2022 (8) TMI 839 - HC - Companies Law

Court sets aside orders, remands for fresh decision; Regional Director to issue reasoned order within one month.

MPCG Mobile Private Limited Versus Union of India Through Secretary Ministry Of Corporate Affairs, Regional Director North Western Region, Ca Rajesh Gurbani

MPCG Mobile Private Limited Versus Union of India Through Secretary Ministry Of Corporate Affairs, Regional Director North Western Region, Ca Rajesh ... Issues Involved:1. Legality of the appointment of the statutory auditor.2. Compliance with Sections 141(3)(i) and 144(b) of the Companies Act, 2013.3. Maintainability of the writ petition in the presence of an alternative remedy.4. Adequacy of reasoning in the impugned orders.Detailed Analysis:1. Legality of the Appointment of the Statutory Auditor:The petitioner contended that the appointment of the respondent No.3 as the statutory auditor was in gross violation of Sections 141(3)(i) and 144(b) of the Companies Act, 2013. The petitioner argued that the respondent No.3 was also serving as the internal auditor and tax consultant, which created a conflict of interest and rendered him ineligible for the statutory auditor position. The court noted that the respondent No.3 was drawing a monthly salary from the company and was also acting as a tax consultant, which violated the independence required for a statutory auditor under the Act.2. Compliance with Sections 141(3)(i) and 144(b) of the Companies Act, 2013:The petitioner argued that the respondent No.3's dual role as an internal auditor and statutory auditor contravened Sections 141(3)(i) and 144(b) of the Companies Act, 2013. Section 144(b) explicitly prohibits an auditor from providing internal audit services to the company. The court observed that the impugned orders did not address these statutory violations adequately, thus failing to consider the merits of the petitioner's claims.3. Maintainability of the Writ Petition:The respondent No.3 raised a preliminary objection regarding the maintainability of the writ petition, citing the availability of an alternative remedy before the National Company Law Tribunal (NCLT). However, the court referenced the Supreme Court's decision in Satwati Deswal v. State of Haryana, which allows for a writ petition even when an alternative remedy exists, particularly when there is a violation of natural justice or lack of inherent jurisdiction. The court held that the writ petition was maintainable as the impugned orders were unreasoned and violated principles of natural justice.4. Adequacy of Reasoning in the Impugned Orders:The court found that the impugned order dated 03.09.2021, and the subsequent review order dated 09.12.2021, were bereft of reasoning. The Regional Director failed to address the issues raised by the petitioner, rendering the orders unreasoned and violative of natural justice. The court emphasized that an unreasoned order could be challenged under Article 226 of the Constitution.Conclusion:The court set aside the impugned orders dated 03.09.2021 and 09.12.2021 due to their lack of reasoning and remanded the matter back to the Regional Director for a fresh decision. The Regional Director was instructed to issue a reasoned and speaking order within one month, considering the merits of the petitioner's application without being influenced by the court's order. The court clarified that it had not addressed the merits of the case and provided the petitioner the right to appeal any adverse decision as per the law.Disposition:The petition was disposed of with directions for a fresh, reasoned decision by the Regional Director.