In the landmark case Shriram Transport Finance Company Limited
v. NCLT (2014), the National Company Law Tribunal and subsequently the courts addressed the scope of Audit Committee authority and auditor independence. The case involved disputes over auditor appointment and related party transactions. The Court established that: Which principle regarding Audit Committee authority was established?

In cases involving Audit Committee authority (including observations in Shriram Transport and related NCLT rulings), courts have established that the statutory provisions governing Audit Committee constitution (Section 177) are mandatory. Companies cannot deviate from requirements like majority independent director composition, minimum member strength, or mandatory functions. The Committee must strictly comply with statutory prescriptions; deviations are not permitted even for claimed operational convenience. This landmark principle emphasizes that corporate governance provisions like Audit Committee rules represent mandatory minimum standards, not optional guidelines, and companies must adhere strictly to these provisions.