CG Power Case: NCLT Reserves Order On Corporate Affairs Ministry’s Bid To Appoint Auditor

The Mumbai National Company Law Tribunal reserved its order on a plea from the corporate affairs ministry to appoint an independent auditor to restate the accounts of CG Power & Industrial Solutions Ltd.

Last month, the tribunal had rejected a plea from the ministry to reopen the books stating that the move was based on a report by an auditor appointed by the company itself.

Ministry's senior counsel Sanjay Shourie said the reopening of the books of accounts is needed to bring out the truth in the larger public interest. The board of the company had on Aug. 30, 2019, in a mid-night boardroom coup, had sacked the founder Gautam Thapar as its non-executive chairman alleging fraud to the tune of Rs 3,000 crore.

"We are seeking the right to appoint an independent auditor for reopening of previous accounts of the company," Shourie said.

Opposing the plea, the counsel representing Thapar said the reopening of accounts may hint at fraud being taken place and could have impact on its share price. He said the market regulator Securities and Exchange Board of India has already appointed an auditor to probe the matter.

After hearing the arguments from both the sides, the two-member bench comprising Bhaskara Pantula Mohan and Rajesh Sharma said that it will issue a detailed order later.

Earlier this month, the NCLT had quashed the audit report submitted by Vaish Associates on the company, terming it as bogus. Thapar was sacked based on this report, which was in fact penned by a rival agency KPMG.

Dismissing the Vaish report, the bench had said it would rely only on a report either ordered independently or by a government agency in the matter. The Vaish report was ordered by the board of CG Power.

Following the report, the markets regulator SEBI had banned Thapar and entities associated with him for three years from the market, following which he moved the Securities Appellate Tribunal, which has asked the company to provide relevant documents to him but upheld the ban on him. Late November, the ministry asked the SFIO to launch a probe into the affairs of the company and 15 group entities.