Kerala High Court stays Centre’s order on CAG audit of KIAL

Kochi | Updated on May 31, 2021

The Kerala High Court on Tuesday stayed the operation of the order issued by the Central government that the Comptroller and Auditor-General of India (CAG) would appoint an auditor for the Kannur International Airport Limited (KIAL).

The stay order came on a writ petition filed by KIAL against the Centre’s decision.

According to the petitioner, section 139(5)(appointment of an auditor by the CAG) is applicable only to a government company as defined in Section 2(45) of the Companies Act 2013 or any other company owned or controlled, directly or indirectly by the Central Government or by any State government or governments or partly by the Central Government and partly by one or more State governments.

A perusal of the shareholding pattern of the KIAL makes it clear that the Government of Kerala holds only 39.25 per cent of the paid up share capital. The Centre does not hold even a single share of the petitioner. Thus KIAL does not come under the definition of a government company. In fact, the only Central government PSU holding shares of the petitioner was Bharat Petroleum Corporation Ltd (BPCL), which holds 16.21 per cent of the paid up share capital. The Central government holds only 53 per cent of BPCL shares. Thus, by no stretch of imagination can the shares held by BPCL be said be ‘indirectly’ ‘owned’ by the Central Government, KIAL said.

It also pointed out that when the CAG, through the office of the Principal Accountant General, sought to appoint an auditor for the financial year 2018-19, KIAL had informed the Principal Accountant General as per the new 2013 Act, the CAG could not appoint a statutory auditor. KIAL is entitled to appoint a statutory auditor by itself.

KIAL also pointed out that Deloitte, an auditing firm appointed by it already been auditing it with ‘utmost diligence and in accordance with law’.

Published on December 03, 2019

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