Gulshan Rai vs The Institute Of Chartered ...
2011 Latest Caselaw 5350 Del

*               THE HIGH COURT OF DELHI AT NEW DELHI
+                    REVIEW PETITION No. 505 OF 2011
                                 IN
                      R.F.A. NO. 714 OF 1999

                                                  Reserved on: 23.09.2011
                                                Date of Order: 04.11.2011

GULSHAN RAI                                               ...... Appellant

                                 Through:       Mr.     Siddharth       Yadav,
                                                Advocate for the appellant.

                                           Versus

THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR.                     ...... Respondents
                   Through: Mr. Rakesh Agrawal, Advocate
                            for the respondent.

CORAM:
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE M.L. MEHTA

1.      Whether Reporters of local papers may be
        allowed to see the judgment?
2.      To be referred to the Reporter or not ?
3.      Whether the judgment should be reported
        in the Digest ?

M.L. MEHTA, J.

1. This review petition under Order XLVII Rule 1 r/w Section

151 CPC has been filed by the appellant for review of judgment

dated 10th August, 2011 of this Court vide which RFA 714/1999 of

the appellant was disposed of.

2. The appellant is a Chartered Accountant by profession and

there being some complaint against him with regard to his

professional misconduct, the Respondent No. 1 Institute

conducted inquiry into the complaint and entrusted the matter to

Disciplinary Committee which after hearing the appellant found

him guilty of professional misconduct within the meaning of

Clause (11) of Part-I of First Schedule of Chartered Accounts Act,

1949 and submitted report dated 29.12.1994. The Council of

Institute of Chartered Accountants of India (for short 'the Council)

considered the report of the Disciplinary Committee and found

the appellant guilty of professional misconduct and decided to

delete the name of the appellant from the list of members of the

Council for a period of six months. The appellant challenged the

decision of the Council in the present appeal. The said appeal,

being RFA 714/1999, has been disposed of by this Court on 10th

August, 2011 vide which the decision dated 04.07.1998 of the

Council was modified reducing the period of removal of the name

of the appellant from the list of members from six months to

three months.

3. The appellant has filed this Review Petition stating that

owing to viral fever his counsel could not appear before the Court

on 10th August, 2011 and his clerk also could not appear due to an

accident. It is further submitted that the penalty imposed by this

Court vide judgment dated 10.08.2011 is extremely harsh as the

case of the appellant is that he is not guilty of any misconduct

within the definition of Section 21 of the Chartered Accountants

Act, 1949. It submitted that the appellant had an impeccable and

spotless career of more than 55 years. It is submitted that he may

be given an opportunity to make submissions through his counsel

on merits of the case and craves leave to rely upon the paper-

book and record already available on the record of this Court.

4. Mr. Rakesh Agarwal has appeared on behalf of the

respondent Institute and accepted notice of the review petition.

5. We have heard learned counsel for the appellant/applicant

and also learned counsel for the respondent on the review

petition as well as on the merits of the case.

6. Learned counsel for the appellant/review petitioner has

submitted on merits that the appellant was not engaged in full

time commercial activities and that his engagement was only to

look after the banking and overseas activities of the company. He

also submitted that vide his letter dated 20.06.1987, he had

applied to the Council for seeking permission for engagement in

other occupation under Sec. 166 of Chartered Accountants

Regulation 1964. He has drawn our attention to the letter dated

20.06.1987 and the Court record. In this regard, it may be noted

that this submission of learned counsel for the appellant has been

specifically dealt with by this Court in the said judgment in the

following manner:-

"The Council examined the plea of the appellant that he had sought permission of the Institute for engaging in other occupation vide his letter dated 20-06-1987. Since the said letter was not available on record of the Institute, the Disciplinary Committee questioned the appellant to the manner of his sending the said letter to the Institute. In reply thereto, the appellant stated having sent the same by ordinary post. The Disciplinary Committee has recorded that after the hearing was concluded, the appellant vide his letter dated 14th March, 1994 informed about having dispatched the said letter on 23-06-1987. The Disciplinary Committee further records that although the appellant in the said letter dated 14-03-1994 had stated about his enclosing photocopy of the dispatch register along with it, no such enclosure was received. In an answer to a question the appellant had also admitted before the Disciplinary Committee that he used to arrange loans for the company from the banks. In an answer to another question, he admitted that substantial paper work of the company was being signed by him since he had the competence in the field.

Considering the submissions and evidence on record, the Disciplinary Committee arrived at the conclusion that the appellant never made any application for obtaining permission of the Disciplinary Committee to act as a full-time Director of the company. The Disciplinary Committee recorded that as per rule before engaging himself in any commercial activities he should have verified that in fact the permission had been granted. In fact this was the requirement of Clause 11 of Part-I of the First Schedule of the Act read with Regulation 190(A) of the Regulations and Appendix (10) thereto which speaks about obtaining specific and prior approval of the Disciplinary Committee."

7. In addition to what is recorded above, it is also noted that in

the aforesaid letter dated 20.06.1987, there appears a note at the

bottom stating the company i.e. M/s Sai Beverage Private Limited

had been incorporated on 26th April, 1987. If that was so, as per

the appellant' own showing, this company had already been

incorporated with him as its Director which was apparently

without the prior permission of the Council. On 10th August, 2011

though, none appeared for the appellant despite long pass over,

we heard the learned counsel for respondent No. 1 and it was

after perusal of the entire record including the proceedings and

report dated 29.12.1994 of the Disciplinary Committee that the

said judgment was passed. It has not been pointed out as to

which was the document of the paper book relied upon by the

appellant, that was not considered by us while passing the said

judgment.

8. At the cost of repetition, it may be reiterated that all the

pleas taken by the appellant in the grounds of appeal and also

each and every part of statement made by him before the

Disciplinary Committee was discussed by us in the said judgment.

9. The plea that petitioner was only a part time Director and

not responsible for the entire affairs of the company, was also

discussed by the Disciplinary Committee and has been re-

appreciated by us in the following manner:

"We have perused the record including the report dated 29th December 1994 of the Disciplinary Committee. The matter was finally heard by the Disciplinary Committee on 12th March, 1994 which was attended by the appellant along with his counsel. The Council perused the statement of the respondent made before the Committee. The appellant stated that in April, 1987 he had discussions with respondent no.2 for starting business of a bottling plant and it was agreed that the capital required was to be contributed by them equally and the company was to be established

under the name and style of M/s Sai Beverage Private Limited. The said company was incorporated on 16-04-1987 with the appellant and respondent no.2 as the only Directors holding equal shares. The appellant stated that he was not engaged as whole-time Director or Managing Director and has never managed the substantial work of the company, which was being looked after by the General Manager and respondent no.2 as its Executive Director. The appellant in the grounds of appeal has admitted that as Director of the company his role was to handle the bank operations of the company including obtaining loans from the banks and to look after the accounting records of the company. It was also an admitted case that the appellant and respondent no.2 were authorized signatories to operate the bank accounts of the company in different banks. The Disciplinary Committee also found from the record that both the appellant as well as respondent no.2 were authorized to raise loans and overdraft from the banks and to acknowledge all types of debts from the company.

The type of activities being carried out by the appellant as Director thereto would demonstrate that he was substantially involved in the managing of affairs of the company though not designated as Managing Director or

whole-time Director. The Disciplinary Committee report records that the appellant was guilty of professional misconduct for violating the provisions of Clause 11 of Part-II of First Schedule read with Section 190 (A) of the Regulations."

10. There being no error apparent in the judgment dated

10.08.2011, we do not see any reason for review of the same.

The review application is hereby dismissed.

M.L. MEHTA (JUDGE)

ACTING CHIEF JUSTICE

November 04, 2011 awanish