NCLT gave 10 days to Udayan Sen and Kalpesh Mehta of Deloitte, and Sampath Ganesh of BSR Associates to file an appeal and said the impugned order would remain inoperative for four weeks from Thursday. 

“We have heard the argument of the senior counsel for the applicant and the arguments advanced by joint director on behalf of the government. Since our order is appealable, the applicants are free to file a petition. 

“Therefore, we stay the operation of the impugned order and allow the applicants 10 days from today for filing an appeal,” the tribunal said, listing the matter for hearing on August 6. 

On July 18, the NCLT had given the go-ahead to the corporate affairs ministry to prosecute Deloitte and BSR Associates for failing to detect and report the scam that took place across the now bankrupt IL&FS group and 21 other entities, when they were the auditors of IL&FS Financial Services. 

The NCLT order is based on the findings of the probe conducted by the Serious Fraud Investigation Office. 

The tribunal also allowed the government to implead Udayan Sen and Kalpesh Mehta, partners of Deloitte, and BSR Associates partner Sampath Ganesh. 

While Deloitte resigned as the auditor of the IL&FS group companies in FY18, BSR, an affiliate of KPMG, did so in June well after the government sought to ban them from for five years. The NCLT is yet to give its nod to the government to do so.