The National Company Law Tribunal (NCLT) Bench at Indore has directed Resolution Professional (RP)to appoint an auditor to conduct a forensic audit on irregularities qua assets of the corporate debtor.
Motel Rahans Pvt, the applicant sought to pass necessary orders by invoking Rule 11 of NCLT Rules read with Section 25(1)(j) and Section 26 of the Code and appoint an independent transaction auditor to undertake transaction (under Section 43, 45, 50 &66) audit for period 2009-10 till ICD and submit a report to Respondent No. 1 within 30 days of this order appointing such independent transaction auditor.
The Committee of Creditors(CoC) proposed the appointment of the Forensic Auditor, as espoused in the captioned IA. The Applicant contended that Order No. IBBI/DC/128/2022 passed by the IBBI on 07.09.2022 enumerates that the scope of consideration by the CoC regarding the appointment of the Professional is limited to the determination of their fees and the rest of the decision is left to the RP.
As per Regulation 34 of CIRP Regulations, the CoC shall fix the expenses incurred by the RP, and expenses so incurred shall be treated as CIRP costs. Hence, the role of the CoC is limited to approval/ratification of the fee of auditors.
The duty of appointment of professional’s vests with RP only. Thus, it is noted that he has abdicated his duty for appointing a forensic auditor in favour of the CoC members thereby violating Section 25(2)(d) of the code.” Indubitably, it is for the RP/IRP to run the affairs of CIRP and it is for him to take a call regarding the services of the Professional to be availed for the successful completion of CIRP.
There can be no doubt that the matter needs to be placed before the CoC for its approval. In the order, the IBBI has already made it clear that the decision of the CoC regarding the services of Professionals is limited to the sanction of their fees and the rest of the decision is to be taken by the RP.
The applicant is one of the secured financial creditors who precipitate precept certain irregularities/transactions qua the assets of the Corporate Debtor.Considering such apprehension, Coram comprising Ashok Kumar Bhardwaj, Member(J), and Kaushalendra Kumar Singh, Member(T) held that there would be no difficulty in conducting the audit of the account of the Corporate Debtor for the period referred to in the IA.
“In the wake, the RP is directed to appoint an auditor to conduct the forensic audit of the Corporate Debtor for the period referred to in the IA and the auditor would submit its report within four weeks thereafter.”, the coram held.
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