Section 140(2) of the Act provides for the resignation of an auditor. It states that an auditor needs to file a statement of resignation as provided in the Rules to the Registrar, within thirty days from the date of his resignation. In the case of the Government Company or Government-owned company, the auditor of such a company will file the statement with the Comptroller and Auditor-General of India.
The auditor shall indicate his reasons and other relevant facts regarding his resignation in the statement. It is important that the auditor intimates his resignation to the Registrar. If the auditor fails to do so, it attracts a penalty under the Act.
If the auditor does not file his statement of resignation, he shall be liable to pay a penalty of Rs 50,000 or an amount equal to his remuneration, whichever is less. In case of continuing failure, the auditor shall be liable to a further penalty of five hundred rupees for each day of such continuing failure, subject to a maximum of five lakh rupees.
The application or statement of resignation to be filed by the auditor intimating his resignation is provided in the Rules. The Rules provide that an auditor should file the application Form ADT-3 to the Registrar after resigning from the company.
Form ADT-3 can be filed online on the Ministry of Corporate Affairs (“MCA”) website, or it can be filled and given or posted to the Registrar. After the auditor submits his resignation and Form ADT-3 to the company, a board meeting shall be organised with all the directors to effect the resignation. The company shall appoint a new auditor to fill the vacancy of the resigned auditor as per the provisions of the Act and Rules.
In the meantime, the company can also appoint a casual auditor to fill the vacancy in a general meeting within three months, and such an auditor will hold the post until the conclusion of the next annual general meeting. After the resignation of the auditor, the company shall appoint a new auditor in the next annual general meeting.
In the case of a government company, an auditor will be appointed by the Comptroller and Auditor-General of India within thirty days from the resignation of the auditor.
The following information is to be filled by the resigning auditor in the Form ADT – 3:
The auditor has to affix his digital signature to the form. The resignation letter, if any is to be attached with this form by the auditor.
The auditor has to pay the prescribed fee along with Form ADT-3 at the time of filing the form. The fee varies according to the share capital of the company of the resigning auditor. The fees prescribed by MCA is as follows:
| Nominal Share Capital | Fee Applicable |
| Less than 1,00,000 | Rs 200 |
| 1,00,000 to 4,99,999 | Rs 300 |
| 5,00,000 to 24,99,999 | Rs 400 |
| 25,00,000 to 99,99,999 | Rs 500 |
| 1,00,00,000 or more | Rs 600 |
| Period Of Delay | Additional Fee |
| 30 - 60 Days | 4 Times Of Normal Fees |
| 60 - 90 Days | 6 Times Of Normal Fees |
| 90 - 180 Days | 10 Times Of Normal Fees |
| Above 180 Days Delay | 12 Times Of Normal Fees |