The Institute of Chartered Accountants of India ( ICAI ) found the Chartered Accountant ( CA ) guilty of professional misconduct for failing to exercise due diligence and also failed to check that other directors were not eligible to sign the e-forms as they were disqualified directors. The institute reprimands CA with a Fine of Rs. 30,000.
The complaint, filed by the Promoter and Director of the company, alleged misconduct concerning the certification of various documents, including Form DIR-12 for appointments and resignations within the company.
The complaint outlined that Mr. Khan allegedly stole the complainant’s Digital Signature certificate, leading to its misuse in certifying several crucial documents. Specifically, it was highlighted that Mr. Khan certified appointments of directors, Mr. Adil Khan and Mr. Shamim Akhtar Khan, without due diligence and misusing the complainant’s digital signature. The Director (Discipline) found Mr. Khan prima facie guilty on multiple charges.
One charge related to the certification of DIR-12 regarding Mr. Adil Khan’s appointment. Despite the complainant’s resignation being accepted in March 2018, Mr. Khan certified the appointment in June 2018, raising questions about the validity of the process. The Committee observed that Mr. Khan failed to exercise due diligence and verify the eligibility of signatories, leading to a verdict of professional misconduct.
Another charge focused on the certification of DIR-12 concerning the complainant’s resignation. Despite claims of thorough verification, Mr. Khan’s defence lacked crucial evidence, including an email supposedly containing the resignation letter. The Committee deemed Mr. Khan’s actions as lacking requisite due diligence, resulting in another finding of professional misconduct.
The ICAI disciplinary Committee noted the interrelated nature of the charges against the Respondent, emphasising that the first charge, involving the misuse of the Complainant’s digital signature for director appointments, hinges on the second charge, which pertains to certifying the Complainant’s resignation. The Committee opted to address the second charge first.
During the proceedings, the Respondent-CA claimed to have meticulously checked relevant documents before certifying the resignation form. However, crucial evidence, such as an email containing the resignation letter, was not provided. Despite the Respondent’s explanations regarding his former association and deactivated email, the Committee found his defence lacking in substantiation.
Subsequently, the Disciplinary Committee found the Respondent-CA guilty of professional misconduct concerning the second charge. Moving to the first charge, the Committee noted discrepancies in the certification process of appointments, particularly regarding the use of the Complainant’s digital signature after his resignation. The Committee determined that the Respondent failed to exercise due diligence in this certification, further compounded by the absence of crucial documents and evidence.
The Committee, upon consideration of documents and submissions on record, noted that the Respondent-CA while certifying the e-forms, failed to exercise due diligence and also failed to check that other directors were not eligible to sign the e-forms as they were disqualified directors.
Furthermore, the respondent-CA did not produce any document in his defence. Accordingly, the Respondent is held Guilty with respect to the above charge of professional misconduct falling within the meaning of Item (7) of Part I of Second Schedule to the Chartered Accountants Act, 1949.
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