Case Note & Summary
The dispute arose between the Comptroller and Auditor General (CAG) and a sole proprietor of a Chartered Accountant firm regarding the exclusion of proprietary firms from the empanelment for auditing government companies. The CAG had issued an advertisement in May 1981 inviting applications for empanelment, which stipulated that only partnership firms were eligible, rendering proprietary firms ineligible. The respondent challenged this exclusion in a writ petition under Article 226 of the Constitution, claiming it was discriminatory and arbitrary. The High Court ruled in favor of the respondent, stating that the exclusion was unreasonable and lacked a real nexus with the objectives of the policy. The CAG appealed against this decision, arguing that the policy was a matter of administrative discretion and that partnership firms were more efficient due to their structure. The Supreme Court analyzed the arguments, emphasizing that the statutory function of appointing auditors could not be treated as a mere policy matter. The court found that the classification between partnership and proprietary firms was arbitrary, as both could possess the necessary qualifications and efficiency for auditing. The court dismissed the appeal, affirming the High Court's decision and stating that the exclusion of proprietary firms violated Article 14 of the Constitution. The court did not impose any costs.
Headnote
A) Constitutional Law - Discrimination - Exclusion of Proprietary Firms - Article 14 of the Constitution - The policy of excluding proprietary firms from empanelment for audit work was held to be arbitrary and discriminatory, lacking a reasonable nexus to the objectives of efficiency in auditing. The court directed that the exclusion be set aside and proprietary firms be considered for empanelment (Paras 1-4).
Issue of Consideration
Whether the exclusion of proprietary firms from the empanelment for audit work of government companies is discriminatory and violates Article 14 of the Constitution.
Final Decision
The Supreme Court dismissed the appeal, affirming the High Court's ruling that the exclusion of proprietary firms from the empanelment was arbitrary and discriminatory under Article 14 of the Constitution. No costs were awarded.
Law Points
- Article 14
- discrimination
- statutory functions
- empanelment policy
- audit work
- partnership firms
- proprietary firms
