Bombay High Court rejects plea by Essel's Amit Goenka against SEBI's forensic auditor in Shirpur case

The Bombay High Court on Wednesday dismissed a plea by Essel Group's Amit Goenka, who had challenged Security and Exchange Board of India's (SEBI) decision to appoint KPMG Assurance and Consulting Services LLP (KPMG) as a forensic auditor in its probe into the Shirpur Gold Refinery fund siphoning case [Amit Goenka v. SEBI]..Goenka had also challenged SEBI's reliance on KPMG's report in an interim order-cum-show cause notice against him and others in the matter.By its August 14 order, a Division Bench comprising Justices AS Chandurkar and Rajesh S Patil dismissed Goenka's petition since it was filed belatedly."We do not find any justifiable reason assigned by the petitioner in the writ petition for the belated challenge being raised to the appointment of KPMG as Forensic Auditor on 13th September 2021," the Court said. .In an interim order dated April 25, 2023, SEBI had leveled serious allegations of fund diversion against Shirpur Gold Refinery Ltd., a debt-ridden entity within the Subash Chandra Goenka-led Essel Group. The company is currently undergoing insolvency proceedings, and Amit Goenka, who served as Shirpur's non-executive chairman until 2021-22, was among those restrained by SEBI from diluting their assets.Goenka’s plea, argued by senior advocate Pradeep Sancheti, centred on the claim that KPMG, being a non-Chartered Accountant firm, did not meet the eligibility criteria under the Chartered Accountants Act, 1949, to conduct a forensic audit. He further contended that KPMG's report, dated March 21, 2023, lacked mandatory elements such as a Unique Document Identification Number (UDIN) and that KPMG's name was not listed among firms registered with the Institute of Chartered Accountants of India (ICAI). Sancheti argued that SEBI's reliance on this report for issuing the interim order was therefore unlawful.However, SEBI, represented by senior advocate Mustafa Doctor, argued that Goenka's petition was filed too late, pointing out that KPMG was appointed as the forensic auditor on September 13, 2021, and that the petitioner had ample time to challenge this appointment but failed to do so. Doctor further noted that Goenka had already raised similar objections in response to SEBI’s show cause notice issued in April 2023, which is still under consideration by SEBI..The Court agreed with SEBI's argument. It noted that Goenka had already contested KPMG's eligibility in his response to SEBI's show cause notice, making the current petition redundant. Further, it observed that Goenka had failed to challenge SEBI's interim order from April 2023, despite having the opportunity to do so through the statutory remedies available under the SEBI Act."We are of the view that the writ petition is not liable to be entertained on the ground that a belated challenge has been raised ... much water has flowed after issuance of the communication dated 13th September 2021 appointing KPMG as Forensic Auditor," the Court added.The Court subsequently dismissed the petition, clarifying that the merits of the challenge were not examined and that Goenka remains free to pursue his objections before SEBI in accordance with the law. .Senior advocate Pradeep Sancheti with advocates Vikramaditya Deshmukh, Shreni Shetty and Antara Kalmbi appeared for Goenka.Senior advocate Mustafa Doctor, with advocates Vidhi Shah Ajmera, Mihir Mody, Harshvardhan Melanta, and Shreyas Menkudale represented SEBI..[Read Judgment]