Director resignation effective on communication: use of a chartered accountant's name in a prospectus amounted to misconduct.

A chartered accountant's resignation as a director was treated as effective when tendered or communicated, in the absence of any contrary provision in the company's articles or memorandum. Because the public issue opened after the resignation, his name should not have appeared in the prospectus. The court also held that proof of actual investor deception was unnecessary once he had lent his name to the prospectus, as the misconduct was complete on participation. The finding of other misconduct was affirmed and the recommendation to remove his name from the register of members for three months was upheld.

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Issues: Whether the chartered accountant had ceased to be a director before the public issue and, if so, whether his name appearing in the prospectus amounted to other misconduct under the Chartered Accountants Act, 1949.

Analysis: The public issue opened after the chartered accountant had tendered his resignation, and the materials on record did not establish any contrary articles or memorandum governing resignation. In the absence of a specific provision to the contrary, the governing principle applied was that resignation of a director takes effect from the date it is tendered or communicated. On that basis, his name could not properly have appeared in the prospectus. The Court further held that actual proof of investor deception was unnecessary once the act of lending his name to the prospectus was established, because the misconduct was complete upon such participation.

Conclusion: The finding of guilt for other misconduct was affirmed, and the recommendation that the chartered accountant's name be removed from the register of members for three months was upheld.

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