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2021 (12) TMI 127 - HC - Indian LawsProfessional misconduct of Chartered Accountant - High Court of Karnataka appointed Respondent No.3/Chartered Accountant for verification of the books and other documents of the three Transferor Companies and to submit his report - scheme of merger sanctioned based on the report - HELD THAT - The report was thus a part of the judicial proceedings before the said Court and it was duly considered and deliberated upon by the Karnataka High Court. The Court sanctioned the Scheme of Amalgamation vide judgment dated 26.03.2015 and it is apparent that the Court found no fault with or falsity in the report. Once the report passed the threshold of judicial scrutiny, there was no reason why the Disciplinary Committee of ICAI should have adjudicated the correctness or otherwise of the Report. In fact, the Disciplinary Committee rightly refrained from interfering in the report by observing that it had no jurisdiction to even delve into the report, once it had received approval from the Karnataka High Court. Hence, no error was committed by ICAI in dismissing the complaint filed by the Appellant - It needs to be highlighted that the order of the Karnataka High Court sanctioning the Amalgamation Scheme was sought to be recalled by India Awake for Transparency, however, the recall application, being in the nature of a review petition, was dismissed. The Appellant has repeatedly defaulted in complying with the orders of various Courts by not depositing the costs imposed - no error has been committed by learned Single Judge while deciding the petition and we are in complete agreement with the observations, reasoning and findings rendered in the impugned judgment. There is no merit in the appeal and the same is accordingly dismissed along with all pending applications with costs of ₹ 50,000/- to be deposited by the Appellant with the Delhi State Legal Service Authority within eight weeks from today. The aforesaid amount shall be utilized for the programme Access to Justice . The Appeal shall be listed on 07.01.2022, only for the limited purpose of reporting compliance with respect to deposit of costs.
Issues Involved:
1. Intervention Application 2. Complaint Dismissal by ICAI 3. Locus Standi of the Appellant 4. Professional Misconduct Allegations 5. Judicial Scrutiny of the Report 6. Costs and Conduct of the Appellant Detailed Analysis: 1. Intervention Application: The application by M/s Hasham Investment and Trading Company Private Limited to intervene in the appeal was allowed, permitting the intervener to argue and assist the Court. This application was disposed of accordingly. 2. Complaint Dismissal by ICAI: The appellant challenged the ICAI's dismissal of their complaint against Respondent No. 3, a Chartered Accountant appointed by the Karnataka High Court to verify the books of three companies involved in a merger. The Disciplinary Committee of ICAI dismissed the complaint on the grounds that the report was judicially scrutinized and accepted by the Karnataka High Court, thus falling outside the Committee's jurisdiction to re-evaluate. 3. Locus Standi of the Appellant: The appellant argued that any person could file a complaint under the Chartered Accountants Act, 1949, and that their locus standi was valid. However, the Court noted that the appellant had no connection with the companies involved in the merger and was not a shareholder or creditor, thus lacking the necessary standing to file the complaint. 4. Professional Misconduct Allegations: The appellant alleged professional misconduct by Respondent No. 3, claiming the audit report overlooked fraudulent transactions. The Court found that these allegations were similar to those dismissed by the Karnataka High Court in a recall application filed by another entity, India Awake for Transparency, which was also represented by the same advocate as the appellant. 5. Judicial Scrutiny of the Report: The report by Respondent No. 3 was part of the judicial proceedings and was accepted by the Karnataka High Court, which sanctioned the merger. The Court held that once the report passed judicial scrutiny, the ICAI had no jurisdiction to re-evaluate it. The Disciplinary Committee's decision to dismiss the complaint was thus upheld. 6. Costs and Conduct of the Appellant: The appellant had a history of filing multiple litigations, many of which were dismissed with costs. The Court noted the appellant's repeated non-compliance with orders to deposit costs, reflecting a pattern of abusing the judicial process. The present appeal was dismissed with costs of ?50,000 to be deposited with the Delhi State Legal Service Authority within eight weeks, to be utilized for the program 'Access to Justice.' Conclusion: The appeal was dismissed on the grounds that the appellant lacked locus standi, the complaint was rightly dismissed by the ICAI, and the report by Respondent No. 3 had already passed judicial scrutiny. The Court also highlighted the appellant's conduct in repeatedly filing speculative litigations, which amounted to an abuse of the judicial process.
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