2018 (11) TMI 1163 - SC - Indian Laws

Disciplinary proceedings against CA - professional misconduct - Sale of 100 shares in 1999, which were transferred to the Chartered Accountant s own name - Disciplinary Committee took up the case and ultimately found that the conduct of the Respondent No.1-Chartered Accountant was derogatory in nature - guilty of Other Misconduct under Section 22 read with Section 21 of the Chartered Accountants Act, 1949. Held that - The Disciplinary Committee has, on facts, found the Chartered Accountant guilty of a practice which was not in the Chartered Accountant s professional capacity - Thus, it was entitled to do under Schedule I Part-IV subclause( 2) if, in the opinion of the Council, such act brings disrepute to the profession whether or not related to his professional work. The impugned judgment is incorrect and must, therefore, be set aside - appeal disposed off.

Summary

Issues: Appeal against the judgment of the High Court regarding misconduct by a Chartered Accountant under the Chartered Accountants Act, 1949.

Analysis:
1. Background: The appeal arose from a complaint against a Chartered Accountant for transferring shares to his own name in 1999. Despite settling with the complainant, the Disciplinary Committee found the accountant guilty of 'Other Misconduct' under the Chartered Accountants Act, 1949.

2. High Court Judgment: The Council recommended the removal of the Chartered Accountant for six months. However, the High Court, in its judgment, concluded that the accountant was not acting in a professional capacity while selling the shares, hence no penalty was imposed.

3. Interpretation of the Law: The Supreme Court found that the High Court misinterpreted Section 21(3) of the Act. The section outlines the process for handling professional misconduct. The Court highlighted Schedule-I Part-IV, which defines 'Other Misconduct' related to members of the Institute.

4. Disciplinary Committee's Findings: The Disciplinary Committee correctly found the accountant guilty of an act that brought disrepute to the profession, even if it was not directly related to his professional work. This action was justified under Schedule I Part-IV subclause(2).

5. Decision: The Supreme Court held that the High Court's judgment was incorrect and set it aside. The case was remanded back to the High Court for a fresh decision, allowing both parties to present their arguments. The appeal was disposed of accordingly.

This detailed analysis of the judgment highlights the key legal issues, the interpretation of relevant sections of the Chartered Accountants Act, and the corrective action taken by the Supreme Court in remanding the case for further consideration.