NFRA urges Delhi HC to lift stay on 2020 orders against IFIN ex-auditors

economictimes.indiatimes.com:

National Financial Reporting Authority (NFRA) has approached the Delhi High Court, seeking the vacation of the court's earlier directions that had effectively stayed the auditing regulator's 2020 orders against former auditors of IL&FS Financial Services (IFIN). The High Court will examine the matter on Friday along with a batch of petitions by the auditors who have challenged the constitutional validity of NFRA's power to investigate professional misconduct of auditors.

In 2020, NFRA had imposed a seven-year ban and a penalty of ₹25 lakh on Udayan Sen, former chief of Deloitte Haskins and Sells LLP that conducted the statutory audit of IFIN for 2017-18. It had also banned auditors Rukshad Daruvala and Shrenik Baid of Deloitte Haskins for five years and imposed penalty of ₹15 lakh each on them.

The regulator had cited various instances of professional misconduct, gross negligence and non-adherence to auditing standards, following an investigation into the role of the auditors in the 2018 IL&FS crisis. Subsequently, the auditors had approached the Delhi High Court and challenged the vires of Section 132 (4) of the Companies Act, 2013, and the relevant rules that empower NFRA to investigate professional lapses by auditors.

The High Court had subsequently stayed NFRA's orders against the auditors until the disposal of the issue. In its latest applications, NFRA has suggested that during the pendency of the current proceedings, the petitioners (auditors) should not be allowed to carry out any audit work «as it would be hazardous to public interest».