# In the matter of Rama Krishna Knitters Private Ltd.  IA No. 738-23 in IA No. 851-2020 in CP (IB) No.286-Chd-Pb-2018

> NCLT judgment dated 2023-05-30. Citation: TCN-2023-NCLT-03138. The case involves an application (IA No. 851/2020) filed by the Resolution Professional under…

- **Court:** NCLT
- **Order date:** 30 May 2023
- **Citation:** TCN-2023-NCLT-03138
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/rama-krishna-knitters-private-ltd-ia-no-738-23-in-ia-no-851-2020-in-cp-ib-no286-1068682e

## Summary

### Background

The case involves an application (IA No. 851/2020) filed by the Resolution Professional under Section 35(1)(i) & (n) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 6(1) of the IBBI (Liquidation Process) Regulations, 2016. The application seeks directions to the statutory auditor to conduct an audit or issue a No Objection Certificate (NOC) to enable the applicant to appoint another auditor. The Corporate Insolvency Resolution Process (CIRP) was initiated following an application filed by the financial creditor, Punjab National Bank, which was admitted by the adjudicating authority. Rajendra Kumar Jain was appointed as the IRP and later as the liquidator of the corporate debtor.

## Facts

Punjab National Bank initiated corporate insolvency proceedings against M/s. Rama Krishna Knitters Private Ltd. which was admitted. Rajendra Kumar Jain was appointed as the IRP and later as the liquidator. During the CIRP, it was found that the financial statements for FYs 2017-2018 and 2018-2019 were unaudited. The liquidator requested Mr. Sanjay Kalra, the statutory auditor, to conduct the audit, but he failed to do so, citing outstanding dues. The liquidator repeatedly sought completion of the audit or a No Objection Certificate (NOC) from 01.04.2019 until the liquidation commencement date of 24.12.2019. Mr. Kalra referred to a resolution from 25.06.2015 appointing statutory auditors for five years, subject to annual ratification, which was not ratified for FY

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## Issues and analysis

### Issue 1: Whether the statutory auditor is obligated to conduct the audit of the corporate debtor's financial …

**Ratio:** The statutory auditor has a responsibility to fulfill their duties as per their

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**Reasoning:** The court reasoned that the statutory auditor was appointed for a specific period, and

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**Interpretation:** This issue involves the interpretation of the duties and responsibilities of a

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**Application:** The court applied the ratio to the specific facts of the case, noting that the

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## Parties

- **Judges:** Harnam Singh…; SUBRATA KUM…
- **Appellants:** Rajender Kumar…
- **Respondents:** M/s Rama Krishna…; Sanjay…
- **Advocates:** Abhishek…; Viren S…; +2 more

## Timeline

- **2018-01-01 — CP (IB) No.286/Chd/Pb/20…**: Company Petition filed…
- **2019-12-24 — Liquidation…**: Order for the liquidation of the corporate debtor passed by the Adjudicating Authority;…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 35(1) — Powers and duties of liquidator](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-35)

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