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2019 (11) TMI 43 - HC - Indian LawsGuilty of professional misconduct on the part of Chartered Accountant - Clause (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949 - statutory auditor or not - whether KNA is guilty of any professional misconduct? HELD THAT:- KNA was appointed as an auditor of TIL for auditing the accounts for the financial year 2009-2010. It appears that on becoming aware that TIL was proposing to pass a resolution to appoint another auditor (KNA), the petitioner sent a letter dated 13.09.2011 to TIL, asserting that the petitioner continued to hold office as an auditor and alleging that appointment of any statutory auditor would be illegal. In the same breath, the petitioner also stated that it is not known who the present auditor of TIL is, as respondent no. 6 (Manu Sharma) had allegedly disclaimed that he was appointed as an auditor of TIL. Thus, the petitioner was fully aware that another auditor was to be appointed by TIL at the AGM to be held on 30.09.2011. Whether KNA or its constituent partner, CA Alok Shukla, was guilty of professional misconduct on account of not obtaining a NOC from the petitioner? - HELD THAT:- The Board held that KNA was not guilty of any professional misconduct as alleged, as the petitioner was not the previous auditor with which KNA was required to communicate before accepting the assignment to audit the accounts of TIL. It is relevant to note that there is no requirement for an auditor to secure a no objection from the previous auditor. Therefore, the premise that respondent no.3 required to obtain a “no objection certificate” from the petitioner, is fundamentally flawed. The only requirement is that the Chartered Accountant, who accepts the position as an auditor, must communicate with the previous auditor about the same. In the present case, the accounts filed with the Registrar of Companies for the years 2006-07 to 2008-09, that is, for the three years prior to the period for which KNA was appointed, had been audited by M/s Manu Sharma and Co. and therefore, there was no necessity for KNA to correspond with the petitioner, since the petitioner was not the previous auditor of TIL - the petitioner was not appointed as an auditor for the financial year 2007-08. The assertion made by the petitioner that it continued to be a statutory auditor of TIL for the said period, is incorrect. This Court finds no infirmity with the impugned order. It is also relevant to note that the complaint filed by the petitioner is, essentially, motivated on account of inter se disputes between the petitioner and TIL. The entire correspondence placed on record clearly indicates that the petitioner had made all efforts to dissuade other Chartered Accountants from taking up the assignment to audit the accounts of TIL. This, clearly, is not the object of requiring an auditor to correspond with the previous auditor. It is also material to note that the petitioner is not associated with TIL as an auditor since 2008. The present petition is dismissed with costs quantified at ₹25,000/-.
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