1973 PLP 42 (PTD)

Messrs Eva Hornby & Company is a firm of Chartered Accountants. On 28‑8‑68, they were appointed statutory Auditors of Messrs Oriental Mutual Life Assurance Company Limited respondent, at a remuneration of Rs. 1,750 payable in lump sum. this appointment was renewed for the year 1969 on 8‑6‑1969 and the remuneration was raised to Rs. 2,

000. In addition, the petitioner‑company was appointed Internal Auditor of the respondent at a remuneration of Rs. 5,

000. Their term was extended for the year 1970 on 26‑6‑1970 and the remuneration was raised from Rs. 2,000 to Rs. 2,500.

2. The respondent‑company let out a portion of their premise to the petitioner‑company for their office at the rate of Rs.‑300 per month. The petitioner‑company claims that it did not pay any rent from 1‑1‑1970 to 1‑1‑1971 because the respondent‑company was in arrears regarding the feebills presented by the petitioner to the respondent and the former, therefore, wrote to the latter that the rent may be deducted from the fee due to the Company. When the amount claimed tea be due us fees by the petitioner‑company became equal to the amount of the rent of the premises due from the petitioner to the respondent, the petitioner sent a cheque of Rs. 200 and later another cheque of Rs. 1,100 to the respondent towards the payment of rent.

3. It seems that the respondent‑company was not satisfied with this arrangement and, therefore, sent a letter to the petitioner along with a resolution passed by the Board of Directors on 14‑5‑1971 calling an Extraordinary General ‑ Meeting of the Company to look into the outstanding bills of the petitioner. The date of the meeting was fixed as 10th of July 1991, and one of the items on the agenda was the appointment of new auditors for the year 1970.

4. The petitioner informed the respondent‑Company that this meeting was not in accordance with law. It seems, however, that the respondent decided not to pay any heed to this letter and duly held the General Meeting on the 14th of June 1971, and by a unanimous Resolution disqualified the petitioner‑firm for the year 1970 on account of Indebtedness of the petitioner firm to the respondent‑company under section 144(5)(iv) of the Companies Act, 1913. Messrs Sheikh & Chaudhry were proposed to be appointed as Auditors for the year 1970.

5. The Resolution doing away with 'the services of the petitioner and the proposal to appoint new auditors was dubbed as illegal by the petitioners and has been challenged through this application under section 144 read with section 79 and Regulation 112 Table 'A' of the Companies. Act.

6. The short question involved in this case is whether this Court has the power to grant the relief prayed, i.e. restrain the respondent‑company‑ (a) from Implementing the resolution dated 14‑6‑1971 terminating the services of the petitioner‑firm; and (b) from holding the Extraordinary General Meeting for the appointment of Messrs Sheikh & Chaudhry Accountants.

7. Section 144 deals with the qualifications and appointment of Auditors. Subsection (3) provides that‑ "Every Company shall at each Annual General Meeting appoint an Auditor or Auditors to hold office‑ until the next Annual General Meeting." This section only provides the qualifications and the tenure of service of an Auditor. It does not, however, lay down that if the Company chooses for one reason or the other to terminate the services of an Auditor so appointed earlier than stipulated in A the Resolution of "appointment or the statutory period of one year, this Court has any jurisdiction under the Companies Act to stop the Company from adopting such a course, however illegalit might be. In Cuff v. London and County Land & Building Co. Ltd. (106 L T R 285), it was hold that‑ "It is the Company who have a duty imposed upon them to appoint the auditor. to hold office till the next Annual General Meeting. Prima facie, it is his appointment; arid if he is dismissed by the Company before their, hoe has the usual right 'of action for wrongful dismissal before the expiration of his term of office; and it may be that there will be an answer justifying .the dismissal, but whether that be so or not, to say that he can enforce his services upon a Company which does not wish for them seems tome to be extravagant."

8. In the absence of any, provision in section 144 of the Companies Act or in any other section of that Act empowering this Court t4 compel ah unwilling Company, to continue to retain the services of 0 Statutory auditor appointed by it during the continuance of the term of his office, I have no option but to hold Oat this petition is incompetent and is therefore, dismissed as such with costs. Petition dismissed.