22 May 2010
Mr. Y was appointed as an auditor of PQR £td. for the year ended 31.3.2009 at Annual General Meeting held on 16.08.2008. Mr. Y has been indebted to the company for sum of Rs. 10,000 as on 1.4.2008, the opening date of accounting year which has been subject to his audit. However, Mr. Y having come to know that he might be appointed as auditor, he repaid the amount on 10.8.2008. Is Mr. Y,auditor disqualified u/s 226 of the Companies Act, 1956.
22 May 2010
The appointment of auditor will be valid because of the reason that, on the date of appointment he is not indebted to the company . As per sec 226 of Companies Act,1956 an auditor shall be disqualified from being appointment only when they are indebted at the time of appointment or during the tenure as a auditor.
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