Fayaz Takkar Limited is involved in a dispute with a competitor, Kelawala Furniture Limited. The competitor is alleging that Fayaz Takkar has infringed patents and is seeking damages of ₹99 lakh. Fayaz Takkar, in his annual report, recognizes a provision for its best estimate of the obligation, but discloses none of the information.

The following information is disclosed in its annual report: ‘Litigation is in process against the company, relating to a dispute with a competitor, who alleges that the company has infringed patents and is seeking damages of ₹99 lakh. Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to prejudice the interests of the company. The directors are of the opinion that the claim can be successfully resisted by the company’. Is the company correct in its stance? Discuss.