Delhi High Court

Council Of The Institute Of ... vs A.P. Gupta on 4 September, 2000

Equivalent citations: 2001 113 TAXMAN 224 Delhi

Author: A Pasayat

JUDGMENT

Arijit Pasayat, C.J.

This is a reference under section 21(5) of the Chartered Accountants Act, 1949 (hereinafter referred to as `the Act') by the Institute of Chartered Accountants of India (hereinafter referred to as `the Institute') alleging that A.P. Gupta, (hereinafter referred to as `the respondent') had violated and contravened the provisions of clause (11) of Part 1 of the First Schedule, clause (1) of Part III of the First Schedule and clause (i) of Part II of the Second Schedule to the Act.

2. Background facts are as under:

Proceedings were initiated on the basis of information received that while holding a certificate of practice respondent was in full-time employment with National Insurance Co. Ltd., without obtaining permission of the institute to be so engaged as required under Regulation 166 of the then Chartered Accountants Regulation, 1964 (hereinafter referred to as `the old Regulations') corresponding to Regulation 190A of the Chartered Accountants Regulations, 1988 (hereinafter referred to as `the Regulations'). It was alleged that the respondent failed to disclose the particulars of the aforesaid full-time salaried employment while furnishing particulars in the prescribed Form No. 16A under the old Regulations for registration of articled clerks and also violated Regulation No. 29(11) of the old Regulations corresponding to Regulation 43(8) of the Regulations for training of articled clerks which he was not eligible to do, since his main occupation was not practice of the profession of Chartered Accountancy. As a matter of fact, 14 articled clerks are stated to have been trained. Information was conveyed to the respondent by the Institute's letter of 27-7-1990 and he was required to submit his written statement. On 6-8-1990, the respondent submitted his written statement. On examination of the said written statement, in the background of information received, the Council of the Institute was prima facie of the opinion that the respondent was guilty of professional and/or other misconduct and, accordingly, referred the case to the Disciplinary Committee constituted under the Act for enquiry. The meeting of the Disciplinary Committee was held on 11-4-1991. On perusal of documents on record and those which were produced before it, upon recording evidence of witnesses and bearing submissions made by the respondent, submitted its report dated 20-12-1991. It came to hold that the respondent was guilty of professional misconduct. A copy of the report was forwarded to the respondent along with the institute's letter dated 25-2-1992 and he was informed that the report would be considered by the council and he was requested to send his written representation and to appear before the council either in person or through a duly authorised institute's member at the meetings of the council. Vide letter dated 19-3-1993 the respondent was informed that the report would be considered by the council in its meeting fixed for 22 to 24-4-1993. The respondent was again requested to send his written representation, if any, and to appear before the council, if he so desired either in person or through a member of the institute duly authorised by him on 23-4-1993. Consideration of the report of the Disciplinary Committee was deferred for want of time on that date. Vide letter dated 10-5-1993 the respondent was informed that the report would be considered at its meeting to be held on 10, 11 and 12-6-1993. Request in terms as conveyed earlier was repeated. The respondent did not submit any written representation. Neither he, nor any authorised representative appeared on 10-6-1993 when the report of the Disciplinary Committee was considered by the council. On consideration of the report of the Disciplinary Committee, the council accepted the report and found as follows :

"(1) The respondent was guilty of professional misconduct within the meaning of section 21, read with section 22 of the Chartered Accountants Act, 1949 and clause (11) of Part I and clause (1) of Part III of the First Schedule to the above Act.

(2) He was guilty of professional misconduct under section 21, read with section 22 of the Chartered Accountants Act, 1949 and clause (i) of Part II of the Second Schedule of the above Act."

In respect of the professional misconduct specified in the First Schedule, the council decided that a separate order would be passed by the council under section 21(4). In respect of the professional misconduct specified in the Second Schedule, it was decided to recommend to the High Court that the name of the respondent be removed from the Register of Members for a period of one year.

3. After receipt of reference, this court had issued a notice to the respondent but there is no appearance in spite of valid service. Considering the important aspects involved, Mr. Sanjiv Khanna, Advocate, was appointed amices Curiae to assist this court. From the factual aspects, which have gone unrebutted, position emerges clearly that though the respondent was in full-time employment with National Insurance Co. Ltd., requisite permission was not obtained for this purpose. Therefore, there was clear contravention of clause (11) of Part I of the First Schedule of the Act. So far as the allegations regarding non-disclosure of particulars of the aforesaid full-time salaried employment is concerned, the same has been clearly established in view of the material on record. There are two aspects which are to be separately dealt with by the council in terms of section 21(4), which reads as follows :

"(4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in the First Schedule, the council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely:

(a) reprimand the member;

(b) remove the name of the member from the Register for such period, not exceeding five years, as the council thinks fit;

Provided that where it appears to the council that the case is one in which the name of member ought to be removed from the Register for a period exceeding five years or permanently, it shall not make any order referred to in clause (a) or clause (b) but shall forward the case to the High Court with its recommendations thereon.

We do not think it necessary to deal with the question as an order to be passed by the council on those two aspects."

4. So far as the third aspects is concerned, the stand taken by the respondent in the reply needs to be considered. It is seen from tile respondent's letter dated 6-8-1990 that he accepted his employment. He only stated that there was mistake on his part, he was sorry for it and tendered his apology. He also assured that no such act would be committed in future. During his examination-in-chief by the Disciplinary Commmittee, the respondent admitted his employment with the National Insurance Co. Ltd. He also admitted to have enrolled articled clerks but took the stand that they were getting training under some Chartered Accountant whose name he did not remember. He also admitted that he had no professional work but took stand that he was holding a whole-time certificate for practice. In essence, therefore, he accepted that he did not impart any training to articled clerks. Plea that they were getting training under some other Chartered Accountants whose name he did not disclose appears to be an afterthought. Professional misconduct under clause (i) of Part II of the Second Schedule was clearly made out. Misconduct implies failure to act honestly and reasonably, according to the ordinary and natural standard or according to the standard of a particular profession. Members of honourable profession like Chartered Accountancy are supposed to possess nobility, pride and honour of the profession. The profession is one of trust. The conduct displayed by the respondent does nut in any manner befit that of a person belonging to the noble profession. Not only did he take up employment without requisite permissions but also gave certificate of training to several persons of having imparted training. An articled clerk joins a Chartered Accountant's concern with the objective of getting training. This is a part of the curriculum. If without any training being really imparted, certificate is given the same looses its importance and significance and goes against the very purpose for which an articled clerk is enrolled, If the respondent did give training which could not have given, there is contravention of statutory requirements. If on the other hand, he did not give training, but certified to have given training, it is equally infraction of law. The matter is certainly serious considering the fact that career of an articled clerk to qualify and become full fledged Chartered Accountant is at stake. The conclusions of the council of the institute as regards the commission of professional misconduct are well-founded.

5. The only other question relates to penalty proposed. Mr. Sanjiv Khanna with reference to Institute of Chartered Accountants of India v. P.K. Mukherjee AlR 1968 SC 1104 pointed out that there has been long passage of time and that is a relevant factor, but delay in this case is of no consequence. In fact the membership continued to be operative. In the circumstances, we accept the recommendations of the council of the institute for removal of the respondent's name from the Register of the Members for a period of one year. We record our appreciation of the assistance rendered by Mr. Sanjiv Khanna amices Citriae.