9911796707
Advanced Search 
TMI Blog2023 (10) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... of N.H. Securities Ltd. for years 1997-98 and 1998-99 did not disclose the purchase and sales of shares and securities made and the opening and closing stock giving break up of shares and securities traded in by the company and also indicating the quantities thereof as required under Section 211 read with Schedule VI, Part II 3(ii)(2) of the Companies Act in case of a trading company. Respondent - Rajiv Khandelwal was the concerned partner of the audit firm M/s. Falod and Khandelwal, had not qualified the reports. It was only this charge that respondent was called upon by the Council to answer under Regulations 12 (7) read with Regulations 13 of the Chartered Accountants Regulations, 1988. 3. Based on this information, as the Council was prima facie satisfied that there was alleged misconduct under Clauses (7), (8) and (9) of Part I of the Second Schedule to the Act, the Disciplinary Committee was constituted under Section 21 of the Act. Three members, viz., one Mr. T.N. Manoharan, (Vice President of the Institute of Chartered Accountants of India) (the Institute), Mr. Manoj Fadnis and one Mr. G. Ramaswamy were the members who formed the Disciplinary Committee. The Disciplinary Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Though the Department of Company Affairs did not raise any grievance, upon going through further documents received from the Ministry further charges have been framed. In our view, as the remaining charges did not form part of the information/complaint received from the Ministry of Corporate affairs, there is nothing to indicate how the scope of inquiry could be expanded to include those charges. Respondent was also called upon to reply under Regulations 12 (7) read with Regulations 13 only with regard to the first charge. Therefore, in our view, the entire complaint should have been closed. Instead the Disciplinary Committee has exceeded the brief and proceeded to frame 9 more charges. The Disciplinary Committee, we have to note has been appointed only to look into the information received and could not have gone beyond the scope of their appointment. 7. Moreover, if we consider discussion in the Disciplinary Committee report on charges no. 2 and 4 as noted above, it says in the opening Paragraph No. 10.1 (and that is the entire basis) as under : 10.1 The charge against the Respondent is that the inspection conducted by the Ministry of Company Affairs revealed that none of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties and has failed to obtain sufficient information to warrant the expression of an opinion. The report does not explain why respondent was "grossly" negligent and why he was not just negligent assuming he was. The report also does not explain what according to them was further information that respondent should have taken to form his opinion. It is a professional matter where one professional may form an opinion after receiving certain information where as another professional may ask for further details to form an opinion. 11. Coming to the recommendations by the Council, in the extract of the minutes of meeting annexed to the reference, it states none of the members of the Disciplinary Committee participated. Mr. T.N. Manoharan was no longer a member of the Council and the other two members Mr. Manoj Fadnis and Mr. G. Ramaswamy were not present at the time of consideration of the report. The Council as it appears from its findings dated 6th November 2008, has accepted the report of the Disciplinary Committee as it was submitted. The Council states because respondent was unable to substantiate from his working papers as to how he satisfied himself while carrying out the audit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be. (3) If on receipt of such report the Council finds that the member of the Institute is guilty of any professional or other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding subsections. (4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in the First Schedule, the Council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely : (a) reprimand the member; (b) remove the name of the member from the Register for such period, not exceeding five years, as the Council thinks fit : Provided that where it appears to the Council that the case is one in which the name of the member ought to be removed from the Register for a period exceeding five years or permanently, it shall not make any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) or (b) of sub section (4) of section, the complainant and the respondent shall be informed accordingly. 15. Procedure in a hearing before the Council. (1) If the Council, in view of its findings, is of opinion that there is a case for passing one of the orders specified in clauses (a) or (b) of subsection (4) of Section 21, is shall- (a) furnish to the respondent a copy of the report of the Disciplinary Committee and a copy of its findings: and (b) give him a notice indicating the order proposed to be passed against him and calling upon him to appear before it on a specified date or if he does not wish to be heard in person, to send within a specified time, such representation in writing as he may wish to make against the proposed order. (2) The scope of the hearing or of the representation in writing, as the case may be, shall be restricted to the order proposed to be passed. (3) The Council shall, after hearing the respondent, if he appears in person, or after considering the representation, if any, made by him, pass such orders as it may think fit. (4) The orders passed by the Council shall be communicated to the complainant and the respondent." 15. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
