2017 (3) TMI 751 - Tri - Companies Law

Professional misconduct - Chartered Accountant certified the documents without proper verification and without following the procedures laid down in the declaration contained in the certificates - Held that - Based on the arguments which have been submitted by both of the parties, we deem it appropriate to delete the names of Applicants/R8 & R9 from the array of Respondents in the company petition and direct the Institute of Chartered Accountants of India that para 34 and 35 of the company petition and the counter filed by the Respondent/Petitioner-1 be treated as complaint against Applicants/R8 & R9 in Form-I under sub-rule (1) of Rule 3 of the Chartered Accountants (Procedure of investigation of professional and other misconduct and conduct of cases) Rules, 2007 read with Section 21(3) of the Chartered Accountants Act, 1949 and to investigate into the allegations levelled against the Applicants/R8 & R9, if found correct, appropriate action be taken against them. The complainant is directed to provide the said documents including e-mail dated 23.08.2016 in triplicate before the Director (Discipline) of the Institute of Chartered Accountants of India by making payment of the fees prescribed. Accordingly, the Company applicant is disposed of.

Summary

Issues Involved:
1. Allegations of professional misconduct against Chartered Accountants in company petition.

Detailed Analysis:
1. The case involved an application filed by two Chartered Accountants, referred to as Respondents 8 & 9, seeking exoneration from being named as respondents in a company petition. The petition alleged that the Respondents 8 & 9 had certified documents without proper verification and following procedures, leading to fraudulent activities colluding with another party for personal gain.

2. The petitioners accused the Respondents 8 & 9 of professional misconduct with mala fide intentions, seeking disciplinary action from the Institute of Chartered Accountants of India. In response, Respondents 8 & 9 denied the allegations, stating they acted based on information provided by others and complied with professional duties and the institute's code of conduct.

3. The Respondent/Petitioner and Respondent/Respondent-1 denied any mala fide intention to defame the Respondents 8 & 9, claiming their motive was to expose illegal elements and professional misconduct. They highlighted email communication showing a lack of cooperation and contemptuous tone towards regulatory authorities, expressing displeasure at the lack of cooperation with the NCLT.

4. After hearing both sides, the tribunal decided to remove the names of Respondents 8 & 9 from the array of respondents in the company petition. Instead, the allegations were treated as a complaint against Respondents 8 & 9 under the Chartered Accountants Act, 1949. The tribunal directed the Institute of Chartered Accountants of India to investigate the allegations, and if found correct, take appropriate disciplinary action.

5. The tribunal emphasized the importance of addressing professional misconduct to maintain the integrity of the accounting profession. It noted that legal provisions existed for disciplinary action against erring Chartered Accountants, making it unnecessary to keep Respondents 8 & 9 as respondents in the company petition. Ultimately, the tribunal disposed of the company application, directing further investigation by the institute.