Case Note & Summary
The Supreme Court considered an appeal by the Council of the Institute of Chartered Accountants against an order of the High Court rejecting a reference regarding professional misconduct of a chartered accountant. The respondent, B. Mukherjea, a chartered accountant, had been appointed as liquidator of three insurance companies by the High Court. After receiving records, cash, and securities, his conduct was found to be wholly unsatisfactory by the Assistant Controller of Insurance; he failed to respond to letters and, after his appointment was cancelled, did not return the entrusted materials despite repeated demands. A complaint was lodged with the Institute's Council, which after inquiry found him guilty of misconduct and forwarded its report to the High Court under Section 21 of the Chartered Accountants Act, 1949. The High Court rejected the reference on the ground that the conduct did not constitute professional misconduct within the meaning of the Act. The Supreme Court held that when a chartered accountant works as a court-appointed liquidator, he must be deemed to be in practice as a chartered accountant under Section 2(2). The definition of misconduct in Section 22 is inclusive, not exhaustive, and the Council may find a member guilty of conduct which renders him unfit, even if not listed in the schedule. The Court also emphasized the wide powers of the High Court under Section 21 to do complete justice, including examining findings and remanding for further inquiry. It found the respondent's conduct grossly improper and unworthy, amounting to professional misconduct. Accordingly, the Supreme Court set aside the High Court's order and remitted the matter for disposal in accordance with law, directing the High Court to exercise its full statutory powers.
Headnote
A) Professional Practice - Definition of 'Practice' under Chartered Accountants Act, 1949 - Section 2(2) - A chartered accountant appointed as liquidator by court is deemed to be in practice as a chartered accountant within the meaning of the Act. Held that the respondent, when working as liquidator, must be deemed to have been in practice. (Paras Not mentioned) B) Professional Misconduct - Scope of Misconduct under Section 22 - Chartered Accountants Act, 1949, Section 22 - The definition of misconduct in Section 22 is inclusive; the Council may find a member guilty of conduct rendering him unfit, even if not in schedule. Held that respondent's conduct was grossly improper and unworthy, amounting to professional misconduct. (Paras Not mentioned) C) High Court's Powers - Reference under Section 21 - Chartered Accountants Act, 1949, Section 21 - High Court has ample powers in reference under Section 21 to do complete justice, examine findings, or remit for inquiry. Held that High Court should have exercised full powers. (Paras Not mentioned)
Issue of Consideration
Whether the respondent's conduct as a court-appointed liquidator amounted to professional misconduct under the Chartered Accountants Act, 1949, and whether the High Court was correct in rejecting the reference under Section 21.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's order, held that the respondent's conduct amounted to professional misconduct, and directed the High Court to deal with the reference in accordance with law, exercising its full powers under Section 21.
Law Points
- Liquidator deemed in practice
- Professional misconduct includes conduct rendering unfit
- High Court's wide powers under Section 21.
