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TMI Blog2012 (6) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... T Bhaskar Bhattacharya, J. - This is an application for reference under section 21(5) of the Chartered Accountants Act. 2. The facts giving rise to filing of this reference may be summed up thus: ( a )The Institute of Chartered Accountants of India (hereinafter referred to as the "Institute") received a complaint dated 24-5-2005 from Shri Ranjit Singh (complainant) against Shri Dipak Kumar De Sarkar, a Chartered Accountant, the respondent before us. ( b )A copy of the complaint was sent to the respondent with a request to send his written statement. The respondent submitted his written statement and the complainant submitted his rejoinder. ( c )In accordance with the provisions contained in Regulation 12(11) of the Chartered Accountants Regulations, 1988, the above papers containing the complaint, written statement, rejoinder and comments were considered by the Council at its meeting held in May, 2006 at New Delhi. The Council was prima facie of the opinion that the respondent was guilty of professional misconduct and other misconduct and accordingly, referred the case to the disciplinary committee. ( d )A meeting of the disciplinary committee for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the share certificates on 1-2-2004, immediately after receipt of my objection letter dated 24-1-2004. He tried to conceal his wrongful actions by not addressing my objections in his correspondence. But when the facts were exposed in the E.G.M. of 6-1-2005, he made an effort to justify his actions by raising false allegations against me in his letter of 28-1-2005. (Copy of the letter and the record from R.O.C. indicating the discrepancy is attached. Exhibits D1, D2, D3 - Letter dated 28-1-2005, Exhibit E - Annual Return Submitted in R.O.C. Point of contention duly highlighted). (5) Mr. D.K. De Sarkar wrongfully alleged in his letter dated 28-1-2005 that I have failed to substantially establish my objections and thus he is handing over the share certificates to Sri Subhash Singh. Where as the fact is that an E.G.M. was held on 6-1-2005 at the request of the majority shareholders. In the meeting both Sri Subhash Singh and Mr. De Sarkar were present. Sri Subhash Singh left the meeting, in a huff when questions were raised about his actions regarding affairs of the company. However the meeting was continued. It was attended by all the shareholders except three. The minutes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the MOU and without ensuring the full payment and without taking the consent of the Complainant i.e., one of the party of the MOU handed over the shares certificate to the resident Directors. In the opinion of the Committee, the Respondent did not act in a professional manner and it appears that he adopted a biased approach towards the Complainant. Further, the Respondent did not file any final acknowledgement receipt of the money received by him as required by the acknowledgement given by the Complainant's son. Therefore, in the opinion of the Committee the Respondent was guilty of professional misconduct falling within the meaning of Clause 7 of Part 1 of Second Schedule to the Chartered Accountants Act, 1949 under this charge. 13.7 In respect of charges No. 4 5, that the Respondent handed over the share certificate to Shri Subhash Singh, the Committee noted that on the basis of documents placed on record and also agreed to by the Respondent, the Respondent had handed over the share certificate to the other Director, Shri Subhash Singh even on non-acceptance of money by the Complainant. Therefore, in the opinion of the Committee, the Respondent had failed to comply with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. [2010] 7 SCC 1; 2. Institute of Chartered Financial Analysts of India v. Council of Institute of Chartered Accountants of India AIR 2007 SC 2091; 3. Siddeshwari Cotton Mills (P.) Ltd. v. Union of India AIR 1989 SC 1019; 4. Chief Controller of Exports, New Delhi v. G.P. Acharya AIR 1964 Cal. 178; 5. Sunderdas Thakersey Bros. v. P.K. Mukherji AIR 1966 Cal. 468; 6. S. Ganesan v. A.K. Joscelyne AIR 1957 Cal. 33; 7. Union of India by the Deptt. of Company; Law Administration, Ministry of Commerce Industry v. R.N. Rajam Iyer AIR 1964 Mad. 398. 7. Therefore, the only question that falls for determination in this Reference is whether in this case, the respondent can be held to be guilty of professional misconduct within the meaning of Clause 7 of Part 1 of Second Schedule to the Chartered Accountants Act, 1949 read with section 21(5) of the Act as charged by the Council. 8. In order to appreciate the above question, it will be profitable to refer to the provisions contained in sections 21 and 22 of the Act and the Schedules annexed thereto which are quoted below: "21. Procedure in inquiries relating to misconduct of members of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of being heard, and may thereafter make any of the following orders, namely:- ( a )direct that the proceedings be filled, or dismiss the complaint, as the case may be; ( b )reprimand the member; ( c )remove him from membership of the Institute either permanently or for such period as the High Court thinks fit; ( d )refer the case to the Council for further inquiry and report. (7)Where it appears to the High Court that the transfer of any case pending before it to another High Court, will promote the ends of justice or tend to the general convenience of the parties, it may so transfer the case, subject to such conditions, if any, at it thinks fit to impose, and the High Court to which such case is transferred shall deal with it as if the case had been forwarded to it by the Council. Explanation I. In this section "High Court" means the highest civil court of appeal, not including the Supreme Court, exercising jurisdiction in the area in which the person whose conduct is being inquired into carries on business, or has his principal place of business at the commencement of the inquiry: Provided that where the cases relating to two or more members of the Instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits of the professional work of a lawyer, auctioneer, broker or other agent who is not a member of the Institute; (4)enters into partnership with any person other than a chartered accountant in practice or a person resident without India who but for his residence abroad would be entitled to be registered as a member under clause ( v ) of sub-section (1) of section 4 or whose qualifications are recognised by the Central Government or the Council for the purpose of permitting such partnerships, provided that the chartered accountant shares in the fees or profits of the business of the partnership both within and without India; (5)secures, either through the services of a person not qualified to be his partner or by means which are not open to a chartered accountant, any professional business; (6)solicits clients or professional work either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means; (7)advertises his professional attainments or services, or uses any designation or expressions other than chartered accountant on professional documents, visiting cards, letter heads or sign boards, unless it be a degree of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of his employment except as and when required by law or except as permitted by the employer. PART III Professional misconduct in relation to members of the Institute generally A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he (1)includes in any statement, return or form to be submitted to the Council any particulars knowing them to be false; (2)not being a fellow styles himself as a fellow; (3)does not supply the information called for, or does not comply with the requirements asked for, by the Council or any of its Committees. SCHEDULE 2 [See Sections 21(5) and 22] PART I Professional misconduct in relation to chartered accountants in practice requiring action by a High Court A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he (1)discloses information acquired in the course of his professional engagement to any person other than his client, without the consent of his client or otherwise than as required by any law for the time being in force; (2)certifies or submits in his name or in the name of his firm a report of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to hold the respondent guilty under the aforesaid charge, it must be established that the alleged act or omission on the part of the respondent relates to his professional duty as a Chartered Accountant. In the case before us, he was made an arbitrator or mediator by the parties and the duty cast upon him as such arbitrator could be done by any person and it is not necessary that only a Chartered Accountant can do such duties. 10. It is true that the respondent was an auditor of the company with which the parties were connected and for acting as such auditor, the parties had confidence in him and that was probably the reason for making him the arbitrator. In such circumstances, even if we accept the contention of Mr. Basu, the learned Advocate appearing on behalf of the Council, that he did not act fairly as such arbitrator, in our opinion, such betrayal of confidence reposed in him did not come with the purview of professional misconduct. The duties conferred upon the respondent by virtue of the agreement between the parties were not the duties of a Chartered Accountant and thus, in this case, by no stretch of imagination the alleged act or omission could be brought within t ..... 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