Case Note & Summary
This is a reference case filed by the Council of the Institute of Chartered Accountants of India under Section 21(5) of the Chartered Accountants Act, 1949, seeking confirmation of its recommendation to remove the name of the respondent, S. Giridharan, a practicing Chartered Accountant, from the register of members for a period of one year. The background of the case is that the respondent was the statutory auditor of M/s Great Western Industries Ltd. (GWIL) and had signed audit reports and balance sheets for the financial years ending 30.09.1998, 30.09.1999 and 30.09.2000. A complaint was lodged by the Superintendent of Police, CBI EOW, Chennai on 18.08.2006 before the Council, alleging professional misconduct against the respondent. The respondent submitted his written reply on 26.02.2007, the complainant filed a rejoinder on 16.04.2007, and the respondent replied on 21.06.2007. Both parties were heard by the disciplinary committee of the Council, which, after concluding the hearing on 24.03.2010, submitted a report dated 10.06.2010 finding the respondent guilty of professional misconduct under Clauses (5), (6), (7), (8) and (9) of Part I of Second Schedule to the Act read with Sections 21 and 22. Copies of the report were sent to the parties on 11.10.2010, and after granting adjournments, the Council on 11.04.2011 recommended the removal of the respondent's name from the register for one year. The matter was then referred to the High Court. The legal issues considered were whether the respondent was guilty of professional misconduct and whether the recommendation for removal should be confirmed. The arguments of the parties are not detailed in the judgment. The court's analysis, as reflected in the order, upheld the finding of the disciplinary committee and the Council's recommendation. The court held that the respondent was guilty of professional misconduct and confirmed the recommendation for removal of his name from the register of members for a period of one year. The decision was in favor of the Council (prosecutor).
Headnote
A) Professional Misconduct - Chartered Accountant - Audit Report - Clauses (5), (6), (7), (8) and (9) of Part I of Second Schedule to the Chartered Accountants Act, 1949 read with Sections 21 and 22 - The respondent, as statutory auditor of M/s Great Western Industries Ltd., signed audit reports and balance sheets for the years ending 30.09.1998, 30.09.1999 and 30.30.2000. A complaint was filed by the Superintendent of Police, CBI EOW, Chennai alleging professional misconduct. The disciplinary committee found the respondent guilty and recommended removal for one year. The Council referred the matter to the High Court under Section 21(5) of the Act. The High Court, after hearing the parties, confirmed the finding of guilt and the recommendation for removal, holding that the respondent had failed to exercise due diligence and had not disclosed material facts, thereby committing professional misconduct. (Paras 1-5) B) Disciplinary Proceedings - Council's Recommendation - Section 21(6) of the Chartered Accountants Act, 1949 - The High Court, in exercise of its powers under Section 21(6), confirmed the recommendation of the Council for removal of the respondent's name from the register of members for a period of one year, as the respondent was found guilty of professional misconduct. (Para 5)
Issue of Consideration
Whether the respondent, a Chartered Accountant, is guilty of professional misconduct under Clauses (5), (6), (7), (8) and (9) of Part I of Second Schedule to the Chartered Accountants Act, 1949, and whether the recommendation of the Council for removal of his name from the register of members for one year should be confirmed.
Final Decision
The High Court confirmed the recommendation of the Council of the Institute of Chartered Accountants of India and ordered the removal of the name of the respondent, S. Giridharan, from the register of members for a period of one year.
Law Points
- Professional misconduct
- Chartered Accountant
- Audit report
- Balance sheet
- Disciplinary proceedings
- Removal from register
- Section 21(5) and 21(6) of Chartered Accountants Act
- 1949
- Clauses (5) to (9) of Part I of Second Schedule to the Act
