2.4       Query

Consent of Previous Auditors for Acceptance of

Appointment as Auditors.

 We had sent the letter of communication of our appointment as auditors of Messrs XYZ Traders Pvt. Ltd., to the previous auditors Messrs ABC & Co. by registered post with acknowledgement due, and the same was accepted by them also.

But to our great astonishment they had denied everything in their reply and vehemently objected to our acceptance of appointment on the plea of non-compliance of Section 172 and Section 225 of the Companies Act, 1956, by the said Messrs XYZ Traders Private Ltd., Calcutta.

However, after re-ascertaining from Messrs XYZ Traders Pvt. Ltd. Regarding the compliances of section 172 and Section 225 of the Companies Act, 1956, we wrote to the previous auditors about the same, but to that they have also grossly denied in their letters.

Under the circumstances, we are at a loss to understand as to how the non-compliance of the provisions of Section 172 and Section 225 of companies Act, 1956, by the said Messrs XYZ Traders Pvt. Ltd., exist and would seek your advice as to whether we would be violating the Code of Conduct and other statutory provisions of law by accepting the appointment as auditors of the said Company.

In any case, under the circumstances as they stand now, even if the provisions of the said Sections are said to be not correctly complied with, can Messrs XYZ Traders Pvt. Ltd. not appoint another auditor in place of the retiring auditor by calling an Extra-ordinary General Meeting of the company after duly complying with the provisions of both the sections as referred above?  Please give us your valuable opinion in the matter.

                                                                   Opinion                                                 July 16,1970

The Committee is of the opinion that on the facts given by you, the requirements of the Companies Act relating to the appointment of an auditor by a company in substitution of the existing auditor have been fully complied with. In expressing the opinion, the Committee has assumed that the facts stated that the facts stated in your letter are correct.

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