TaxTMI 
TaxTMI 
2021 (12) TMI 127
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....368/2021(Clarification of order dated 02.08.2021), 31765/2021(Addl. Doc.) 1. Being aggrieved and feeling dissatisfied with the judgment and order dated 13.05.2021, passed by the learned Single Judge in W.P.(C) 376/2021, present Letters Patent Appeal has been preferred by the Appellant. Writ petition was filed by the Appellant, impugning order dated 16.12.2020, passed by the Institute of Chartered Accountants of India (hereinafter referred to as 'ICAI'), whereby the complaint preferred by the Appellant against Respondent No. 3, a Chartered Accountant, was dismissed. Appellant herein was the Petitioner in the writ petition and the Chartered Accountant against whom the complaint was filed was Respondent No.3 and has been impleaded in the present appeal as Respondent No.3. For the sake of convenience, parties are hereinafter referred to by their litigating status before this Court. Factual Matrix i. A petition for merger was filed before the High Court of Karnataka by three Companies viz. a) M/s Napean Trading and Investment Company Private Limited; b) M/s Regal Trading and Investment Company Private Limited; and c) M/s. Vidhya Trading and Inve....
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....ingle Judge vide judgment dated 13.05.2021 imposing costs of Rs. 50,000/- on the Appellant. It is this judgment which is impugned before this Court in the present appeal. Arguments canvassed by counsel for the Appellant xii. It is submitted by learned counsel appearing on behalf of the Appellant that the ICAI has erroneously dismissed the complaint of the Appellant and the learned Single Judge has erred in upholding the order in as much as it is the Disciplinary Committee of the ICAI which has the original jurisdiction to take cognizance of a professional misconduct of a Chartered Accountant. Learned Single Judge could not have relied on the judgments of the Karnataka High Court as the proceedings before the Karnataka High Court, relating to recall of merger, were wholly unrelated to the complaint of professional misconduct by Respondent No.3, filed before the ICAI. xiii. Learned Single Judge failed to appreciate that there is no restriction on who can file a complaint under the Chartered Accountants Act, 1949 and the Rules framed thereunder and therefore, the question of locus of the Appellant in filing the complaint before ICAI did not even arise. Direc....
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....counts of the Companies and its wholly owned Subsidiaries reveal that the assets of the three Companies have been misused in the said five year period, for the benefit of the Director, to the extent of tens of thousands of crores of assets being gifted to a private Trust. Despite this, a false certificate had been given by Respondent No.3, in order to suppress the misuse and misappropriation. Arguments canvassed by Learned Senior Counsel for Respondent No. 3-Chartered Accountant xvi. Mr. Dayan Krishnan, learned Senior Counsel submits that no error has been committed by the learned Single Judge while passing the impugned judgment dated 13.05.2021 and upholding the order dated 16.12.2020 passed by the ICAI, whereby the complaint of the Appellant was dismissed. xvi. Respondent No.3 was appointed by the Karnataka High Court in the Company Petitions, wherein Scheme of Merger of the three Companies into M/s. Hasham Investment and Trading Company Private Limited, was sanctioned. Respondent No.3 was appointed to verify the books and papers of the three Transferor Companies and the report was given by Respondent No. 3 on 25.11.2014, which became a part of the judicial record of the....
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....nsferor Companies into M/s. Hasham Investment and Trading Company Pvt. Ltd., which is a Non-Banking Finance Company and a part of the closely held Group of Private Companies promoted by Sh. Azim Hasham Premji. Respondent No.3 was appointed by the Karnataka High Court for looking into the books and papers of the three Transferor Companies and to submit his report. After the report was rendered by the Chartered Accountant, the same was placed before the Court. Report was deliberated upon and after the same was duly considered, the Scheme of Merger was sanctioned by the Court. A recall application was filed by India Awake for Transparency, but the same was dismissed and the appeal before the Division Bench also met the same fate. xx. The complaint filed by the Appellant before Respondents No.1 and 2 related to allegations that the report filed by Respondent No.3 before the Karnataka High Court was incorrect and the Appellant also sought disciplinary action against Respondent No.3. Respondents No.1 and 2 rightly dismissed the complaint, noting that once the appointment of Respondent No.3 was made under orders of the Karnataka High Court and the report was considered by the Cou....
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....nataka High Court would apply with equal vigour to the present case. xxiii. Mr. R. Subramanian promoted a Company by the name of Subiksha Trading Service Ltd. and entered into certain business dealings with the Applicant, wherein the Applicant invested around Rs. 240 crores and extended a loan of Rs. 40 crores. Subiksha defaulted on payment of debts owed to the Applicant Company, as a consequence of which the Applicant resorted to remedies for recovery of money and also filed complaints under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheques worth Rs. 39.32 Crores. As a matter of vendetta, Mr. Subramanian has been filing cases against the Applicant Company, its Associate Companies, Directors, etc. as a matter of harassment and coercion. Cases have been filed in various Forums across the Country in different names, either in the name of Appellant or through India Awake for Transparency, which is a Company controlled by Mr. Subramanian. In the last five years, more than 36 cases have been filed and most of them have been dismissed with exemplary costs. In fact, the Karnataka High Court while dismissing a petition under Section 482 Cr.P.C. seeking q....
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....d a detailed report was furnished by Respondent No.3 on 25.11.2014, before the learned Single Judge of Karnataka High Court. II. The report was thus a part of the judicial proceedings before the said Court and it was duly considered and deliberated upon by the Karnataka High Court. The Court sanctioned the Scheme of Amalgamation vide judgment dated 26.03.2015 and it is apparent that the Court found no fault with or falsity in the report. III. Once the report passed the threshold of judicial scrutiny, there was no reason why the Disciplinary Committee of ICAI should have adjudicated the correctness or otherwise of the Report. In fact, the Disciplinary Committee rightly refrained from interfering in the report by observing that it had no jurisdiction to even delve into the report, once it had received approval from the Karnataka High Court. Hence, no error was committed by ICAI in dismissing the complaint filed by the Appellant. For ready reference, relevant paras of the order passed by the Disciplinary Committee of ICAI are as under:- "5. The Committee further noted that the Respondent conducted the audit on behalf of the Respondent firm whereby he, on ver....
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....ly by the applicant on 01.10.2020 as well as the orders passed by this Court in W.P.13838/2020 dated 08.01.2021 W.P.No. 11482/2020 dated 18.01.2021 and W.P.No.172/2021 dated 12.02.2021, all filed by the applicant which were dismissed with costs is sufficient to establish that the applicant is not entitled to any relief in the present application also; in fact, in the aforesaid W.P.No.172/2021 dated 12.02.2021, while dismissing the petition after noticing the conduct of the applicant, and imposing exemplary costs of Rs. 10 lakhs on the applicant, this Court held as under: xxx xxx xxx 27. Thus, there remains no doubt that petitioner is indulging in forum shopping on the very same cause of action. As held in Udyami, this amounts to criminal contempt as the core issue in all these writ petitions is one and the same. 28. In the result, this writ petition is not only devoid of merits, but an absolute abuse of process of law. Though Petitioner was forewarned, he chose to argue this writ petition as a stand-alone petition, wasting the valuable time of this Court to deal with such frivolous cases. Therefore, imposition of punitive cost is necessary. ....
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....e with the legal procedural requirement and hence cannot be entertained. 24. Despite the above circumstances, we have considered the order of learned Single Judge in light of the submission made by the learned counsel for the appellant and learned senior counsel for respondent No.1 and we find that the learned single judge was justified in dismissing the application filed in Company Application No.185/2016 seeking recall of the order dated 26.03.2015, by which, the scheme of the amalgamation of the three companies with respondent No.1 was sanctioned in Company Petition No.182/2014 as the appellant had no locus standi to file such an application hence, we find no merit in this appeal and the appeal is hence liable to be dismissed. 25. Before parting with this judgment, we would like to remind ourselves that in recent years there has emerged a trend of filing speculative litigation before various courts of law, not just in the Court of first instance, but also in the High Court. It is the duty of the Courts to ensure that such speculative litigation is weeded out at the first instances rather than allowing it to be festered and thereby coming in the way of genuine l....
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....ised by India Awake for Transparency in the recall application before the Karnataka High Court. Mr. R. Subramanian, Advocate was the lawyer for the Petitioner in the recall application and beyond a doubt was conscious of the similarity/overlap of the grounds. Having been unsuccessful in a challenge before the Karnataka High Court, a calculated chance was taken before this Court, to re-agitate the same issue albeit through another Company, i.e. the present Appellant. This, in our view, is certainly an abuse of the process of law by the Appellant and deserves to be condemned. For ready reference ground (h) of the Recall application is extracted hereunder :- "h. The Transferor companies have misled and misrepresented factors to the Official Liquidator and Chartered Accountant appointed by the OL, who submitted reports dated 25.11.2014 to the OL in respect of each of the 3 Transferors. Para 6.5 of the said report in respect of each of the 3 Transferor companies records that the Transferor companies had held out to OL that they being unable to comply with the direction of the RBI in respect of not being partners of partnership firms, they were propounding the scheme for amalgam....
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....ismissal of a complaint by the Appellant herein, we do not wish to enter into the controversy of the earlier litigation, except to the extent mentioned above wherein we have noted the judgments of the Karnataka High Court dealing with the report rendered by Respondent No.3. XI. We may, however, note that the Appellant has repeatedly defaulted in complying with the orders of various Courts by not depositing the costs imposed. The learned Single Judge has taken note of an order of the Division Bench dated 01.03.2021 wherein a list of cases was enumerated along with the costs imposed by the Courts, which were unpaid, except in LPA 89/2021, where the costs was deposited after this Court passed an order of arrest of one of the Directors of the Appellant. Reference to the table is only to reflect upon the conduct of the Appellant, who defies the orders of this Court with impunity. For ready reference, the table is as under:- Sl.No. Case Details Date of Order Bench Costs 1. Wholesale Trading Services Pvt. Ltd. v. UOI WP(C) 5602/2017 07.07.2017 Division bench of the Hon'ble Delhi High Court Rs. 10,000/- Imposed as costs on the Appellant 2. Whole....