TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether Section 140(1) of the Companies Act, 2013 applies to the Comptroller and Auditor-General in relation to appointment and removal of auditors of Government companies and State-controlled corporations; (ii) what procedure governs removal of a statutory auditor appointed under Section 139 of the Companies Act, 2013 on allegations of fraud or related irregularity; and (iii) whether the statutory auditor could be removed without notice or hearing.
Issue (i): Whether Section 140(1) of the Companies Act, 2013 applies to the Comptroller and Auditor-General in relation to appointment and removal of auditors of Government companies and State-controlled corporations.
Analysis: The statutory scheme under Sections 139 and 143 of the Companies Act, 2013 gives the Comptroller and Auditor-General the power to appoint auditors for Government companies and to direct the manner of audit, but the removal power under Section 140 is not excluded merely because the appointment is made through that mechanism. The expressions used in Section 139 are wide enough to include such appointments, and the post-2013 framework differs from the earlier regime under the Companies Act, 1956. The control of the Comptroller and Auditor-General over the audit process is limited and does not authorise unilateral deprivation of the auditor's appointment without following fair procedure.
Conclusion: Section 140(1) was held applicable in principle to the statutory auditor appointed under Section 139 in the relevant framework, and the contrary objection was rejected.
Issue (ii): What procedure governs removal of a statutory auditor appointed under Section 139 of the Companies Act, 2013 on allegations of fraud or related irregularity.
Analysis: Section 140(5) deals with a distinct situation where fraudulent conduct or collusion is alleged and permits the Tribunal to direct a change of auditor. The provision operates separately from ordinary removal under Section 140(1). Even where the Comptroller and Auditor-General considers action necessary, the statute and the appointment conditions contemplate due administrative process, and the Tribunal mechanism under Section 140(5) cannot be bypassed by unilateral administrative action.
Conclusion: Removal on such allegations had to follow the statutory mechanism and could not be effected by an informal or unilateral administrative step.
Issue (iii): Whether the statutory auditor could be removed without notice or hearing.
Analysis: The removal of an auditor has civil consequences and therefore attracts the principles of natural justice. The Court held that, even assuming the specific removal provision did not directly govern the Comptroller and Auditor-General's action, fairness required notice and an opportunity of hearing before a prejudicial decision was taken. The impugned action and the consequential letter were taken without hearing the affected auditor and were therefore unsustainable.
Conclusion: The removal without notice or hearing was held invalid and was set aside.
Final Conclusion: The impugned termination of the statutory auditor and the related communication issued by the State were quashed, the auditor's name was ordered to be restored on the portal, and the matters were finally disposed of in the petitioner's favour.
Ratio Decidendi: Where removal of a statutory auditor entails civil consequences, the authority must follow the governing statutory mechanism and comply with audi alteram partem before taking a prejudicial decision.
TaxTMI 
TaxTMI 
