According to the resignation letter, PwC cited Section 143(12) of the Companies Act in support of their move.
Ministry of Corporate Affairs (MCA) and Securities and Exchange Board of India (SEBI) may seek clarifications from PwC and Reliance Capital and Reliance Home Finance to ascertain the reasons behind the recent events, which saw PwC resigning as auditor of the companies on June 11.
"Ministry will seek reply from auditor and it should justify their decision of resigning. The ministry will also ask seek details from the two companies," a source told Moneycontrol.
According to the resignation letter, PwC cited Section 143(12) of the Companies Act in support of their move.
As per the Section, which says where the auditor seeks some information and he doesn’t get it from the company. “If auditor of a company in course of the performance of his duties as an auditor has a reason to believe that an offence or fraud involving such amounts is being committed in the company by its officers or employees the auditor shall report the matter to central government,”.
"Exchanges already sought clarification from company and after analysing comments will seek detail clarification also. We will ask auditor also specific reason for resigning from company,” a source told Moneycontrol.
Last year also, PwC resigned as statutory auditor of Varkrangee Limited.
"PwC was not able to justify their decision of resignation at the time of statement on oath,” an official in the ministry told Moneycontrol.
Another source in the ministry told Moneycontrol that almost all the cases of resignation of auditors from listed companies are referred to NFRA for further investigations.
SEBI has already barred PwC from auditing listed companies. In January 2018, SEBI had said PwC can only service their existing clients till March 31, 2018. The Securities Appellate Tribunal however extended the timeline till March 31, 2019. However, SAT is yet to deliver the final order in this case.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.
