XYZ & Co, is an auditor of VPN Limited which is a listed company and the balance sheet of VPN Limited is being signed by X who is also a partner in other Audit firm PQR & Co. The original tenure of XYZ & Co.

Section 139(2) of the Companies Act, 2013 provides for mandatory rotation of auditor or audit firm by listed and certain class or classes of companies. The Section specifies that no listed company or a company belonging to such class or classes of companies as specified shall appoint or reappoint. An individual as auditor for a more than one term of five consecutive years; and An audit firm as auditor for more than two terms of five consecutive years. Therefore, rotation of auditor is applicable to all listed companies and such other class of companies as may be prescribed. Since M/S VPN limited is a listed company so provisions w.r.t. rotation of auditor applies to M/s VPN Limited. Further as per Second Proviso to Section 139(2) of the Companies Act, 2013 if Audit Firm i.e. incoming audit firm and outgoing audit firm whose tenure has expired in a company immediately preceding the financial year, are having common partner or partners, then such incoming audit firm is not eligible to get appointed as auditor of the same company for a period of 5 years. Keeping the above proviso in view, M/s PQR & Co. cannot be appointed as the auditor of the company as X is the common partner in the both firm i.e. M/s XYZ & Co. which is outgoing auditor and M/s PQR & Co.