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of <h1>Company seeks audit direction for credit facility renewal under Companies Act</h1> <h3>Manoj Kumar Khandelwal Versus Neelmani Mines & Marbles Ltd.</h3> Manoj Kumar Khandelwal Versus Neelmani Mines & Marbles Ltd. - TMI Issues:1. Company Application for direction to audit company accounts for credit facility renewal.2. Dispute over appointment of directors affecting audit process.3. Compliance with statutory provisions of Companies Act, 1956 for audit approval.4. Request for appointment of independent director for audit finalization.Issue 1: Company Application for Audit DirectionThe case involved a Company Application under Sections 397 & 398 of the Companies Act, 1956, seeking direction to audit the company's accounts for credit facility renewal. The Respondent-Company's cash credit limit from a bank was due for renewal, but the statutory auditor refused to audit the accounts due to a pending dispute before the Company Law Board. The Respondent Bank required audited financial statements for renewal, leading to the application for audit direction to ensure credit facility continuation.Issue 2: Dispute Over Appointment of DirectorsThe Respondent's advocate highlighted the lack of Board meetings since 2011, emphasizing the challenge to the appointment of certain directors. The Respondent suggested appointing an independent director to ensure the company's operation continuity amidst the directorial stalemate. The Respondent's argument focused on the responsibility of the Board to approve accounts before auditing, raising concerns about delegation of such powers in the absence of proper Board meetings.Issue 3: Compliance with Companies Act for Audit ApprovalBoth parties acknowledged the statutory duty of the auditor to audit the company's accounts for specific financial years. Compliance with Section 215 of the Companies Act, 1956, regarding the approval of balance sheets by the Board of Directors before auditing, was a key point of contention. The Respondents advocated for strict adherence to the Act's provisions, emphasizing the importance of Board approval before audit.Issue 4: Request for Independent Director AppointmentConsidering the directorial dispute and the need for audit finalization, the Respondent proposed appointing an independent director to facilitate the audit process and ensure operational continuity. The judgment directed for a statutory audit of the company's accounts for the relevant financial years with the cooperation of the Board of Directors, aiming to balance the audit requirements with the ongoing directorial disputes.In conclusion, the Company Application was disposed of without costs, emphasizing the need for statutory audit compliance and cooperation among directors for the audit process to proceed smoothly, ensuring the company's operational continuity and financial transparency.
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