The Ministry of Corporate Affairs (MCA) has asked the National Company Law Tribunal (NCLT) to freeze the assets of the former auditors of an Infrastructure Leasing & Financial Services (IL&FS) subsidiary, arguing that the step is needed to stop fund diversion.
The government’s counsel requested the tribunal on Tuesday to pass an order to freeze the bank accounts of 23 proposed respondents that have been newly impleaded in MCA’s main petition against IL&FS, including Deloitte Haskins & Sells LLP and BSR Associates LLP, the former auditors of subsidiary IL&FS Financial Services (IFIN).
“We are very careful to use words like fraud or collusion but as we go deeper into the affairs of the group, we are of the view that there is more than what meets the eye. We are seeking an order to freeze assets of audit firms, its partners as well as the erstwhile directors of IFIN,” argued Sanjay Shorey, director — legal prosecution, MCA.
According to Shorey, the audit firms can continue to work with other operating costs, but the partners should be allowed to withdraw only Rs 1 lakh or Rs 2 lakh, as per the tribunal’s directions against others accused in the case.
The government had moved NCLT to ban Deloitte and BSR Associates, a KPMG affiliate, for five years for their alleged role in financial irregularities in the IL&FS case.
The tribunal has reserved its order on the plea for the ban.
Counsel for the auditors will argue the case before the tribunal decides on the MCA’s plea.
