Explanation:

- The auditor of a government company is appointed by the Comptroller and Auditor General of India (C & AG).

- Remuneration refers to the fees paid to the auditor for his services.

- Option 1: the C & AG — Correct Answer. As per Section 139(5) of the Companies Act, 2013, the remuneration of the auditor in the case of a government company is fixed by the C & AG, not the company or its shareholders.

- Option 2: the shareholders — In ordinary (non-government) companies, shareholders fix the remuneration, but not in government companies.

- Option 3: the shareholders at an annual general meeting — Same as option 2, but specifically mentions the AGM; this also does not apply to government companies.

- Option 4: the board of directors — The board does not have authority to fix the auditor's remuneration in case of a government company.