The court has the power to vary the manner or the fees prescribed for audit of the Official Liquidator's account in Rules 301 to 304 of the Companies (Court) Rules, 1959, in exercise of its general and wide power under Sub-section (3) of Sec. 462 of the Companies Act, 1956.

N.L.Untwalia, J.

1. The Official Liquidator filed his statement of accounts for the period commencing from 1-10-1966 to 31-3-1967 in accordance with Rule 298 of the Companies (Court) Rules, 1959 --hereinafter called the Rules -- framed by the Supreme Court of India under Sec. 643 of the Companies Act, 1956 hereinafter to be referred to as the Act.

2. The accounts have got to be audited as required by Sub-section (3) of Section 462 of the Act. So far the half-yearly accounts of this Company filed under the said section of the Act were being audited by the Examiner of Local Fund Accounts as directed by this Court under Rule 302 of the Rules. The Official Liquidator filed the report which is at flag 725 dated the 30th of June, 1967 wherewith he appended a letter from Messrs. R.N. Rudra and Company, Chartered Accountants, Patna which have been carrying on the work of auditing the accounts of various companies in liquidation either under orders of this Court or under its supervision. The amount of fees which Messrs. R.N. Rudra and Company have been getting for auditing the liquidators accounts under rule 304 of the Rules has been, rather, low according to them, since in accordance with that rule the Company being small and small sums of money being involved in the Official Liquidators account, they were not entitled to get more than the fee prescribed therein.

The Chotanagpur Banking Association. Limited is a big company. The figures involved in the account of the official Liquidator are rather substantial and much more compared to the figures involved in the accounts of small companies. The said Chartered Accountants, therefore, approached the Official Liquidator through, their letter of June 13, 1967--which letter in original is appended to the Official Liquidators report--to allow them to audit bigger companies like the Chotanagpur Banking Association Ltd., which would enable them to earn more fees as prescribed under Rule 304. Thus, they thought they would be compensated for the loss which they had to suffer because of the small amount of fees which they were getting for the audit of the Official Liquidators account in respect of smaller companies. In their letters Messrs. R.N. Rudra and Company have further stated that they would be agreeable to deviate from the rate of fees prescribed by Rule 304 and would be prepared to accept any reasonable fees which may be fixed by the Hon ble Company Judge.

3. When this report of the Official Liquidator with the letter aforesaid was placed before me on 7-8-1967, a question arose as to whether this Court was competent to vary the manner or the fees prescribed for audit of the Official Liquidators account in Rules 301 to 304 of the Rules, In this connection a decision of the Calcutta High Court in "In Re: Fire & General Insurance Co. of India Ltd.", 66 Cal WN 566 was brought to my notice. S.P. Mitra, J., has held in that case that the Supreme Court has no power to prescribe rules relating to the manner in which the Court shall cause the Liquidators account to be audited and hence rules 301 to 304 of the Rules dealing with the manner of auditing are beyond the rule-making power of the Supreme Court; they have been struck down as being ultra vires and void as they contradict the express provisions of the Act. I, therefore, directed by my order No. 241(6) dated 7-8-1967 as modified by order no. 242 dated 25-8-1967 to issue a show cause notice to the Central Government as also to the Registrar of Supreme Court to give them an opportunity to have their say in the matter and to show cause as to why the said rules should not be declared ultra vires. In response to the said notice, Mr. Bajrang Sahay, learned Government Advocate of the State of Bihar, has appeared for the Union of India to support the vires of the rules. The Registrar, Supreme Court, has not instructed anybody to appear in the matter. Mr. Shreenath Singh, learned Advocate for the Official Liquidator, has placed before me al