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Vismay Shah asked 1 month ago

As per section 139 (10) if NO auditor is appointed in General meeting then existing auditor shall continue. But if that auditor is disqualified then he can’t be reappointed  as per section 139(9)…( so as per my understanding it is because of specific section 139 (9) overrule ,General section 139(10)….)
Now my question is if rotation applies, then auditor ceases to be appointed as an auditor as per Section 139 (2), but he may be automatically reappointed U/S 139(10) , if no auditor appointed in G.M. So, here why “specific overrule general” doesn’t apply like we see above? and don’t you think it’s a loophole that company won’t appoint new auditor (when rotation applies), and their old auditor will continue and it will clearly inhibit the purpose of rotation section?

2 Answers
RaviRavi Staff answered 1 month ago

First of all if section 139(2) says rotation is applicable to auditor after particular AGM and in the same AGM no new auditor is appointed then 139 (10) says automatic reappointment will happen, so both of them clash. In such situation 139(10) will prevail, because 139(2) prohibits company to appointment auditor whose maximum tenure is over and 139(10) is appointment by law and not by company. So 139(10) automatic reappointment will prevail.
Now in practical life not appointing auditor is a bad sign, company & BOD may need to answer shareholders, ROC etc. Company will rarely select such things on there own. And person appointed by law under 139(10) will continue only till next AGM. If ROC smells something fishy they may go for investigation.

So i dont think this loophole will become very famous and gets exploited, law is made for regular circumstances and not hypothetical situations.

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