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TMI Blog2023 (10) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... d the sales registers and list of supply bills of the accused companies without verifying facts and figures to facilitate loans being sanctioned to the said companies. 2. The Institute called upon Respondent to send his response and by a written statement dated 9th July 2007, Respondent defended himself by referring to the complaint as frivolous, without offering any documentary evidence and even went on to refer to the complaint as being premature on the ground that criminal complaints against the main accused were yet pending before the Criminal Court. He also asserted that the certificates were issued by him after due checking of relevant records and obtaining necessary explanations and verification. Complainant rebutted the written statement by its own rejoinder dated 27th July 2007 and Respondent once again submitted his additional comments on the rejoinder. The Council of the Institute ("Council"), prima facie, found Respondent guilty of professional misconduct and accordingly referred the case to Disciplinary Committee ("Committee") constituted under the Chartered Accountants Act, 1949 ("the Act"). 3. The Committee held various meetings on 7th October 2008, 25th November 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red for Petitioner but Respondent failed to appear, despite service, and put forth any representation. Mr. Choudhary took us through successive reports of the Committee as well as the deposition of Respondent. He also took us through the written statement, written representation of Respondent before the Council as well as the decision of Council. 6. The Institute of Chartered Accountants of India is a statutory body created by an Act of Parliament that is the Chartered Accountants Act, 1949. In accordance with Section 9 of the Act, the management of the affairs of the Institute are vested in the Central Council. The Council performs its function through three different standing committees constituted under Section 17 of the Act and various other committees. One of the standing committees of the Institute is the Disciplinary Committee. The function of the Institute is to regulate the provisions of the Act and it is also empowered to take action against its members for any misconduct as contemplated in the Act and relevant regulations framed thereunder. Section 21 of the Act prescribes the procedure to be followed with regard to an inquiry relating to the misconduct of the members o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court with its recommendations thereon (6) On receipt of any case under sub-section (4) or subsection (5), the High Court shall fix a date for the hearing of the case and shall cause notice of the date so fixed to be given to the member of the Institute concerned, the Council and to the Central Government, and shall afford such member, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders, namely : (a) direct that the proceedings be filed, 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;....." 7. Regulation 13 of the Chartered Accountants Regulations, 1964 ("Regulation") provides for the procedure of an inquiry before the Disciplinary Committee. Regulations 14 and 15 which are relevant for the purpose of this case are as under : "14. Report of the Disciplinary Committee. (1) The Disciplinary committee shall submit its report to the Council. (2) The Council shall consider the report of the Disciplinary Committee and if, in its opinion, a further enquiry is nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d development etc., Respondent was unable to produce any document. On another issue flagged by the Council pertaining to examining employees of the banks, the Committee had summoned as many as 11 witnesses. Respondent had also given names of 11 persons whom he wanted to cross-examine before the Committee. However, none of the witnesses appeared before the Committee. Thirdly, the Committee also enquired from Respondent as to how he had satisfied himself about the existence and valuation of assets as mentioned in the certificates issued by him, but apart from his working papers which also did not contain any basis for arriving at any satisfaction, Respondent failed to establish any cogent justification for the same. 9. It is interesting to note that statements of two partners of accused firm clearly indicated that they were working with one company called M/s. Dinesh Agro Products Limited during the period 1999-2000 and were made partners in another firm called M/s. Mahalaxmi Farms by taking their signatures on forms for opening bank accounts. They were also asked to sign documents for the purpose of availing credit facilities from the Central Bank of India in the name of M/s. Mahal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be pardoned." 11. Mr. Choudhary thus points out that the Committee found Respondent guilty of misconduct on his own admission of guilt and also on other lapses such as working papers and other evidence not indicating satisfaction of Respondent regarding verification of valuation of assets of the accused companies and communicated as such to the Council in its report. The Council upon considering the report and the representation of Respondent, referred the matter to this Court recommending that Respondent be reprimanded. Thus we find that there is no irregularity nor illegality in the procedure followed by the Committee and Council, as laid down in the Act and Rules. 12. It is true that the employees of the banks were not available for cross-examination by Respondent. Respondent had absented himself at the final hearing of the Committee. Respondent has relied on the absence of witnesses for cross-examination and has contested the finding of Committee at the same time admitting omissions committed by him and his failure to comply with the due diligence, which he ought to have done while issuing the certificates. On perusal of the committee report and the deposition of Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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