Delhi HC Confirms Suspension of CA for Manipulating Public Issue of Company, Asks CA Fraternity to Ensure Probity and Sanctity [Read Judgment]

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While confirming the decision of the Institute of Chartered Accountants in India (ICAI) to debar a Chartered Accountant from its roll for one year, a two-judge bench of the Delhi High Court, last day said that the entire CA fraternity should ensure that their probity and sanctity are not compromised in any manner.

A division bench comprising Justices Prathiba M Singh and Sanjiv Khanna was hearing a petition filed by ICAI.

In the instant case, SEBI debarred respondent, a CA for 5 years after holding him guilty of manipulating public issue of Company. SEBI intimated ICAI to proceed against him. On the basis of reports of the SEBI pointing out several irregularities in the public issue of one M/s. Bhartari Financial Services Ltd, the ICAI initiated disciplinary proceedings against its members, S.K Gupta and Ashok Chawla.

After enquiry, the disciplinary committee found them guilty of ‘other misconduct’ under the provisions of the Act. Consequently, the ICAI approached the High Court to finalize the proposal for suspending the respondent from its roll for one year.

Before the Court, the respondent explained that Mr Ashok is only a CA and not it is Mr. Gupta who is the beneficiary of any of the transactions and it is his liability to explain about the irregular allotment.

The Court noted that, as per the report of the SEBI, 80-90 stock invests of Rs.10,000/- each were issued to Mr. Ashok Chawla by Sangli Bank, Karol Bagh after the closing of public issue by BFSL. The respondent had also admitted before SEBI that 7000 shares allotted against these applicants were sold through Mr. Gautam Rohatagi, member of Delhi Stock Exchange. Also, before SEBI, he admitted that he had obtained ante-dated stock invests. Through these irregular investments he earned profit of Rs.40,000/-by conniving with Mr. S. K. Gupta and indulging in ante-dating. He also deprived the general investing public from investing in BFSL.

Confirming the action of the ICAI, Justice Prathiba M singh, who penned the judgment, added that “This Court would like to observe that CAs ought to maintain the highest level of ethics and integrity, not only in the interest of their clients but also to ensure that probity and sanctity are not compromised in any manner as CAs are not merely professionals engaged by their clients, but are protectors and guardians of financial markets on which a nation depends.”

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