Factual Background 

In the case of Yogesh Verma v. State of Himachal Pradesh, a lawsuit was launched contesting the National Bank for Agriculture and Rural Development’s recommendations for the choice of statutory auditors for cooperative banks. In the Present Situation. The petitioners, chartered accountants certified by the Institute of Chartered Accountants of India, contend that 85% of chartered accountant firms empanelled with cooperative banks have lost their eligibility for empanelment and have not been subject to a required bank branch audit for the fiscal year 2022–2023. They contend that the demands made were arbitrary, irrational, and unrelated to the goal desired, favouring larger businesses and barring single proprietorships and smaller businesses. The petitioners contend that NABARD’s requirements are arbitrary, and unfair, and would favour larger businesses.

Analysis of Court Decision 

Ramachandra Rao, Chief Justice and Ajay Mohan Goel, a division judge on the Himachal Pradesh High Court, dismissed the petition and upheld the NABARD guidelines because the requirements were logically related to the responsibilities and duties associated with the position of auditors

According to the Court, the ICAI has classified the firms into categories I, II, III, and IV, and the petitioner falls within categories III and IV, hence the division of Chartered Accountants firms into these groups is neither arbitrary nor discriminatory. For the purpose of creating panels for public sector banks and organisations, the Reserve Bank of India received this list. The court further stated that although the recommendations in the contested order focused on selecting chartered accounting companies in categories I and II, they also stated that category III businesses with strong track records might be taken into consideration. Thus, such a group of businesses is not entirely excluded. The Court stated that it did not see the need to criticise the need for qualification for inclusion in the qualified list of Chartered Accountants having such a Diploma given that the majority of banks now maintain their data in information systems.

The court determined that the contested letter is essentially a recommendation to the state government’s registrar of cooperative societies to appoint chartered accountants to perform a required audit of state cooperative banks. In order to protect depositors’ interests, some criteria have been established with certain credentials, such as holding a diploma in information system audit and having completed a specified number of years of bank audits. These requirements cannot be entirely irrelevant. Therefore, the requirements set were logically related to the responsibilities and activities associated with the position of auditors. The writ petition was thus rejected by the Court.

CASE NAME – Yogesh Verma v. State of Himachal Pradesh CWP No. 3822/23