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2023 (12) TMI 108 - HC - Indian LawsProfessional misconduct - Disciplinary proceedings against Chartered Accountant (CA) - Abatement of proceedings of death of the accused - Procedure to be followed by Director on a complaint - Correctness of closing the complaint of the Petitioner - direction to the Respondent No. 1 to re-open her complaint and conduct a disciplinary enquiry against the Respondent No. 2 - HELD THAT - Rule 8 provides for the procedure to be followed by the Director on receiving a complaint. Under Rule 8(1)(b) of the Rules, Director of the Institute has to send a copy of the complaint to the firm calling upon the firm to disclose the name or names of the member or members concerned. In terms of the said Rules, on receiving the complaint of the Petitioner the Respondent No. 1/ICAI vide letter dated 17.08.2020 called upon Respondent No. 2 firm to disclose the name of the member answerable to the complaint and Respondent No. 2 by its letter dated 27.08.2020 informed Respondent No. 1/ICAI that the Audit in question was carried by CA Vijay Kumar Lalla who passed away on 18.11.2017. In terms of Rule 8(2) a member whose name is disclosed by the firm shall be responsible for answering the complaint. Name of CA Vijay Kumar Lalla was disclosed by the Respondent No. 2/Firm. CA Vijay Kumar Lalla was associated as a partner with the Respondent No. 2/Firm at the time of occurrence of the alleged misconduct. It is not the case of the Petitioner that no one has owned the responsibility for the allegations made against the firm and therefore, in absence of such responsibility the disciplinary proceedings can be initiated against Chartered Accountant firm. In the present case, the Respondent No. 2/Firm has disclosed the name of CA Vijay Kumar Lalla, who conducted the Audit of Respondent No. 3/IIC. The complaint was filed by the Petitioner after three years of the report of Audit and by the time the said CA Vijay Kumar Lalla had passed away. It is well settled that disciplinary proceedings cannot continue after the death of the concerned person. Thus, it cannot be said that the Respondent No. 2/Firm has whittled away from its responsibility and the Respondent No. 1/ICAI is at fault for closing the complaint of the Petitioner. Therefore, this Court is of the opinion that the decision of Respondent No. 1/ICAI in closing the complaint of the Petitioner does not require any interference by this Court - petition dismissed.
Issues Involved:
1. Challenge to the Order dated 30.03.2021 closing the complaint. 2. Request for re-opening the complaint and conducting a disciplinary inquiry. 3. Applicability of Section 26 of the Indian Partnership Act, 1932. 4. Interpretation of Rule 8 (2) of the Chartered Accountants (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases), Rules 2007. 5. Legality of disciplinary proceedings against a firm after the death of a partner. Summary: 1. Challenge to the Order dated 30.03.2021 closing the complaint: The Petitioner sought to challenge the Order dated 30.03.2021 by Respondent No. 1, which closed the complaint against Respondent No. 2. The Petitioner argued that the complaint should remain open and a disciplinary inquiry should be conducted as per the Chartered Accountants Act, 1949 and relevant Rules. 2. Request for re-opening the complaint and conducting a disciplinary inquiry: The Petitioner requested the court to direct Respondent No. 1 to re-open the complaint and conduct a disciplinary inquiry against Respondent No. 2, arguing that the firm should be held accountable for the actions of its deceased partner, Mr. Vijay Kumar Lalla. 3. Applicability of Section 26 of the Indian Partnership Act, 1932: The Petitioner argued that under Section 26 of the Indian Partnership Act, 1932, a firm is liable for wrongful acts committed by its partners. The Petitioner contended that the firm should answer the allegations even after the death of Mr. Vijay Kumar Lalla. 4. Interpretation of Rule 8 (2) of the Chartered Accountants (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases), Rules 2007: The Petitioner relied on Rule 8 (2) to argue that if no individual member takes responsibility for the allegations, the firm as a whole should be responsible. The Petitioner claimed that the remaining members of Respondent No. 2 should answer the allegations. 5. Legality of disciplinary proceedings against a firm after the death of a partner: Respondent No. 1 argued that disciplinary proceedings could only be initiated against individual members of the Institute, not firms, as per Sections 2(b), 2(ca), and 3 of the Chartered Accountants Act, 1949. The court agreed, stating that disciplinary proceedings are in personam and become infructuous upon the death of the concerned individual. The court cited previous judgments to support this view, including Gita Bhattacharjee & Ors. vs. South Bengal State Transport Corporation & Ors. and Durgawati Dubey vs. State of UP & Ors. Conclusion: The court concluded that the Act does not contemplate disciplinary proceedings against firms but only against individual members. Consequently, the court found no fault with Respondent No. 1's decision to close the complaint and dismissed the Writ Petition.
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