Council Of The Institute Of ... vs A.P. Gupta
2000 Latest Caselaw 896 Del

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) alleging that A.P. Gupta, (hereinafter referred to as the respondent) had violated and contravened the provisions of clause (11) of Part I of the First Schedule, Clause (I) of Part III of First Schedule and Clause (i) of part II of the Second Schedule to the Act. 2.

2. Back ground 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 employ- ment with National Insurance Company Ltd. without obtaining permission of the Institute to be so engaged as required under Regulation 166 of the then Chartered Accountants Regulations, 1964 (hereinafter called the old Regula- tions) correspondence of Regulation 190A of the Chartered Accountants Regulations, 1988 (in short, 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 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 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 27th July, 1990, and he was required to submit his written statement. On 6.8.1990, the respondent submit- ted his written statement. On examination of the said written statement, in the background of information received, 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 Disciplinary Commit- tee constituted under the Act for enquiry. The meeting of the Disciplinary Committee was held on 11th April, 1991. On perusal of documents on record and those which were produced before it, upon recording evidence of wit- nesses and hearing submissions made by the respondent, submitted its report dated 20th December, 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 meeting 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 22nd to 24th April, 1993. 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 Disci- plinary Committee was deferred for want of time on that date. Vide another letter dated 10-5-1993 the respondent was informed that the report would be considered at its meeting to be held on 10th, 11th and 12th June, 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 10th June, 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 professional misconduct specified in the First Schedule, the Council decided that a separate order would be passed by the Council under Section 21(4) of the Act. 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 has issued notice to the re- spondent 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) of the Act, 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) 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 aspect is concerned, the stand taken by the re- spondent in the reply needs to be considered. It is seen from the 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 Committee, the respond- ent 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 Accountant 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 rea- sonably, according to the ordinary and natural standard or according to the standard of a particular profession. Members of honorable 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 not in any manner befit that of a person belonging to the noble profession. Not only did he take up employment without requisite permission 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 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 Institution 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 Vs. P.K. Mukherjee 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 continues to be operative. In the circumstances we accept 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 Curiae.