Council Of The Institute Of ... vs Shri Manoj Kumar Sachdeva And ...
2011 Latest Caselaw 1794 Del

*               IN THE HIGH COURT OF DELHI AT NEW DELHI


+              Chartered Accountants Reference No.2/2009

%
                          Date of Decision: 28.03.2011

Council of the Institute of Chartered                     .... Petitioner
Accountants of India
                Through: Mr.Rakesh     Agarwal          with      Mr.Pulkit
                          Agarwal, Advocates

                                   Versus

Shri Manoj Kumar Sachdeva and                        .... RESPONDENTS
Another
              Through: None.

CORAM:
HON'BLE MR. JUSTICE A.K. SIKRI
HON'BLE MR. JUSTICE M.L. MEHTA


1.    Whether reporters of Local papers be                  Yes
      allowed to see the judgment?
2.    To be referred to the reporter or not?                Yes

3.    Whether the judgment            should   be           Yes
      reported in the Digest?


M.L. MEHTA, J. (ORAL)

*

1. None appears for the respondent nor has the counter affidavit

been filed by the respondent. The respondent is, therefore,

proceeded ex parte. Now, we proceed to decide the matter

finally on the basis of arguments advanced by the counsel for the

petitioner and the material available on record.

2. This is a reference under Section 21(5) of the Chartered

Accountants Act, 1949 (hereinafter referred to as "the Act").

This reference has been made by the Council of Institute of

Chartered Accountants of India (hereinafter referred to as "the

Council"). The respondent has been a qualified Chartered

Accountant at all material times. He was on the professional

assignment of conducting the regular inspection of the Oriental

Bank of Commerce, Rajpur, Vrindaban, Mathura, for the year

ending on 31st March, 1998. The respondent reported for his

assignment on this Branch in mid August 1998. A complaint was

made by the Manager, Oriental Bank of Commerce, Rajpur,

Mathura (hereinafter referred to as "the complainant") with the

Council regarding the professional and other misconduct of the

respondent during his assignment. It was alleged that the

respondent within a few days of his taking the assignment

opened two current accounts - one in the name of M/s.Gauri Fin

Vest Pvt. Ltd. (hereinafter referred to "M/s.Gauri") and second in

the name and style of M/s.M.K. Sachdeva & Associates - both

having the same address, i.e., 108, Sunehri Bagh Apartments,

Plot No.15, Sector 13, Rohini, New Delhi-110085. The charges

against the respondent proceeded alleging that he represented

himself to be the Principal Director of M/s.Gauri and assured the

complainant Bank of good business and balances. He also made

a representation that he was Director in a Cooperative Bank at

Delhi and assured that an amount of about Rs.5.00 crores would

be deposited with the complainant bank. The respondent

persuaded the complainant to allow cheque discount limit of

Rs.5.00 lakhs to M/s.Gauri, for which he also offered equitable

mortgage of immovable property of agricultural land standing in

the name of one Kewal Krishan by delivering the original title

deeds. On inquiry made by the complainant, it came to be

known that the valuation report of the said immovable property

was made by the father-in-law of the respondent and was

manipulated by him dishonestly and fraudulently to cause undue

loss to the complainant bank. On 26th August, 1998 and 30th

August, 1998, the respondent presented cheques of Rs.50,000/-

and Rs.4.75 lakhs each of Indian Overseas Bank purported to be

issued by M/s.Indian Remedies Ltd. and requested the

complainant to discount the same. Both the cheques on

presentation, however, got dishonoured on account of

"insufficient funds". When informed about the same, the

respondent issued another cheuqe of Rs.5.50 lakh of the same

bank in favour of M/s.Gauri, which cheque on presentation was

returned unpaid for the same reason. It was alleged that the

respondent kept assuring the complainant to adjust the

accounts. However, he gave a cheque on 30th October, 1998

which was also returned dishonoured. Ultimately, two cheques

of Rs.30,000/- and Rs.50,000/- were issued by the respondent

from the account of M/s.Gauri in favour of his two accounts in

their Branch, but these were also returned dishonoured with the

reasons "insufficient funds". On repeated contacts, the

respondent issued nine cheques of Rs.50,000/- each towards

repayment of M/s.Gauri, but all these cheques were also

returned for the same reason. Ultimately, criminal complaint

under Section 138 of the Negotiable Instruments Act was lodged

against him, which was stated to be pending in the courts at

Mathura. It was also alleged that respondent also got a car loan

of Rs.1.6 lakhs from the complainant by submitting fake and

fabricated registration certificate. Based on these allegations,

the Council issued notice to the respondent calling upon him to

file written statement. Getting no response, a reminder was

sent, but without any response. The Council being prima facie

of the view that the respondent was guilty of professional and

other misconduct, proceeded to cause an inquiry to be made into

the matter by the Disciplinary Committee.

3. Before the Disciplinary Committee also, respondent did not

appear. However, he sent a letter for adjournment. Since the

respondent did not appear on the adjourned date as well, the

matter was proceeded ex parte against him. The Disciplinary

Committee after following the required procedure and perusing

the submissions of the complainant as also the documents,

submitted its report on 2nd February, 2005. The Committee

found the respondent guilty of "other misconduct" under Section

22 of the Act, however, did not find him guilty of professional

misconduct within the meaning of clause 11 of Part 1 of the First

Schedule of the Act. The copy of the report of the Disciplinary

Committee was forwarded to the parties with the information

that the report was to be considered by the Council. They were

also requested to give written representations, if any, and also to

appear in person or through any authorised representative. The

parties were further informed vide Council‟s letter on 3 rd May,

2006 that the report of the Disciplinary Committee would be

considered by the Council on 21st June, 2006 and they were

requested to send their written representation, if any, and if they

so desire, to appear in person or through authorised

representative. The complainant submitted written

representation on the report of the Disciplinary Committee. The

respondent did not submit any representation nor appeared

before the Council. The Council on consideration of the report of

the Disciplinary Authority along with the written representation

of the complainant decided to accept the report of the

Disciplinary Committee and held the respondent guilty of

misconduct as noted above. In respect of the guilt of "other

misconduct", the Council has recommended to this Court that

the name of respondent be removed from Register of Members

for a period of three years.

4. This is how the reference has come to this court for consideration

of the recommendation of the council under Section 21(5) of the

Act. From the record of the present proceedings, it is seen that

the respondent was served notice for appearance on 7th

September, 2010, but none appeared for him in this Court.

However, his counsel, Ms.M. Singh, appeared on 7th September,

2010 and filed vakalatnama. Counter affidavit, if any, was

directed to be filed within four weeks. On that date, it was also

ordered that the respondent shall remain present in the Court on

the next date, i.e., 24th November, 2011. On 24th November,

2011, neither the respondent nor anyone else appeared on his

behalf. The counter affidavit was also not filed. The matter was

adjourned for 28th March, 2011. On this date also, none

appeared for the respondent. The matter was finally heard.

5. From the averments of the complainant, as have been noted

above, it would be seen that the respondent, who was a

professional Chartered Accountant, was engaged by Oriental

Bank of Commerce for conducting regular inspection of this

bank. He misused his position by persuading the complainant to

discount various cheques on the false assurances. Not only

that, he also persuaded the complainant bank to get car loan by

presenting forged and fabricated registration certificate. All that

the respondent did in his position as Chartered Accountant was

beyond the realm of his duties as Chartered Accountant and

were all centered towards defrauding and cheating the

complainant bank by deceitful representations. All his activities

right from the inception of his assignment were focused towards

making gains to himself and losses to the complainant bank by

various acts of cheating, forgery, fraud, mis-representation, etc.

In fact, the respondent succeeded in his nefarious acts. The

Disciplinary Committee gave him sufficient opportunity to

controvert this, but the respondent has deliberately not chosen

to participate in the proceedings before the Disciplinary

Committee and the Council. Even after the report of the

Disciplinary Committee, respondent did not choose to send any

representation not only that he did not appear in person he did

not choose to file any counter affidavit in the case before us also.

The respondent seems to have nothing to controvert the

allegations against him. From all this, we are of the considered

view that the Disciplinary Authority was right in holding the

respondent guilty of other misconduct under Section 22 read

with Section 21 of the Act. Keeping in view the nature and

gravity of the misconduct, we are in agreement with the

punishment awarded to the respondent by the Council.

6. Hence, for all these reasons, the reference made by the Council

for removal of the respondent from Register of Members for a

period of three years is hereby approved. Ordered accordingly.

                                                      M.L.MEHTA
                                                       (JUDGE)



                                                       A.K. SIKRI
MARCH 28, 2011                                          (JUDGE)
„Dev‟