9911796707
TMI Blog2024 (10) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... ht out that the Impugned Order has been passed by NFRA in respect of statutory audit of SEYA Industries Ltd. (SIL/Company) for the financial years i.e. 2018-2019 and 2019-2020. The Appellant was appointed as a statutory auditor of company for financial year - 2018-2019 and 2019-2020 and as such he was responsible for audit of the said company. 4. We note that Securities and Exchange Board of India (in short, SEBI) vide their letter dated 28th March, 2023, issued a letter to NFRA under subject "SEBI Order dated 20th March, 2023 in matter of SEYA Ltd." where the SEBI indicated that they have investigated the matter of SEYA Industries Ltd. and passed the Order on 20th March, 2023 in the matter of SEYA Industries Ltd. The SEBI has stated in their letter dated 28th March, 2023 that since the matter was relating to non-compliance with the applicable accounting standards by the Company and "the conduct and non-cooperation of Auditor", the case has been referred to NFRA for necessary action. 5. We further note that based on SEBI letter dated 28.3.2023, NFRA issued the letter dated 27.4.2023 seeking various files and information in respect of audit of SEYA Industries Ltd. for the Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulltime Members of NFRA. 9. We observe that since no Reply was received, it has been pleaded by NFRA before us that based on the information available with NFRA and based on the complaint of SEBI, NFRA issued detailed Impugned Order No.002 of 2024 dated 5th January, 2024 under which, after proving the charges of professional misconduct by the Appellant, NFRA imposed a penalty of Rs.20 lakhs on the Appellant and also debarred the Appellant as well as audit firm for 10 years from being appointed as an Auditor or internal auditor or from undertaking any audit in respect of financial statement for internal audit of functions and activities of any company or body corporate. 10. The Appellant pleaded that it did not receive any information since he moved to Nepal along with his family in the month of January, 2021 and in this respect stated that he obtained the PAN Card from the Government of Nepal since he started working as Supply Agent Consultant in Nepal. 11. The Appellant claimed that during his pleading that he has worked very sincerely during course of Audit of the company and followed all accounting standards and maintained proper record, however, since he was in Nepal, he di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also tried several times on the mobile number of the Appellant. However, the Appellant did not respond to any of e-mails or calls. 17. Only plea of the Appellant in his defence is that he relocated himself in Nepal in 2021 and therefore he could not receive any letters and also since in Nepal his telephone was not working and his e-mail was also not accessible. In this regard, it is interesting to find that as a defence he has quoted SEBI's letter according to which the Appellant claims in the present Appeal that he has replied to SEBI in 2021 stating that he was residing in Nepal. We quote the exact submissions made by him in writing in the Appeal which reads as under:- "A. BECAUSE the impugned order has been passed solely on account of the fact that the Appellant did not respond to the letters and SCN issued by the Respondent, and the respondent has assumed that the Appellant did not maintain any documents in violation of SA 230. or that he was unwilling to cooperate with NFRA. B. BECAUSE the Appellant had conducted the audit on the basis of details and documents as available with the Company by duly following the laid down procedure and practice as per the standards lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the letters/ SCN. G. BECAUSE the Appellant was unable to respond to the letters for the reasons mentioned above and the same was inadvertent and not deliberate or willful. It is submitted that on account of the peculiar circumstances stated above, the Appellant remained unaware of the letters and can provide the Respondent with the requisite documents. H. BECAUSE without prejudice to the aforesaid. it is submitted that the penalty in the present case is wholly excessive and arbitrary as it imposes the highest prescribed penalty for debarment without any reasons or satisfaction. It is submitted that the statutory scheme of Section 132(4)(c) of the Companies Act grants the Respondent with ample discretion with respect to imposition of penalty. It is submitted that given the ample discretion available with the Respondent, it must act in a reasonable manner and not impose the highest permissible penalty without any basis or reasoning. In the facts of the present case, the Respondent merely mentions that the charges of professional misconduct stand proved and further that the power of imposition of penalty exists with the respondent. however, there is no discussion as to how th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndian citizen and has Indian passport and PAN. Therefore, the various pleadings regarding his immigration to Nepal and consequently not knowing what was happening in India by his earlier professional deeds, are not found convincing. 22. Only another point raised by the Appellant was regarding quantum of penalty and cited the Judgement of this Appellate Tribunal in the matter of Mr. Harish Kumar (supra). 23. It is true that the principles of proportionality is relevant for any Authority like NFRA, in deciding quantum of punishment in the disciplinary proceeding. It is well settled principle of law that judicial review, generally speaking, is directed against the "decision making process". In other words, the type and the quantum of penalty is by and large remains within the jurisdiction of the authority who has been vested with powers as in case of NFRA in terms of Companies Act, 2013. It is true that the punishment should be reasonable keeping in view the facts and circumstances of each case and the adverse impact in particular cases should not be vindictive or unduly hardship. The penalty should not be in a manner which reflects any bias on the part of such authority. We feel th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
