The Custodian vs. Partial Release Of Professional Fees TO M/S Borkar And Muzumdar,Chartered Accountant
Held
The Court acknowledged the Notified Party's objections regarding the breach of assurances made to the Supreme Court. However, the Court stated that it may not be justified in delving into the specifics of those assurances. The Court reasoned that if there was a breach of assurances, the aggrieved party could pursue appropriate proceedings. Crucially, the Court held that the auditors, who rendered services at the instance of the Custodian, should not be deprived of their remuneration, particularly as only 30% of the claimed professional charges were being sought. Therefore, the Court was inclined to allow the report in terms of prayer clauses (ii), (iii), and (iv), which pertained to the interim release of professional fees and GST, subject to an undertaking from the auditors and permission to break fixed deposits. The Court did not expressly leave any issue undecided.
Facts
The Custodian filed a report seeking directions, including the release of Rs. 9,73,500/- as interim professional fees to M/s. Borkar and Muzumdar, Chartered Accountants. This amount comprised 30% of their claimed fees of Rs. 27,50,000/- plus Rs. 1,48,500/- towards GST (9% SGST + 9% CGST). The Notified Party opposed the prayers, contending that the Custodian breached assurances given to the Supreme Court that the auditors would not proceed with their work until the next date. The Notified Party argued that the Custodian had proceeded with the audit and obtained a report in violation of these assurances, and therefore, the prayers should be rejected. The Custodian argued that the assurance was only not to precipitate matters and not to take action to 'notify' under the TORT Act, 1992.
Key Issues
1. Whether the Custodian breached the assurances given to the Supreme Court regarding the auditors not proceeding with their work until the next date, and if so, what is the consequence for the present prayers? The Notified Party argued that the Custodian gave oral assurances in September 2022 and reiterated them before the Supreme Court on May 16, 2024, that the auditors would not proceed. They contended that the submission of the Preliminary Audit Report on April 3, 2023, and the current prayers for release of fees were in breach of these assurances, and therefore, the prayers should be rejected. The Custodian argued that the assurance given in September 2022 was only not to precipitate matters and not to take action to 'notify' under the TORT Act, 1992, and that the Supreme Court's order on May 16, 2024, was also misinterpreted. The Custodian also argued that even if there were objections to the audit, the auditors should not be deprived of their remuneration, especially since only 30% of the fees were being sought.
Sections Cited
Section 9, Section 10, Section 11
AI-generated summary — verify with the full judgment below
3-SPCR12-2024.DOC Santosh IN THE SPECIAL COURT AT BOMBAY Constituted under the Special Court [Trial of Offences Relating to Transactions in Securities] Act, 1992 CUSTODIAN’S REPORT NO. 12 OF 2024 The Custodian ...Applicant Versus Partial Release of Professional Fees to M/s. Borkar and Muzumdar, C.A. …Respondent Mr. Hormaz Daruwalla, Senior Advocate, a/w Mr. J. Chandra, i/b Ms. Shilpa Bhate, for the Custodian. Ms. Kamini Jaiswal, Ms. Rani Mishra, Ms. Dipika Batheja, Dikshita Pawar and Mahenoor Khan, i/b Agrud Partners, for the Notiied Party. CORAM: N. J. JAMADAR, J. Judge, Special Court DATED : 25th OCTOBER, 2024 PC:-
This report is iled by the Custodian seeking the following directions: (i) That this Hob’ble Court be pleased to take on record the Preliminary Audit Report dated 3rd April, 2023 submitted by M/s. Borkar & Muzumdar, Chartered Accountants, and pass an order it deems appropriate. (ii) That, as an interim measure, this Hon’ble Court be pleased to pass orders for release of Rs.9,73,500/- (which is 30% of Rs.32,45,000/- claimed) (Rs.Nine Lakhs seventy three thousand and ive hundred only) to M/s. Borkar & Muzmudar, Chartered Accountants comprising of Rs.8,25,0
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