2015 (3) TMI 582 - HC - Indian Laws

Guilty of Professional misconduct - Clause (7) of Part I and Clause (1) of Part II of Second Schedule to the Chartered Accountants Act, 1949 - Name removal from the register of members - Held that - We are satisfied that the prescribed procedure has been followed in the conduct of the complaint of professional misconduct against the respondent no.1. We, on perusal of the material placed before us, are also satisfied with the reasoning aforesaid recorded by the Disciplinary Committee of the petitioner institute for holding the respondent No.1 guilty as aforesaid. We also find the punishment recommended by the petitioner Council to be proportionate to the misconduct of which the respondent No.1 has been found guilty of. Though the jurisdiction of this Court under Section 21(6) of the Act is wide, without any restriction but in our opinion, the findings of the members of the Disciplinary Committee of the petitioner and the views of the petitioner Council are entitled to great weight in light of the fact that they are the experts with regard to the matters pertaining to profession of chartered accountants and know the intricacies of the profession on account of their personal experience. Moreover, the said bodies have been created to maintain a high standard of conduct and discipline amongst the members of the petitioner institute. Thus, unless gross violation or disregard of the provisions of the Act or the Regulations made thereunder or of the principles of natural justice and fairness is to be found, this Court would be slow to interfere with the finding of such professional bodies. We accordingly accept the recommendation of the petitioner institute and remove the respondent No.1 from the membership of the petitioner institute for a period of six months effective from this date.

Issues Involved:
1. Professional Misconduct Allegations Against Respondent No.1
2. Procedural Compliance in Disciplinary Proceedings
3. Validity of Disciplinary Committee's Findings
4. Proportionality of Recommended Punishment

Issue-wise Detailed Analysis:

1. Professional Misconduct Allegations Against Respondent No.1:
The petitioner found the respondent No.1, a Chartered Accountant, guilty of misconduct. The Managing Director of M/s Anghaila Housing Private Limited filed a complaint alleging that respondent No.1 engaged in unprofessional activities, including falsifying records and demanding money for returning company documents. The Disciplinary Committee found respondent No.1 guilty of filing bogus forms with the Registrar of Companies and signing balance sheets as the company's auditor from 1995-2003 without proper authorization. The Committee, however, did not find sufficient evidence to hold respondent No.1 guilty of demanding money for returning company records, opening unauthorized bank accounts, or attempting to dispose of company assets.

2. Procedural Compliance in Disciplinary Proceedings:
The court ensured that the prescribed procedure was followed. Notices were issued to respondent No.1, but he could not be served through ordinary means, leading to substituted service via newspaper publication. The Disciplinary Committee considered the complaint, response, and rejoinder, and conducted hearings where respondent No.1 pleaded not guilty. Despite repeated opportunities, respondent No.1 failed to provide comments or evidence.

3. Validity of Disciplinary Committee's Findings:
The Disciplinary Committee's findings were based on evidence, including reports from the Economic Offences Wing and the Company Law Board. The Committee concluded that respondent No.1 was involved in filing anti-dated documents and signing balance sheets without proper appointment. The Committee noted discrepancies in the share transfer forms and unauthorized use of a closed Chartered Accountants firm's name. The court found the Committee's reasoning and conclusions to be satisfactory and supported by evidence.

4. Proportionality of Recommended Punishment:
The petitioner Council recommended removing respondent No.1 from the register of members for six months. The court found the punishment proportionate to the misconduct. The court emphasized the importance of maintaining high standards of conduct and discipline among Chartered Accountants. The court acknowledged the expertise of the Disciplinary Committee and the petitioner Council, and found no gross violation of the Act, Regulations, or principles of natural justice.

Conclusion:
The court accepted the petitioner institute's recommendation and ordered the removal of respondent No.1 from the membership for six months, effective from the judgment date. The reference was disposed of accordingly.

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