The petition – filed with the National Company Law Tribunal – related to allegations that the firms failed to fulfil their audit duties in relation to IL&FS, according to documents seen by Reuters.
The filing said the firms had “miserably failed” in fulfilling their audit duties at IL&F, Reuters reported. Both firms denied any wrongdoing.
The engineering company, responsible for some of India’s biggest infrastructure projects, defaulted on several loan repayments in 2018 and had its long-term ratings downgraded as a result.
According to the petition, Deloitte audited IL&FS Financial Services Limited (IFIN) from 2008/9 to 2017/18 while BSR & Associates began auditing IFIN from 2017/2018 – both firms audited IFIN in 2017/18.
A spokesperson for KPMG India said the firm was aware of the petition and was studying it.
“BSR’s audit of IFIN [IL&FS Financial Services Limited] was performed in accordance with the applicable auditing standards and legal framework,” it said.
IFIN is the advisory branch of IL&FS, specialising in infrastructure financing.
The firm will defend its position “in accordance with the law” and that it is “confident that the judicial process will confirm BSR’s position”, the spokesperson said, adding, “BSR is committed to audit quality and the highest ethical standards”.
A Deloitte spokesperson said that Deloitte Haskins and Sells LLP (DHS) "is confident that it has been thorough and diligent in the performance of its duties as an auditor," adding that it stands behind its audit work, which it said was conducted in full compliance of professional standards in India and "applicable laws and regulations".
The spokesperson said that DHS "looks forward to presenting their position, which will be supported by the facts and necessary context, to the courts and other relevant authorities. The firm has faith in the regulatory and judicial processes and will continue to cooperate fully with the authorities," the spokesperson said.
The notice asked the firm to prove why it shouldn’t be removed as auditor after allegedly failing to highlight irregularities that ultimately led the company to default on paying loans.
Last year, Big Four rival PwC had its Indian member firm, Price Waterhouse, banned for two years over the audit of now-defunct Satyam Computer Services.