a nationalised bank or an insurance company carrying on general insurance business

(c) a nationalised bank or an insurance company carrying on general insurance business;
the appointment of an Auditor or Auditors shall be made by a s£~l
resolution only.
Section 224A does not specify the date on which 25 per cent of the subscribed capital must be held by the specified institution(s). The Deptt. of Company Affairs has clarified that the material date is the date of the annual general meeting at which the special resolution is required to be passed.(fhus, the fact that the shareholding of LIC and UTI increased beyond 25% only after issue of the notice, Sec. 224 A shall be required to be complied with. Fresh notice of the meeting shall become necessar)0
(ii) 1." the company fails to pass a special resolution where it is required to be so' passed for appointment of Auditor, it shall be deemed that no Auditor(s) had been appointed by the company at its annual general meeting and the Central Government will be empowered to make the appointment.
~ 50. yi))vhat is the liability of an Auditor for failure to point out in his report that
dividend is paid out of sale of the company's real estate?
(ii) Can an Auditor be disqualified for indebtedness in the following cases:
(a) where he is recovering his fees on a progressive basis even though the
job is not complete;
(b) where the Auditor's firm has purchased goods from the auditee company
and not paid for them for over six months? [C.A. (Final) Nov., 1998J
.9l.ns. /(;)1An Auditor who is party to such payment of improper dividend is liable
\J to proceeding by action, or in case of winding up, to misfeasance sum
mons and that the improperly paid dividend may be recovered from him
with inteFest.
(ii) (a) No. The Auditor cannot be said to be indebted within the meaning
of Section 226(3) (d) of the Companies Act.
(b) In this case the Auditor of the company is said to be indebted if the
. amount outstanding from him regarding goods and services purchased from the company Audited by him exceeds Rs. 1,000 irrespective of the nature of purchase or period of credit allowed to other customers, the provisions regarding disqualification of Auditor as contained in Section 225 (3) (d) will be attracted (Guida~ce Note on Independence of Auditors). Also when the firm is indebted to the company, each and every partner of the firm also is deemed to have been indebted.

~ 51. State the requirements under the Companies Act with regard to compliance
of accounting standards and the disclosures to be made in case the profit and loss account and the Balance Sheet of the company do not comply with the accounting standards. What is the duty of the Auditor of the company in this regard?
. [C.A. (Final) May, 2000J