Union of India and Another vs Deloitte Haskins and Sells LLP & Anr

Bench: 2 — M.R. Shah, M.M. Sundresh

In Brief

The Supreme Court upheld the validity and maintainability of Section 140(5) proceedings against auditors of IL&FS Financial Services Limited (IFIN) despite their resignation. The Court held that subsequent auditor resignation does not terminate Section 140(5) proceedings, which must proceed to final determination of fraudulent conduct. On finding fraud, auditors face mandatory five-year debarment from any auditing role. The Court also upheld a Section 212(14) prosecution direction issued within 30 hours of receiving the 750-page SFIO report, holding speed alone does not prove non-application of mind. The investigation into IFIN was treated as complete despite ongoing investigations into other IL&FS group entities, as the IFIN report itself contemplated supplementary reports if needed.

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Audit and Auditors Corporate Governance Statutory Auditor Removal Fraud Investigation Constitutional Law Administrative Law Criminal Procedure Companies Act NCLT Jurisdiction Professional Liability Financial Crime

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