2021 (1) TMI 1225 - HC - Indian Laws

Appellant seeking benefit of probation on the ground that the sentence already undergone by him would cast a stigma on his profession and he would be disqualified by the ICAI - moral turpitude - incident qua which the Petitioner was convicted took place in 2001 i.e. much prior to him qualifying and being enrolled as a CA - Section 8(v) of the Chartered Accountants Act 1949 - HELD THAT - A conviction for an offence involving moral turpitude punishable with imprisonment- is a third and higher class of offence under Section 8(v) of the Act and is stipulated as a separate class of disabilities which bars a person s name from being entered or borne in/continued in the register of the ICAI. This is a graver offence in terms of the scheme of the Act juxtaposed to what is contemplated under the third part of the Second Schedule or the fourth part of the First Schedule to the Act. Although from a bare reading of sub-section 8(v) it may appear that the Central Government would have the power to remove the disability even in offences involving moral turpitude in the opinion of this Court in case of an offence or a conviction involving moral turpitude such power being vested with the Central Government would be contrary to the spirit of the statute as also contrary to the settled judicial precedents to the effect that moral turpitude would be a complete disqualification. The use of the expression entered in contained in Section 8 also shows that offences committed prior to the person qualifying as a CA are also within the purview of the disabilities mentioned under Section 8 of the Act. The only condition upon which a person convicted can be entered into or can continue on the register of ICAI would be if the person has been granted a pardon. The Petitioner s conviction would be attracted by the disability of moral turpitude as contemplated under Section 8(v) of the Act. The ICAI shall award reasonable time for the Petitioner to file a fresh reply to the impugned notices and for him to be heard by the ICAI in accordance with the principles of natural justice. Upon the said hearing being concluded ICAI shall proceed in accordance with law. Directions to ICAI - HELD THAT - As is evident from the facts of the present case the Petitioner despite a criminal case being pending at the time of his enrolment as a Chartered Account and thereafter his conviction was enrolled and was permitted to practice as a CA. This Court has not been shown any policy or disclosure requirements that are asked for from candidates or CAs either at inception or thereafter. There is a clear need for the ICAI to create a framework wherein there is proper disclosure by candidates who apply to become Chartered Accountants at the inception itself. In the case of an FIR or a Criminal Complaint having been filed there ought to be an obligation upon the applicant to keep the ICAI informed and updated as to the progress in the said Complaint/Case. ICAI shall accordingly frame a policy and a mechanism if not already in existence for disclosure by members both at the inception as also on a periodic basis thereafter of any criminal cases or convictions so that the spirit and intent of the statute is given effect to and the ICAI is not in the dark about the same until it is notified by some information or complaint Petition dismissed.

Summary

Issues Involved:
1. Applicability of Section 8(v) of the Chartered Accountants Act, 1949.
2. Interpretation of "moral turpitude" under Section 8(v).
3. Procedural fairness and principles of natural justice in disciplinary proceedings.
4. Validity of the ICAI's actions and notices in light of the Petitioner's conviction.
5. The need for disclosure requirements for Chartered Accountants.

Detailed Analysis:

1. Applicability of Section 8(v) of the Chartered Accountants Act, 1949:
The Petitioner, a Chartered Accountant, was convicted under Sections 354 and 506-II of the IPC, which involve moral turpitude. Section 8(v) of the Chartered Accountants Act, 1949, disqualifies a person from being entered in or borne on the register if convicted of an offence involving moral turpitude. The Court concluded that the Petitioner's conviction falls within this provision, thus attracting the disqualification.

2. Interpretation of "moral turpitude" under Section 8(v):
The Court examined various precedents and concluded that "moral turpitude" involves acts of baseness, vileness, or depravity in private and social duties. The Petitioner's conviction for offences involving assault and criminal intimidation against a woman was deemed to involve moral turpitude, thus justifying the application of Section 8(v).

3. Procedural Fairness and Principles of Natural Justice:
The Petitioner argued that the ICAI did not follow due process under Section 21 of the Act, which requires an inquiry for professional or other misconduct. However, the Court held that for offences involving moral turpitude under Section 8(v), a formal inquiry is not strictly required, although principles of natural justice must be followed. The ICAI provided the Petitioner with an opportunity to be heard, thus complying with these principles.

4. Validity of the ICAI's Actions and Notices:
The ICAI issued a show cause notice to the Petitioner, asking why action under Section 8(v) should not be taken against him. The Petitioner sought to quash this notice and the proceedings. The Court upheld the validity of the ICAI's actions, stating that the ICAI is within its rights to initiate such proceedings given the gravity of the offences and the lack of any pardon for the Petitioner.

5. Need for Disclosure Requirements for Chartered Accountants:
The Court noted the absence of any disclosure requirement for criminal cases or convictions at the time of enrolment or thereafter. It directed the ICAI to establish a framework for mandatory disclosures by candidates and members regarding any criminal cases or convictions, ensuring the ICAI is informed and can maintain the integrity of the profession.

Conclusion:
The Court dismissed the Petitioner's writ petition, upholding the ICAI's show cause notice and subsequent proceedings. It directed the ICAI to allow the Petitioner reasonable time to respond and to conduct a fair hearing. Additionally, the ICAI was instructed to implement disclosure requirements for criminal cases or convictions to maintain the integrity of the Chartered Accountancy profession.