AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2003 (1) TMI 520
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....chartered accountants. The audit work of Government and public sector undertakings is assigned to only those chartered accountant firms which are enrolled on the panel maintained by the appellant. In May, 1981, the appellant through an advertisement invited applications from firms of chartered accountants for the purpose of empanelment for audit of Government companies. The aforesaid advertisement stipulated that excepting the States of Orissa, Jammu and Kashmir, Assam, Manipur, Meghalaya, Nagaland and Tripura, only partnership firms of chartered accountants were eligible for enrolment on the panel and proprietary firms of chartered accountants were made ineligible either to apply or to be empanelled for being assigned audit work of Governm....
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....es the proprietary firm of F. C. As with registered office in the States other than the States of Orissa, Jammu and Kashmir, Assam, Manipur, Meghalaya, Nagaland and Tripura as mentioned in the advertisement at annexure B as unconstitutional, illegal, null and void and restraining the respondent permanently from adopting the said policy and not considering the firm of the petitioner for the purpose of empanelment as per annexure B." The said writ petition came up for hearing before a learned single judge of the High Court of Gujarat, who, by a judgment and order on April 26, 1982, allowed the writ petition. The learned single judge was of the view that the policy followed by the appellant was unreasonable and that such sub-classification ha....
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....rnment corporations and public sector undertakings is statutorily assigned under the Companies Act and it cannot then be urged that the Comptroller and Auditor General is free to act untrammelled and unreasonably. Whenever the CAG appoints an auditor for audit of Government corporations and public sector undertakings under the Companies Act, he exercises statutory powers under the Companies Act and such an exercise of the power manifestly is a statutory function and not a matter of policy. It was then contended by learned counsel for the appellant that the policy of empanelment of partnership firms of chartered accountants by the appellant was on account of the fact that partnership firms of chartered accountants have been found more effic....
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....ther the sub-classification of partnership firms stands the test of reasonableness on the touchstone of article 14. It is not disputed that chartered accountants having qualification are eligible for being considered for entrustment of audit work for public sector undertakings or Government concerns. Once it is accepted that these chartered accountants are qualified and eligible for audit work and also are eligible for being brought on the panel of audit work for public sector undertakings and Government concerns, there appears no valid reason why the impugned advertisement has created a sub-classification from the general class of eligible chartered accountants which relates to a smaller group of chartered accountants who form partnership....
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....in a proprietary concern where a chartered accountant would be carrying on audit work all-in-one. Merely because some of the chartered accountants have formed a partnership firm, it cannot be assumed that they become more efficient for carrying out audit work than the individual chartered accountant who forms a proprietary concern. It is, therefore, evident that the appellant himself erroneously assumed that the partnership firms are more efficient than the proprietary concern in the matter of audit of accounts of the public sector undertakings or of the Government concerns. A useful analogy may be drawn with the experiences of the legal profesison. It could not be justifiably argued that the quality of the legal services rendered by a sen....
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....unt of the nomenclature or numbers involved. For the aforesaid reasons the classification between proprietary and partnership firms is arbitrary and unfair, and accordingly falls on the anvil of article 14 of the Constitution. It was also urged that the proprietary firms of chartered accountants have been allowed empanelment in certain States namely, in the States of Orissa, Jammu and Kashmir, Assam, Manipur, Meghalaya, Nagaland and Tripura out of necessity and exigency and it would not be in public interest to allot audit work of Government concerns to partnership firms from outside the State and, therefore, there was no discrimination involved in empanelment of proprietary concern in such States. We find this submission inconsistent wi....