Case Law Details
Punita Khatter Vs. Explorers Travels & Tours (P) Ltd. (National Company Law Tribunal)
Since it was argued by the Respondents that the Auditor’s report being independent had to be incorporated in the Directors Report so as to apprise the shareholders of the true situation and there was no discretion in omitting the same, this Bench thought it fit to hear the Chartered Accountant as well as seek an opinion from the Institute of Chartered Accountant whether the statements such as those made in the aforesaid objected paragraphs would fall within the jurisdiction of a Chartered Accountant to opinionate and incorporate the same in the financial statement to be approved by the shareholders in the AGM to be convened.
Pursuant to the notice issued CA was present in court and has categorically made a statement on Oath that the said Note No. 20 annexed to the accounts had been prepared and given to him by the Management of the Respondent Company which he had to incorporate in his report and has therefore filed a disclaimer.
Representatives from the Institute of Chartered Accountant have prayed for some time to assist this Bench whether disparaging remarks of a personal nature would fall within the purview of a Chartered Accountant to be mentioned in the Audit report.
NCLT held that Company should go ahead with convening of the AGM called for at the appointed time, but all derogatory remarks of a personal nature, having no relevance on the financial statements should stand deleted or expunged from the Auditor’s report.
OFFHAND
“NCLT held that Company should go ahead with convening of the AGM called for at the appointed time, but all derogatory remarks of a personal nature, having no relevance on the financial statements SHOULD STAND DELETED OR EXPUNGED FROM THE AUDITOR” REPORT”
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Unclear what was the ICAI’s opinion tendered, what precisely is the view taken by NCLT on the point of grievance raised. Be that as it may, how the suggested deletion or expunging of any of the derogatory remarks of a personal nature, would really ‘put the clock back’ so to say, and save or help the already created embarrassing situation for the aggrieved is equally unclear. Perhaps, at best, in order to avoid a repetition of this kind of situation – of adverse publicity – in future, besides the ICAI , the concerned authority (ies) , should think of and have in place appropriate rules for effectively having a control.
Now the NCLT Order is public and can be viewed y the shareholders as well as public; was the purpose of protection from defamation achieved? I wonder 🙂
OFFHAND
It is said (para 12.) that the final hearing had been posted in early August (2017 ?). If so, the final outcome may have been known, by now; but not made known.
Incidentally,, the whole dispute is centered on one point of grave objection to the audit report i.e. – “PERSONAL NATURE”.
Incidentally, one is left personally wondering, -should not then it would have made more sense, and been prudent, had the matter not been given so much publicity prematurely; but been reported only after the dispute has been finally concluded !
May be, law pundits at large hold a different or like view ?!