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TMI Blog2013 (3) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... : "1.2 The complainant-bank sanctioned a loan of Rs. 1,84,000 on the request of the respondent relying on the bona fides and authenticity of the income-tax returns submitted by the respondent to the complainant-bank which were forged and fabricated. The respondent intentionally submitted the forged and fabricated income-tax returns to induce the complainant-bank to extend loan to him. Later, the income-tax authorities have confirmed that the said income-tax returns have not been filed at all." 3. On receiving the said complaint, the Council for the Institute of Chartered Accountants of India (hereinafter referred to as "the Council") sent the copy of the said complaint to the respondent vide letter dated June 30, 2000, with a request to submit his written statement as required under regulation 12(7) of the Chartered Accountants Regulation, 1988. Even after the reminder dated February 7, 2002, the respondent did not file his written statement. However, in regulation 12(11) of the Chartered Accountants Regulation, 1988, the papers containing the complaint were considered, obviously in the absence of the written statement. In the Council's meeting held in April, 2003 the Council wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee and both the parties submitted detailed submission also. The committee found that the complainant had submitted certified xerox copies of the personal income-tax acknowledgement form of the income-tax returns for the assessment years 1996-97, 1997-98 and 1998-99. These acknowledgements, according to the complainant, were enclosed by the respondent along with the loan application submitted by him to avail professional loan of Rs. 1.84 lakhs. The respondent issued post-dated cheques for repaying his loan, however, the cheques were bounced on presentation. 8. The complainant submitted before the committee that he was not assessed to tax in the concerned ward. This created suspicion about the bona fides of the information submitted by the respondent. The complainant initiated criminal and other proceedings against the respondent and also similarly initiated disciplinary proceedings by filing Form No. 8 with the Institute of Chartered Accountants of India against the respondent alleging "other misconduct". The specific charge made out was that the respondent intentionally submitted forged and fabricated income-tax returns to induce the complainant-bank to extend loan to him. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication was never filled up by the respondent. He had further informed vide its representation in paragraph 11 that he had already repaid the loan amount in June, 2005 and nothing is due to him. 13. On perusal of the representation submitted by the respondent, paragraph 11 is contrary to paragraph 5 of the same representation whereas he had admitted that he had taken a personal loan from the complainant-bank in August, 1998 as professional under the category of the chartered accountants from one of DSA (Direct Selling Agent) of the complainant-bank based in Green Park and he got the signature on printed application form and took proof of residence and identity and proof of membership with the institute and a loan of Rs. 1,84,000 was extended to him. He further submitted that he had executed some blank papers/form in good faith in favour of the complainant-bank. 14. Mr. Aggarwal, learned counsel appearing for the Council argued that the respondent had admitted his visiting/business card which was affixed on the loan application form. Though as per his own submission, his certificate of practice was cancelled from August 1, 1987, due to non-payment of annual fee and his membership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys the faith and trust of the parties. The parties disclose all secrets of business to their chartered accountants ; therefore, this profession requires upmost sincerity, faithfulness and honesty towards their clients. Therefore, there is no place of forgery, cheating, dishonesty, unfaithfulness and carelessness in any of the profession whether of a doctor or advocate or a chartered accountant. These professions are of zero tolerance ; therefore, no misconduct can be tolerated. 19. In the present case, as per his own submission, he was not a member of the Institute since August 1, 1987 till May 1, 2002, in spite of that he was maintaining his visiting card/business card and during this period he only applied for professional loan. It is not material while deciding this case whether the loan amount has ultimately been paid or not. We have to see whether there is any misconduct committed by the respondent being member of the Institute or not. Although, learned counsel for the respondent has not argued before us, but he has taken the plea in his representation that during the alleged misconduct, he was not a member of the Institute, therefore, the Council had no power to hold him gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Accountants Act, 1949. 23. For convenience, we are reproducing section 22 of professional misconduct as under : "22. Professional misconduct defined.-For the purposes of this Act, the expression 'professional misconduct' shall be deemed to include any act or omission specified in any of the Schedules, but nothing in this section shall be construed to limit or abridge in any way the power conferred or duty cast on the Council under sub-section (1) of section 21 to inquire into the conduct of any member of the Institute under any other circumstances." 24. A code of ethics is a legally binding statement of conduct. The code of conduct issued by the Institute proclaimed as follows : "Code of conduct.-. . . A client, before engaging the services of a professional man, requires to be assured : (i) that he has the required competence ; and (ii) that he is a man of character and integrity. As regards the first, evidence is available to the client in the form of a certificate that the accountant has undergone the training and passed the examination, and as regards the second, he would have an assurance only if the professional body to which he belongs has adopted a code of professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actice or not, shall be deemed to be guilty of professional misconduct, if he is guilty of such other act or omission as may be specified by the Council in this behalf, by notification in the Gazette of India" under clause (2) of Part II. It is not possible to encompass within a statutory enactment all myriad situations that arise in the course of profession that would amount to misconduct. Thus, "other misconduct" will be any misconduct which is not specified in the Schedule or notified thereunder. 26. The other ground he has taken in his representation submitted on July 6, 2005, that, the income-tax returns in question were not filed by him, and if at all filed, might have been prepared/filed by the DSA. However, the respondent has admitted his signature on the loan application form and all documents attached with "for professional loan". Therefore, we cannot believe his submission that the income-tax returns were prepared by the DSA. If at all these were prepared and filed by DSA, it was certainly with his consent. Therefore, we discard this submission also. 27. We deem it appropriate to mention the following judgments which, according to us, closely relate to the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which makes a person unworthy to belong to the noble fraternity of lawyers or makes an advocate unfit to be entrusted with the responsible task of looking after the interests of the litigant must be regarded as conduct involving moral turpitude. It was held that (page 1316) : "An advocate invites disciplinary orders not only if he is guilty of professional misconduct ; but also if he is guilty of other misconduct; and this other misconduct which may not be directly concerned with his professional activity as such, may nevertheless be of such a dishonourable or infamous character as to invite the punishment due to professional misconduct itself". (c) The decision of the Supreme Court in N.G. Dastane v. Shrikant S. Shivde [2002] 37 SCL 553 , which was rendered in context of the provisions of section 35 of the Advocates Act, 1961, by which the State Bar Council was empowered to refer the case for disposal to its disciplinary committee when it had reason to believe that any advocate on its roll has been guilty of "professional or other misconduct", was cited to point out that, it was held by the Supreme Court (page 2031) : "The collocation of the words 'guilty of professional or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, whether they be in public practice, industry, commerce, public sector or education. 29. A hallmark of any noble profession is adherence by its members to a common code of values and conduct established by its administrative body, including maintaining an outlook which is essentially objective and acceptance of a duty to the society as a whole. Acceptance of its responsibility to public is a distinguishing mark of a procession. A large section of public relies on the objectivity and integrity of professional accountants to maintain the orderly functioning of commerce. Such reliance imposes a public interest responsibility on the accounting profession. Professional accountants have an important role to play in the society. Investors, creditors, employees and other sectors of the business community as well as the Government and the public at large rely on professional accountants for sound financial accounting and reporting, effective financial management and competent advice on a variety of business and taxation matters. The attitude and behaviour of the professional accountants in providing such services have an impact on the economic well-being of their community and the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be open to the Council to hold an inquiry against the member in respect of such conduct and a finding against him in such an inquiry would justify appropriate action being taken by the High Court. It was held that though the definition of the material expression used in section 21(1) refers to the acts and omissions specified in the Schedule, the list of the said acts and omissions is not exhaustive ; and in any event, the said list does not purport to limit the powers of the Council under section 21(1), which may otherwise flow from the words used in the said sub-section itself. It was held that 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 section 22. Members of the Institute are bound to act in a manner consistent with the good reputation of the profession. They should refrain from any conduct which might bring discredit to the Institute. The members should be guided not merely by the terms, but also by the spirit of the code of conduct and the fact that particular conduct does not receive mention, does not prevent it from being unacceptable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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