The Himachal Pradesh High Court has recently dismissed a petition preferred by Chartered Accountants registered with the Institute of Chartered Accountants of India, challenging certain guidelines for qualifications required for doing bank audits, issued by the National Bank for Agriculture and Rural Development (NABARD).

While commenting that the guidelines cannot be considered to be wholly irrelevant criteria, a bench of Chief Justice M.S. Ramachandra Rao and Justice Ajay Mohan Goel observed, "This Court has neither the expertise to decide whether the conditions mentioned in the guidelines issued by the NABARD are valid or not, nor does it have any ability to compare the nature or responsibility of statutory auditors, who do not have such qualifications, with those who possess the said qualifications. The conditions imposed appear to be reasonably relevant and have a rational nexus with the functions and duties attached to the post of auditors".

Advocate Suneel Awasthi appeared for the petitioners, and Advocate General Anup Rattan appeared for the respondents.

In this case, certain criteria were prescribed with certain qualifications such as possession of Diploma in Information System Audit and certain number of years of experience in doing bank audits by NABARD.

Therefore, challenging the said criteria It was the case of the petitioners that they had been conducting statutory audit of certain Cooperative banks branches till 2021­-2022, but their names were excluded from the panel for the financial year 2022-­23, their names were excluded from the panel.

However, pursuant to an inquiry, they came to know that the Registrar had relied upon the letter dated January 16, 2015, issued by NABARD.

It was further contended that the conditions imposed by the NABARD give an advantage to big firms and virtually oust the sole proprietorship concerns and smaller firms and have resulted in curtailing their right of freedom to carry on their profession.

The bench while referring to a catena of judgments was of the opinion that it is not for the courts to assess the relevancy and suitability of qualification for any post. The bench referred to Chief Manager, Punjab National Bank and another v. Anit Kumar Das (2021) 12 SCC 80 and J Ranga Swamy v. Govt. of Andhra Pradesh (1990) 1 SCC 288.

The Court further rejected to place reliance on Comptroller & Auditor General v. Kamlesh Vadilal Mehta (2003) 2 SCC 349, as the Supreme Court held that merely because some of the Chartered Accountants have formed partnership firms, it cannot be a ground to assume that they become more efficient for carrying out audit work than the individual Chartered Accountants, who forms proprietary concern.

"This decision has no application in the instant case because the impugned letter is in the nature of advice to the Registrar of the Cooperative Societies of the State Governments to empanel Chartered Accountants for conducting statutory audit of State Cooperative Banks. Having regard to requirement of protecting interest of depositors, certain criteria has been prescribed with certain qualifications such as possession of Diploma in Information System Audit and certain number of years of experience in doing bank audits, which cannot be considered to be wholly irrelevant criteria. Therefore, the decision cited by the petitioners is clearly distinguishable", the bench observed.

Accordingly, the Court dismissed the Petition.

Cause Title: Yogesh Verma and others v. State of Himachal Pradesh and others

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Chief Justice MS Ramchandra RaoJustice Ajay Mohan Goel

Agatha Shukla