Audit by administrator will take greater precedence: Counsel for Srei promoter – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/todays-paper/tp-news/audit-by-administrator-will-take-greater-precedence-counsel-for-srei-promoter/article65202777.ece

Man holds Insolvency and bankruptcy code IBC.

Man holds Insolvency and bankruptcy code IBC. | Photo Credit: designer491

Under a statutory framework, an audit being conducted by the Resolution Professional or an administrator will take greater precedence over a private audit conducted by lenders or some of them, said the counsel appearing on behalf of Hemant Kanoria, promoter and erstwhile director of two Srei group of companies – Srei Infrastructure and Srei Equipment.

IBC requirement

According to Ratnanko Banerjee, the liability of the promoters or ex-directors of Srei group companies arises only because of their association with the corporate debtor and not in their personal capacity and hence any proceedings or audit conducted should be in accordance with the requirement under the Insolvency and Bankruptcy Code (IBC) since the company is undergoing CIRP (corporate insolvency resolution process).

Corporate debtor

“The promoters or ex-directors are only involved because of their relation with the corporate debtor otherwise it is not a question of KPMG or banks examining fraud or anything else. It is only vis-a-vis their role in conducting the affairs of the corporate debtor which is under scrutiny. The question we had posed is whether two authorities should examine the affairs relating to the corporate debtor and liability of people who are connected with the corporate debtor,” he said before the Kolkata Bench of National Company Law Tribunal on Monday.

It may be noted that in a recent application, Kanoria had sought setting aside the KPMG audit into the company citing the issue of a possible parallel auditing as it is currently undergoing CIRP.

Arguing on behalf of Kanoria, he said, “In a statutory framework there are certain checks and balances so we have come and said that we are willing to submit to these checks and balances and not to the arbitrary actions of banks who were already prejudiced against me.”

Any further proceedings on the basis of the forensic audit report would be “upstaging” the IBC proceedings, he argued.

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