NCLT seek opinion of ICAI on derogatory remarks of personal nature in Audit Report

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.