2016 (7) TMI 1189 - HC - Indian Laws

Court dismisses contempt petition over Chartered Accountant practice, finding respondent's actions permissible under law

The Court dismissed the contempt petition, finding that the respondent's actions did not constitute a wilful violation of the undertaking given to the ... Contempt of court - undertaking to the court / binding statement - practice of chartered accountancy - meaning of 'to be in practice' - holding out as a chartered accountant - advertisement and teaching/coaching activities vis-a -vis professional practiceContempt of court - undertaking to the court / binding statement - advertisement and teaching/coaching activities vis-a -vis professional practice - Whether the respondent wilfully violated the undertaking given to the Court on 14.03.2016 by issuing advertisements and conducting coaching classes, thereby attracting contempt proceedings. - HELD THAT: - The Court recorded that on 14.03.2016 the respondent, through counsel, undertook that he 'shall voluntarily not practice the profession of Chartered Accountant till the next date of hearing,' and the statement was accepted and held binding on the petitioner. The statutory definition of being 'in practice' under Section 2(2) of the Chartered Accountants Act, 1949 was examined, which includes engaging in accountancy practice, offering or performing auditing/verification/related accounting services, rendering professional services relating to accounting procedures, or holding oneself out to the public as an accountant. The advertisements relied upon by the petitioner showed that the respondent was running coaching classes for aspirants to the chartered accountancy profession and did not offer or advertise auditing, verification, preparation, certification of financial statements, or similar professional accounting services. On that factual and legal matrix, offering coaching or training to aspirants was held not to amount to engaging in the practice of accountancy as defined in Section 2(2), and therefore did not constitute a wilful breach of the undertaking to the Court. [Paras 5, 7, 8, 9, 14]The allegation of wilful violation of the undertaking by issuing advertisements and running coaching classes is rejected; the conduct did not constitute contempt.Holding out as a chartered accountant - practice of chartered accountancy - meaning of 'to be in practice' - Whether the respondent was precluded from using the prefix/suffix 'CA' after being held guilty by the Board of Discipline but prior to any punishment of removal or suspension, and whether use of 'CA' amounted to holding out as in practice. - HELD THAT: - The Court noted that the respondent remained a registered member of the Institute until and unless removed from the rolls or suspended. The Board of Discipline had found guilt of 'other misconduct' and the punishments to follow included removal, suspension or reprimand. As of the relevant time the respondent had not been suspended or removed and was ultimately awarded only a reprimand. Consequently, the respondent was entitled to use the prefix/suffix 'CA' while on the rolls. The mere inclusion of 'CA' with his name in advertisements for coaching did not, in the circumstances, amount to holding himself out as engaging in the practice of accountancy under the statutory definition. [Paras 11, 12, 13]Use of the designation 'CA' by the respondent while he remained on the rolls did not amount to holding out as being in practice, and was permissible; this did not constitute breach of the undertaking.Final Conclusion: Petition dismissed for lack of merit; no wilful breach of the undertaking established and the contention that the respondent's advertisements and coaching amounted to practising as a chartered accountant is rejected; the earlier listing date was cancelled. Issues:Violation of statement given to the Court regarding practicing chartered accountancy.Analysis:The petitioner filed a contempt petition alleging that the respondent wilfully violated a statement made in a previous petition regarding not practicing as a Chartered Accountant until the next hearing. The respondent had challenged a report by the Board of Discipline of the Institute of Chartered Accountants of India, which found him guilty of misconduct under the Chartered Accountants Act, 1949.During the previous hearing, the respondent had given a statement through his counsel that he would not practice as a Chartered Accountant until the next hearing. The petitioner contended that despite this statement, the respondent had advertised himself as a Chartered Accountant in April and May 2016, thus violating the commitment made to the Court.The Court examined the definition of 'to be in practice' as per Section 2(2) of the Chartered Accountants Act, which includes engaging in accountancy, offering auditing services, or holding oneself out as an accountant. The respondent was accused of running coaching classes for Chartered Accountant aspirants, but the Court noted that this did not amount to practicing as a Chartered Accountant under the Act.Moreover, the respondent's use of 'CA' in his name was considered valid as long as he was registered as a Chartered Accountant. The Court highlighted that the respondent had been awarded a punishment of reprimand, not suspension or removal, by the Institute of Chartered Accountants of India.Ultimately, the Court found no merit in the contempt petition, stating that the respondent's actions did not constitute a wilful violation of the undertaking given to the Court. The petition was dismissed, and the next hearing date was canceled.