9911796707
TMI Blog2002 (9) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... crores, the net current assets stated to be Rs. 87 crores. It noted that the auditor had certified that it was not a BIFR company. The balance sheet of JRCE showed a profit of around Rs. 20.23 lakhs for the year ended 31-3-2001. It was seen to have cash and bank balances totalling Rs. 10.69 lakhs and it earned interest on fixed deposit Rs. 40 lakhs. Its fixed deposit with the Overseas Body Corporates (OBC) was stated to be around Rs. 81 lakhs. 3. These applications now seek modifications of the Tribunal's order on the ground of financial hardships. 4. We shall first consider the case of JRCE. The applicant contends that "The facts of the matter however is that the applicant company presently has no business or income of any kind whatsoever" and says "The certificate issued by the Chartered Accountants M/s. Nidhi & Associates to show the actual financial position of the company". 5. When this certificate was first produced, we had asked the advocate for the applicant to furnish an affidavit by the chartered accountants in support of the claim. This, the counsel refused to furnish saying that what he was tendering was an opinion of a professional and that the affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been valued and certified by the management, and that the raw materials are at cost and net realisable value whichever is lower. The contention in the current certificate given therefore is entirely baseless. It is clear that the valuation of inventories is shown in the balance sheet was not in fact done by the auditor but by the applicant and that such valuation has been the lower of the carried cost or net realisable value. The statement now made by the applicant flies in the fast of it the declaration made in a document prescribed by law. There is not even a word of explanation as to the contradiction. We therefore do not see why we should prefer the statement of this chartered accountant who has not even audited the books of account of the applicant and does not indicate any basis over the statement of an auditor who has carried out the audit as required by law. 9. The further statement that, "The sum reflected in cash and bank balances are subject to pending bank reconciliation" is again totally unacceptable. If this were the case, the balance sheet would have carried a statement rider that the bank balances were subject to reconciliation with the bank. The report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate is a little over two months. In this case too, it is not possible to accept most of the statements that have been made in support of the contention. It is stated that out of the sums due to the applicant of Rs. 21.45 crores, a substantial amount is unrealizable because of the applicant's, inability to provide sale support and service to its dealers because the contract for marketing the applicant's product is in dispute in an arbitration court in London. Now, the balance sheet does not contain any such indication. On the contrary, after making provision for doubtful debts, schedule 8 shows that unsecured loan considered good to be at of order of Rs. 5.10 crores. The basis for the auditor's conclusion, the arbitration proceedings was known even at the time of the finalisation of the balance sheet; it is referred to in the notes forming part of the balance sheet as on 30-6-2001. There is nothing in the report to indicate that the debts, which were otherwise considered good, became bad between the date on which the auditor certified the accounts and the date on which he issued the certificate. As we have noted, no affidavit showing as the date on which the auditor acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws that they were actually present as on that date. If that is so, evidence is required to show that they were reduced after 16-4-2002 and before 30-6-2002. This has not been produced. Similarly, the claim that loan of Rs. 50.82 crores out of the total loan and advances of Rs. 11.58 crores is to a subsidiary company Baron Electronics Pvt. Ltd. which is not recoverable. The certificate shows "we are being informed that the said sum is not recoverable as Viacom Electronics Pvt. Ltd. has incurred huge losses". Not a single scrap of material is produced in support of this contention. 13. It is clear from this report that this is also nothing but an attempt to blacken otherwise the rosy picture that is given in the balance sheet. As we have said with regard to JRCE, it is obviously preferable to go by the report of an auditor furnished in accordance with the requirement of the Companies Act and not in accordance with some vague statement made thereafter which the auditor is reluctant to put on oath which is in any case entirely unsubstantiated in material evidence, and containing significant contradictions to the balance sheet. We therefore find ourselves unable to accept the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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