The National Company Law Tribunal (NCLT) will give its final verdict on restatement on CG power accounts after 23 January when it will hear the arguments of Ministry of Corporate Affairs.
The Tribunal deferred hearing on the petition filed by MCA seeking restatement of the company's financial accounts as the government department suspects a fraud and that its financial statements did not reflect the true picture of its accounts.
MCA posted the hearing to 23 January as their counsel was not present.
While the NCLT deferred the matter it also said that it cannot rely on a private investigation report commissioned by the company but needs government’s independent investigation.
“Only government's investigation will be taken on record," the NCLT bench said on Thursday in Mumbai.
The matter pertains to a case of alleged fraud at the manufacturing company. Its former Chairman Gautam Thapar was removed on 30 August after CG Power informed the stock exchanges on 20 August 2019, it was in the midst of restating its earnings after discovering suspected fraudulent transactions.
CG Power, in exchange filings at the time, had disclosed that the total liabilities of the company and the group may have been understated by approximately ₹1,053.54 crore and ₹1,608.17 crore, respectively, as on 31 March 2018.
This was based on the Vaish report commissioned by the company. The report was forwarded by the company to MCA and the Securities and Exchange Board of India (Sebi) for investigations.
Following these oral directions, the MCA would need to conduct its own inquiry in the matter, said a lawyer representing Gautam Thappar.
“Needs to be an independent examination and a fair audit for a true picture of the company," the lawyer added.
Sebi which had passed interim orders against the former management of the company on 17 September 2019 is due to pass confirmatory orders based on the Vaish report and company, its current management and former management representations.
Parallel to that Sebi is also conducting a forensic audit to verify the fraud allegations.
"Sebi being a party to proceedings before NCLT will have to give due deference and respect to the views of NCLT, even if they are verbal observations (in terms of its own investigations)," said Sumit Agrawal, Founder, Regstreet Law Advisors & former Sebi official.
"Any investigation done on behalf of or by an interested party, under its control and based on information submitted by it, makes findings of such investigation inadmissible." Said Agrawal. He is representing former director of CG Power, B Hariharan in the Sebi proceedings.