BASANT RAM AND SONS Vs. UNION OF INDIA

JUDGEMENT

(1.) Rule. Petitioners by this writ petition have assailed the order of the Central Government dated 12.4.1999, granting the approval under Section 224(7) of the Companies Act, 1956 (hereinafter referred to as the 'Act') for removal of the statutory auditor, viz. petitioner No. 1.

(2.) Learned Counsel for the petitioner, Mr. Navin Chawla, has assailed the impugned order as being based upon irrelevant and extraneous considerations. He submits that the Central Government has given the approval in a mechanical manner and by relying on assertions and matters, which were not mentioned in the application for removal of the auditors. Further, that the impugned order was vitiated by non-compliance with the statutory provisions under Section 224(7) of the Act. It is submitted that as per statute, the previous sanction of the Central Government is required to the proposal, for removal of the statutory auditors, before expiry of their term, being considered in the General Body Meeting. In the instant case, the proposal had been put up in the Extraordinary General Body Meeting, by which the Resolution dated 5.12.1998 was passed, without obtaining the previous sanction of the Central Government.

(3.) Before dealing with the specific submissions made by Mr. Navin Chawla, learned Counsel for the petitioners, it would be appropriate to recapitulate the relevant facts, in brief, leading to the filing of this writ petition.