2015 (6) TMI 464 - HC - Indian Laws

Charges of inflated expenses claimed during the course of audit - disciplinary action CA - Held that - It is clear that two of the three charges against the respondent No.1 were indeed baseless exaggerated. The same lends credence to the plea of the respondent No.1 of the complaint against him being revengeful. Similarly there is no finding of the Disciplinary Committee on the plea of the respondent No.1 of his having infact incurred expenditure on travel more than even the first AC fare. The Disciplinary Committee though noted that the travel was at short notice in rush season and that the respondent No.1 had procured rail tickets through an agent but did not consider the charges of the travel agent or the premium at which rail tickets are sold in rush season. We in the circumstances have two options; either to ourselves reduce the punishment from that of removal of name from the Register of Members for a period of one month to that of reprimand or to remand the matter to Council to consider the recommendation in the light of the report of the Disciplinary Committee and the representation of the respondent no.1 thereagainst. We choose the former simply for the reason that the matter has already been pending for the last more than ten years and we feel that it need not be prolonged any further. - The requisite reprimand be issued in accordance with law.

Summary

Issues:
- Misconduct under the Chartered Accountants Act, 1949
- Disciplinary action against a Chartered Accountant
- Consideration of evidence and representations
- Justification of the punishment

Analysis:
The judgment dealt with a case of misconduct under the Chartered Accountants Act, 1949, involving a Chartered Accountant (CA) found guilty of "Other Misconduct" as per the complaint by the Office of the Comptroller & Auditor General of India (CAG). The petitioner Institute of Chartered Accountants of India recommended the removal of the CA's name from the Register of Members for one month. The respondent CA failed to appear despite multiple notices, leading to a hearing where the petitioner's counsel presented the case. The allegations against the CA's firm included inflated expenses during the audit of Cotton Corporation of India for 2000-2001.

The Disciplinary Committee's report found the CA guilty of "other misconduct" in justifying an unentitled amount claimed for AC first-class rail fare during travel. The CA defended himself, stating the expenses were genuine and not intended to deceive. The Council of the petitioner Institute reviewed the report and the CA's representation, recommending the CA's removal from the Register of Members for one month. However, the judgment highlighted discrepancies in the Council's decision-making process, noting the lack of consideration for certain aspects and representations made by the CA.

The judgment emphasized procedural fairness and natural justice, acknowledging the findings of the Disciplinary Committee but critiquing the Council's failure to address key points raised by the CA. The Court had the option to reduce the punishment to a reprimand or remand the matter to the Council for reconsideration. To expedite the resolution after a prolonged period, the Court chose to modify the punishment to a reprimand, citing the unnecessary delay in the case's conclusion. Consequently, the judgment disposed of the reference by altering the penalty to a reprimand instead of removal from the Register of Members for one month, emphasizing compliance with legal procedures for issuing the reprimand.