AA deletes Order holding CS Guilty of Misconduct since No Opportunity given on Question of Quantum of Punishment [Read Order]

Company Secretary - Misconduct-

Order holding CS guilty of misconduct set aside as no opportunity was provided on the question of quantum of punishment irrespective of admission of guilt.

Disciplinary proceedings were initiated against the Company Secretary, i.e, Ms. Gayathri Pasarakayala on a complaint lodged by the complainant wherein it was alleged that three Secretarial Compliance Certificates were issued by her on a single day, i.e., 12th December, 2013 for the three previous Financial Years i.e., 2010-11, 2011-12 and 2012-13 to Hyderabad Pollution Controls Limited, Hyderabad which is a violation of Article (40) of the Articles of Association of the said Company in respect of the quorum for Board Meetings and in violation of Companies Act, 1956 in respect of the quorum prescribed for any AGM for a public limited company and thus the complainant stated that she is guilty of Professional Misconduct.

After investigation, the disciplinary committee of the ICAI imposed a fine of Rs. 35,000/- and removal of her from the Register for 60 days.

The appellant submitted that she had admitted her guilt after receipt of an advice from the Members of Disciplinary Committee to plead guilty so as to get rid of proceedings in this matter further under impression that she will be awarded only lighter monitory punishment. However, there is nothing on record which reveals that she was advised by any of the Members of the Disciplinary Committee to plead guilty so as to get rid of proceedings further.

Considering the above contentions, the Appellate Authority observed that it is clear that the Disciplinary Committee has not followed the due procedure as prescribed statutorily as no opportunity of being heard was provided to Ms. Gayathri Pasarakayala on the question of quantum of punishment irrespective of her admission of guilt conveyed vide her aforementioned letter dated 4th June, 2017 (sic).

“Further, the provisions of the Act as well as Rules do not empower the Disciplinary Committee to dispense with the mandatory requirements of providing an opportunity of being heard on account of quantum of punishment on the ground of saving effort and cost of the respondent in the Disciplinary proceedings,” the AA said.

“Thus, in view of the above, we are of the considered view that this matter requires to be remanded back to the Disciplinary Committee of the Institute of Company Secretaries of India with the directions to hear both the parties afresh on account of guilt as well as in respect of quantum of punishment in accordance with the applicable provisions of the Company Secretaries Act, 1985 and the Company Secretaries (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 and pass a fresh order in the matter within 60 days from the date of receipt of this Order,” it said.

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