In a rare move, the National Company Law Tribunal (NCLT) has allowed the removal of the statutory auditor of a company following a plea by the Corporate Affairs Ministry.
The case pertains to Mumbai-based Zen Shaving Ltd (Respondent 2) and its auditor Mukesh Maneklal Choksi (Respondent 1).
An inspection by the Ministry found that all the commonly known attributes of a shell company existed in the case of Zen Shaving. Among others, the company came out with an initial public offer and issued prospectus to raise public funds in October 1996 but is not listed on any stock exchange despite assurances given in the prospectus.
Against this backdrop, the Ministry moved the NCLT seeking removal of the company’s statutory auditor and appointment of an independent auditor.
A senior official said this was the first time that a provision of the Companies Act was being invoked to remove the statutory auditor of a firm.
Besides, the Ministry has been permitted to appoint an independent auditor for the company. The tribunal has listed the matter for final argument on February 4.