2017 (12) TMI 1812 - HC - Companies Law

Dismissal of Petition for Audit Investigation; Costs Imposed on Petitioner

WHOLESALE TRADING SERVICES P LTD. Versus INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND ANR

The court dismissed the petition seeking completion of the investigation procedure under Rule 9 of the Chartered Accountants Rules within 14 weeks. The ... Seeking direction for completion of entire procedure as required under Rule 9 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 within a maximum period of 14 weeks - HELD THAT:- Apparently, the petitioner had filed a writ petition in respect of another complaint which had been pending enquiry for a considerable period time - Admittedly, there were considerable delays in processing the petitioner’s complaint in that case. However, no such grievance can be made by the petitioner in the facts of the present case, where the Director (Discipline) has already completed the process of examining the petitioner’s complaint. This Court is of the view that the present petition is unmerited and wholly unjustified. This court is also of the view that such frivolous petitions ought to be discouraged - Petition dismissed with cost quantified at ₹10,000/-. Issues:1. Petition seeking completion of investigation procedure under Rule 9 of Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 within 14 weeks.2. Allegation of professional misconduct by a firm of Chartered Accountants in audit of a partnership firm.3. Lack of specified time frames for processing complaints under Rule 9.4. Petitioner's demand for completion of enquiry within 14 weeks and subsequent court petition.5. Respondent's argument of pending complaints and lack of undue delay.6. Previous legal actions by petitioner in similar cases.7. Lack of direct interest of petitioner in the matter.Analysis:1. The petitioner filed a petition requesting the completion of the investigation procedure under Rule 9 of the Chartered Accountants Rules within 14 weeks. The complaint alleged professional misconduct by a firm of Chartered Accountants in the audit of a partnership firm based in Chennai. The petitioner sought direction for the respondents to complete the procedure within a specified time frame, emphasizing the lack of defined time limits under Rule 9.2. The petitioner's demand for the completion of the enquiry within 14 weeks was based on the respondent's alleged refusal to respond to the request, leading to the court petition. The court noted the absence of specified time frames for processing complaints under Rule 9, which prompted the petitioner to approach the court seeking a directive for timely completion of the investigation.3. The respondent argued that there were several pending complaints, and the petitioner's complaint would be addressed in due course. The court observed that there was no undue delay in processing the petitioner's complaint, and the petitioner had no right to insist on precedence over other pending complaints before the Disciplinary Authorities of ICAI.4. Previous legal actions by the petitioner in similar cases were highlighted, where delays were noted in processing complaints. However, in the present case, the Director (Discipline) had already completed the examination of the petitioner's complaint, leading the court to view the current petition as unmerited and unjustified, emphasizing the need to discourage frivolous petitions.5. The court also noted that the petitioner did not have a direct interest in the matter, as the complaint pertained to alleged professional misconduct by chartered accountants in auditing a third party. Consequently, the petition and application were dismissed with costs quantified at Rs. 10,000, to be deposited with the Delhi High Court Legal Services Committee within three weeks from the judgment date.