2023 (10) TMI 1294 - HC - Indian Laws

77-year-old chartered accountant escapes removal from practice due to 19-year delay in disciplinary proceedings

The Institute of Chartered Accountants of India, Versus CA Gordhanbhai Madhabhai Savalia

The Bombay HC disposed of a professional misconduct reference against a 77-year-old chartered accountant accused of fabricating bogus payment challans and ... Professional Misconduct - Chartered Accountant (CA) - Delay of 19 years for completion of Proceeding on the part of ICAI - fabrication of bogus payment challans by putting forged stamp of Dena Bank, Vile Parle (W) Branch - allegation to have collected account payee cheques for making payment of sales tax dues which he misappropriated by depositing in his own bank account - HELD THAT:- The sequence of events clearly indicate that firstly the complaint itself was made after 10-12 years of the incident having taken place. Thereafter, it took the Council as many as 14 years to complete the procedure prescribed under the Act and reach a finding of guilt of Respondent. Another almost two years were spent in the process of filing the Reference and finally, about four more years were spent in removing office objections to get the Reference registered. Thus, the Council has prolonged the procedure for as many as 19 years and kept Respondent in the dock for the entire period. Considering the nature of accusation against Respondent, the finding of guilt by the Committee and the Council and the consequent penal recommendation of such grave ramification, it is surprising that the Institute took such a long time to complete the procedure of indictment. The attitude of the Institute appears to be completely casual and negligent - Respondent is presently 77 years of age and save and except a period of five years for which he himself had surrendered his certificate of practice, he has been professionally active and no other complaint is found to have been made against him. The Institute has offered no explanation whatsoever for the inordinate delay in initiating and concluding the disciplinary action against Respondent. The Supreme Court in its decision in the matter of State of Madhya Pradesh v Bani Singh [1990 (4) TMI 286 - SUPREME COURT] has quashed the charge memo and the departmental enquiry against an officer of the SAF, Gwalior on the ground of inordinate delay of 12 years to initiate departmental proceedings with reference to an incident that took place in 1975-76 and held that since there was no satisfactory explanation for the delay, it will be unfair to permit departmental enquiry against the officer to continue. In the present case no explanation is offered by the Institute for the inordinate delay of as many as 19 years. Respondent has inasmuch suffered the agony of the sword of Damocles hanging over his head for so many years. In any case, we do not find that the Committee has found any substantial justification in the form of unrebutted evidence against Respondent as much as to hold him guilty to the extent that his name should be removed for a period of one year and Respondent be compelled to face an ignominy of the tag of ‘other misconduct’ at this stage in his professional career and at an age of 77 years - even the Council has merely reproduced the report of the Committee without giving its own independent findings. There is neither any analysis by the Council nor any justification recorded to explain the quantum of punishment recommended to this Court. The view of Council is wholly untenable and the recommendation of the Council as prayed cannot be accepted. In view thereof, there is no need to take any further action against Respondent - Reference disposed off. Issues Involved:1. Allegations of Professional Misconduct2. Disciplinary Proceedings and Findings3. Delay in Proceedings4. Acquittal in Criminal Case5. Council's Recommendation and Judicial ReviewSummary:1. Allegations of Professional Misconduct:The Institute of Chartered Accountants of India ('the Institute') received a complaint alleging that the Respondent, a Chartered Accountant, fabricated bogus payment challans and misappropriated funds meant for sales tax payments during 1992-1994. The complaint was filed by the Director of M/s. Twincity Glass Pvt. Ltd. in April 2004.2. Disciplinary Proceedings and Findings:Upon receiving the complaint, the Institute called for a response from the Respondent, who denied all allegations. The Council of the Institute found a prima facie case of professional misconduct and referred it to the Disciplinary Committee. The Committee, after hearings, found the Respondent guilty of 'other misconduct' under Sections 21 and 22 of the Chartered Accountants Act, 1949, and recommended his removal from the Register of Members for one year.3. Delay in Proceedings:The judgment highlights the inordinate delay in the proceedings. The complaint was filed in 2004, but the final recommendation was made only in 2018, with the Reference being filed in 2019 and registered in 2023. The Court criticized the Institute for the 19-year delay, noting that it kept the Respondent in a prolonged state of uncertainty.4. Acquittal in Criminal Case:The Respondent was acquitted of all charges in a related criminal case by the Additional Chief Metropolitan Magistrate in May 2018. The Court noted that the criminal court's acquittal, based on the 'proof beyond reasonable doubt' principle, casts doubt on the findings of the Disciplinary Committee, which operates under a lesser degree of proof.5. Council's Recommendation and Judicial Review:The Court found that the Council merely reproduced the Committee's report without independent analysis or justification for the recommended punishment. Citing principles of natural justice, the Court emphasized the need for reasoned decisions. The Court concluded that the prolonged delay and lack of substantial evidence warranted no further action against the Respondent, directing the proceedings to be filed by the Institute.Conclusion:The Reference was disposed of with no order as to costs, and the Court directed that no further action be taken against the Respondent.