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Issues: (i) Whether the respondent was guilty of misconduct in relation to the irregular allotment of shares through stock invests issued after closure of the public issue. (ii) Whether the respondent was guilty of misconduct in relation to the use of ante-dated stock invests and the consequent irregular allotment of shares.
Issue (i): Whether the respondent was guilty of misconduct in relation to the irregular allotment of shares through stock invests issued after closure of the public issue.
Analysis: The record showed that the respondent arranged finance, obtained stock invests against his own fixed deposits, and handed over the instruments and applications in a manner that enabled irregular allotments after the public issue had closed. The findings of the disciplinary authorities, together with the respondent's statement, supported a conclusion of active association with the promoter and not a detached professional role. The Court treated this conduct as beyond the permissible conduct of a chartered accountant and as constituting misconduct under the Act.
Conclusion: The issue was decided against the respondent and in favour of the petitioner.
Issue (ii): Whether the respondent was guilty of misconduct in relation to the use of ante-dated stock invests and the consequent irregular allotment of shares.
Analysis: The evidence established that stock invests were issued after the closure of the issue, that the respondent had earlier accepted ante-dating, and that he derived benefit from the transactions. The Court relied on the chain of events and the disciplinary findings to hold that the respondent was the central participant in the transactions and had facilitated allotments detrimental to the investing public. This conduct was treated as other misconduct under the Act.
Conclusion: The issue was decided against the respondent and in favour of the petitioner.
Final Conclusion: The reference was accepted, the disciplinary recommendation was upheld, and the respondent was directed to suffer suspension from membership for one year with costs.
Ratio Decidendi: Conduct by a chartered accountant that facilitates irregular allotment of shares through stock invests and ante-dated instruments, even if not falling within a scheduled act of misconduct, can constitute other misconduct under the Chartered Accountants Act, 1949 when the evidence shows active connivance and participation.
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