TaxTMI 
TaxTMI 
1967 (3) TMI 125
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....nsidered the matter in September, 1960 and decided to refer the case to the Disciplinary Committee for enquiry; because the Council was prima facie of opinion that Shri Batraa was guilty of professional or other misconduct. The Disciplinary Committee held its sitting in January, 1961 at New Delhi and after examining a number of witnesses, recorded its report the findings where of were summarised in the following words:- "The respondent's contention that the audit of the complainant's accounts was not completed towards the end of February 1959 but that only certain preliminary checking of accounts was done by a junior assistant cannot be accepted. There is before us the copy of the Balance Sheet admittedly typed by the respondent's staff, at his office and containing an unqualified report thereon (unsigned) produced by the complainant. There is also the reminder dated 23-3-1959 sent by the respondent to the complainant regarding his bill for Rs. 300/-. There is and can be no Explanation to an unqualified report appended to the Balance Sheet produced by the complainant and the version of the respondent that this was also typed in a mechanical fashion his office e....
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.... at its contents, its being observed that since the audit of the accounts had already been completed in every respect and all the books examined. It was not understood under what circumstances this enquiry was necessitated. It was asserted that even the balance-sheet duly sent by the Company for adoption a and signatures by the Corporation had been returned for the signatures of the auditors. Visit from the Company was invited for the purpose of inspecting the relevant books of account and other documents of the Corporation. Emphasis was laid on the fact that the last date for holding the annual general meeting under the Companies Act was fast approaching and it was requested that early steps should be taken to finalise the audit. Shri Bhagirath Das points out that the Corporation did not care to give the details required though the offer was made for the inspection of the relevant books of account and other documents. On 8-4-1959, the Company sent a further reminder to the Corporation about the payment of Rs. 100 in connection with the Income Tax representation fee for the assessment year 1958-59 for which the bill had already been sent. On 9-4-1959, the Company acknowledged re....
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....ice of profits by the two directors A copy of the resolution passed in respect thereof is enclosed herewith. (iv) No amount of audit fee was fixed at the last general meeting as it as it was presumed that the audit fee would remain the same Furthermore no indication for any change in the amount of audit fee from your end substantiates the presumption. (V) As has been requested above, please send us the statement of accounts for the year ending 30-9-58 for adoption by the Board. * * * * * * *" I have repeated only what has been considered necessary; by the learned counsel at the bar for the purposes of the present dispute. This letter concluded with the hope that the information furnished would enable the Company to finalise the matter at their earlier. On 15-4-1959, the Company returned to the Corporation the statements of accounts requesting that the remaining information may be given soon enough so that the representative of the Company may visit the office of the Corporation and finalise the audit. This letter was acknowledged by the Corporation as per letter dated 21-4-1959 and certain inaccuracies in the Trading & profit & Loss Accounts statements....
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....Companies, seeking extension of about 2 months' time for compliance of the statutory provisions of law It appears that correspondence was going on between the Corporation and the Registrar of Companies for extension of time for holding the annual general meeting of the shareholders and it was pointed out to the registrar that the auditors of the Company had taken up the audit of the accounts in hand sometime in the beginning of 1959 but the matter had been lingering on all this while. A copy of the letter dated 2-5-1959 received by the Corporation from the Company was forwarded to the registrar. On the same day the Corporation acknowledged the letter of the Company dated 2-5-1959 and requested once again to finalise the audit of the accounts so that the Corporation may fulfilll the statutory obligations required under the Indian Companies Act. On 6-5-1959 the Corporation wrtoe to the Company stating that their letter dated 4-5-1959 was opened by some member of the staff of the Company and after copying out the letter the peon of the Corporation was asked to go back The mater being urgent, the Corporation requested the Company to send a representative for completing up the wo....
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....n and if so, a copy thereof with the annexures thereto was required for the Company's record. This was stated to be proof of denial of necessary cooperation on the part of the Corporation which delayed the audit unnecessarily. On the same day, the Company wrtoe to the Registrar of Companies, New Delhi, in answer to his letter dated 13-5-1959 and explained the difficulty in finalising the audit of the Corporation. In this letter the Company sought the assistance of the registrar in finalising the audit of the Corporation. On 19-5-1959, the Corporation wrtoe to the Company acknowledging letter No 22406/145B dated 16-5-1959 delivered by the peon of the Company at the office of the Corporation at 3 P.M. on 19-5-1959. In this letter, it is pointed out that the Corporation had been affording all necessary facilities to the Company to finalise the audit and assurance was given that Shri Batra and Shri Gupta were most welcome to visit the office of the Corporation and all books and documents would be placed at their disposal for the purpose of finalising the audit. It was also pointed out that the special resolution in question had been examined by the Company while conducting the audi....
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....fact of the information sought from the Corporation having been withheld. On 29-5-1959, the Corporation thanked the Company for the letter dated 27-5-1959, and acknowledged receipt of two copies each of the balance sheet and Profit & Loss Account and the report of the auditors to the share-holders of the Corporation and the revised bill for Rs. 200 a request was made for sending to the corporation the remaining copies of the balance-sheet and Profit & Loss Account duly signed by the Company. Visits of Shri Batra and Shri Gupta to the office of the Corporation, as alleged by the Company, was again denied, it being pointed out that there was no point in the Corporation withholding any information or refusing to show to the Company the minute books. In the end it was emphasised that the remaining copies of the balance-sheet etc. Should be sent so as to enable the Corporation to forward the cheque on account of the audit fee. On 30-6-1959, a formal complaint was presented to the Council of the Institute of Chartered Accountants against the Company in which reference was made to the earlier letter dated 23-5-1959. Before referring to the oral evidence in the case, it is desirable at ....
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....alance Sheet and Profit & Loss Account duly signed without all the fuss. (c) Instead of pursuing the fair and just course which their profession demands Messrs. Batra & Co. On the contrary, but deliberately and willfully, preferred to harass us by adopting dilatory tactics such as repeatedly raising objections which had already been answered by us. Pre-dating letters which actually reached us very late - and deliberately give in insufficient address on the envelopes so that they should reach us envelopes so that they should reach us very late - the object of all these being to prevent us from holding the Annual General Meeting on the 23rd May, 1959 (being the last date to do so) (d) Apparently the conduct of M/s. Batra & Co. In this instance is tantamount to professional misconduct which has been indulged in with the sole object of creating trouble for us. Such a behavior on the part of a man belonging to a noble and honorable profession, could hardly be expected for obviously if casts a slur on the profession" 6. In the written statement on behalf of Shri s. L. Batra Chartered Accountant. It was denied that the audit for the period ending 30-9-1958 had been co....
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....n that the relevant resolution passed by the shareholders in the general meeting held on 24-12-1958 had been drafted by the auditors Messrs. Batra and Company and moved with their content and knowledge. On 12-1-1961. Shri s. L. Batra also submitted to the Secretary of the institute a list of document attaching therewith those in his possession or power. The Council of the Institute of Chartered Accountants, it may be pointed out, enquired from Messrs. Batra and company, Chartered Accountants, about the names of the members of the firm concerned as required under regulation 11(5)(b) of the Chartered Accountants Regulations, 1949 so as to have written statement from the members concerned. To this s. L. Batra stated in his letter dated 22-8-1959 that he was the member concerned. Shri Batra on receipt of a copy of the complaint and relevant enclosures in reply wrtoe to the Institute on 22-8-1959 expressing his inability to send the necessary reply within 14 days as required by the secretary of the Institute, stating that the notice was too short and he had to go out of Delhi for about 7 days in connection with his professional engagements, further adding that in order to give a suit....
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....Batra and it was decided to refer the case to the Disciplinary Committee for enquiry prima facie case having been established against Shri Batrai. It was in these circumstances that the written statement dated 12-1-1961 was presented by Shri Batra. It may be pointed out that the enquiry by the Disciplinary Committee started on 12-1-1961 at new Delhi at 3 P. M. The record discloses that at the commencement of the proceedings among the parties present was Shri R. K. Relan. Describing himself as partner of the respondent Shri S. L. Batra before the Committee He informed the Committee that Shri Batra had left Chandigarh at 11 A. M. That morning and his car had, according to a telephonic message broken down at Karnal where arrangement for an other car were being made As Shri S. L.Batra had admittedly had ample notice of the date of hearing it was not considered proper to wait for him and the proceedings were begun Shri reline on enquiry being made by the Committee replied that he was not representing Shri S. L. Batra Shri Relan was in the circumstances desired to retire which he did Shri Chopra, counsel for the complainant, the opened the case At about 3.45 P. M. Shri Batra appeared ....
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.... K. K. Jain, learned counsel appearing for the Council, has while dealing with the second point drawn our attention to a decision of the Supreme Court in council of the Institute of Chartered Accountants v B. Mukherjea. [1958] 1 SCR 371 . In which Gajendragadkar. J (as he then was ) speaking for the Court, after considering the relevant sections dealing with enquiry into professional misconduct, observed as follows:- "It must be conceded that the conduct of the responded in the present case cannot attract any of the provisions in the schedule and may not Therefore be regarded as falling within the first part of S. 22; itself purports to be an inclusive definition and if the section itself in its latter portion specifically preserves the larger powers and jurisdiction conferred upon the Council to hold inquiries by s. 21. Sub. s. (1), it would not be right to hold that such disciplinary jurisdiction can be invoked only in respect of conduct falling specifically and expressly within the inclusive definition given by S. 22. In this connection it would be relevant to mention S. 8 which deals with disabilities. Section 8, sub-ss. (V) and (vi) supper the argument that disciplina....
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....nswer to the second objection raised on behalf of Shri Batra. Our attention has indeed also been drawn to an unreported judgment of the Supreme Court in H. A. K. Rao v. Council of Institute of Chartered accountants, Civil Appeals Nos. 447 and 501 of 1965 decided by a Bench of five Judges on 13-12-1966=(reported in H.A.K. Rao, Chartered Accountant v. Council of Institute of Chartered Accountants of India, New Delhi [1967] 2 SCR 256 . In which also it is observed that for purposes of the Chartered Accountants Act. The expression "professional misconduct" includes the Act or omission specified in the Schedules to their Act. It is urged that inclusive definition is not to be construed as exhaustive, which contention, prima facie appears to be correct. 10. Coming now to the merits, the case of the Corporation before the Committee and of the Council in this Court has been that Shri s. L. Batra had with the object of forcing the Corporation to pay him the sum of Rs. 300 by way of audit-fee, attempted to delay the finalisation of the balance-sheet and the Profit & Loss Account and that this constitute misconduct on his part. After going through the evidence, which mainly consists of doc....
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....t was observed that man's professional reputation is as valuable as a trader's financial reputation it being added that proceedings under S. 13, Legal Practitioners Act though not described as a prosecution., are something very akin to a prosecution. In Emperor v. Surjya Narayan Singh. Air 1920 Pat 84, a Full Bench of that Court observed that the proof which is required in order to convict on a criminal charge, is that which leaves no reasonable doubt in the mind of the Court that the offence has been committed, and the same standard ought to be applied to cases arising under the Legal practitioners Act. A special Bench of the Rajasthan High Court in Amar Singh v. Madanmohan, relied on the aforesaid decisions of the Supreme Court, Privy Council and Patna High Court. Special Bench of the Orissa High Court in Annanda Devi v. Banchhanidhi, Air 1959 Ori 11, laid down that the standard of proof required in cases under Legal Practitioners Act to prove the charge of unprofessional conduct is the same which is required in order to convict an accused on a criminal charge. The decision of the Supreme Court in Nageshwara Rao's case, [1955] 1 SCR 1055 and of the Rajasthan High Cour....
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....ich the complainant was not prepared to agree. The evidence on the question whether Shri Gupta visited the office of the Corporation on 29-4-1959, 1-5-1959 and 5-5-1959 and Shri Batra did so on 7-5-1959, cannot be considered to be sufficiently satisfactory to justify a safe conclusion either way, though it does appear that there was no plausible reason why the Corporation, anxious as it was to expedite finalisation of the accounts, and balance-sheet, should have failed to co-operate with the Company. The evidence of Mr. Sood explaining the circumstances in which he had written the chit ex. P. 48 - a document purporting to establish Shri Batra's visit to the office of the Corporation - is most unimpressive and it does seem to suggest that there was perhaps something more than meets the eye so far as the dealings between Mr. Batra and Mr. Sood are concerned. It is somewhat difficult to place implicit reliance on the testimony of Mr. Sood in this connection We are undoubtedly inclined to take the view that time factor in finalising the audit report, the balance-sheet and the Profit & Loss Account, in the present case, was of the greatest importance and Shri S. L. Batra, who as ....