Negligence in filing Form-32 on the part of Company Secretary constitute Misconduct: AA [Read Order]

Company Secretary

While upholding an order by the Disciplinary Committee of the Institute of Company Secretaries of India (ICSI), the Appellate Authority held that professional misconduct can be alleged against a Company Secretary for negligence in filing Form-32.

The Appellant was practicing as a Company Secretary for M/s. Khosla Steel Industries Private Ltd. the allegation against the appellant was that in a Form-32, signed by Mr. Kishor Khosla, a Director of the Company and verified by the Appellant, wherein, the appointment of one Mr. Bishendra Singh was shown as a Director under the category of ‘Promoter’ and not as Additional Director. A complaint was lodged against the appellant on the ground that while working as Company Secretary for the company, he did not exercise due diligence in verifying and certifying Form-32 on certain occasions.

After enquiry, the Disciplinary Committee found that the appellant has committed professional misconduct as he was guilty of negligence.

The Appellate Authority noted that the Disciplinary Committee after the remand of the matter has gone through the entire controversy in detail, given cogent reasons in holding that the Appellant was Guilty of Professional Misconduct under item (7) of Part-I of the Second Schedule of the Act in as much as he did not exercise due diligence while certifying the two Forms-32 on both the occasions and as such he was grossly negligent in the conduct of his professional duties.

Diving deeply into the facts of the case, the AA found that in the present case, it has been clearly held that the Appellant was negligent in filing Form-32 on both the occasions and failed to exercise diligence required on his part.

The Appellate Authority was of the view that it is not a case where the professional i.e. the Appellant was expected to act as an investigator. “What was required for him was to only see the contents of the resolution passed and relied upon in support of Form-32 himself and in case, it was shown to him in minute books, than he should have been very categorical as to who was in possession of minute books shown to him containing the resolutions in question. However, in this regard, no assistance has been provided to us,” the AA said.

“As stated above, we are of the considered view that in the present case, the Disciplinary Committee after the remand of the matter has gone through the entire controversy in detail, given cogent reasons in holding that the Appellant was Guilty of Professional Misconduct under item (7) of Part-I of the Second Schedule of the Act in as much as he did not exercise due diligence while certifying the two Forms-32 on both the occasions and as such he was grossly negligent in the conduct of his professional duties. We accordingly dismiss the appeal while maintaining the order of sentence as awarded by the Disciplinary Committee in this case, which according to us is not excessive in any manner.”

**This story has been earlier published with a Title that “Company Secretary cannot be punished for Misconduct for Mere Negligence in filing Form-32: AA”. Editorial Team apologizes for the error.

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