Disqualification u/s 226(3)

Acc. to me, 

acc. to sec. 226(3) , on the date of apponitment of auditor, if he is indebited for Rs. more than 1000 , then he is disqualified for apponitment. 

but if auditor takes travelling expenses for company audit as travelling advance then he is not disqualified for appointment.

Anshu ,

           Thanks For Replying. In Situation No (2) I Do Agree With You. But In Situation (1) , Mr. A Is Not Indebted By Any Sum, He Only Holds A Credit Card. Is He Disqualified ?

Acc. to me. credit card is treated like a loan . so auditor holding credit card is disqualifed .

Waiting for other replies

According to me, he is not disqualified because currently he is not indebted by any amount & currently only holding a credit card. He'll be disqualified only when he is actually indebted.

He is not qualified because he is indebtedness for an amount exceedinng Rs. 1000 .

A question of indebtedness may also be raised where an auditor of a company purchases goods or services from a company audited by him. In such a case, if the amount outstanding exceeds Rs.1 000/- irrespective of the nature of the purchase or period of credit allowed to other customers the provisions concerning disqualification of auditor as contained in Section 226 (3)(d) of the Companies Act, 1956 will be attracted.

so according to me he is not disqualifiled for appointment as an Auditor

in situation 1 if the auditor is make credit purchases till Rs. 5000 he qualified. if the amount cross the limit he is not qualified to act as statutory auditor of the co.   Issuing of credit card is a common business transaction. 

Firstlly ,to be disqalifeied he should be indebted for more than Rs.1000

as per many previos judgemnet the fact that he was indepted in the normal course is immatiral

Furthe in this case holding a credit card per se will not make him dis qualifed as per law

however the day his purchases excied Rs 1000 he shall be disqualified

however as per SAs and Counil genral guidlins the practising CA  shall make all efforts to keep intigrty and INDIPENDNCE entact so it will be highlly advisable to him either to surrender the Credit card or Not to accept the audit

Originally posted by : Abhimanyu Bind
	In first case he is not disqualified as he is holding a credit but he is not under any debt of company so, he can hold his office. In second also he is not disqualified as he has taken advance only to meet his general expenses related with audit it cannot call debt on Auditor. Regards, Abhi

Totally Agree with Member Abhimanyu...