Regulation 58 — Audit Regulations 2020
Original Rule Text
58. Termination of appointment before expiry of normal tenure
The General Clauses Act, 1897 provides that the authority having power to make the appointment shall also have power to suspend or dismiss any person appointed. Accordingly, where the statutory auditor is appointed by the Comptroller and Auditor General under Section 139(5) and 139(7) of the Companies Act, 2013 or any other Act, the power to remove such auditor, after due administrative process, would also be with the Comptroller and
Regulations on Audit and Accounts 2020 41
Auditor General. Thus, the Comptroller and Auditor General may terminate the appointment of a statutory auditor before the expiry of the normal tenure of appointment for reasonable and sufficient grounds after following the due administrative process, including giving an opportunity to the statutory auditor to make representation against the premature termination of appointment.
What This Means
Since the CAG appoints the statutory auditor, the CAG also has the power to terminate that appointment before the normal tenure ends. This power comes from the General Clauses Act, 1897, which states that the authority with the power to appoint also has the power to remove. However, premature termination requires reasonable grounds, due administrative process, and giving the auditor an opportunity to represent their case.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1CAG can terminate a statutory auditor's appointment before tenure expiry
- 2Power derives from the General Clauses Act, 1897 (appointing authority = removing authority)
- 3Termination requires reasonable and sufficient grounds
- 4Due administrative process must be followed before termination
- 5The auditor must be given an opportunity to make a representation against premature termination
Practical Example
If the CAG finds that a statutory auditor appointed for GAIL (India) Ltd has been issuing audit reports without actually verifying key financial transactions, the CAG can initiate termination proceedings. Before removing the auditor, the CAG must document the grounds, send a show-cause notice to the auditor, consider the auditor's written representation, and then pass a reasoned order.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can a government company request CAG to remove the statutory auditor?▼
What constitutes 'reasonable and sufficient grounds' for premature termination?▼
Is there a difference between termination under Regulation 58 and debarment under Regulation 59?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.