Worked Solution
✓ VerifiedSub-part (i): Procedure to fill Casual Vacancy in the office of Statutory Auditor
As per Section 139(8) of the Companies Act, 2013, the procedure to fill a casual vacancy in the office of a Statutory Auditor is as follows:
Where casual vacancy arises due to reasons other than resignation (e.g., death, disqualification, etc.):
(a) The Board of Directors is empowered to fill the casual vacancy by appointing a new auditor.
(b) Such appointment must be made within 30 days of the occurrence of the vacancy.
(c) The auditor so appointed shall hold office till the conclusion of the next Annual General Meeting (AGM).
Where casual vacancy arises due to resignation of the auditor:
(a) The Board of Directors shall fill the vacancy within 30 days.
(b) Additionally, such appointment must also be approved by the members (shareholders) at a General Meeting to be convened within 3 months of the Board's recommendation.
(c) The auditor so appointed holds office till the conclusion of the next AGM.
---
Sub-part (ii): Whether Keshav's Contention is Justified
Keshav's contention is NOT justified under the Companies Act, 2013.
In the present case, the casual vacancy arose due to the death of Sangeeta on 23rd December, 2023. The Board of Directors validly exercised its power under Section 139(8) to fill this vacancy by appointing Keshav. However, the critical point is that Keshav was appointed only to fill the casual vacancy, and under Section 139(8), an auditor appointed to fill a casual vacancy (due to reasons other than resignation) holds office only until the conclusion of the next AGM.
Therefore, Keshav's tenure was limited to the conclusion of the AGM scheduled for 28th August, 2024. At that AGM, the company is fully within its rights to appoint a new auditor — in this case, Aashish — in accordance with the normal appointment provisions under Section 139(1).
Keshav has no right to continue beyond the next AGM, and his threat to approach the Registrar and NCLT is baseless. The Board's recommendation of Aashish for appointment at the AGM is a lawful act and does not constitute any violation. Keshav's representation and objection have no legal standing.
---
Sub-part (iii): If Casual Vacancy was caused by Resignation of Sangeeta
If the casual vacancy had been caused by resignation of Sangeeta (instead of her death), the procedure would differ in one significant aspect under Section 139(8) of the Companies Act, 2013.
In the case of resignation:
(a) The Board of Directors can still recommend an auditor (Keshav) to fill the vacancy within 30 days.
(b) However, such appointment must mandatorily be approved by the members at a General Meeting to be convened within 3 months from the date of the Board's recommendation.
(c) Without shareholder approval at such a General Meeting, Keshav's appointment would be incomplete and invalid.
(d) Once duly approved, Keshav would hold office till the conclusion of the next AGM.
The rationale for this additional requirement in the case of resignation is to ensure that shareholders have a say in filling the vacancy, since resignation may sometimes be a consequence of disputes or governance issues, and member oversight is considered necessary in such circumstances.
Regarding Keshav's contention — even in the resignation scenario — once properly appointed, Keshav's tenure would still end at the conclusion of the next AGM, and the company could legitimately appoint Aashish at that AGM. Hence, Keshav's contention would remain unjustified even in that scenario.
Write it like this
1The skeleton
- Anchor Section 139(8) in line 1 of each sub-part — don't make the examiner hunt for it; they tick the section reference first before reading anything else.
- State the death vs. resignation split as a clean table or two labelled blocks — examiners award separate ticks for each limb, so if you run them together in one paragraph you'll lose half the structured marks.
- For Keshav's contention, write your conclusion sentence first ('Keshav's contention is NOT justified') — ICAI awards a dedicated 1-mark tick for the conclusion, and burying it at the end risks it being missed in a fast scan.
- Quote the '30 days' and 'next AGM' limits by name, not just implication — these are the two operative facts examiners are specifically checking for, and vague language like 'limited period' won't get the tick.
- In sub-part (iii), explicitly flag the one differentiating step ('additionally, shareholder approval at a General Meeting within 3 months is required') — that single sentence IS the answer; everything else is context padding that only helps if you've already written this.
2Examiner-rewarded phrases
3Common trap
Watch out — most students write that Keshav 'cannot' continue without explaining WHY (his tenure is statutorily capped at the next AGM under 139(8), not because the Board did anything wrong). If you only say 'Board has the power to appoint Aashish' without tying it back to Keshav's limited tenure ending at the AGM, you'll lose the reasoning mark even though your conclusion is correct.