2018 (5) TMI 733 - Other - Companies Law

Professional misconduct in relation to Company Secretaries in Practice - quantum of punishment - Held that - Disciplinary Committee has taken a different view in this case though the nature of professional misconduct relates to certification of Forms. After perusing all, we are of the considered view that punishment awarded to the Appellant in the present matter is certainly on the higher side, enormous and harsh in comparison with the punishment awarded to the errant members of the Institute by the Disciplinary Committee for the violation of same professional misconduct in other cases. The interest of justice will be met out by reducing the punishment awarded to the Appellant. Therefore, in exercise of the powers conferred on this Authority under clause (b) of sub- section (2) of Section 22E of the Company Secretaries Act, 1980, we hereby reduce the punishment awarded and the fine imposed on the Appellant by the Disciplinary Committee of the Institute and passes the following order in this regard. Reprimand and fine of ₹ 50000/- payable within sixty days from the date of issue of this Order and in case of failure of the Appellant to pay the fine of ₹ 50000/- within the stipulated time, his name shall be removed from the Register of Members of the Institute for a period of one month, after sixty days from the date of issue of this order.

Summary

Issues:
- Appeal against the order of the Disciplinary Committee of the Institute of Company Secretaries of India.
- Allegation of professional misconduct under clause (7) of Part-I of the Second Schedule of the Company Secretaries Act, 1980.
- Quantum of punishment awarded by the Disciplinary Committee.
- Comparison of punishment awarded in similar cases.
- Review of the punishment imposed on the Appellant.

Analysis:
1. The Appellant filed an appeal against the order of the Disciplinary Committee of the Institute of Company Secretaries of India, which found him guilty of professional misconduct under clause (7) of Part-I of the Second Schedule of the Act. The complaint alleged that the Appellant did not exercise due diligence in certifying certain forms related to a company, leading to the removal of directors' names and issuance of incorrect certificates. The Disciplinary Committee imposed a punishment of removal of the Appellant's name from the Register of members for one year and a fine of ?1,00,000.

2. The Director (Discipline) found the Appellant guilty of professional misconduct for certifying forms without due diligence but not regarding other allegations. The Disciplinary Committee agreed and passed the order imposing the mentioned punishment after examining all relevant documents and hearing related parties.

3. During the appeal, the Appellant argued that the punishment was excessive compared to similar cases where reprimand or fines were imposed for similar misconduct. The Appellant emphasized the disparity in punishment and requested a review based on the quantum of punishment rather than the merits of the professional misconduct allegations.

4. The Authority reviewed similar cases where reprimand and fines were imposed for certification-related misconduct. The Authority acknowledged the discrepancy in punishment and concluded that the punishment awarded to the Appellant was excessive. Therefore, the Authority reduced the punishment to a reprimand and a fine of ?50,000, emphasizing the need for consistency in awarding punishments for similar misconduct.

5. The Authority advised the Disciplinary Committee to maintain uniformity in awarding punishments for professional misconduct to ensure justice and appropriate consideration of the circumstances. The order was communicated to the Institute of Company Secretaries of India and the Appellant for compliance.

6. The appeal was disposed of without costs to either party, and any excess fine already paid by the Appellant was directed to be refunded. The judgment highlighted the importance of fairness and consistency in disciplinary actions related to professional misconduct among members of the Institute.