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5. Mr. Swaminathan, learned Counsel for the respondent drew our attention to passages in one of the leading text-books, Spicer and Pegler's Practical Auditing which dealt with internal audit and the relationship between the internal auditor and a statutory auditor. At page 25 of the 12th edition of this book the following passage occurs and Mr. Swamination placed reliance on it:

There also exists considerable scope for mutual assistance between the two auditors in the planning of their respective audits. Where the statutory auditor is satisfied that the internal auditor has adequately covered part of the work which the statutory auditor would otherwise do he may be able to reduce the extent of his examination of detail ; and consultation between the two auditors may enable the internal auditor to refrain from carrying out work which he would otherwise do but which, having regard to the examination which the statutory auditor considers he must make in any event would result in duplication.

This passage must be understood in the proper context by the distinction which the learned authors themselves make between internal check and internal audit. The internal check is most often carried out by the employees or directors of the company and it consists in checking the day-to-day transactions which operate continuously as part of the routine system. The internal audit is conducted by a qualified auditor ; only, these auditors are generally in the employment of the company. They are not independent auditors. Indeed the learned authors pointed out that one of the duties of an internal auditor would be to see how far the system of internal check is operating satisfactorily. It is also pointed out that even when there is an internal auditor, it is for the statutory or independent auditor to decide whether and to what extent he can rely on the work of the internal auditor in order to reduce the extent of his own examination of detail, and his decision will depend upon his judgment on the facts of each case, having regard in particular to the extent and efficiency of the internal audit, the experience and qualifications of the chief internal auditor and his staff and the character of their reports, and the authority vested in the chief internal auditor. We are not concerned in this case with the mutual relation between an internal auditor and an independent statutory auditor because it cannot be said that the special examiners appointed under Article 103, of the Articles of Association of the Company are in any sense internal auditors.