2012 (11) TMI 972 - HC - Indian Laws

Petition against an Order of ICAI holding that the complaint filed by the Petitioner against Mr. Ajay B. Garg, a Chartered Accountant and the Member of the Institute of Chartered Accountants of India was frivolous - Settlement of accounts of Firm - Principle of Natural Justice - According to the Petitioner, the Lucknow office of the Petitioner firm had prepared base accounts as on 30th November, 2004 and circulated amongst the partners for their comments. M/s. Atlanta Ltd. thereafter made the changes in the accounts without consent of the Petitioner which were detrimental to the interest of the Petitioner. It is the case of the Petitioner that the 1st Respondent did not take proper care while certifying the accounts of the said firm for the broken period of financial year 2004-05. Held that - Dispute between the partners is in respect of the accounts of the firm was referred to the arbitrator who was an independent person and the said arbitrator looking to the entire evidence has accepted the balance-sheet audited by the 1st Respondent as correct,there is no reason to interfere with the prima facie view of the Institute on the complaint filed by the Petitioner. The fact that the Award made by the arbitratior has been set aside subsequently and restored to the file of the arbitrator for fresh Award, would not vitiate the prima facie view taken by the Institute during the period the Award was subsisting. In view thereof,there is no need to go into the issue raised by the Petitioner regarding the alleged violation of principles of natural justice and/or alleged procedure while conducting enquiry by the Institute in these proceedings - Award for a limited purpose so as to find out whether there was any substance in the complaint made by the Petitioner against the 1st Respondent and have not expressed our view on merits of the award - Rule is discharged.

Summary

Issues involved:
Petition for Writ of Certiorari to quash an Order by the Council of the Institute of Chartered Accountants of India, Allegations of misconduct against a Chartered Accountant, Violation of principles of natural justice in disciplinary proceedings.

Analysis:

1. Petition for Writ of Certiorari:
The petitioner sought a Writ of Certiorari to quash an Order by the Council of the Institute of Chartered Accountants of India, which deemed the complaint against a Chartered Accountant as frivolous. The petitioner contended that the complaint should be decided in adherence to the principles of natural justice. The dispute arose from the settlement of accounts after the petitioner's retirement from a partnership firm, where allegations were made against the Chartered Accountant for certifying accounts without proper verification.

2. Allegations of Misconduct:
The petitioner alleged that the Chartered Accountant had committed misconduct by certifying accounts without access to all relevant vouchers, leading to detrimental changes in the accounts. The petitioner highlighted discrepancies in the audit process and claimed that the Chartered Accountant falsely certified the firm as registered without verifying the facts. The Chartered Accountant's actions were challenged in the context of an arbitration proceeding, where the Arbitrator accepted the audited balance-sheet as correct based on the evidence presented.

3. Violation of Principles of Natural Justice:
The petitioner argued that the disciplinary proceedings conducted by the Institute lacked transparency and violated principles of natural justice. The petitioner raised concerns about the non-disclosure of official notings and comments, as well as the lack of reasons provided for the decision. The petitioner contended that the Institute's procedures did not afford an oral hearing or adequate opportunity for the petitioner to present their case effectively.

4. Judicial Analysis and Decision:
The High Court, after reviewing the evidence presented in the arbitration proceedings, concluded that the Arbitrator had accepted the audited balance-sheet as accurate based on the accounts maintained by the Chartered Accountant. The Court found no reason to interfere with the Institute's prima facie view on the complaint, considering the independent arbitration process. The Court clarified that its assessment was limited to the complaint's substance and did not delve into the merits of the arbitration award. Consequently, the Court discharged the rule with no order as to costs, indicating no grounds for further legal intervention.

In conclusion, the High Court's judgment upheld the Institute's decision based on the evidence presented in the arbitration proceedings, emphasizing the importance of independent arbitration in resolving disputes and determining the accuracy of audited financial statements.