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of <h1>High Court upholds Council's decision on chartered accountant complaint referral</h1> <h3>Ajit Kumar Iddya Versus Institute of Chartered Accountants of India</h3> The High Court dismissed the writ petition challenging the Council's decision to refer a complaint against a chartered accountant to its Disciplinary ... Resolution for appointing or removing auditors Issues Involved:1. Reference of Complaint to Disciplinary Committee2. Compliance with Section 225 of the Companies Act3. Prima Facie Opinion of Misconduct4. Jurisdiction of the High Court in Writ PetitionsDetailed Analysis:1. Reference of Complaint to Disciplinary Committee:The petitioner, a chartered accountant, challenged the Council's decision to refer a complaint against him to its Disciplinary Committee. The complaint alleged that the petitioner accepted an appointment as an auditor without ensuring compliance with Section 225 of the Companies Act. The Council expressed a prima facie opinion of professional and/or other misconduct. The court noted that the essence of the allegation was the petitioner's failure to ascertain from the company whether the requirements of Section 225 were duly complied with.2. Compliance with Section 225 of the Companies Act:The petitioner argued that the requisite notices were sent under a certificate of posting and that the outgoing auditor had knowledge of the proposal. Legal opinions were obtained to support compliance. The court emphasized that 'to ascertain' means to make certain or precise, and a casual inquiry is insufficient. The auditor must verify the company's compliance with Section 225 through a proper probe into the relevant facts. The court explained that the Institute's guidelines, which suggest sending notices by registered post, do not have statutory force and cannot enlarge the statutory concept of misconduct under the Chartered Accountants Act.3. Prima Facie Opinion of Misconduct:The court discussed the term 'prima facie of opinion,' indicating the existence of some material that leads to an initial opinion that the complaint is not frivolous. The court held that the Council's prima facie opinion does not shift the burden of proof to the member; the Disciplinary Committee must establish the misconduct through its proceedings. The court refrained from expressing any opinion on the material on record to avoid affecting the Disciplinary Committee's proceedings.4. Jurisdiction of the High Court in Writ Petitions:The respondent argued that the writ petition was premature and that the petitioner had an effective alternative remedy before the Disciplinary Committee. The court agreed, stating that the proceedings before the Disciplinary Committee are not lengthy and are governed by Section 21(4) of the Chartered Accountants Act. The court emphasized that it is primarily for the disciplinary body to examine the case objectively and fairly. The court dismissed the writ petition, noting that the petitioner could appeal to the High Court under Section 22A of the Chartered Accountants Act if an adverse finding is given.Conclusion:The writ petition was dismissed, and the court discharged the rule. The court highlighted the importance of maintaining professional integrity and avoiding unnecessary disciplinary proceedings driven by professional rivalry. The proceedings against the petitioner were to be concluded with utmost speed, as assured by the counsel for the Institute.
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