TaxTMI 
TaxTMI 
2019 (8) TMI 415
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....s a member of ICAI and is a practicing Chartered Accountant. The petitioner alleges that HA is guilty of professional misconduct on account of verifying forms (Forms-23 AC) containing false statements filed in respect of seven separate companies. The said forms were filed online in respect of various financial years commencing from the financial year 2009-10 to 2013-14. 3. The petitioner caused its advocates to issue a legal notice dated 22nd May, 2015 to HA, alleging misconduct and calling upon him to respond within a period of ten days while reserving the right to file a complaint in that regard. Thereafter, on 24th October, 2016, the petitioner filed a complaint with ICAI alleging that HA was guilty of professional misconduct as stipulated under Clauses (5) to (9) of Part-I of the Second Schedule of the Act. As noticed above, the said allegations were made in the context of the forms verified in respect of seven separate companies, namely, Napean Trading and Investment Company Private Limited (hereafter Napean); Prazim Trading and Investment Company Private Limited (Prazim); Regal Investment and Trading Company Private Limited (hereafter Regal); Tarish Investment and Trading ....
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....submitted that notes to the financial statements forming a part of the balance sheet of Hasham disclosed that three companies, namely Napean, Regal and Vidya, as its subsidiaries, but the Forms-23AC verified by HA had indicated that Hasham did not have any subsidiary. He submitted that this was palpably false and clearly established that false information had been submitted to the ROC. Similarly, he stated that the Forms- 23ACs in respect of other companies, namely, Napean, Vidya and Regal did not reflect that they were subsidiaries of Hasham. 8. He contended that although Hasham did not hold a majority share in the three companies (namely, Napean, Regal and Vidya); the Board of Directors of Hasham had passed a resolution on 18.06.2004 wherein the Chairman of the Company had recorded that Hasham controlled the majority of the Board of Directors of the aforesaid companies. He submitted that in terms of Section 4(1)(a) of the Companies Act, 1956, Hasham was a holding company of the three companies in question. He contended that the opinion formed by the Board of Discipline was thus unsustainable. Reasons and Conclusion 9. At the outset it is relevant to note that the petitio....
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.... of industry, purchasing techniques (including construction of plants and buildings), production, purchases, sales, material and cost controls, marketing, advertisement, publicity, personnel, export and import for any company, corporation, institution, concerns, bodies, associations (incorporated or unincorporated), departments and services of the government, public or local authorities, trusts, Scientific Research and Development Centres, and to be appointed as technical, financial, industrial, administration, civil consultants." * * * 32. To promote, assist or take part in and appear or lead evidence before any commission, investigation, inquiry trial or hearing whether public or private relating to matter or connected with any trade business or industry. 14. The aforesaid contention is plainly unmerited. The petitioner company has been formed with the main objects as are set out in PartA of the Objects Clause. The same are reproduced below:- "(A) THE MAIN OBJECTS TO BE PERUSED BY THE COMPANY ON ITS INCORPORATION: 1. To carry on the business of wholesalers in all kinds of goods and products including goods, manufactured by and/or for it and to tra....
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....ning the main object and not objects that can be pursued independent of the main objects. They are, as the heading indicates, incidental or ancillary to the attainment of the main objects. 19. Thus, the activity specified in Clause 4 and Clause 32 are objects, which may be carried on as incidental or ancillary to attainment of the main object. They cannot be pursued independent of the main objects. The Petitioner's Memorandum of Association includes other objects as well (Section (C) of Part III); however, filing complaints against various professionals, as an organised activity, is not one of them. 20. Having stated the above, it is apparent from a plain reading of Clause 4 that it also contemplates activities, which are for carrying on a business or vocation and not as a vocation, by itself. The activity as contemplated under Clause 32 also does not contemplate filing complaints against various professionals wholly unconnected with the business or the activities of the petitioner company. 21. It is possible that in the course of business, the petitioner may come across documents or become aware of facts that indicate that a chartered accountant has misconducted himsel....
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....the composition of the Board of Directors of any of the other companies. In order to establish that the composition of the Board of Directors of Napean, Regal and Vidya were controlled by Hasham, it was necessary for the petitioner to establish that those companies (Napean, Regal and Vidya) were bound to appoint and remove Directors at the instance of Hasham. This may be provided either by including a provision in the Articles of Association or by execution of any other instrument. However, no such material is produced. The petitioner merely relies on a copy of the resolution passed by the Board of Directors of Hasham on 18th June, 2014 (that is in the next financial year 2014-15). This would not assist the complainant in establishing that a false statement was made in respect of forms verified for the Financial year 2013-14. 26. As noticed above, the companies in question are closely held private companies and there is no element of public interest involved in the complaint made. Even if it is accepted that an error had crept in the form uploaded by HA, it is doubtful that the same could be construed as the petitioner being grossly negligent in his professional duties. 27. I....