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2020 (3) TMI 902 - HC - Indian LawsProfessional Misconduct - Applicability of Network guidelines to petitioner-firm of Chartered Accountants (CAs) - It is the case of the petitioner that the petitioner-firm cannot be considered as having Network with the HLBI , as it never shared its profit, cost etc. It is, therefore, the case of the petitioner that the network guidelines would not be applicable to the petitioner-firm - HELD THAT:- It is relevant to note that prima facie opinion is silent with regard to applicability of Rule 7 of the Rules 2007 which provides that the information has to be in form of any written information containing allegation or allegations against the member or a firm, received in person or by post or courier - However, the report of operation of MNAF in India of the prima facie opinion, there is no reference to petitioner and therefore, question arises whether it would constitute the “Information” as per Rule 7 of the Rules 2007 or not. However, it appears from the material on the record that what is to be treated as “Information” within the meaning of Rule 7 of the Rules 2007 is missing because from the contents of the Paragraph No.3 of the prima facie opinion, which is extracted herein above, it does not reveal any written allegation or allegations against the petitioner so as to treat the same as “Information” within the meaning of Rule 7 of the Rules 2007. The entire basis of formation of prima facie opinion is contrary to Rule 7 of the Rules 2007. The report of operation of MNAF in India of the prima-facie opinion, it cannot consider as “information” within the meaning of Rule 7 of the Rules 2007. Therefore, entire basis of formation of prima-facie opinion is contrary to Rule 7 of the Rules 2007. On perusal of the contents of the letter dated 05.04.2018, it emerges that the very basis to treat the material available on record and observations of the Supreme Court as the “Information” within the meaning of Rule 7 of the Rules 2007 for alleged violation of Section 25 and Section 29 of the Act1949 cannot be considered as “Information” in absence of any written information containing allegation or allegations against the petitioner-firm as provided under Rule 7 of the Rules 2007. Therefore, merely on the basis of inference drawn by the respondent no.2, and thereby, analyzing various terms of the representation agreement between the petitioner and the HLBI to form prima facie opinion is without any basis in absence of information as contemplated in Rule 7 of the Rules 2007. In absence of any “Information”, as contemplated under Rule 7 of the Rules 2007, the respondent no.2 has formed prima facie opinion only to do fishing inquiry and investigation. The intention of prima facie opinion is not for initiating disciplinary inquiry for the purpose of investigating further to establish whether the petitioner-firm in collaboration with the international entity, HLBI was involved in encouraging surrogate practice in India or not - the petitioner-firm which is in existence for more than 70 years cannot be put to rigors of disciplinary proceedings in absence of any specific allegation and in absence of any written information containing allegation as per Rule 7 of the Rule 2007. The preliminary objection raised by the respondents with regard to maintainability of the petition is not tenable as there is no written information containing allegation against the petitioner-firm and no disciplinary proceedings could have been initiated against the petitioner-firm - Petition allowed.
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