Auditor appointment

SECTION 139(2)

No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint—

(a) an individual as auditor for more than one term of five consecutive years; and

(b) an audit firm as auditor for more than two terms of five consecutive years:

Provided that—

(i) an individual auditor who has completed his term under clause (a) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term;

(ii) an audit firm which has completed its term under clause (b), shall not be eligible for re-appointment as auditor in the same company for five years from the completion of such term:

A plain reading of relevant provision suggests that prohibition is only for appointment more than 1 or 2 terms of complete 5 years.

Since a 1 year term of first auditor can’t be deemed as a complete 5 year term hence I don’t think that section 139(2) prohibits such appointment of first auditor for a complete term of 5 years.

But one of the rule of rotation is a break in continues period of 5 year will qualify as fulfilling the requirement of rotation. 

And once the requirement of rotation is fulfilled auditor can't be appointed for 5 years

So for first auditor after one year it will qualify as fulfilling the requirement of rotation and hence he will have to wait 5 years

Madam.. Please read the law..

To interpret a law you have to read it in its letter and spirit

As per first proviso to section 139(1) requirement of 5 year break applies only after completion of completer term of 5 year.

Since 1 year term of first auditor cant be deemed as complete 5 year term hence requirement of 5 year cooling period under proviso to 139(1) does not apply in this case