Inordinate Delay of 19 years for professional Misconduct Proceedings by ICAI Council: Bombay HC quashes Removal of CA [Read Order]

The Bombay High Court has quashed the removal of Chartered Accountants (CA) as there was an inordinate delay of 19 years for professional misconduct proceedings by the council of Institute of Chartered Accountants of India (ICAI).

The ICAI, the petitioner under the provisions of Section 21(v) read with Section 22 of the Chartered Accountants Act, 1949 (pre-amended as applicable to the present case) filed a petition against Respondent, the Chartered Accountant concerned.

The Institute received a complaint from one Bhuvnesh Chandra, Mumbai (“Complainant”) the Director of M/s. Twincity Glass Pvt. Ltd. (“the Company”) made certain allegations against Respondent more particularly that Respondent used to calculate the sales tax liability and collect money from the Company to deposit in the authorized bank and used to send to the Company the photocopies of the original payment challan.

Respondent is further alleged to have collected account payee cheques for making payment of sales tax dues which he misappropriated by depositing in his bank account. The alleged incident has taken place during the period 1992-1994.

Upon receipt of the complaint, the Institute called upon Respondent to send his response and by a written statement dated 16th December 2004, Respondent defended himself firstly by denying every allegation against him and referring to the complaint as sweeping, reckless and containing unsubstantiated allegations.

The Council of the Institute (“Council”) prima facie, found Respondent guilty of professional misconduct and/or other misconduct and accordingly referred the case to Disciplinary Committee (“Committee”) constituted under the Chartered Accountants Act, 1949 (“the Act”).

The Committee held various meetings and concluded the hearing on 1st August 2008. A report was submitted to the Council holding Respondent guilty for ‘other misconduct’ falling within the meaning of Section 22 read with Section 21 of the Act. The Council in its meeting held in November 2010, upon consideration of the Committee’s report along with Respondent’s written representations dated 29th August 2009 and 8th March 2010, remanded the matter to the Committee for an enquiry de novo.

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. Section 21 of the Act prescribes the procedure to be followed for an inquiry relating to the misconduct of the members of the Institute. Section 22-A provides for the filing of an appeal by a member against the imposition of a penalty. The Act was amended on 8th August 2006 by Act 9 of 2006.

It was found by the court that firstly the complaint itself was made after 10-12 years of the incident having taken place. Thereafter, it took the Council as many as 14 years to complete the procedure prescribed under the Act and reach a finding of guilt of Respondent. Another almost two years were spent in the process of filing the Reference and finally, about four more years were spent in removing office objections to get the Reference registered. Thus, the Council has prolonged the procedure for as many as 19 years and kept the Respondent in the dock for the entire period.

A division bench comprising Justice K R Shriram & Justice Dr Neela Gokhale observed that the long-drawn disciplinary proceedings themselves suggest the lack of seriousness on the part of the Institute to take the procedure against Respondent to its logical conclusion. Respondent is presently 77 years of age and safe and except for five years for which he had surrendered his certificate of practice, he has been professionally active and no other complaint is found to have been made against him.

In the present case, no explanation is offered by the Institute for the inordinate delay of as many as 19 years. Respondent has inasmuch suffered the agony of the sword of Damocles hanging over his head for so many years.

It was held that “even the Council has merely reproduced the report of the Committee without giving its independent findings. There is neither any analysis by the Council nor any justification recorded to explain the quantum of punishment recommended to this Court.”

The Court held that the view of the Council is wholly untenable and there is no need to take any further action against Respondent. The Court directed the proceedings to be filed by the Institute.

To Read the full text of the Order CLICK HERE

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