CA Barred for Five Years by NCLT for Failing Duties as Statutory Auditor

Union of India Vs CA. Ramaiah Nataraja (NCLT)

In a significant legal battle before the National Company Law Tribunal (NCLT), the Union of India, represented by the Ministry of Corporate Affairs, pursued action against CA. Ramaiah Nataraja, a chartered accountant (CA) practicing under Nataraja & Co. Chartered Accountants. The case, initiated under Section 140 of the Companies Act, 2013, highlighted severe lapses in audit responsibilities and failure to report fraudulent activities during Nataraja’s tenure as the statutory auditor of M/s Super Royal Holiday India Private Limited.

Appointment and Audit Reports:

• Ramaiah Nataraja was appointed as the statutory auditor of M/s Super Royal Holiday India Private Limited in January 2012, and subsequently reappointed under the Companies Act, 2013 for the financial years 2014-2019.
• He submitted audit reports covering multiple financial years, including 2011-2012 to 2017-2018.

Investigation and Fraudulent Activities:

• The Ministry of Corporate Affairs (MCA) launched an investigation into M/s Super Royal Holiday India Private Limited following complaints of irregularities, particularly during the demonetization period.
• The investigation, concluded in February 2018, revealed fraudulent practices within the company. Notably, the company collected membership fees as revenue without providing promised services, a practice concealed in financial statements audited by Nataraja.

Role of CA. Ramaiah Nataraja:

• Nataraja failed to report these fraudulent activities in the audit reports submitted to the company and the MCA.
• Despite resigning as the statutory auditor in August 2018, he faced allegations of negligence and complicity in fraudulent financial reporting.