Q: ABC & Co., CAs, resigned as auditors of XYZ Ltd (a private company) on 1 April 2024. Within how many days must they file Form ADT-3? With whom?
A: Within 30 days (by 1 May 2024), filing with the company and the Registrar of Companies (no CAG filing required since it is a private company).
### Example 2
Q: MNO & Co. resigned as statutory auditors of a State Government-controlled company on 1 March 2024 but did not file Form ADT-3 at all. Their audit remuneration was ₹30,000. What is the penalty if the default continues for 10 days?
A:
Base penalty = lesser of ₹50,000 or ₹30,000 = ₹30,000
Note: ADT-3 must be filed with the company, Registrar, and CAG for this type of company.
⚠️ Common exam mistakes
Filing ADT-3 only with the company and Registrar for a government company — CAG is a mandatory third recipient.
Applying a flat ₹50,000 penalty without checking remuneration — the penalty is the LESSER of ₹50,000 or the auditor's remuneration.
Forgetting the ₹2,00,000 maximum cap on total penalty for continuing default.
Counting the first day of default in the ₹500/day continuing penalty — the additional daily penalty starts from day 2 onwards.
Bare-Act text Section 140(2) and Section 140(3) · Companies Act, 2013 · click to expand
The auditor who has resigned from the company shall file within thirty days from the date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of companies referred to in sub-section (5) of section 139, the auditor shall also file such statement with the Comptroller and Auditor-General of India, indicating the reasons and other facts as may be relevant with regard to his resignation. [Section 140(2)] | If the auditor does not comply with the provisions of sub-section (2), he or it shall be punishable with penalty of fifty thousand rupees or the remuneration of the auditor, whichever is less, and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees. [Section 140(3)]