ICAI holds CA Not Guilty in alleged ₹15 Cr Bank Loan Fraud Case, attendance in Bank Meetings not Sufficient Proof [Read Notification]
Mere presence, without evidence of active participation in forgery, misrepresentation, or fund diversion, does not constitute professional misconduct.
The Institute of Chartered Accountants of India ( ICAI ) has absolved Chartered Accountant in a disciplinary case arising out of an alleged ₹15 crore bank loan fraud investigated by the Central Bureau of Investigation (CBI).
The Board of Discipline (BoD) held that mere attendance at meetings with bank officials, without any corroborative evidence of involvement in forgery, misrepresentation or diversion of funds, is insufficient to establish professional misconduct under the Chartered Accountants Act, 1949.
The CBI filed a complaint against CA Ankur Gupta before the ICAI disciplinary board after an investigation into the sanction and disbursement of a ₹15 crore loan by the Central Bank of India to M/s V.S. International.
The department alleged that promoters of M/s Adigear International and a bank official fraudulently secured a loan by floating a new firm, M/s V.S. International. The loan later became a non-performing asset (NPA).
The Respondent CA, an employee, was charge-sheeted for his alleged involvement. He was accused of using forged documents to form the new entity, fabricating financial statements, misrepresenting factory premises to secure multi-bank credit, and siphoning loan funds.
Based on these allegations, the Director (Discipline) formed a prima facie opinion holding the CA guilty of “Other Misconduct” under the Chartered Accountants Act.
During the Board of Discipline proceedings, the Respondent CA denied all allegations. He argued his role at company was limited to routine accounting and he had no involvement in sanctioning or disbursing the loan. He neither signed nor verified any related documents. Furthermore, he was not named in the initial bank complaint or CBI FIR.
The CA challenged the evidence, stating it relied on Section 161 CrPC statements from co-accused, which lack substantive value without independent corroboration.
The Board of Discipline found that the Respondent, who resigned from M/s Adigear International in February 2013, merely assisted in filing forms and did not prepare or forge any of the disputed loan documents.
Although the complainant stated his attendance at three bank meetings, the Board noted these occurred only after the loan was already sanctioned and disbursed and in some cases, even after his resignation from the firm.
The Board concluded that the Respondent's attendance at three bank meetings did not prove mala fide intent or complicity in the alleged fraud. Mere presence, without evidence of active participation in forgery, misrepresentation, or fund diversion, does not constitute professional misconduct.
The ICAI board stated that mere suspicion cannot take the place of genuine proof, noting the Bombay High Court's decision in ICAI v. H.S. Ghia. Disciplinary actions against chartered accountants require a higher burden of proof because they are quasi-criminal in nature.
Since no direct evidence linked the respondent to the alleged fraud, the Board found the CA not guilty of "Other Misconduct" under the Chartered Accountants Act, and closed the disciplinary proceedings.
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