2023 (8) TMI 983 - HC - Indian Laws

High Court disposes CA Act reference, finds guilt but no action due to time lapse, abates deceased's case.

The High Court of Bombay disposed of the reference under the Chartered Accountants Act, 1949, finding Mr. R. Salivati guilty on three counts but decided ... Disciplinary Proceedings against Chartered Accountant (CA) - Irregularities in Securities and Banking Transactions (the JPC) SEBI Inspection Report on Canbank Mutual Fund (CBMF) and Annual Reports of various schemes of CBMF for the year 1991-92 - removal of Respondents from the register of members for a period of six months - HELD THAT:- Considering the nature of the charges, the three charges only relate to non-reporting in the annual reports of CBMF. Respondent is not accused of indulging in violative transactions or Respondent was responsible or liable for the alleged losses of CBMF or Respondent indulged in direct or indirect lending or underwriting etc. Nothing has been brought to our notice that Respondent had committed any similar offence earlier or later, in view of the fact that the matter relates to Financial Year 1991-1992. Almost 21 years have passed since the report was received from the Disciplinary Committee. The information relates to Financial Year 1991-92 and the Institute received it in 1995. The fact that the pendency of this Reference itself would have been like the proverbial Damocles sword hanging over the head of Respondent for about 30 years and in view of the fact that Mr. Mehta has given an undertaking on instructions as recorded, there is no need to take any further action against Mr. Salivati. It is directed that the proceedings be filed by the Institute - Reference disposed. Issues involved:This case involves a reference under Section 21(5) of the Chartered Accountants Act, 1949 against the concerned partners of a firm regarding violations related to Securities Transactions of Banks and Financial Institutions, irregularities in Securities and Banking Transactions, and Annual Reports of Canbank Mutual Fund for the year 1991-92.Details of the Judgment:1. Abatement of Reference against Deceased Respondent:The reference against Respondent No.1 abated due to his demise, leaving the case to be decided solely against Respondent No.2.2. Charges and Findings Against Respondent No.2:Respondent No.2, Mr. R. Salivati, was charged on 16 counts but found guilty on 3 counts, including violations of RBI guidelines, losses in the secondary market, and indirect lending by Canbank Mutual Fund.3. Status of Criminal Prosecution:The Institute's counsel could not confirm the status of any criminal prosecution against the Respondents, and it was unclear if Mr. Salivati was accused in any proceedings.4. Retirement and Surrender of Certificate of Practice:Mr. Salivati retired on 31st March 2016, surrendered his certificate of practice in June 2017, and the Institute subsequently canceled his certificate.5. Undertaking and Designation Usage:Mr. Salivati agreed not to apply for a Certificate of Practice again and not to use the designation of Chartered Accountant for six months as per the Institute's directive.6. Decision and Disposal of Reference:Considering the nature of the charges and the time elapsed since the alleged violations in 1991-92, the Court decided not to take further action against Mr. Salivati. The proceedings were directed to be filed by the Institute, and the reference was disposed of with no order as to costs.7. Conclusion:The Court found that the prolonged pendency of the reference over almost 30 years, coupled with Mr. Salivati's undertaking and lack of similar offenses, did not warrant any additional action against him.Judgment: The High Court of Bombay disposed of the reference under the Chartered Accountants Act, 1949, finding Mr. R. Salivati guilty on three counts but deciding not to take further action due to the extended duration since the alleged violations and the Respondent's undertaking.