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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 3—Sub-section (i)

PUBLISHED BY AUTHORITY

No. 306] NEW DELHI, MONDAY, NOVEMBER, 10 1975/KARTIKA 19, 1897

Separate paging is given to this Part in order that it may be filed

as a separate compilation.

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(Department of Company Affairs)

ORDER

New Delhi, the 7th November 1975

G.S.R. 553(E),—In exercise of the powers conferred by sub-section (4A) of section 227 of the Companies Act, 1936 (1 of 1956), read with the notification of the Government of India in the Ministry of Law, Justice and Company Affairs No. G.S.R. 443 (E) dated the 18tb October, 1972, and in supersession of all previous orders on the subject in relation to the companies to which this order applies, and after consultation with the Institute of Chartered Accountant of India, [constituted under the Chartered Accoun- tants Act, 1949 (38 of 1949)] in regard to the class of companies to which this order applies and other ancillary matters, the Company Law Board hereby makes the follow- ing Order, namely:—

1. Short title, application and commencement,—(1) This order may be called the Manufacturing and other Companies (Auditor's Report) Order, 1975.

(2) It shall apply to every company which is engaged in one or more of the following activities, namely:—

(a) manufacturing, mining or processing;

(b) supplying and rendering services;

(c) training; and (d) the business of financing, investment, chit fund, nidhi or mutual benefit societies.

(3) It shall come into force on the 1st of January, 1976.

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2. Definitions.—In this order :—

(a) "chit fund", "nidhi" or "mutual benefit" company means a company engaged in the business of managing, conducting or supervising as a foreman or agent of any transaction or arrangement by which it enters into an agree- ment with a number of subscribers that every one of them shall subscribe a certain sum of instalments for a definite period and that each subscriber in his turn, as determined by lot or by auction or by tender or in such other manner as may be provided for in the agreement, shall be entitled to a prize amount, and includes companies whose principal business is accept- ing fixed deposits from its members and Lending money to them;

(b) ''finance company" means a company engaged in the business of financing, whether by making loans or advances or otherwise, of any industry, com- merce or agriculture and includes any company engaged in the? business of hire-purchase and of financing of housing;

(c) "investment company" means a company engaged in the business of acquisition and holding, or dealing in, shares, stocks, bonds, debentures, debenture stocks or securities issued by the Central or auy State Government or by any local authority or in other marketable securities of a like nature:

(d) "manufacturing company" means a company engaged in any manufacturing

process as defined in the Factories Act, 1948 (63 of 1948);

(c) "mining company" means a company owning a mine, and includes a company which carries oni the business of a mine either as a lessee or occupier thereof; (f) "processing company" menns a company engaged in the business of processing

materials with a view to its use. sale, delivery or disposal;

(g) "service company" means a company engaged in the business of supplying. providing, maintaining and operating any service, facilities, conveniences, bureaux and the like for the benefit of others;

(h) "trading company" means a company engaged in the business of buying and

selling goods.

3 Auditors' report to contain mutters specified In pnrafiraphs 4 and 5.-—Every report made by the auditor under section 227 of the C'omnanies Act, 1956 (1 of 1956) on the accounts of every company examined bv him to which this Order applies for every fin- ancial year endimt on any day on or after the commencement of this order shall contain the matters specified in para.sjaphs 4 and 5 of this Order.

4. The matters to be Inclnded in the Auditors' Report.—Th? Auditors' report on the accounts of the companies to which this Order applies shall include a statement on the following matters, namely : —

(A) in the case of a manufacturing, mining or processing company —

(i) whether the company is miintaim'ne proper records to show full particulars including quantitative details and situation of fixed assets; whether UVse fixed assets have been physically verified by the management, and if any serious discrepancies were noticed on such verification, whether the same have, been properly dealt with in the books of -Accounts;

(ii) in case anv of the fixed assets have be.e-n revalued during the year the basis of revaluation should be indicated:

(iii) bus physical verification been conducted by thy management at reasonable periods in resDccl of finished goods, stores, spare Darts and raw mite.rhls, and if any sicniflcant discrepancies hav? been noticed on such verification as compared to booV records, whether the saw: hav~ been property dcali with in the books of account; whether Ihe mditor is satisfied thnt th = valua- tion of these stocks is fair and proper in accordance with the normnilv accented I'ccountinit principles and is on the same basis m in the carlW vears: if there is anv deviation in th*> bvi'is (if valuation, the effect of such deviation, if material, is to be reported:

(iv) if ih<* comnanv h"f f'ifcen nnv loans, secured or unsecured, from companies, firm* "r other nariiec listed in ih" r a s t er maintained under sections 301 nnd 37Od-C) of Ihr Companies Act. 1956 ("1 of 1956). whether the rate of ini-Tcst and tho terms and conditions of such loans are primn faeir preju- dicial lo the interests of Ihe company:

JiliL. 3(iiJJ LHB GAlLllE 01 INDIA fcXlRAOKDlMAKY 2247

{\) wiieiner tiie parties Lo wliom LJIC toans or auvances m me mature of loans have nc~u given oy me compduy art repaying uic principal amounts as bupmatal UHIL aie also regular in payment 01 me mtcicsi anu ir not, wnetner reasonable steps nave been tuKen r>y tac company lor recovery oi 10c principal and interest;

(vij is there an adequate internal control procedure commensurate with the size of Uie company and ine nature of jis business for tlie purchase of stores, raw materials including components, plant and macnurcry, equipment and other assets;

(vii; where any stores, raw materials or components exceeding Ks, 10,000/- in value for each, type thereof are purchascu during ine year from trie subsidiaries, Iirms or companies or other parties in wnicti the directors are interested, whether the prices paid for such items are reasonable as compared to the prices of similar items supplied by other parties;

(viii) whether any unserviceable or damaged stores and raw materials are determined and whether provision for the loss, if any, has been made in the accounts;

(ix) in case the company has accepted deposits from the public, whether the direc- tives issued by the Reserve Bank of India and the provisions of section 58A of the Companies Act, 1956, and the rules framed thereunder, wherever applicable, have been complied with;

(x> is the company maintaining reasonable records for the sale and disposal of realisable by-products and scraps where applicable and significant;

(xi) in relation to companies the paid-up capital of which at the commencement of the financial year concerned exceeds Rs. 25 lacs, whether the company has an internal audit system commensurate with its size and nature of its business;

(xii) where maintenance of cost records has been prescribed by the Central Govern- ment under section 209(l)(d) of the Companies Act, 1956 (1 of 1956), whether such accounts and records have been maintained;

(xiii) is the company regular in depositing provident fund dues with the appropriate authority and if not, the extent of arrears of provident fund dues, shall be indicated by the auditor:

(B) in the C^NC of a service company—

(i) all the matters specified in clause (A) 10 the extent to which they are applicable; (ii) whether the company has a reasonable system ot recording receipts, issues and consumption of materials and stores, commensurate with its size and nature of its business and whether such system provides for a reasonable allocation of the materials and man-hoursi consumed to the relative jobs;

(iii) whether there is a reasonable system of authorisation at proper levels with necessary control on the issue of stores and allocation of stores and labour to jobs and whether there is any system of internal control commensurate with the size of the company and the nature of its business.

(C) In the case of a trading company—

(i) all the matters specified in clause (AJ to the extent to which they are applicable; (ii) 'nave damaged goods been determined and if the Value of such goods is signi- ficant, has provision been made for the loss;

(D) In the case of a finance, investment, chit fund, nidlil or.mutual benefit company

(i) all the matters specified in, clause (A) to the extent to which they are applicable; (ii) whether adequate documents and records are maintained in a case where the company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other similar securities;

(iii) whether the provisions of any special statute applicable to chit fund, nktlH or mutual benefit society have been duly complied with;

(iv) if the company is dealing or trading in shares, securities, debentures and other investments whether proper records have been maintained of the transactions and contracts and whether timely entries have been made therein; also whether the shares, securities, debentures and other investments have been held by the company in its own name except to the extent of the exemption, if any, granted under section 2248 THE GAZETTE OF INDIA EXTRAORDINARY [PART D—

5. Reason to be slated for unfavourable or pjuallfled answers.—Where, in the Auditor's Report the answer to any of the questions referred to in paragraph 4 of this order is unfavourable or qualified, the Auditor's Report shall also state the reasons for such unfavourable or qualified answer, as the case may be. Where the auditor is urtable to express any opinion in answer to a particular question, his report shall indicate such fact together with the reasons why it ia not possible for him to give an answer to such question.

[No.52/4/68-CL.H]

P. B. MENON,

Member, Company Law Board.

PRINTED BY THE GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI AND PUBLISHED BT THE CONTROLLER OF PUBLICATIONS, DELHI, 1 9 75

REGISTERED NO. D-(D)-7Z

The Gazette of India

EXTRAORDINARY

PART II—Section 3—Sub-section (i)

PUBLISHED BY AUTHORITY

No. 307] NEW DELHI, MONDAY, NOVEMBER 10, 1975/KARTIKA 19, 1897

Separate paging is given to this Part in order that it may be filed

as a separate compilation

MINISTRY OF RAILWAYS

(Railway Board)

NOTIFICATION

New Delhi, the 7th November 1975

THE INDIAN RAILWAYS (DISPOSAL OF GOODS [NOT REMOVED FROM NOTIFIED RAILWAY STATIONS) RULES, 1975

G.S.R. 554(E).—In exercise of the powers conferred by Section 56E of the Indian Railways Act, 1890 (9 of 1890), as amended by the Indian Railways (Amendment) Ordinance, 1975 (10 of 1975), the Central Government hereby makes the following rules for the purpose of giving effect to the provisions of sections 56B, 56C and 56D of the said Act, namely:—

1. (1) These rules may be called the Indian Railways (Disposal of Goods not removed from Notified Railway Stations) Rules, 1975.

(2) They shall come into force on the date of publication in the Official Gazette.

2. Definitions.—In these rules, unless the context otherwise requires.—

(a) 'Act' means the Indian Railways Act, 1890 as amended by the Indian Railways (Amendment) Ordinance, 1975.

(b) 'Form' means a form set out in the Schedule. (c) 'Schedule' means the Schedule to these rules. (d) 'Section' means a section of the Act.

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