Case Brief: Comptroller and Auditor General Vs. Kamlesh Vadilal Mehta

Deciding Authority: Supreme Court of India
Date of Judgement: 21st January, 2003
Bench: Justice V.N.Khare, Justice Ashok Bhan and Justice S.B.Sinha
Facts of the Case: The respondent herein, is a sole proprietor of a Chartered Accountant firm in Ahmedabad, Gujarat. One of the statutory functions assigned to the appellant herein is to get the accounts of public sector undertakings and governments concerns audited by the Chartered Accountants. The audit work of the 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 the firms of the Chartered Accountants for the purpose of empanelment for audit of government companies. The aforesaid advertisement stipulated that excepting the States of Orissa, Jammu & Kashmir, Assam, Manipur, Meghalya, Nagaland and Tripura, only the partnership firm of the Chartered Accountants were eligible for enrolment on the panel and the proprietary firms of the Chartered Accountants were made ineligible either to apply or to be empanelled for being assigned audit work of the government companies. However, in several States the proprietary firm based on those States was made eligible for being brought on the panel for audit work of government companies and concerns. A writ petition was filed in the Supreme Court and the question of law was as to whether the sub classification of partnership firms stands the test of reasonableness on the touchstone of Article 14.
Judgement of the Case: The Supreme Court held that either proprietary concerns are suitable and, therefore, eligible, or they are not. If the proprietary concern of Chartered Accountants are really inefficient, there appears no reason why they have been made eligible to audit the government and public sector undertakings in the aforesaid states. Further, if there was a paucity of partnership firm of Chartered Accountants in a given State, the services of partnership firm who were said to be efficient based on in other States could be taken. Under such circumstances, we are of the view that the impugned notification does not stand the test of Article 14 of the Constitution. Hence, it dismisses the petition.