Professional Misconduct during Statutory Audit of Religare Finvest: Delhi HC Directs Petitioner to File Objections towards NFRA SCN [Read Order]

The Delhi High Court recently directed a petitioner who challenged a Show Cause Notice issued by the National Financial Reporting Authority (NFRA) in relation to alleged professional misconduct during the statutory audit of M/s Religare Finvest Ltd., to file their objections towards the same.

The petitioner, Sunil Wahal represented by Abhimanyu Bhandari, Arjun Syal and Shreya, assailed a Show Cause Notice dated 30.12.2024 issued by the NFRA, contending that the proceedings initiated under Section 132(4)(c) of the Companies Act, 2013 read with Rule 11 of the NFRA Rules, 2018 were arbitrary, illegal, and without jurisdiction.

The Show Cause Notice pertained to allegations of misconduct against the petitioner, from his role as the Engagement Quality Control Reviewer (EQCR) in the said audit engagement for M/s Religare Finvest Ltd. for the financial year 2017-18.

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The matter was first listed before the Delhi High Court on 06.02.2025, when it was specifically contended by the petitioner that the legal issues involved in the present writ petition were identical to those in W.P.(C) 1135/2025 before the same Court, in which interim relief had already been granted by the Court on 30.01.2025. On this basis, interim protection was similarly extended to the petitioner in the current matter.

Subsequently, the Respondent No. 1 (NFRA) filed a Civil Miscellaneous Application (CM APPL.), pointing out that the interim relief granted in W.P.(C) 1135/2025 had been challenged before the Supreme Court in SLP (Civil) No. 5468/2025 titled National Financial Regulatory Authority vs. Charmi M. Shah and Anr.

The Supreme Court, while disposing of the SLP, granted liberty to the respondent to file objections to the impugned Show Cause Notice within four weeks. The apex court directed that the said objections be duly considered by the authority, including the issue of exercisable jurisdiction and that a speaking order on the same be passed.

The Supreme Court had further directed that no coercive steps were to be taken against the respondent until such time as the speaking order was passed.

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Relying on the aforesaid directions of the Supreme Court, the Delhi High Court Bench presided by Justice Sachin Datta allowed the Civil Miscellaneous Application filed by the NFRA and directed that the petitioner be entitled to file objections to the NFRA Show Cause Notice within the stipulated period, which shall be duly considered by the authority in accordance with law.

The Delhi High Court further clarified that the earlier date fixed for hearing, i.e., 31.07.2025, stood cancelled in terms of the disposal of the present case.

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