Ravikumar Duraisamy, Member - (1.) The present Petition is filed by SPC & Associates (Petitioner herein) under Section 140 of the Companies Act, 2013 read with Rule 78 of the National Company Law Tribunal Rules, 2016, seeking inter alia following reliefs: a. Declare that the removal of Petitioner firm as auditor of Respondent No. 2 Company as illegal; b. Declare that the appointment of Respondent No. 1 firm as auditor of Respondent No. 2 Company as illegal; c. Direct the Respondent No. 2 to change its auditors under Section 140(5) of the Companies Act, 2013; d. Declare the Petitioner firm as Auditor of Respondent No. 2 Company; etc.
(2.) The present application is filed against the illegal removal of Petitioner, who was originally appointed as auditor of Respondent No. 2 Company under Section 139 of the Companies Act, 2013 by Respondent No. 2, in collusion with Respondent No. 1 and in gross violation of Section 140 and 134 of the Companies Act, 2013 and prevailing rules thereunder.
(3.) The brief facts of the case as averred in the petition are as follows: a. Respondent No. 2 Company was originally incorporated under the Companies Act, 1956 on 27.02.2013 with Registration No. 085942 (CIN U93030TG2013NPL085942). b. The main objects of the R2 Company is to develop, promote arts and science by creating infrastructure and other facilities or projects either on its own or by way of lease for conversion of environment, ecosystems, forests, agricultural lands for mutual benefits of members, etc. c. The Respondent No. 2 Company originally appointed the Petitioner firm as an auditor of the Company at 3 rd Annual General Meeting held on 18.09.2015 for a period of 5 years starting from the conclusion of 3rd AGM till the conclusion of AGM to be held in 2020 and filed notice of such appointment Form ADT-1 vide SRN S43517713 on 29.11.2015 with the RoC, Hyderabad. d. It is submitted that CA Dilli Kumar N and CA Vamsi Krishna Bona are partners of R1 firm, have worked with the Petitioner firm in the capacity of partners for a period of 3 years and quit the Petitioner firm on 31.01.2016. After departing from the Petitioner firm, CA Dilli Kumar N and CA Vamsi Krishna Borra established R1 firm and immediately started soliciting and poaching the clients of Petitioner firm with the acquaintance and relationship developed while working for Petitioner firm. e. Ms. Anu Kashyap Durr, one of the Directors of Respondent No. 2 Company, in a reply email dated 27.05.2016, to an email forwarded by one of the partners of Petitioner firm dated 27.05.2016, stated that "your proposal to increase the audit fees comes to a complete surprise to us because at the time when we appointed SPCA as our auditors in August, 2014, we had a detailed discussion with Mr. Sesha Prasad and Mr. Vamshi that the audit fee will remain unchanged for a period of 5 years." In response to the above email, the Petitioner forwarded a reply substantiating the reasons and responsibilities associated with their professional services that warrant to enhance the audit fees. f. Subsequently, on 21.09.2016, Ms Anu Kashyap Durr, sent an email dated 21.09.2016 stating that they have not been satisfied working with the Petitioner firm staff since 01.01.2016 and therefore, finalized on another auditor for all of their companies and requested for resignation letter from the Petitioner firm for all their companies at the earliest. In reply, the Petitioner firm stated that "Petitioner firm intimated about the implications and repercussions in the light of appointment of R1 Company being in violation of the provisions of the Companies Act, 2013; the institute of Chartered Accountants of India Act, 1948 and the contractual obligations" and hence not resigned from R2 Company. g. It is submitted that R1 firm committed breach of trust, unethical professional practices by misusing the confidential information and taking undue advantage of relationships gained and developed with the clients of Petitioner firm while working for the Petitioner firm, clinchingly proves the mala fide intention and willful default of violating the Section 140 of the Companies Act, 2013 and in collusion and connivance with R2 company, for illegal removal of Petitioner firm as auditor of R2 Company and appointment of R1 firm as auditor of R2 Company, even though seeking NOC from the existing auditors of R2 company. Some of the material submissions of the Petitioner firm are as follows: 1. No special resolution passed by the R2 Company at the 4th Annual General Meeting of the Company held on 26.09.2016 for the removal of Petitioner firm. 2. R2 Company has not obtained previous approval of the Central Government (Regional Director) for removal of Petitioner firms' existing auditor of R2 company 3. The R2 company has not given any opportunity of being heard to the petitioner firm before removing Petitioner firm as auditor of R2 Company. 4. R2 Company appointing the same staff of Petitioner firm (with whom Ms. Ami Durr was not satisfied since 01.01.2016) i.e. R1 Company as auditors of R2 company for 5 years, clinchingly proves the mala fide intention of R2 Company and collusion with R1 Company for illegal removal of Petitioner firm. h. Therefore, the present petition is filed seeking the above reliefs before this Tribunal.;