The National Company Law Tribunal ( NCLT ) in Bengaluru has barred a chartered accountant ( CA ) from Bengaluru-based firm M/s. Nataraja & Co. from serving as a statutory auditor for any company for five years.
This decision comes after investigations by the Ministry of Corporate Affairs ( MCA ) revealed collusion between the CA and Super Royal Holiday India Private Limited in fraudulent activities.
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Allegedly, CA Ramaiah Nataraja, the proprietor of M/s. Nataraja & Co. Chartered Accountants failed to report significant discrepancies and fraudulent transactions at Super Royal Holiday, violating Section 143 of the Companies Act, 2013, which outlines auditors’ responsibilities.
The Tribunal Bench held that, “this Tribunal is of the considered opinion that the Respondent No.1/Auditor has not performed his duties as a statutory auditor under Section 143 in a diligent manner and has committed fraud along with the company by not reporting the discrepancies of the company to the statutory bodies. The auditor has failed to inquire about the fraudulent functioning of the said company which is against the prudent business practice. Therefore, we are in line with the outcome of the investigation conducted by the Central Government and therefore hold that as per Section 143(5) of the Companies Act, 2013, the Respondent No.1 shall not be eligible to be appointed as a statutory auditor of any company for a period of five years from the date of the order by this Tribunal.”
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The NCLT bench, comprising K. Biswal ( member-judicial) and Manoj Kumar Subey (member-technical), issued the order in response to a petition from the MCA, which had launched investigations into Super Royal Holiday’s financial practices post-demonetisation.
These investigations uncovered that the company collected substantial deposits under the guise of membership fees from nearly two lakh customers but failed to provide promised tour services.
The complicity of the Chartered Accountant in these fraudulent activities led the MCA to also initiate liquidation proceedings against Super Royal Holiday under the law. Action against Ramaiah Nataraja was sought under Section 140(5) of the Companies Act for his failure to fulfil his duties as the company’s statutory auditor.
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