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Karnataka High Court
Shri Naginchand Khincha vs Board Of Discipline on 18 December, 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF DECEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE E.S.INDIRESH
WRIT PETITION NO.19236 OF 2018 (GM-RES)
BETWEEN:
SHRI. NAGINCHAND KHINCHA
S/O HUKMICHAND KHINCHA
AGED ABOUT 65 YEARS
R/AT NO.24, 2ND CROSS
SHANKARPURAM
BENGALURU - 560 004.
....PETITIONER
(BY SRI. KIRAN S. JAVALI, SENIOR ADVOCATE FOR
SMT. REVATHI T., ADVOCATE)
AND:
BOARD OF DISCIPLINE
Digitally signed by INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
ARUNKUMAR M S
Location: HIGH ICAI BHAWAN, PO BOX - 7100
COURT OF INDIRAPRASTA MARG - 110 002.
KARNATAKA
...RESPONDENT
(BY SRI. S. SRIRANGA, SENIOR ADVOCATE FOR
SMT. SUMANA NAGANAND & NIDHI GUPTA, ADVOCATES)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED ORDER DATED 10.02.2018 BEARING FILE
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NO.PR/180/2013/DD/188/2013/BOD/224/2016 PENDING ON
THE FILES OF THE BOARD OF DISCIPLINE, INSTITUTES OF
CHARTERED ACCOUNTANTS OF INDIA PASSED BY THE
RESPONDENT AT ANNEXURE-A AGAINST THE PETITIONER.
THIS WRIT PETITION HAVING BEEN RESERVED FOR
ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY,
E.S. INDIRESH J., MADE THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE E.S.INDIRESH
CAV ORDER
1. In this Writ Petition, the petitioner is assailing the order
dated 10.02.2018 (Annexure-A) issued by the Institute of
Chartered Accountants of India - respondent herein.
2. It is the case of the petitioner that, the petitioner is a
Chartered Accountant having experience of more than four
decades. It is further stated that, the CBI has filed charge sheet
against the petitioner along with one Mr. Nagaraj, an Income
Tax Officer (for short, ITO) under the provisions of the
Prevention of Corruption Act, 1988 (for short, 'the PC Act') in
Spl. CC. No.130/2013 which is pending consideration before the
Special Court of CBI Offences. It is further pleaded in the Writ
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Petition that, the petitioner has allegedly collected money from
one Mr. A.K. Halim, to be paid as bribe to the said ITO and in
this regard, charges were framed against the petitioner and the
said Mr. Nagaraj - ITO, under Section 120B of IPC and Sections
7, 8, 13(2) read with Section13(1)(d) of the PC Act. It is also
stated that the charges levelled against the petitioner under
Sections 7, 13(2) and 13(1)(d) of the PC Act were dropped
subsequently, however, the proceedings continued in respect of
the remaining charges levelled against the petitioner. In
respect of the dropping of the proceedings as stated above, the
respondent herein had filed Criminal Revision Petition
No.1040/2014 before this Court, which came to be dismissed
on 13.09.2017.
3. It is further stated in the Writ Petition that, the CBI,
lodged complaint to the competent authorities, under the
provisions of the Chartered Accountants, (Procedure of
Investigations of Professional and other Misconducts and
Conduct of Cases,) Rules, 2007 (hereinafter referred to as 'the
Rules, 2007') as per Annexure-B to the Writ Petition. The
allegations made in the complaint at Annexure-B, that the
petitioner has collected money from Mr. A.K. Halim as
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professional fees, purportedly in violation of the fees structure
prescribed under clause 7.7 of Chapter 7 of the Code of Ethics
of the Institute of Chartered Accountants of India.
4. It is further stated that, pursuant to the notice issued by
the respondent for appearance of the petitioner herein, the
Directorate of the respondent formed a prima facie opinion that
the petitioner is guilty of "other misconduct" as per Clause (2)
of part IV of the First Schedule to the Chartered Accountants
Act, 1949 (for short, 'the C.A. Act'), as per Annexure-C to the
Writ Petition. Based on the prima-facie opinion formed by the
Disciplinary Directorate, an enquiry was initiated against the
petitioner, directing the petitioner to file his defence, as per
Annexure-D to the Writ Petition. Pursuant to the issuance of
Annexure-D, the petitioner has filed application seeking stay of
further proceedings by the respondent on the ground that a
criminal case in Special Court of CBI is pending consideration
on the identical facts and circumstances, and in this regard the
petitioner has filed written arguments as per Annexure-F the
Writ Petition. However, the petitioner has received notice, as
per Annexures-G and H, to participate in the proceedings. It is
the grievance of the petitioner that, though the application filed
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by the petitioner seeking stay of the proceedings was pending
consideration before the respondent, however, the respondent
proceeded with the proceedings, and as such, the petitioner
filed W.P.No.42659/2017 before this Court, seeking quashing of
the disciplinary proceedings initiated by the respondent against
the petitioner, based on a prima facie opinion. However, the
petitioner withdrew the said Writ Petition, as the respondent -
Board of Discipline, proceeded with the matter. Further, the
respondent - Board of Discipline, arrived at the conclusion on
10.02.2018 (Annexure-A) holding that the petitioner is guilty of
"other misconduct" under the provisions of the Chartered
Accountants Act, 1949. Being aggrieved by the same, the
petitioner has presented this Writ Petition.
5. I have heard Sri. Kiran S. Javali, learned Senior Counsel
on behalf of Smt. Revathi T., learned counsel for the petitioner
and Sri. S. Sriranga, learned Senior Counsel appearing on
behalf of Smt. Sumana Naganand and Smt. Nidhi Gupta,
learned counsel for the respondent.
6. Sri. Kiran S. Javali, learned Senior Counsel appearing for
the petitioner contended that, the petitioner is a reputed
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Chartered Accountant, practising since 1974 and having
unblemished record in the profession of Chartered Accountant.
Learned Senior Counsel for the petitioner invited the attention
of the Court to the conclusion arrived at by the respondent
(Annexure-A), wherein, the petitioner is held guilty of "other
misconduct", as per Clause 2 of part IV of the First Schedule to
the Chartered Accountants Act, 1949, and further submitted
that the said conclusion has caused miscarriage of justice to the
petitioner. By inviting the attention of the Court to the notice
issued by the respondent (Annexure-G) as well as the
complaint dated 16.08.2013, forwarded by the CBI to the
respondent as per Annexure-B, at paragraph 5 of the
complaint, learned Senior Counsel for the petitioner submitted
that the allegations made against the petitioner was with
regard to charging exorbitant professional fees, however, the
enquiry was conducted against the petitioner allegedly for
having indulged in illegal activity of bribing the ITO and
therefore, it is contended by the learned Senior Counsel, that
the entire enquiry requires to be set aside.
7. It is also argued by the learned Senior Counsel that the
petitioner has sought for time to file detailed objections and
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also apprised about the pending proceedings in Spl. CC No.
130/2013 before the Special Court of CBI Offences as the facts
are identical in nature, however, the said aspect of the matter
was not considered by the respondent and accordingly, sought
for interference of this Court.
8. It is also argued by the learned Senior Counsel for the
petitioner, that the reply filed by the petitioner as to the alleged
action was not considered by the respondent - Board in the
right perspective, which amounts to violation under the
provisions of the Act and therefore, submitted that, the
impugned proceedings before the respondent is non est. It is
also argued by the learned Senior Counsel for the petitioner,
that the entire action of the respondent is based on the
complaint of CBI as to charge excessive profession fees,
however the enquiry was initiated on the ground that the
petitioner is conduit for bribing the ITO officer, in so far as the
complaint filed regarding filing of the tax returns for the
appropriate financial year, and therefore, sought for
interference of this Court. In this regard, learned Senior
Counsel for the petitioner relied upon the Judgment of the
Hon'ble Supreme Court in the case of M PAUL ANTHONY Vs.
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BHARAT GOLD MINES LIMITED AND ANOTHER reported in
(1999) 3 SCC 679 and in the case of ROOP SINGH NEGI
VS. PUNJAB NATIONAL BANK AND OTHERS reported in
(2009) 2 SCC 570 and argued that, the manner in which the
respondent has proceeded with the matter, with an allegation
as specified in the complaint by the CBI is totally different from
the charges framed against the petitioner in the Departmental
proceedings and therefore, sought for interference of this
Court.
9. Per contra, Sri. S. Sriranga, learned Senior Counsel for
the respondent, invited the attention of the Court to the Order
dated 19.08.2024 in W.P.No.42659/2017 and submitted that,
this Court has not reserved liberty to the petitioner to challenge
the impugned proceedings, and therefore, the Writ Petition is
devoid of merits and hit by principles of res judicata.
10. It is also contended by the learned Senior Counsel for the
respondent that, the respondent diligently followed the
procedure as provided under the Rules, 2007 and the Director
(Discipline) has formulated prima facie opinion on 30.09.2016
under Rule 9 (Annexure-C), after following the procedure
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contained under Rule 8 of the Rules, 2007, and therefore, it is
argued that, no interference is called for in this Writ Petition as
the petitioner has acted in violation of the Code of Ethics of the
Institute of Chartered Accountants of India and accordingly,
sought for dismissal of the Writ Petition. It is further argued by
the learned Senior Counsel for the respondent that, the
sufficient opportunity were given to the petitioners to file his
written submissions, and the impugned order at Annexure-A
has been passed after considering the written arguments filed
by the petitioner and as such, the respondent has followed the
principles of natural justice and therefore, sought for dismissal
of the Writ Petition. It is also argued by the learned Senior
Counsel for the respondent that, the petitioner is having an
efficacious remedy by filling appeal under Section 22G of the
Act, to challenge the order of Board of Discipline passed under
Clause (2) of part IV of the First Schedule to the C.A. Act read
with Section 22 of the C.A. Act, and therefore, the Writ Petition
is premature, and requires to be dismissed. In this regard,
learned Senior Counsel for the respondent places reliance on
the judgment of the Hon'ble Supreme Court in the case of
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UNION OF INDIA AND ANOTHER Vs. KUNISETTY
SATYANARAYANA reported in (2006) 12 SCC 28.
11. Nextly, Sri. Sriranga, learned Senior Counsel for the
respondent submitted that, there is no legal bar as to
conducting disciplinary proceedings against the petitioner
besides the pending criminal proceedings before the Special
Court and in this regard, learned Senior Counsel submitted
that, as the scope of two proceedings are completely different
and independent, and therefore, the outcome of the result in
one proceedings does not influence the outcome of the other
proceedings and as such, referred to the Judgment of the
Hon'ble Supreme Court in the case of STATE OF RAJASTHAN
Vs. B.K. MEENA AND OTHERS reported in (1996) 6 SCC
417. It is also argued by the learned Senior Counsel for the
respondent by referring to Rule 8(5) of C.A. Rules, would
indicate that it is merely optional and at the discretion of the
Director (Discipline) to call for additional documents and same
cannot be imposed as a mandatory condition and as the
Director (Discipline) with the prima facie opinion dated
30.09.2016 has arrived at the conclusion to hold enquiry
against the petitioner and same cannot be challenged before
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this Court. Finally it is argued that, as the entire proceedings
have been conducted by adhering to the principles of natural
justice and as the contention that the complainant does not
state that the petitioner had allegedly collected fees that for
disproportionate and contrary to Clause 7.7 of Code of Ethics, is
misleading and accordingly, sought for dismissal of the Writ
Petition.
12. In the light of the submissions made by the learned
counsel appearing for the parties, it is not in dispute as to the
fact that the petitioner is a Chartered Accountant and Member
of the respondent - Institute of Chartered Accountants of India.
It is the case of the CBI which has forwarded the complaint
filed against the petitioner as forthcoming at Annexure-B,
reflected at paragraph No.5 of the complaint, which reads as
under:
" 5. During investigation, Sri. Naginchand
V.Kincha had stated that he had collected the
money from Shri A.K. Halim towards his
professional fees. The amount received by him
from Shri A.K. Halim is clearly in violation of the fee
structure prescribed in Chapter 7.7 of the Code of
Ethics (Eleventh Edition issued in January, 2009),
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issued by the Institute of Chartered Accountants of
India, for the practising Chartered Accountants."
(emphasis supplied)
13. It is forthcoming in the Disciplinary proceedings initiated
against the petitioner in File No.PR/180/2013-DD/188/2013,
wherein, at para 1.1 at Annexure-C, it is stated in the facts
that, CBI, ACB, Bengaluru, had registered a criminal case
against the petitioner and Sri. V. Nagaraj, the then ITO, Ward -
4(3), Bengaluru, based on a written complaint received from
Sri. A.K. Halim, alleging demand of bribe of Rs.20,00,000/- by
both the above accused in the criminal case for settling his IT
dispute.
14. It is also not in dispute that, the petitioner and V.Nagaraj
were arrested by the CBI and were released on bail on
10.09.2012. At the time of trap, it is stated that the petitioner
admit in writing that he had taken the money on behalf of Sri.
V. Nagaraj the ITO. In this regard, Special Case in CC
No.130/2013 is pending consideration before the competent
Court. It is argued at the Bar that, the matter is set down for
arguments, after completion of evidence and in that view of the
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matter, I am refraining from making any finding as to the
pending criminal case launched against the petitioner.
15. It is pertinent to mention here that, it is the case of CBI
that the petitioner has colluded with Sri. V. Nagaraj, the ITO
and committed and offences punishable under Sections 7,
13(2) read with Section 13(1)(d) of the P.C. Act and charge-
sheet has been laid before the competent Criminal Court.
However, the complaint of the CBI with the respondent as
mentioned at para 12 above, that the petitioner had collected
exorbitant professional fee which is contrary to Chapter 7.7 of
the Code of Ethics and these two grounds are distinct and one
cannot co-related with other and same caused discrepancy as
to on what basis .. proceedings initiated against the petitioner
and therefore, in the backdrop of these aspects, the entire facts
on which the enquiry was initiated under the Act are that, the
petitioner has collected exorbitant professional fee from Sri.
A.K. Halim is contrary to fats of the case. On the other hand,
the perusal of the Annexure-C would indicate that, the
allegation of demanding of Rs.20,00,000/- was made by the
petitioner and Sri. V. Nagaraj, the then ITO, to close the tax
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dispute of the said Sri. A.K. Halim, the complainant. On perusal
of the finding recorded by the competent authority at
Annexure-C, therein, paragraph No.8 reads as under:
" In view of the above, I am of the prima facie
opinion that, in respect of the allegations made out
in the instant complaint, the respondent is GUILTY
of 'Other Misconduct', falling within the meaning of
Clause (2) of Part IV of the First Schedule to the
Chartered Accountants Act, 1949."
16. Part-IV of the First Schedule reads as follows:
Other misconduct in relation to members
of the Institute generally
A member of the Institute, whether in practice
or not, shall be deemed to be guilty of other
misconduct, if he-
Clause (1): is held guilty by any civil or criminal court
for an offence which is punishable with
imprisonment for a term not exceeding six months:
The members who are held guilty by a Court
of law for an offence punishable upto six months in
person are also liable for misconduct.
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Clause (2): in the opinion of the Council, brings
disrepute to the profession or the Institute as a result
of his action whether or not related to his
professional work.
The Council has been empowered to opine
on any action of a member which brings the Institute
or profession in disrepute as misconduct.
This Clause, read with Section 22 of the Act,
now defines 'Other misconduct, which has been
covered under this Part does not limit or abridge in
anyway the power conferred or duty cast on the
Director (Discipline) under Section 21(1) of the Act
to inquire into the conduct of any member of the
Institute under any other circumstances."
17. Perusal of the aforementioned provision would indicate
that, the case of the petitioner shall come within the purview of
Clause (2) of "Other Misconduct". It is also to be noted from
the proceedings before the respondent that, the petitioner has
sought for stay of the proceedings, however, it is admitted
that, no enquiry was made in the proceedings before
concluding the proceeding and the respondent passed
impugned order at Annexure-A, based on the written
arguments filed by the petitioner herein as per Annexure-F, and
found that, the petitioner is guilty of "other misconduct". It is
also to be reflected from the notice dated 07.07.2017 issued by
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the respondent at Annexure-G, for which the petitioner has
filed reply as per letter dated 19.09.2017 (Annexure-J to the
Writ Petition).
18. Be that as it may be, the petitioner has sought for time
as per letter dated 01.10.2013 (Annexure-M) and thereafter
written statement was filed on 19.01.2017, however, the
respondent - authorities have premeditated to arrive at a
conclusion that, the petitioner is guilty of "other misconduct".
While issuing notice to conduct alleged proceedings against the
petitioner and the complaint lodged by the CBI as per
Annexure-B are totally different and distinct and further, the
petitioner is unaware about under which proceedings, the
petitioner is being questioned by the respondent - Institute.
Perusal of Annexure-B and the conclusion arrived at by the
respondent as per Annexure-C is totally based on distinct facts
and the respondent has failed to establish as to the imputation
of charge under which ground against the petitioner. It is
settled principle in law that, the delinquent must be aware
about the charge framed against him before participating in the
enquiry proceedings by the Disciplinary Authority.
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At one breath, the perusal of the complaint would indicate that
the petitioner has been interrogated for charging excessive fees
under the Act and found guilty as per Order dated 10.02.2018
(Annexure-A), and on the other hand, the proceedings
communicated with regard to the allegation made against the
petitioner that, the petitioner along with one Mr. V. Nagaraj,
the then ITO had collected money from Sri. A.K. Halim to pay
bribe to the said ITO to settle tax dispute and on that aspect,
criminal action was set into motion. In that view of the matter,
the complaint refers to an allegation that, the petitioner has
collected money from Sri. A.K. Halim as professional fees
perforately in violation of fee structure prescribed under Clause
7.7 of Chapter 7 of the Code of Ethics of the respondent -
Institute. Therefore, I find force in the submission made by the
learned Senior Counsel for the petitioner that, there is
discrepancy in imputation of charges as per Annexure-B and
the enquiry conducted by the respondent as per the prima facie
opinion at Annexure-C, are altogether different and distinct and
as such, the entire proceedings conducted by the respondent
and arrived at the conclusion to hold the petitioner guilty under
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"other misconduct" is misnomer and hereby requires to be set
aside in this Writ Petition.
19. However, in so far as the contention of the petitioner in
the pleadings that, both the criminal proceedings and the
departmental enquiry shall not continue together, however,
learned Senior Counsel Sri. Kiran S. Javali, fairly concedes that,
there is no impediment for holding both the proceedings
together.
20. Nextly, in so far as the contention raised by the learned
Senior Counsel for the respondent that, the petitioner has filed
W.P.No.42659/2017 before this Court which came to be
dismissed as having become infructuous, I have carefully
examined the pleadings in the said Writ Petition, wherein the
petitioner has sought for quashing the proceedings initiated
against the petitioner, however, on account of passing the
impugned order at Annexure-A, in which, the petitioner was
held guilty of "other misconduct" as per the order dated
10.02.2018, was not questioned before this Court in the earlier
Writ Petition in W.P.No.42659/2017, and therefore, I am of the
view that, the cause of action are distinct and as such, the
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principle of res judicata is not applicable to the facts and
circumstances of this case.
21. Though the learned Senior Counsel appearing for the
respondent argued that, the petitioner is having an efficacious
remedy of filing an appeal under S.22G of the C.A. Act,
however, having arrived at a conclusion that the entire
departmental proceedings before the respondent is based on
disputed facts on record, as per the aforementioned finding at
paragraph No.15 by the Board of Discipline at Annexure-A, I
am of the view that, relegating the petitioner to approach the
appropriate authority is a useless formality. At this stage it is
relevant to cite the judgment of Hon'ble Supreme Court in the
case of ALIGARH MUSLIM UNIVERSITY AND OTHERS VS.
MANSOOR ALI KHAN reported in (2000) 7 SCC 529,
paragraph No.25 reads as under:
"25. The "useless formality" theory, it must be
noted, is an exception. Apart from the class of cases
of "admitted or indisputable facts leading only to
one conclusion" referred to above, there has been
considerable debate on the application of that
theory in other cases. The divergent views
expressed in regard to this theory have been
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elaborately considered by this Court in M.C.
Mehta [(1999) 6 SCC 237] referred to above. This
Court surveyed the views expressed in various
judgments in England by Lord Reid, Lord
Wilberforce, Lord Woolf, Lord Bingham, Megarry, J.
and Straughton, L.J. etc. in various cases and also
views expressed by leading writers like Profs.
Garner, Craig, de Smith, Wade, D.H. Clark etc.
Some of them have said that orders passed in
violation must always be quashed for otherwise the
court will be prejudging the issue. Some others have
said that there is no such absolute rule and
prejudice must be shown. Yet, some others have
applied via media rules. We do not think it
necessary in this case to go deeper into these
issues. In the ultimate analysis, it may depend on
the facts of a particular case."
22. Following the declaration of law made by the Hon'ble
Supreme Court in the above case, as the issuance of notice to
the petitioner calling upon the petitioner for filing reply or
appeal as per Annexure-G is totally in contradict to the case of
CBI on facts in their complaint at Annexure-B to the Writ
Petition. Therefore, relegating the petitioner to approach the
appellate authority, at this stage, cannot be accepted as the
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proceedings conducted against the petitioner de-hors the Act
and Regulations governing the same.
23. In the result, I pass the following:
ORDER
(i) The Writ Petition is allowed.
(ii) The letter dated 16.04.2018 (Annexure-A) at
Ref.No. PR-180/13-DD/188/13/BOD/224/2016 and
the findings of the Board of Discipline at
Ref.No. PR/180/2013/DD/188/2013/BOD/224/2016
dated 10.02.2018, are hereby quashed. The
petitioner is exonerated from the alleged enquiry
conducted by the respondent - Institute.
(iii) Pending applications if any, do not survive for
consideration.
SD/-
(E.S.INDIRESH)
JUDGE
sac
List No.: 1 Sl No.: 49
