CA Som Prakash Aggarwal Vs National Financial Reporting Authority (NCLAT Delhi)
Material Facts
The appeals were filed by CA Som Prakash Aggarwal, the Engagement Partner (EP), and M/s S. Prakash Aggarwal & Co., the statutory audit firm, under Section 132(5) of the Companies Act, 2013 challenging separate NFRA orders dated 12.09.2022 and 23.04.2024.
The firm was the statutory auditor of Vikas WSP Limited (VWL) for FY 2019-20, while CA Som Prakash Aggarwal acted as the Engagement Partner. NFRA’s proceedings arose after information received from SEBI regarding the company’s non-recognition of interest expense on bank borrowings classified as NPAs, allegedly resulting in overstatement of profits.
The impugned orders imposed:
- On the Engagement Partner:
- Monetary penalty of Rs. 3,00,000
- Debarment for three years from undertaking audit assignments relating to companies or body corporates
- Mandatory training in Standards on Auditing and Indian Accounting Standards within 180 days.
- On the audit firm:
- Monetary penalty of Rs. 5,00,000.
Procedural History
SEBI forwarded information to NFRA on 25.08.2021. NFRA initiated proceedings under Section 132 of the Companies Act, 2013, issued notices, obtained audit records, conducted hearings, and passed separate orders against the Engagement Partner and the audit firm. Both orders were challenged before NCLAT and were heard together as they arose from the same statutory audit.
