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2016 (12) TMI 185 - HC - Indian LawsProfessional misconduct by chartered accountant - gross negligence and professional misconduct by respondent, a Chartered Accountant - Held that:- The specific omissions or commission attributed to the respondent are as follows: (1) The respondent issued a certificate, being the statutory Auditor of Ritesh Polysters Limited, which formed the basis for issuing a notification inviting the general public to contribute to the share capital, without verifying actual receipt of cash of ₹ 4.50 crores for allotment of 15,00,000 shares to the promoters worth ₹ 2,25,00,000/-, and the cheques issued by the promoters bounced later. (2) Respondent issued a certificate without qualifying that allotment of shares to the promoters was subject to realisation of cheques. (3) The respondent did not verify the individual bank accounts of the promoters to ascertain whether there was sufficient balance in their account to ensure that the cheques would be honoured, by the payee bank, on its presentation. (4) Respondent failed to verify actual receipt of cash while allotting shares. (5) Contribution of ₹ 2,25,00,000/- as promoters contribution by Ritesh Exports was not examined, similarly routing of ₹ 22,00,000/- through M/s Pratha Investments (owned by the wife of the respondent and being managed by the respondent himself) to the promoters Sri Deepak Agarwal and Sri Ritesh Agarwal, who allegedly contributed ₹ 10,50,000/- each was also not examined. Thus, the said investment of Rs . 22,00,000/- by Sri Deepak Agarwal and Sri Ritesh Agarwal was only a book entry without actual receipt of consideration. The companys money was divered and was brought back as contribution by the promoters. The professional misconduct attributed to the respondent is grave and serious in nature which affects public confidence, and their faith in the integrity and impartiality of the Chartered Accountants and the Institute of which they are members. A false certification by the respondent has enabled the promoters of the company to squander public money, on inducing the general public to subscribe to the share capital of the company. Taking a lenient view, or exonerating such professionals, would encourage others to indulge in similar acts, and completely erode the faith of the general public in the impartiality and integrity of the members of the Institute, and bring the Institute itself into disrepute. The Council of the Institute has recommended removal of the name of the respondent from the Register of the Institute for a period of three (3) years i.e. suspending him from practicing as a Chartered Accountant for a period of three (3) years. The recommendation of the Institute, regarding the nature of the punishment, is not binding on this Court and, in exercise of the wide powers conferred on it by the Act, this Court can impose a different punishment. Thus after anxious consideration of the matter, we find it appropriate that the respondent herein should be suspended from practising as a Chartered Accountant for a period of three years from 01.11.2016 to 31.10.2019.
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