P. G.

DEPARTMENT OF COMMERCE
RAMA DEVI WOMEN’S UNIVERSITY
A report submitted in the partial fulfilment of 4th Mid-Semester
Examination 2023-2024

Topic-PROVISION OF COMPANIES ACT,1956 AS REGARDS TO

MAINTENANCE OF BOOKS OF ACCOUNTS AND REGISTERS
Submitted by:
Sanjana patnaik (171R0022031)
Sasmita Jena (171R0022032)
Sasmita sahoo (171R0022033)
Sayda Quadri (171R0022034)
Seema Samal (171R0022035)
S.NO CONTENTS PAGE

1 Section 209

2 Section 224

3 Section 233

4 Section 217

5 Section 159

6 Section209
(a)&(b)
 Introduction

Section 209 is one of the most important sections in the Companies Act,
1956. This section deals with the requirements of maintenance of books
of accounts and penalties for non compliance. A detailed analysis of the
provisions of Section 209 and its implication on other related sections is
brought out in this article.

Analysis of Section 209

Section 209 (1) of the Companies Act, 1956 requires every company to
maintain necessary books of accounts relating to—

a) All sums of money received and spent by the company together with
details as to receipts and expenditure;

b) All sales and purchases of goods by the company;

c) All assets and liabilities of the company; and

d) In case the company is engaged in production, processing,

manufacturing or mining activities, such particulars relating to utilization
of labour, or material or other items of costs as may be prescribed, if
required by the Central Government to be included in the books of
accounts.

It would be clear from the above every company has to maintain books
of accounts reflecting true and fair view of transactions mentioned in (a)
to (d) of Section 209 (1)
Section 224 – Appointment and remuneration of Auditors.
“Sec 224 – Appointment and remuneration of Auditors.

(1) Every company shall, at each annual general meeting, appoint an

auditor or auditors to hold office from the conclusion of that meeting
until the conclusion of the next annual general meeting and shall,
within seven days of the appointment, give intimation thereof to
every auditor so appointed :

Provided that before any appointment or re-appointment of auditor

or auditors is made by any company at any annual general meeting,
a written certificate shall be obtained by the company from the
auditor or auditors proposed to be so appointed to the effect that
the appointment or re-appointment if made, will be in accordance
with the limits specified in sub-section (1B).

(1A) Every auditor appointed under sub-section (1), shall within thirty
days of the receipt from the company of the intimation of his
appointment, inform the Registrar in writing that he has accepted, or
refused to accept, the appointment.

(1B) On and from the financial year next following the

commencement of the Companies (Amendment) Act, 1974 (41 of
1974), no company or its Board of directors shall appoint or re-
appoint any person who is in full-time employment elsewhere or
firm as its auditors if such person or firm is, at the date of such
appointment or re-appointment, holding appointment as auditor of
the specified number of companies or more than the specified
number of companies :

Provided that in the case of a firm of auditors, “” specified number of

companies “” shall be construed as the number of companies
specified for every partner of the firm who is not in full-time
employment elsewhere :
Provided further that where any partner of the firm is also a partner
of any other firm or firms of auditors, the number of companies
which may be taken into account, by all the firms together, in relation
to such partner shall not exceed the specified number, in the
aggregate :

Provided also that where any partner of a firm of auditors is also

holding office, in his individual capacity, as the auditor of one or
more companies, the number of companies which may be taken into
account in his case shall not exceed the specified number, in the
aggregate.

Provided also that the provisions of this sub-section shall not apply,
on and after the commencement of the Companies (Amendment)
Act, 2000, to a private company.

(1C) For the purposes of enabling a company to comply with the

provisions of sub-section (1B), a person or firm holding, immediately
before the commencement of the Companies (Amendment) Act,
1974 (41 of 1974), appointment as the auditor of a number of
companies exceeding the specified number, shall, within sixty days
from such commencement, intimate his or its unwillingness to be re-
appointed as the auditor from the financial year next following such
commencement, to the company or companies of which he or it is
not willing to be re-appointed as the auditor ; and shall
simultaneously intimate to the Registrar the names of the companies
of which he or it is willing to be re-appointed as the auditor and
forward a copy of the intimation to each of the companies referred
to therein.

Explanation I: For the purposes of sub-sections (1B) and (1C), “”

specified number “” means,

(a) in the case of a person or firm holding appointment as auditor of

a number of companies each of which has a paid-up share capital of
less than rupees twenty-five lakhs, twenty such companies;
(b) in any other case, twenty companies, out of which not more than
ten shall be companies each of which has a paid-up share capital of
rupees twenty-five lakhs or more.

Explanation II: In computing the specified number, the number of

companies in respect of which or any part of which any person or
firm has been appointed as an auditor, whether singly or in
combination with any other person or firm, shall be taken into
account.

(2) Subject to the provisions of sub-section (1B) and section 224A, at

any annual general meeting, a retiring auditor, by whatsoever
authority appointed, shall be re-appointed, unless:

(a) he is not qualified for re-appointment ;

(b) he has given the company notice in writing of his unwillingness to

be re-appointed ;

(c) a resolution has been passed at that meeting appointing

somebody instead of him or providing expressly that he shall not be
re-appointed ; or

(d) where notice has been given of an intended resolution to appoint

some person or persons in the place of a retiring auditor, and by
reason of the death, incapacity or disqualification of that person or
of all those persons, as the case may be, the resolution cannot be
proceeded with.

(3) Where at an annual general meeting no auditors are appointed or

re-appointed, the Central Government may appoint a person to fill
the vacancy.

(4) The company shall, within seven days of the Central

Government’s power under sub-section (3), becoming exercisable,
give notice of that fact to that Government ; and, if a company fails to
give such notice, the company, and every officer of the company who
is in default, shall be punishable, with fine which may extend to five
thousand rupees.

(5) The first auditor or auditors of a company shall be appointed by

the Board of directors within one month of the date of registration of
the company ; and the auditor or auditors so appointed shall hold
office until the conclusion of the first annual general meeting :

Provided that:

(a) the company may, at a general meeting, remove any such auditor
or all or any of such auditors and appoint in his or their places any
other person or persons who have been nominated for appointment
by any member of the company and of whose nomination notice has
been given to the members of the company not less than fourteen
days before the date of the meeting ; and

(b) if the Board fails to exercise its powers under this sub-section, the
company in general meeting may appoint the first auditor or
auditors.

(6)

(a) The Board may fill any casual vacancy in the office of an auditor ;
but while any such vacancy continues, the remaining auditor or
auditors, if any, may act :

Provided that where such vacancy is caused by the resignation of an

auditor, the vacancy shall only be filled by the company in general
meeting.

(b) Any auditor appointed in a casual vacancy shall hold office until
the conclusion of the next annual general meeting.

(7) Except as provided in the proviso to sub-section (5), any auditor

appointed under this section may be removed from office before the
expiry of his term only by the company in general meeting, after
obtaining the previous approval of the Central Government in that
behalf.

(8) The remuneration of the auditors of a company :

(a) in the case of an auditor appointed by the Board or the Central

Government, may be fixed by the Board or the Central Government,
as the case may be; and

(aa) in the case of an auditor appointed under section 619 by the

Comptroller and Auditor-General of India, shall be fixed by the
company in general meeting or in such manner as the company in
general meeting may determine.

(b) subject to clause (a), shall be fixed by the company in general

meeting or in such manner as the company in general meeting may
determine.

For the purposes of this sub-section, any sums paid by the company
in respect of the auditors’ expenses shall be deemed to be included
in the expression “” remuneration “”.
 AUDIT OF COST ACCOUNTS IN CERTAIN CASES - ORDER UNDER
SECTION 233B(1)

In exercise of the powers conferred by sub-section (1) of section 233B

of the Companies Act, 1956 (1 of 1956), the Central Government, being
of the opinion that it is necessary to do so, hereby directs that all
companies to which any of the following rules apply, and wherein, the
aggregate value of net worth as on the last date of the immediately
preceding financial year exceeds five crores of rupees; or wherein the
aggregate value of the turnover made by the company from sale or
supply of all products or activities during the immediately preceding
financial year exceeds twenty crores of rupees; or wherein the
company's equity or debt securities are listed or are in the process of
listing on any stock exchange, whether in India or outside India, shall
get its cost accounting records, in respect of each of its financial year
commencing on or after the 1st day of April, 2011, audited by a cost
auditor who shall be, either a cost accountant or a firm of cost
accountants, holding valid certificate of practice under the provisions
of Cost and Works Accountants Act, 1959 (23 of 1959).
(a) Cost Accounting Records (Bulk Drugs) Rules, 1974
(b) Cost Accounting Records (Formulations) Rules, 1988
(c) Cost Accounting Records (Fertilizers) Rules, 1993
(d) Cost Accounting Records (Sugar) Rules, 1997
(e) Cost Accounting Records (Industrial Alcohol) Rules, 1997
(f) Cost Accounting Records (Electricity Industry) Rules, 2001
(g) Cost Accounting Records (Petroleum Industry) Rules, 2002
(h) Cost Accounting Records (Telecommunications) Rules, 2002

2. Every company to which these orders apply shall follow the revised
procedure for appointment of cost auditor as laid down vide Ministry of
Corporate Affairs' General Circular No. 15/2011 [52/5/CAB-2011],
dated 11th April, 2011.
3. The audit shall be conducted in such manner as will enable the cost
auditor to prepare the report in accordance with the Cost Audit
(Report) Rules, 2001 as amended from time to time. The report of the
cost auditor shall be forwarded to the Central Government in the
prescribed format within the time stipulated under the said Rules.

4. These orders do not apply to a company which is a body corporate

governed by any special Act.

5. All companies covered by these orders and wherein cost audit orders
have been issued so far in respect of products/activities covered by
the above mentioned rules shall continue to comply with the said
orders until these orders become applicable on them.

6. If a company contravenes any provisions of these orders, the

company and every officer thereof who is in default, including the
persons referred to in sub-section (6) of section 209 of the Companies
Act, 1956, shall be punishable as provided under sub-section (2) of
section 642 read with sub-section (11) of section 233B of the
Companies Act, 1956 (1 of 1956).
 Section 217 in The Companies Act, 1956
217. Board's report .-

(1)There shall be attached to every balance sheet laid before a company in

general meeting, a report by its Board of Directors, with respect to-
(a)the state of the company's affairs;
(b)the amounts, if any, which it proposes to carry to any reserves [* * *] in such
balance sheet [* * *] [ The words " or in a subsequent balance sheet; and"
omitted by Act 65 of 1960, Section 65 (w.e.f. 28.12.1960).];
(c)the amount, if any, which it recommends should be paid by way of dividend;
(d)[material changes and commitments, if any, affecting the financial position
of the company which have occurred between the end of the financial year of
the company to which the balance sheet relates and the date of the
report;] [ Inserted by Act 65 of 1960, Section 65 (w.e.f. 28.12.1960).]
(e)[ the conservation of energy, technology absorption, foreign exchange
earnings and outgo, in such manner as may be prescribed.] [ Added by Act 31
of 1988, Section 30 (w.e.f. 1.4.1989).]
(2)The Board's report shall, so far as is material for the appreciation of the state
of the company's affairs by its members and will not in the Board's opinion be
harmful to the business of the company or of any of its subsidiaries, deal with
any changes which have occurred during the financial year-(a)in the nature of
the company's business;
(b)in the company's subsidiaries or in the nature of the business carried on by
them; and
(c)generally in the classes of business in which the company has an interest.
(2A)(a)[The Board's report shall also include a statement showing the name of
every employee of the company who-(i)if employed throughout the financial
year, was in receipt of remuneration for that year which, in the aggregate, was
not less than [such sum as may be prescribed]; or(ii)[if employed for a part of
the financial year, was in receipt of remuneration for any part of that year, at a
rate which, in the aggregate, was not less than [such sum per month as may be
prescribed] [ Inserted by Act 41 of 1974, Section 22 (w.e.f. 1.2.1975).]; or](iii)[if
employed throughout the financial year or part thereof, was in receipt of
remuneration in that year which, in the aggregate, or as the case may be, at a
rate which, in the aggregate, is in excess of that drawn by the Managing
Director or whole-time Director or manager and holds by himself or along with
his spouse and dependent children, not less than two per cent., of the equity
shares of the company.]
(b)The statement referred to in clause (a) shall also indicate,-(i)whether any
such employee is a relative of any Director or manager of the company and if
so, the name of such Director, and(ii)such other particulars, as may be
prescribed. Explanation .-"Remuneration" has the meaning assigned to it in the
Explanation to section 198.
(2AA)[The Board's report shall also include a Directors' Responsibility
Statement, indicating therein,-(i)that in the preparation of the annual accounts,
the applicable accounting standards had been followed along with proper
explanation relating to material departures;
(ii)that the Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the company
at the end of the financial year and of the profit or loss of the company for that
period;
(iii)that the Directors had taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of this Act
for safeguarding the assets of the company and for preventing and detecting
fraud and other irregularities;
(iv)that the Directors had prepared the annual accounts on a going concern
basis.]
(2B)[The Board's report shall also specify the reasons for the failure, if any, to
complete the buy-back within the time specified in sub-section (4) of section
77-A.]
(3)The Board shall also be bound to give the fullest information and
explanations in its report aforesaid, or, in cases falling under the proviso to
section 222, in an addendum to that report, on every reservation, qualification
or adverse remark contained in the auditor's report.
(4)The Board's report and any addendum thereto shall be signed by its
Chairman if he is authorised in that behalf by the Board; and where he is not so
authorised, shall be signed by such number of Directors as are required to sign
the balance sheet and the profit and loss account of the company by virtue of
sub-sections (1) and (2) of section 215.
(5)If any person, being a Director of a company, fails to take all reasonable
steps to comply with the provisions of sub-sections (1) to (3), or being the
Chairman, signs the Board's report otherwise than in conformity with the
provisions of sub-section (4), he shall, in respect of each offence, be punishable
with imprisonment for a term which may extend to six months, or with fine
which may extend to or with both: Provided that no person shall be sentenced
to imprisonment for any such offence unless it was committed wilfully:
Provided further that in any proceedings against a person in respect of an
offence under sub-section (1), it shall be a defence to prove, The that a
competent and reliable person was charged with the duty of seeing that the
provisions of that sub-section were complied with and was in a position to
discharge that duty.
(6)If any person, not being a Director, having been charged by the Board of
Directors with the duty of seeing that the provisions of sub-sections (1) to (3)
are complied with, makes default in doing so, he shall, in respect of each
offence, be punishable with imprisonment for a term which may extend to six
months, or with fine which may extend to [ Substituted by Act 53 of 2000,
Section 101, for " two thousand rupees" , or with both: Provided that no person
shall be sentenced to imprisonment for any such offence unless it was
committed wilfully.
 Section 209A in The Companies Act, 1956

209A. [Inspection of books of account, etc., of companies

(1)The books of account and other books and papers of every company
shall be open to inspection during business hours-
(i)by the Registrar; or
(ii)[ by such officer of the Government as may be authorised by the
Central Government in this behalf;
(iii)by such officers of the Securities and Exchange Board of India as may
be authorised by it:Provided that such inspection may be made without
giving any previous notice to the company or any officer
thereof:Provided further that the inspection by the Securities and
Exchange Board of India shall be made in respect of matters covered
under sections referred to in section 55A.]
(2)[It shall be the duty of every Director, other officer or employee of the
company to produce to the person making inspection under sub-section
(1), all such books of account and other books and papers of the
company in his custody or control and to furnish him with any
statement, information or explanation relating to the affairs of the
company as the said person may require of him within such time and at
such place as he may specify.
(3)It shall also be the duty of every Director, other officer or employee of
the company to give to the person making inspection under this section
all assistance in connection with the inspection which the company may
be reasonably expected to give.
(4)The person making the inspection under this section may, during the
course of inspection,-
(i)make or cause to be made copies of books of account and other books
and papers, or
(ii)place or cause to be placed any marks of identification thereon in
token of the inspection having been made.
(5)Notwithstanding anything contained in any other law for the time
being in force or any contract to the contrary, any person making an
inspection under this section shall have the same powers as are vested in
a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while
trying a suit, in respect of the following matters, namely:-
(i)the discovery and production of books of account and other docu-
ments, at such place and such time as may be specified by such person;
(ii)summoning and enforcing the attendance of persons and examining
them on oath;
(iii)inspection of any books, registers and other documents of the
company at any place.
(6)Where an inspection of the books of account and other books and
papers of the company has been made under this section, the person
making the inspection shall make a report to the Central Government
[or the Securities and Exchange Board of India in respect of inspection
made by its officers.]
(7)[ Any officer authorised to make an inspection under this section shall
have all the powers that a Registrar has under this Act in relation to the
making of inquiries.
(8)If default is made in complying with the provisions of this section,
every officer of the company who is in default shall be punishable with
fine which shall not be less than [fifty thousand rupees] and also with
imprisonment for a term not exceeding one year.
(9)Where a Director or any other officer of a company has been
convicted of an offence under this section he shall, on and from the date
on which he is so convicted, be deemed to have vacated his office as
such and on such vacation of office, shall be disqualified for holding
such office in any company, for a period of five years from such date.]