New Dimensions of the Relationship between a Company and its Auditors – An Analysis of Union of India and ANR. Vs Deloitte Haskins and Sells LLP And ANR.

Abstract

The accounts of a company are significant indicators of its performance in the market. The auditors are responsible for conducting an impartial inspection and verification of the books of accounts of a company so as to ensure that the figures indicated therein are correct. This verification is crucial for the interest of investors and the overall capital market stability. However, collusion between auditors and the management for mutual benefit is not uncommon. Many provisions of the Companies Act, 2013 come into play in such a case. One such provision is Section 140(5). This case revolves around the liability of fraudulent auditors and the powers of National Company Law Tribunal with regard to them under the said provision. Additionally, the judgment throws light upon the legislative purpose of section 140(5) and it’s relevance in the event of resignation by an auditor before a final order is passed under the said section.