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TMI Blog2023 (12) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1/ICAI that the Audit in question was carried by CA Vijay Kumar Lalla who passed away on 18.11.2017. In terms of Rule 8(2) a member whose name is disclosed by the firm shall be responsible for answering the complaint. Name of CA Vijay Kumar Lalla was disclosed by the Respondent No. 2/Firm. CA Vijay Kumar Lalla was associated as a partner with the Respondent No. 2/Firm at the time of occurrence of the alleged misconduct. It is not the case of the Petitioner that no one has owned the responsibility for the allegations made against the firm and therefore, in absence of such responsibility the disciplinary proceedings can be initiated against Chartered Accountant firm. In the present case, the Respondent No. 2/Firm has disclosed the name of CA Vijay Kumar Lalla, who conducted the Audit of Respondent No. 3/IIC. The complaint was filed by the Petitioner after three years of the report of Audit and by the time the said CA Vijay Kumar Lalla had passed away. It is well settled that disciplinary proceedings cannot continue after the death of the concerned person. Thus, it cannot be said that the Respondent No. 2/Firm has whittled away from its responsibility and the Respondent No. 1/ICAI i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od 01.10.2014 to 30.04.2017, Respondent No. 2/Firm was appointed by the Respondent No. 3/Society. e) It is stated that Respondent No. 2 appointed one Mr. Vijay Lalla, who was the partner of Respondent No. 2/Firm, to conduct the said Audit based on the information provided by the Respondent No. 3/IIC. f) Special Audit Report dated 08.09.2017 was released by Respondent No. 2/Firm wherein it was disclosed that the allotment of membership was done in a highly irregular manner and in certain cases even without taking proper approvals of the sanctioning authority. It is further stated in the Report that Rules laid down by the Board of Trustees in relation to the ceiling placed on maximum number of STAM members at any given point of time have been violated while allotting membership. While the Audit report highlights certain irregularities in the allotment of Regular Membership and STAM by Respondent No. 3/IIC however, no specific individual has been named in the said report. g) It is stated that on the basis of the Audit Report, Respondent No. 3/IIC suspended the Petitioner herein on 08.10.2017. On 09.10.2017, the Petitioner herein resigned from the service. h) It is stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm as a whole shall be responsible for answering the allegation or allegations, and all the members who were partners or employees of that firm, as on the date of occurrence of the alleged misconduct, shall be responsible for answering the allegation or allegations as contained in the complaint. He, therefore, states that in view of the said Rule in the absence of any member of a firm taking responsibility for the allegations, the firm as a whole and its members are responsible for answering the allegations as contained in the complaint. He further states that in view of the abovementioned rule it is the duty of the remaining members of the Respondent No. 2/Firm answer the allegations. He states that the Respondent No. 2/Firm is required to answer the allegations as contained in the complaint. He further states that upon coming to know about the demise of Mr. Vijay Kumar Lalla, who conducted the Special Audit of Respondent No. 3/IIC, the Respondent No. 1/ICAI should have asked the existing members of the Respondent No. 2/firm to answer the allegations contained in the complaint. He further states that a perusal of the letter dated 16.08.2017 issued by the Respondent No. 3/IIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho was the partner in Respondent No. 2/Firm and who conducted the Special Audit of Respondent No. 3/IIC, passed away and the factum of his death was informed to the Respondent No. 1/ICAI vide letter dated 30.12.2017. He further states that the name of Mr. Vijay Lalla was removed from the list of partnership firms by Respondent No. 1 on 19.11.2017. He states that nearly three years later, the Petitioner filed a complaint before the CAG seeking blacklisting of Respondent No. 2 and making the Audit Report dated 08.09.2017 null and void. He states that in view of the fact that the name of Mr. Vijay Lalla has been removed from the list of partnership firms by Respondent No. 1, the decision of Respondent No. 1/ICAI in closing the complaint, does not require any interference from this Court. 6. Heard the Counsels and perused the material on record. 7. At this juncture it is imperative to reproduce Section 2(b), Section 2(ca), Section 3, Sections 21A(3) and 21B(3) of the Chartered Accountants Act, 1949 and the same reads as under: " 2(b) "chartered accountant" means a person who is a member of the Institute ***** 2(ca) "firm" shall have the meaning assigned to it in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the death of Mr. Vijay Kumar Lalla would not come in the way of the complaint and the same ought not to have been closed as having become infructuous, cannot be accepted. Further, as defined under Section 2(ca) of the Chartered Accountants Act, 1949, firms are not members of the ICAI and disciplinary Proceedings can only be initiated against the members of the ICAI and as per Sections 21A(3) and 21B(3) of the Act if a member is found guilty of professional misconduct he/she may either be reprimanded, his name be removed from the register of members or be imposed with fine. Therefore, it can be said that the Act does not contemplate or provide for disciplinary proceedings against firms but only against members whose name are borne in the Register of members and, therefore, the contention of the Petitioner that disciplinary proceedings can continue against Respondent No. 2/Firm even after the death of Mr. Vijay Kumar Lalla, who conducted the Special Audit of Respondent No. 3/ICC, cannot be accepted. 9. It is well settled that disciplinary proceedings are in personam and the same would become infructuous on the death of the member. In the absence of any provision in law, partner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 to contend that disciplinary proceedings can be initiated against Chartered Accountant firms. Rule 8 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 reads as under: "8. Procedure to be followed by Director on a complaint (1) The Director or an officer or officers authorized by the Director, within sixty days of the receipt of a complaint under rule 3, shall, − (a) if the complaint is against an individual member, send particulars of the acts of commission or omission alleged or a copy of the complaint, as the case may be, to that member at his professional address; (b) if the complaint is against a firm, send particulars of the acts of commission or omission alleged or a copy of the complaint, as the case may be, to the firm at the address of its head office, as entered last in the Register of Offices and Firms maintained by the Institute, with a notice calling upon the firm to disclose the name or names of the member or members concerned and to send particulars of acts of commission or omission or a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any third party or parties, as he may consider appropriate: Provided that if no reply is sent by the respondent within the time allowed under sub-rule (3) or by the complainant within the time allowed under sub-rule (4), the Director shall presume that the respondent or the complainant, as the case may be, have nothing further to state and take further action as provided under this Chapter." 11. A perusal of the above rules shows that that Rule 8 provides for the procedure to be followed by the Director on receiving a complaint. Under Rule 8(1)(b) of the Rules, Director of the Institute has to send a copy of the complaint to the firm calling upon the firm to disclose the name or names of the member or members concerned. In terms of the said Rules, on receiving the complaint of the Petitioner the Respondent No. 1/ICAI vide letter dated 17.08.2020 called upon Respondent No. 2 firm to disclose the name of the member answerable to the complaint and Respondent No. 2 by its letter dated 27.08.2020 informed Respondent No. 1/ICAI that the Audit in question was carried by CA Vijay Kumar Lalla who passed away on 18.11.2017. In terms of Rule 8(2) a member whose name is disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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