Due diligence in certifying corporate filings requires verification of board records, and careless certification amounts to professional misconduct.

A practising company secretary must verify the supporting corporate records before certifying statutory filings, especially where management control is disputed. In certifying Form-32 for Shri Bishender Singh's appointment, the form described him as a Promoter Director although the board had approved him only as an Additional Director, and the supporting resolutions were not properly verified. In certifying cessation of two directors under section 283(1)(g) of the Companies Act, 1956, the relevant notice, service, attendance, minutes and quorum materials were not examined with sufficient care. The disciplinary finding of professional misconduct was sustained, and the reprimand and fine were maintained.

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Issues: (i) Whether the appellant was guilty of professional misconduct for certifying Form-32 relating to the appointment of Shri Bishender Singh by treating him as a Promoter Director instead of an Additional Director; (ii) Whether the appellant failed to exercise due diligence while certifying Form-32 relating to cessation of the complainant and his wife as directors under section 283(1)(g) of the Companies Act, 1956.

Issue (i): Whether the appellant was guilty of professional misconduct for certifying Form-32 relating to the appointment of Shri Bishender Singh by treating him as a Promoter Director instead of an Additional Director.

Analysis: The material showed that the Board had approved Shri Bishender Singh only as an Additional Director, while the form certified by the appellant described him as a Promoter Director. The record relied upon for certification was not supported by the original resolutions and accompanying documents expected of a practising company secretary. In a disputed management situation, the appellant was required to verify the basis of the appointment with greater care and maintain proper supporting documents before certifying the filing.

Conclusion: The appellant failed to exercise due diligence and was rightly held guilty on this issue.

Issue (ii): Whether the appellant failed to exercise due diligence while certifying Form-32 relating to cessation of the complainant and his wife as directors under section 283(1)(g) of the Companies Act, 1956.

Analysis: The appellant certified the cessation on the footing that the directors had absented themselves from three consecutive board meetings, but the surrounding material indicated a disputed factual background and raised questions about notice, service, attendance, and the relevance of the meeting held on 20 December 2011. A practising company secretary was expected to examine the notice, agenda, proof of dispatch, minutes, quorum and related documents with care before endorsing removal under a provision that has serious consequences for directorial office. The Authority found that such diligence was not shown.

Conclusion: The appellant was guilty of negligence and misconduct on this issue as well.

Final Conclusion: The disciplinary finding of professional misconduct was sustained and the appeal was dismissed, with the reprimand and fine maintained.

Ratio Decidendi: A practising company secretary certifying statutory forms must verify the supporting corporate records with due diligence, and failure to do so in relation to director appointment or cessation amounts to professional misconduct when the certification affects public records and corporate rights.

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