Other misconduct under Chartered Accountants law confirmed for facilitating ante-dated stock invest allotments and irregular share issuance.

A Chartered Accountant acting as Chairman-cum-Whole Time Director was found to have participated in arranging ante-dated stock invests and facilitating an irregular public issue allotment after the issue had closed. The disciplinary materials showed awareness of the closure, acceptance of applications supported by ante-dated instruments, disregard of withdrawal communications, and issuance of share certificates despite those defects. On that basis, the conduct was treated as unbecoming of a Chartered Accountant and as other misconduct under the Chartered Accountants Act, 1949, attracting disciplinary sanction of suspension from membership for one year.

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Issues: Whether the respondent was guilty of other misconduct under the Chartered Accountants Act, 1949 for his role in arranging ante-dated stock invests and facilitating irregular allotment in the public issue.

Analysis: The materials before the Court showed that the respondent, a Chartered Accountant and Chairman-cum-Whole Time Director of the company, was associated with the finance arrangement for obtaining ante-dated stock invests after the public issue had closed. The disciplinary record and the earlier SEBI findings indicated that the respondent was aware of the closure of the issue, yet applications supported by ante-dated instruments were accepted, withdrawal communications were ignored, and share certificates were still issued. The respondent also failed to file any effective response before the disciplinary process or before the Court. The Court accepted the disciplinary committee's reasoning that the conduct was unbecoming of a Chartered Accountant and that it fell within other misconduct under the Act.

Conclusion: The respondent was held guilty of other misconduct under the Chartered Accountants Act, 1949, and the reference was answered against him, warranting suspension from membership for one year.

Ratio Decidendi: A Chartered Accountant who, in an executive capacity, participates in or facilitates a manipulated securities allotment process involving ante-dated instruments and ignores the withdrawal and closure of the issue commits other misconduct under the Chartered Accountants Act, 1949 and is liable to disciplinary sanction.

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