Confidentiality breach by chartered accountant amounts to grave professional misconduct, though disciplinary proceedings may be filed in suitable cases.

A chartered accountant owes a duty of secrecy in respect of confidential information obtained through professional engagement, and disclosure to third parties without the client's consent is inconsistent with honesty, good faith and professional propriety. Such unauthorized disclosure constitutes grave professional misconduct within the Chartered Accountants Act, 1949. Although misconduct was established, the High Court considered the long lapse of time, the respondent's disturbed state of mind and his present lack of professional activity, and directed that the proceedings be filed instead of imposing reprimand or removal.

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Issues: Whether disclosure by a chartered accountant of information obtained in the course of audit without the client's consent constituted professional misconduct, and whether the circumstances justified filing the proceedings instead of imposing a punitive order.

Analysis: A member of the Institute who, by reason of professional engagement, acquires confidential information owes a duty of secrecy to the client. Disclosure of such information to third parties without consent is inconsistent with the standards of honesty, good faith, and professional propriety expected of an auditor and amounts to grave professional misconduct within the scheme of the Chartered Accountants Act, 1949. The statutory scheme empowers the High Court, on reference, to either reprimand the member, remove him from membership, refer the matter for further inquiry, or direct that the proceedings be filed. Although misconduct was established, the Court took into account the long lapse of time, the respondent's disturbed state of mind, and his present lack of professional activity.

Conclusion: The disclosure amounted to professional misconduct, but the case was fit for filing the proceedings rather than imposing reprimand or removal.

Ratio Decidendi: Unauthorized disclosure of confidential information obtained in the course of professional engagement by an auditor constitutes grave professional misconduct, but the Court may, in appropriate circumstances, direct that the proceedings be filed instead of imposing a disciplinary penalty.

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