COMPTROLLER AND AUDITOR GENERAL versus KAMLESH VADILAL MEHTA

Citation: [2003] 1 S.C.R. 471 · Decided: 21-01-2003 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Dismissed

Judgment (excerpt)

.. 
1 
COMPTROLLER AND AUDITOR GENERAL 
A 
v. 
KAMLESH VADILAL MEHTA 
JANUARY 21, 2003 
. 
. 
(V.N KHARE CJ, ASHOK BHAN AND S.B. SINHA, JJ.] 
B 
Constitution of India, 1950: 
Article 14-Clossification-Reosonab/eness of-Applications invitedfrom 
Chartered Accountants firms for empanelment for audit of government C 
companies-Advertisement stipulating only partnership firms eligible except 
in respect of specified States-Proprietary concern challenging rejection of its 
application-Single Judge of High Court allowing the writ petition-Division 
Bench upholding the sam~n appeal held, once Chartered Accountants are 
qualified and eligible, advertisement cannot create a sub-classification from D 
the general c/oss of eligible Chartered Accountants-Such classification is 
discriminatory, arbitrary and violative of Article 14-Also if proprietary 
concerns are inefficient, they co.uld not have been made eligible to audit in the 
specified states. 
Article 226-Judicial Review-Proprietary concern challenging its E 
rejection of application for empanelmentfor audit of government companies-
Scope-Held, such writ petition is maintainable since the appointment of auditor 
by Comptroller and Auditor General is a statutory function under the 
Companies Act and not an administrative function. 
Appellant-Comptroller and Auditor General invited applications F 
from the firms of Chartered Accountant for the purpose of empanelment 
for audit of government companies. Advertisement stipulated that 
excepting certain States only the partnership firm of Charter.ed 
Accountants were eligible for enrolment of the panel'·and not the 
proprietary firms. Respondent-proprietary concern 's application was G 
rejected. Respondent filed .a writ petition challenging exclusion of 
proprietary concern from the empanelment. Single Judge of High Court 
allowed the wri! petition. Appellants then filed an appeal which was 
dismissed. Hence, the present appeal. 
471 
H 
472 
SUPREME COURT REPORTS 
[2003] I S.C.R. 
A 
Appellant contended that the policy of empanelment of partnership 
firm of Chartered Accountants than a sole proprietary firm was on 
account of their efficiency, continuity, experience and· as such, partnership 
firm was a class in itself and a valid classification for the purposes of 
Article 14 of the Constitution; that .the classification passed the test of 
reasonableness and had a r.easonable nexus to the object sought to be 
B achieved by the impugned advertisement; that empanelment of proprietary 
concern in certain States was out of necessity and exigency and, therefore, 
there was no discrimination involved in empanelment of proprietary 
concern in States specified; and that appellant's decision to invite the . 
applications exclusively from·partnership firms was a matter of policy .and 
C thus, beyond the scope of review. 
Dismissing the appeal, the Court 
HELD J.1. The classification between proprietary and partnership 
firms of Chartered Accountants is arbitrary and unfair, and accordingly 
D falls on the anvil of Article 14 of the Constitution. (478-E) 
1.2. Chartered Accountants having qualification are eligible for being 
considered for entrustment of audit work and also for being brought on 
the panel of audit work for public sector ·undertaking or the government 
concerns. Once it is accepted that these Chartered Accountants are 
E qualified and eligible, there appears no valid reason why the impugned 
advertisement has created a sub-classification from the general class of 
eligible Chartered Accountants which !"elates to a smaller group of 
Cha~tered Accountants who form partnership concerns only. 
(476-G, H; 477-A-B) 
F 
1.3. Once a Chartered Accountant is qualified, experienced and 
efficient, he cannot be discriminated against only for the reason that he 
has chosen to act alone in the professional career and has not been able 
to form a partnership firm. The efficiency, springs from the personal 
~xperience, proficiency and personal c.apacities, therefore, these 
G characteristics and professional acumen cannot be linked to a person or 
persons in a firm alone. A single individual as an auditor in a proprietary 
concern can have such characteristics and professional acumen by himself 
and also through the assistance of experienced auditor who could be in 
his services as efficient as any partnership firm. In many cases some of 
the partners of the partnership firm are sleeping partners with no 
H professional duties to di

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