Charmi M Shah Vs National Financial Reporting Authority & Anr. (Delhi High Court)
In the case Charmi M Shah Vs National Financial Reporting Authority & Anr., the Delhi High Court is examining the jurisdiction of the National Financial Reporting Authority (NFRA) in issuing a show-cause notice to the petitioner. The petitioner, an Engagement Quality Control Reviewer (EQCR) for the statutory audit of M/s. MAN (India) Industries Limited for the financial year 2020-21, challenged the NFRA’s authority to take disciplinary action under Section 132(4)(c) of the Companies Act, 2013, and Rule 11 of the NFRA Rules, 2018. The primary contention is whether an EQCR, who is not appointed as a statutory auditor under Section 139 of the Companies Act, falls within the scope of “auditor” as defined under Rule 2(d) of the NFRA Rules.
The petitioner argued that the NFRA’s jurisdiction is confined to statutory auditors and does not extend to EQCRs, as their role is defined under auditing standards and does not involve direct appointment as an auditor. Citing a previous Delhi High Court judgment, the petitioner emphasized that show-cause notices under Rule 11 are limited to auditors directly appointed for companies under NFRA’s purview. Given the prima facie case presented, the court stayed further proceedings on the impugned show-cause notice and directed the respondents to file a counter-affidavit for further deliberation. The matter is scheduled for the next hearing on May 7, 2025.
