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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 ..... espondent revealed nothing of substance pertaining to the basis of material on which the certificates were issued by him. The certificates simply stated that the certificates were issued on the specific request of the firm. On being asked to produce documents regarding statements of expenditure incurred by the accused firms, invoices/vouchers for purchase of plant and machinery for civil work and land development etc., Respondent was unable to produce any document. The Committee has recorded its findings on the basis of the inability of Respondent to provide any material on the basis of which he satisfied himself as to the genuineness of accused firms and the valuation of their properties sufficient enough to justify issuing as many as 11 certificates used by the accused firms to avail credit facilities. The Committee has also recorded its view that Respondent failed to perform due diligence before issuing certificate and he was unable to co-relate any document/papers with the certification/valuation done by him. The Committee thus held Respondent guilty of professional misconduct on the basis of issuance of a large number of certificates at regular intervals, issued as and whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inant ) informing the Institute that Respondent had assisted various companies in availing credit facilities of huge amounts from various banks by issuing false documents certifying valuation of work undertaken and completed by the accused companies. Complainant also alleged that Respondent had also certified 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling within the meaning of Clauses 7 and 8 of Part-I of Second Schedule read with Sections 21 and 22 of the Act. Accordingly, the Council decided to recommend to the High Court that Respondent be reprimanded. Hence, the present Reference arises for our consideration. 5. Mr. Prerak Choudhary, learned Counsel appeared 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in Clause (a) or Clause (b), but shall forward the case to the High Court with its recommendations thereon. (5) Where the misconduct in respect of which the Council has found any member of the Institute guilty is misconduct other than any such misconduct as is referred to in Sub-section (4), it shall forward the case to the High 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent revealed nothing of substance pertaining to the basis of material on which the certificates were issued by him. The certificates simply stated that the certificates were issued on the specific request of the firm. On being asked to produce documents regarding statements of expenditure incurred by the accused firms, invoices/vouchers for purchase of plant and machinery for civil work and land 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 fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as his evidence pleading guilty of committing the indiscretion as alleged by Complainant. His statement to the Committee reads thus, Respondent: Sir, during 1999 to 2003, I was having family problem. Since I have already pleaded guilty therefore under the circumstances according to me under some kind of stress on that particular point in time I have committed this misconduct. Therefore, I 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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