In a significant judgment, the Supreme Court has clarified the scope of Section 140(5) of the Companies Act, 2013, which deals with the disqualification of statutory auditors involved in fraudulent activities. The Court held that the provision can be invoked against auditors who were no longer the statutory auditors of the company at the time of the alleged fraud. This ruling has significant implications for the accountability of auditors in preventing corporate fraud.

The Court’s decision underscores the importance of auditors acting in the larger public interest and the need for harsher consequences for those found to have abetted fraud. This judgment serves as a deterrent to auditors who may be tempted to engage in fraudulent activities and highlights the government’s commitment to promoting corporate transparency and accountability.