Stale professional misconduct complaints may be refused under Rule 12 where delay causes evidentiary difficulty and procedural prejudice.
A company cannot maintain disciplinary complaints against chartered accountants where the complaints do not arise from any real connection with its own business or corporate purpose, and its memorandum of association does not support such action. Under Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Director (Discipline) may decline to entertain a complaint older than seven years if delay has created evidentiary difficulty, defensive prejudice, or procedural inconvenience. The fact that a response has been filed does not bar reliance on Rule 12 where records and witnesses are no longer readily available. The disciplinary order was upheld and no interference under Article 226 was warranted.
Issues: (i) Whether the petitioner company was entitled to pursue complaints against Chartered Accountants unconnected with its business; (ii) Whether the Director (Discipline) could refuse to entertain the complaint under Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 on the ground that the complaint related to alleged misconduct more than seven years old and would be procedurally inconvenient and difficult to defend.
Issue (i): Whether the petitioner company was entitled to pursue complaints against Chartered Accountants unconnected with its business.
Analysis: The petitioner's complaints were not shown to arise from any direct dealing with the Chartered Accountant or the companies whose audits were questioned. The Court noted that the petitioner had no real connection with the transactions in issue and that the attempt to pursue such complaints was being made through a corporate structure unrelated to its business. The Court also found that the petitioner's memorandum of association did not justify such activity.
Conclusion: The petitioner was not entitled to maintain such complaints as a matter of corporate purpose, and the objection to its pursuit of unrelated disciplinary complaints was rejected.
Issue (ii): Whether the Director (Discipline) could refuse to entertain the complaint under Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 on the ground that the complaint related to alleged misconduct more than seven years old and would be procedurally inconvenient and difficult to defend.
Analysis: Rule 12 permits refusal to entertain a complaint made after seven years where the Director is satisfied that proper evidence would be difficult to secure, the member would have difficulty in defending himself, or the inquiry would become procedurally inconvenient or difficult because of changes over time. The complaint related to audit reports prepared years earlier, the member had retired from the firm, and access to records and evidence had become constrained. The Court held that the fact that a response had been filed did not prevent reliance on Rule 12, since the practical difficulty in leading evidence to defend the complaint remained.
Conclusion: The Director (Discipline) and the Board of Discipline were justified in declining to entertain the complaint, and no interference was warranted under Article 226 of the Constitution of India.
Final Conclusion: The impugned disciplinary order was upheld and the petition was found to be without merit, warranting dismissal with costs.
Ratio Decidendi: Judicial review will not interfere with a disciplinary authority's refusal to entertain a stale professional-misconduct complaint where the authority is satisfied that delay has created evidentiary difficulty or procedural inconvenience and the decision is neither perverse nor unreasonable.
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