Three months after independent director’s resignation, this company’s statutory auditor resigns

The auditor had been appointed by the company on December 17, 2019.

After an angry independent director, a “stressed” statutory auditor resigns from Modulex Construction Technologies (MCLT).

In an exchange filing dated June 10, the company has submitted the auditor RMJ & Associates’ resignation letter, which cites the mental stress caused by the independent director’s attack and lack of information provided by the company as some of the reasons.

The auditor had been appointed by the company on December 17, 2019. The company’s filing, that intimated the exchange of the auditor’s resignation, stated that its Audit Committee has “deliberated and noted the concern mentioned in the letter of resignation of M/s. RMJ & Associates, Chartered Accountants, Statutory Auditors”.

Also read: ‘Devastated' and 'humiliated', independent director quits Modulex Construction Technologies

On March 7, 2023, the company’s independent director Sandeep Khurana tendered an explosive resignation letter. In the 65-page letter, he claimed that he was leaving MCLT “in disgust”, from being “devastated” and for having been “humiliated”, for not being given adequate protection as a whistleblower and for being threatened when he flagged corporate governance concerns.

The auditor has stated that the independent director’s complaint had led to a lot of compliance requirements, which hampered their other work.

“Various complaints were raised by one of the independent directors of the Company in the year 2022 (including whistleblower complaints and complaints raised through SEBI Scores platform). Due to this, the Company was occupied with the replies to said complaints. Further as statutory auditors, we too had to prepare and file the necessary response to comply with the legal requirements. This has resulted into delays and hampering our audit /limited review work,” they wrote in their resignation letter.

“Due to these complaints, we, as statutory auditors of the Company, had to appear before various regulatory bodies. As a result, our other pre-planned work and other assignments had to suffer in terms of timely completion,” they added.

They also said that the attitude of the director had caused them a lot of mental stress and agony over the past few months. “The aforesaid independent director, in spite of our specific reply, went on to send e-mails on almost daily basis, to all the partners and others in the firm (including one ex-partner, who retired from the Firm a couple of years back) in relation to whistleblower complaint filed by him. This chain of e-mails, which we strongly believe, were not required to be sent to us and should have been rightly directed to Audit Committee/Board of Directors,” they wrote.

The auditor also placed a portion of the blame on the company’s door. The resignation letter stated, “it has been our experience that on several occasions, we, as statutory auditors, were not getting the required information/clarifications/supporting document etc. in a timely manner. This was putting undue pressure on us in completion of our obligations in a timely manner. You will appreciate that such kind of unwanted & undesirable pressure may, at times, get someone into a situation where one may have to compromise on the quality of work & deliverables. We believe this is certainly avoidable”.

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They also stated that there were delays in payment of their professional fee by the company.

Through an exchange filing on March 18, the company had filed a response to the independent director’s letter. In it, MCLT called the director’s allegations malicious and has stated that they are “mala fide” and “actuated by malice aforethought”. “It has to be also painfully pointed out that by spinning a resignation letter on half-truths and falsities, Mr. Khurana has not approached the BSE with clean hands,” the response added.