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3. With respect to the act carried out by Mr. Avinash, the partner of the new audit firm, what can you infer about the appointment of AG & Associates, as auditors of JK Logistics Ltd.?

Options

AIt is valid since the in-debtness is within the prescribed limit.
BIt is not valid since the in-debtness exceeds the prescribed limit of ` 1 lakh.
CIt is valid since Mr. Avinash is not signing the financials of JK Logistics Ltd.
DIt is valid since the in-debtness is not with JK Logistics Ltd. CORPORATE AND OTHER LAWS Case Scenario II The notice for conducting the annual general meeting of XYZ Limited was sent on 3rd August, 2024 to all the stakeholders, who were eligible to receive the notice. The said notice specified that the Annual General Meeting (AGM) will be held on 5th September, 2024, But, due to want of quorum, said AGM was adjourned to 12thSeptember 2024. In the said meeting held on the 12th September, 2024, the financial statements of the company could not be adopted due to some unavoidable circumstances. Since the financial statements of the company could not be adopted in the above meeting, the directors did not file the financial statements relating to financial year 2023-2024 with the Registrar on the plea that the financial statements of the Company were not adopted in a general meeting and therefore there is no necessity to file any financial statement with the Registrar till the same are not adopted. On 2nd December, 2024, an extra-ordinary general meeting was conducted, in which the financial statements of the company were adopted. Since, the Company Secretary was on a business tour and was absent from India from 10th December, 2024 to 2nd January, 2025, the adopted financial statements were filed with the Registrar only on 3rd January, 2025. Based on the facts given in above case scenario and referring to the applicable provisions of the Companies Act, 2013 and Rules therein, choose the correct answer of the following questions: (Q. No. 4 to Q. No. 7)
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Correct Answer

✅ Option A — It is valid since the in-debtness is within the prescribed limit.

All Options:

  • AIt is valid since the in-debtness is within the prescribed limit. ✓
  • BIt is not valid since the in-debtness exceeds the prescribed limit of ` 1 lakh.
  • CIt is valid since Mr. Avinash is not signing the financials of JK Logistics Ltd.
  • DIt is valid since the in-debtness is not with JK Logistics Ltd. CORPORATE AND OTHER LAWS Case Scenario II The notice for conducting the annual general meeting of XYZ Limited was sent on 3rd August, 2024 to all the stakeholders, who were eligible to receive the notice. The said notice specified that the Annual General Meeting (AGM) will be held on 5th September, 2024, But, due to want of quorum, said AGM was adjourned to 12thSeptember 2024. In the said meeting held on the 12th September, 2024, the financial statements of the company could not be adopted due to some unavoidable circumstances. Since the financial statements of the company could not be adopted in the above meeting, the directors did not file the financial statements relating to financial year 2023-2024 with the Registrar on the plea that the financial statements of the Company were not adopted in a general meeting and therefore there is no necessity to file any financial statement with the Registrar till the same are not adopted. On 2nd December, 2024, an extra-ordinary general meeting was conducted, in which the financial statements of the company were adopted. Since, the Company Secretary was on a business tour and was absent from India from 10th December, 2024 to 2nd January, 2025, the adopted financial statements were filed with the Registrar only on 3rd January, 2025. Based on the facts given in above case scenario and referring to the applicable provisions of the Companies Act, 2013 and Rules therein, choose the correct answer of the following questions: (Q. No. 4 to Q. No. 7)

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Detailed Solution & Explanation

According to Section 141(3)(d)(ii) of the Companies Act, 2013, a person is disqualified from being appointed as an auditor of a company if he, or his relative or partner, is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of such amount as may be prescribed.
Rule 10(1) of the Companies (Audit and Auditors) Rules, 2014 prescribes this limit of indebtedness as five lakh rupees (₹5,00,000\displaystyle \text{₹}5,00,000).
Since Mr. Avinash's indebtedness is within the prescribed limit of 5 lakhs\displaystyle 5\text{ lakhs}, the audit firm AG & Associates is not disqualified and its appointment as the auditor of JK Logistics Ltd. is valid.
Hence, **Option A** is the correct answer.

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