ORDER Arijit Pasayat, C.J.
1. This is a reference under Section 21(5) of the Chartered Accountants Act, 1949 (in short, the 'Act') by the Institute of Chartered Accountants of India (in short, the Institute').
2. Background in which reference has been made is essentially as follows:-
A complaint was made by the Joint Chief Controller, Imports and Ex- ports, New Delhi (hereinafter referred to be complainant) alleging that the certificate issued by Shri S.K.Jain (hereinafter referred to be respondent) was erroneous and he had issued the certificate without proper verification of books of accounts. M/s. Subramanian & Company had furnished a Statement of Export of leather goods including those of other manufacturers for the years 1976-77 and 1977-78, which were certified by the respondent along with their letter dated 05.12.1979. On the basis of Export Statement, the Export House Certificate was issued to M/s Subramanian & Company on 04.01.1980. The respondent had certified that he had checked and verified the particulars of exports from the books/documents of the firm and found them to be correct. When the complainant wrote a letter to said concern to produce, inter alia, the original evidence for the purchase of finished leather/leather goods from other units, the reply was that it had not purchased any finished leather/goods from any other party and denied having exported finished goods manufactured by other units. The complainant made a grievance to the Institute that the respondent had not checked the ac- counts/documents and had issued the certificate without verifying the books of accounts. Moreover, he did not have any contact with the M/s. Subramani- an & Company. It was found unusual that the firm had their auditors in Madras, yet engaged respondent, who was stationed at Delhi. In accordance with Regulation 11 (5) of the Chartered Accountants Regulations, 1964 (in short, 'Regulations'), Institute forwarded a copy of the complaint to M/s Sushil K.Jain & Co., with a request to disclose to the Council of the Institute name of the member answerable to the charge of misconduct and also to send a copy of the complaint to the said member with a request to submit written statement, if any, under Regulation 11 (6). Respondent was indicated to be the member answerable, and he submitted his written state- ment. The respondent in his reply stated that he was retained by M/s Archa- na Associates, the Consultants of M/s. Subramanian & Company, to verify the Export Statements from the records produced by it, and he had certified the facts accordingly. M/s Subramanian & Company had exported the finished leather goods of value specifically shown in their Export Statement dated 25.07.1979 and goods were partially manufactured by them and part of it was got finished by them on job basis by certain manufacturers. The certificate issued was correct and complete and was based on the basis of the documents produced by the concerned parties. The statements signed by him were not financial statements. Disciplinary Committee of the Institute held that the export policy, which was prevalent at the relevant point of time required that 20% of the total exports goods should be manufactured by others to get Export House Benefits and the only dispute was that the figures were not correct because M/s. Subramanian & Company had not been able to show any export of the goods manufactured by others. Accordingly, Disciplinary Committee was of the view that the respondent was guilty of professional misconduct under Section 21 read with Section 22 of the Act and under Clauses 5, 6 and 7 of Part I of the 2nd Schedule of the Act.
3. On receipt of the reports from the Disciplinary Committee by the Council, it was sent to the complainant and the respondent, who were asked to submit their representations, if any, in the matter. Two representations were submitted by the respondent on 30.03.1987 and 02.04.1987 respectively. On hearing the parties and on consideration of the representations, Council was of the view that the respondent was grossly negligent and thus guilty under Clause 7 of the Part I of the 2nd Schedule of the Act. It recommended that the respondent be reprimanded. Reference has been made as afore-stated for views of this Court.
4. We have heard the learned counsel for the Institute and the learned counsel for the respondent. It was submitted by the learned counsel for the Institute that the factual findings as analysed and recorded in detail by the Council shows that the respondent has not even verified the books of accounts and was also not aware of the purpose for which the certificate was being issued. Therefore, the certificate was issued without proper verification, thereby constituting a grossly negligent act, and has been rightly found guilty. The recommendation is also stated to be in order. Learned counsel for the respondent, on the other hand, submitted that the requisite books of accounts have been verified and there was nothing on record to show that without verification of records, the Certificates had been issued.
5. In order to appreciate rival submissions, it is necessary to take note of the examination of the respondent by the Disciplinary Committee. The respondent admitted not to have known the policy, which was prevalent at the relevant point of time. Even there is an admission to the effect that it had not verified as to whether some of the units, he had certified as cottage industries to be really so. To a pointed query made by the Presi- dent as to for what purpose the certificate was issued, the respondent stated that they related to the purchase of raw skins; that the position of the parties had been indicated and the party who sought for the certificate had asked him to simply sign the statement and he was not aware of the policy. To another query made by the President as to why he had not put any date on the certificate, he could not give any reply except saying that he cannot tell as to why he had not put the dates. He also stated that he has not indicated as to what goods were exported. Similarly in response to a particular query as to whether he checked the books of accounts, reply was that he could not say what books were shown to him. Another interesting feature is that respondent stated to have verified books of accounts writ- ten in English, when M/s. Subramanian & Co. stated that its books of ac- counts were maintained in Tamil language. Respondent was asked as to how two different figures appeared (i.e. Rs.1,82,886/- and Rs.17,34,258/-) in the copy submitted to complainant and one produced by Mr.Sundaram. He gave an evasive and vague reply stating that he checked the parties only.
6. "Professional misconduct" has been defined in Section 22 of the Act. Intendment and object of the Act is to maintain standard of the profession at a high level, and consequently a code of conduct has been prescribed. Misconduct implies failure to act honestly and reasonable either according to the ordinary and normal standard, or according to the standard of a particular profession. Authenticity and sanctity is attached to certifica- tion done by a Chartered Accountant. Hallmark of the profession is the expertise possessed by its members, in the matters of accountancy and auditing amongst others. Correctness is a matter of rule in a certificate issued by a Chartered Accountant. He is supposed to have tested correctness of the figures certified. If he puts his signature, without proper verifi- cation, in any certificate, it certainly is a serious matter. Such conduct does not befit a Chartered Accountant, and is unbecoming of him. In such a case, he fails to do what is the minimum required to be done by him. He does something in the pursuit of his profession which is not only unethi- cal, but also disgraceful or dishonourable.
Above being a position, we are of the view that respondent has been rightly found to be guilty of gross negligence.
7. Recommendation of reprimand cannot be said to be unreasonable. We accept the recommendation.
8. The reference stands disposed of accordingly.