Serious Fraud Investigation Office (SFIO) has moved a petition in Mumbai Bench of NCLT (National Company Law Tribunal) against erstwhile auditors of IL&FS Financial. As per sources, in its plea SFIO has sought freezing of assets of Deloitte Haskins & Sells and BSR and Associates — an affiliate of global consulting firm KPMG.

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As per sources SFIO has filed it's petition under section 140(5) of Companies Act. This section of Companies Act deals with removal of auditors. SFIO has alleged that Deloitte and BSR failed to do their duty as auditors. Deloitte was the auditor of IL&FS Financial for financial year 2015-16 and 206-17, BSR and Deloitte were joint auditors for financial year 2017-18 and BSR was full fledged auditor for financial year 2018-19.

SFIO had earlier sought freezing of assets of the auditors but the matter was challenged in Bombay High Court, and the High Court ruled in favour of auditors. The High Court was of the view that once auditor resigned or was no more an auditor, whatever the reason, the proceedings under section 140(5) can not be initiated.

Subsequently, SFIO challenged the High Court order in Supreme Court. In May last year, the apex court ruled in favour of SFIO.

Supreme Court was of the view that such interpretation may lead to far reaching consequence as auditors will save themselves after fraud by resigning, and so frauds will continue to take place.

Auditors have filed a review petition in apex court, which is likely to come up for hearing in second week of March.

On Zee Business' query, KPMG said, "This matter is subjudice so we cannot comment on it". Deloitte too didn't respnded to Zee Business' email seeking response.

Rs 91000 crore IL&FS scam came to light in 2018, when company and its subsidiaries started defaulting. The infra financing giant was giving long term loans via short term resources. Later, government took over the control of IL&FS and changed the board.