TMI Blog2010 (8) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... Siddiqui Parveen for the Appellant. S.K. Kapur, Pratap Chatterjee, Ranjan Bachawat, Sanjay Gondia and Ravi Kapur for the Respondent . JUDGMENT I.P. Mukerji, J . This is an appeal under section 10F of the Companies Act, 1956. The order that is challenged is interlocutory. It was made on September 14, 2009. By that order the appointed auditors were removed. Two firms, M/s. K.K. Chapparia and Associates and S.K. Agarwal and Co., were appointed joint auditors in their place. On this little point, the appeal has been argued for several days. 2. The first point is regarding maintainability. It is said that no appeal under section 10F is maintainable as no question of law arises from the said order. 3. This point has to be gone into before proceeding further with the appeal on the merits. 4. An appeal under the Indian Income-Tax Act, 1922, went up to the Supreme Court. The language of the said Act was identical, to section 10F, namely, that an appeal lay from "any question of law arising out of such order". When does a question of law arise from the order ? In that case, CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 ; AIR 1961 SC 1633, the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s closest to answering the question which is raised in this appeal. The dictum of the Supreme Court relevant to this appeal is to be found in paragraph 36 of the judgment which is as follows (page 184): "Section 10F refers to an appeal being filed on the question of law. Learned counsel for the appellant argued that the High Court could not disturb the findings of fact arrived at by the Company Law Board. It was further argued that the High Court has recorded its own finding on certain issues which the High Court could not go into and therefore the judgment of the High Court is liable to be set aside. We do not agree with the submission made by learned counsel for appellants. It is settled law that if a finding of fact is perverse and is based on no evidence, it can be set aside in appeal even though the appeal is permissible only on the question of law. The perversity of the finding itself becomes a question of law. In the present case we have demonstrated that the judgment of the Company Law Board was given in a very cursory and cavalier manner. The Board has not gone into real issues which were germane for the decision of the controversy involved in the case. The High Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to note the following paragraph in the petition filed by the OPT group before the Company Law Board: "(6) It is submitted that since the mandate of the auditors to carry out the joint audit was for the accounting years 2003-04 and 2004-05 and which audit has been completed it is necessary that appropriate orders be passed by the hon'ble Board appointing independent statutory auditors to carry out the audit of the accounts of M/s. Besco Ltd., for the period October 1, 2005 to March 31, 2006, as also limited audit of expenses for the period April 1, 2006 to June 10, 2006 and also appoint a new Special Officer to supervise the conduct of audit." 15. Therefore, the contention which is made before me on behalf of the respondents is that the only ground on which the application was made was that the period for which the audit was ordered by the earlier order of the Company Law Board had expired and that a fresh auditor be appointed for the period October 1, 2005, onwards. 16. However, I notice that in paragraph 7 of the application bias of the appointed auditors were also alleged or at least apprehended. Paragraph 7 is as follows: "7. It is submitted that the applicants O.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod for which audit was ordered was over, did not matter. 22. It has been argued on behalf of the respondents that the period for which audit was claimed in the application in question was subsequent to the period for which auditors were appointed. The term of the appointed auditors has expired. Therefore, the Tribunal was free to appoint anybody of its choice. On the other hand learned senior counsel for the appellant has argued before me that the audit undertaken was a continuous process. Even if the appointed auditors have been appointed for a period ending September 30, 2005, such auditors ought to have been allowed to continue for the rest of the period for the sake of continuity and expeditious completion of audit. Moreover, it is contended on behalf of the appellant that the order appointing the auditors was passed by consent and ought not to have been set aside. 23. Various authorities have been cited in support of the proposition that a consent order cannot be varied except by consent, namely, M.A. Cunningham Sircar v. Fred Stephens reported in AIR 1931 Cal 51; Lachiram Dagduram Marwari v. Jana Yesu Mang reported in AIR 1914 Bom 127; Khitipati Roy v. Dh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cas. 161 ; [2005] 1 SCC 212. 28. I do not think there would be much use in merely setting aside the order of the Tribunal, because the parties as it appears from the attitude taken by them, in challenging this apparently innocuous order would not cooperate with one another to complete the audit. Further, the respondents' counsel has said that they had no objection if an independent auditor was appointed by the court. 29. Therefore, for effective disposal of this appeal the impugned order of the Tribunal dated September 14, 2009, is set aside. However, in the facts and circumstances of the case I appoint Mr. Monoranjan Sen, Empanelled Auditor of this court, 8/3, Bhabani Dutta Lane, 1st Floor, Kolkata-73, as auditor to audit the accounts for the period October 1, 2005 to March 31, 2006 and also for a limited audit of expenses from April 1, 2006 to June 10, 2006. The auditor may fix his fees, according to the work done. The audit work should be completed expeditiously. Liberty to the parties to approach the Company Law Board for implementation of this order. 30. Appeal and application are allowed to the above extent. 31. Urgent certified photocopy of this judgment and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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