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of <h1>CA's challenge to NFRA professional misconduct proceedings fails as natural justice violation claim rejected</h1> <h3>CA Pranaav G. Ambekar Versus National Financial Reporting Authority (NFRA) & Ors.</h3> CA Pranaav G. Ambekar Versus National Financial Reporting Authority (NFRA) & Ors. - TMI Issues involved:The judgment involves a challenge against an order passed by the National Financial Reporting Authority (NFRA) under Section 132(4) of the Companies Act, 2013, regarding professional misconduct by a Chartered Accountant (CA) during the statutory audit of a company for the Financial Year 2018-19.Details of the Judgment:1. The NFRA found the Appellant guilty of professional misconduct under Section 132(4) of the Companies Act, 2013, and clauses of the Institute of Chartered Accountants of India Act. The Appellant was penalized with Rs. 5 Lac and debarred for five years from certain auditing roles.2. NFRA initiated investigations into the statutory auditors' professional conduct after receiving a report from the Securities and Exchange Board of India regarding diversion of funds from subsidiary companies to an entity owned by the promoters.3. Statutory auditors, including the Engagement Partners and Team, are bound by duties and responsibilities prescribed in the Act, Rules, and Standards on Auditing. Violation of these constitutes professional misconduct punishable under Section 132(4)(c) of the Act.4. NFRA is a statutory authority established to monitor auditing and accounting standards compliance and ensure service quality.5. NFRA's investigation revealed various failures by the Company Auditors during the audit, including lack of competence, conflict of interest, failure to exercise professional judgment, and failure to report misstatements, resulting in significant financial discrepancies.6. The Appellant challenged the order based on non-compliance with the principle of natural justice, claiming the show cause notice lacked accompanying documents, which hindered his ability to respond adequately.7. The Appellant argued a violation of natural justice due to the absence of relevant documents with the show cause notice, preventing him from preparing a proper response.8. The Respondent contended that the Appellant, being an Engagement Partner, was aware of the proceedings and relied on the Firm's response to the show cause notice, thus negating the claim of a natural justice violation.9. After hearing arguments from both sides, the Tribunal found no merit in the Appellant's claim of a natural justice violation, as he had relied on the Firm's response and did not request additional documents during the response period.10. The Tribunal dismissed the appeal, citing the Appellant's reliance on the Firm's response as his own and the lack of merit in the natural justice claim. No costs were awarded in the judgment.
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