Eligibility, qualifications and disqualifications of auditors
Section 141 of the Companies Act, 2013 deals with eligibility, qualifications and disqualifications of auditors. A person shall be eligible for appointment as an auditor of a company only if he is a chartered accountant: Provided that a firm whereof majority of partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company. The Act came into force on 01 Apr 2014.
(1) A person shall be eligible for appointment as an auditor of a company only if he is a chartered accountant:
Provided that a firm whereof majority of partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company.
(2) Where a firm including a limited liability partnership is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorised to act and sign on behalf of the firm.
(3) The following persons shall not be eligible for appointment as an auditor of a company, namely:--
(a) a body corporate other than a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009);
(b) an officer or employee of the company;
(c) a person who is a partner, or who is in the employment, of an officer or employee of the company;
(d) a person who, or his relative or partner--
(i) is holding any security of or interest in the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company:
Provided that the relative may hold security or interest in the company of face value not exceeding one thousand rupees or such sum as may be prescribed;
(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of such amount as may be prescribed; or
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed;
(e) a person or a firm who, whether directly or indirectly, has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed;
(f) a person whose relative is a director or is in the employment of the company as a director or key managerial personnel;
(g) a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies;
(h) a person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction;
1[(i) a person who, directly or indirectly, renders any service referred to in section 144 to the company or its holding company or its subsidiary company.
Explanation.-- For the purposes of this clause, the term "directly or indirectly" shall have the meaning assigned to it in the Explanation to section 144.]
(4) Where a person appointed as an auditor of a company incurs any of the disqualifications mentioned in sub-section (3) after his appointment, he shall vacate his office as such auditor and such vacation shall be deemed to be a casual vacancy in the office of the auditor.
Section 141, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 12
- Banking Companies (Acquisition and Transfer of Undertakings) Act s. 10 Closure of accounts and disposal of profits
- Banking Companies (Acquisition and Transfer of Undertakings) Act s. 10 Closure of accounts and disposal of profits
- Code on Wages s. 47 Presumption about accuracy of balance sheet and profit and loss account of corporations and companies
- Code on Wages s. 48 Audit of account of employers not being corporations or companies
- s. 139 Appointment of auditors
- s. 145 Auditor to sign audit reports, etc
- Finance Act s. 79 Amendment of section 288
- Finance Act s. 174 Amendment of section 40
- Income-tax Act s. 288 Appearance by authorised representative
- National Bank for Agriculture and Rural Development Act s. 48 Audit
- National Bank for Financing Infrastructure and Development Act s. 26 Audit
- National Housing Bank Act s. 40 Audit
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Shrenik Baid vs Union of India
Court's Decision & Legal Precedent
Dealing with the auditors of IL&FS Financial Services, the Court held that the second proviso to section 140(5) is a substantive provision whose consequence is that an auditor against whom the NCLT makes a final order of fraudulent conduct becomes ineligible to be appointed as auditor of any company for five years, and rejected the contention that the existence of other routes to auditor accountability, including disqualification under section 141(3)(h), made the section 140(5) machinery redundant or unconstitutional.
On this section: Treats the disqualification in section 141(3)(h) as a separate and independent statutory bar on an auditor's eligibility, running alongside rather than displacing the removal and five-year debarment worked by section 140(5).
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
6 instruments name this provision in its title or its text without being made under it.
- Companies (Audit and Auditors) Amendment Rules, 2018Rule 2018
- Companies (Audit and Auditors) Amendment Rules, 2018Rule 2018
- Companies (cost records and audit) Amendment Rules, 2016Rule 2016
- Chapter X - The Companies (Audit and Auditors) Rules, 2014.Rule 2014
- Roll out plan of various forms under the Companies Act, 2013 and continuance of forms under the provisions of Companies Act, 1956Circular 2014
- The Companies (Audit and Auditors) Amendment Rules, 2014Rule 2014
Questions about Section 141
What have the courts held on Section 141 of the Companies Act?
Shrenik Baid vs Union of India is the leading judgment on this section among those set out below: Treats the disqualification in section 141(3)(h) as a separate and independent statutory bar on an auditor's eligibility, running alongside rather than displacing the removal and five-year debarment worked by section 140(5).
How do I find court cases under Section 141 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 141, section 141 Companies Act, section 141 of the Companies Act. People searching for it also type companies act 141 3 and companies act section 141 subsection 3. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Shrenik Baid vs Union of India.
What should I read with Section 141 of the Companies Act, and has it changed?
Its own text turns on section 144 (Auditor not to render certain services), so none of them can safely be read on its own. 12 other provisions in this corpus refer back to it. 6 instruments name it without being made under it, most recently Companies (Audit and Auditors) Amendment Rules, 2018 (2018), then Companies (Audit and Auditors) Amendment Rules, 2018 (2018).
When did Section 141 of the Companies Act come into force?
Section 141 of the Companies Act, cited as Companies Act 141, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.