TMI Blog2019 (3) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... ct’ includes any conduct, which brings disrepute to the profession or the ICAI as a result of an action whether or not related to professional work. Thus, it is not necessary that the misconduct complained of should be a conduct in exercise of the profession of Chartered Accountancy. Any conduct, which tends to bring disrepute, would be a subject matter of proceedings under Chapter V of the Act. In Council of the Institute of Chartered Accountants and Another v. B. Mukherjea [1957 (9) TMI 60 - SUPREME COURT], the Supreme Court had examined the provisions of the Act, as in force at the material time (prior to the amendments in the year 2006 and in the year 2011). The Court had explained that the acts of commission and omissions specified in the Schedule were not exhaustive and did not purport to limit the power of the Council under Section 21(1) of the Act. In a recent decision in Council of the Institute of Chartered Accountants of India v. Shri Gurvinder Singh & Anr. [2018 (11) TMI 1163 - SUPREME COURT OF INDIA], the Supreme Court had allowed an appeal preferred against the decision of this Court. In that case, a complaint was made against a Chartered Accountant who had sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order ) of the Board of Discipline of ICAI (hereafter the Board ), taken at a meeting held on 06.11.2015. By the impugned order, the Board expressed its disagreement with the prima facie , opinion of the Director (Discipline) that the petitioner was not guilty of other misconduct falling within the meaning of Clause 2 of Part IV of the First Schedule to the Chartered Accountants Act, 1949 (hereafter the Act ). It is the petitioner s case that the allegations made against him have no bearing with him carrying on the profession as a Chartered Accountant and, therefore, the Board and/or ICAI would have no jurisdiction to entertain a complaint in this regard. 2. The proceedings before the ICAI were commenced pursuant to a complaint filed by respondent no.2. He had alleged that the petitioner had outraged the modesty of his daughter (hereafter referred to as HA ) and also committed certain offences punishable under the Indian Penal Code, 1860 (IPC). He stated that the petitioner was acquainted with HA, as both of them were students of the same school and the petitioner s residence was also located in the vicinity. It is stated that there was an incident of harassment in 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court by an order dated 24.10.2013 (in Bail Application No.1835/2013). 8. In view of the above, the Director (Discipline), ICAI concluded that the allegations leveled against the petitioner relate to inter-personal relationships between HA and the petitioner and thus, it would be appropriate if respondent no.2 sought redressal of the problems in another forum. According to the Director (Discipline), the allegations did not necessarily fall within the disciplinary mechanism in respect of professional or other misconduct as provided under the Act and the Rules framed thereunder. 9. The Board considered the aforesaid opinion at a meeting held on 06.11.2015. The relevant extract of the minutes of the said meeting are set out below:- The Board considered the prima facie opinion dated 18th October, 2015 of the Director along with the Complaint, Written Statement of the Respondent and Rejoinder of the Complainant. The Board, on consideration of the same, was of the view that the charges alleged against the Respondent are grave and his alleged acts clearly bring disrepute to the profession of Chartered Accountancy. Thus, the Board did not agreed with the prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of her contention. She also referred to the following decisions: - 1. Council of the Institute of Chartered Accountants of India v. P. C. Parekh: 2003 SCC OnLine Guj 25 @ para 9 to 22. 2. Institute of Chartered Accountants of India v. H. S. Ghia: 2004 (4) MhlJ 891 @ para 3 and para 6. 3. The Council of Institute of Chartered Accountants of India v. Lokesh Dhawan F.C.A. Chartered Reference No.2 of 2003, Date of Decision 05.11.2007, High Court of Delhi @ para 19 and para 20. 4. Council of Institute of Chartered Accountants of India v. Kul Rattan Bhasin Anr.: Chartered Reference No.1 of 2007, Date of Decision 18.11.2010, High Court of Delhi @ para 24 and para 26 to para 30. 5. Council of Institute of Chartered Accountants of India v. Mahesh Kumar Gupta Anr.: Chartered Reference No.2 of 2012, Date of Decision 12.08.2016, High Court of Delhi @ para 11 and para 12. Reasons and Conclusion 14. Chapter V of the Institute of Chartered Accountants Act, 1949 (the Act) contains provisions regarding misconduct. Section 21 of the Act provides for the constitution of a Disciplinary Directorate, and is set out below:- 21. Disciplinary Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (1) of Section 21 to inquire into the conduct of any member of the Institute under any other circumstances. 17. The First Schedule to the Act is divided into four parts. Part I of the First Schedule to the Act specifies certain acts or omissions, which renders a Chartered Accountant in practice guilty of professional misconduct. Part II of the First Schedule to the Act relates to professional misconduct in relation to members of an Institute in service. Part III of the First Schedule to the Act relates to professional misconduct. Part III lists out certain instances which would deem to be professional misconduct on the part of a member of the ICAI, irrespective of whether the said member is in practice or not. Part IV of the First Schedule to the Act lists out other misconduct. The said part is relevant in the context present petition and is set out below:- PART IV : Other misconduct in relation to members of the Institute generally A member of the Institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if he ( 1) is held guilty by any civil or criminal court for an offence which is punishable with imprisonment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o jurisdiction to apply the prima facie test - before holding an inquiry. The Council is required to cause an inquiry to be held on such complaint straightaway. In both the cases when the inquiry is concluded, the findings of the Council are to be forwarded to the High Court. Section 22 purports to define the expression conduct which, if proved, will render a person unfit to be a member of the Institute . It is an inclusive definition; it includes any act or omission specified in the schedule but the latter portion of s. 22 clearly lays down that nothing contained in this section shall be construed to limit or abridge in any way the power conferred on the Council under sub-s. (1) of s. 21. The position thus appears to be that though the definition of the material expression used in 21, sub-s. (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 s. 21, sub-s. (1), which may otherwise flow from the words used in the said sub-s. itself. 20. In a recent decision in Council of the Institute of Chartered Accountants of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of conduct unrelated to the practice of the profession of accountancy. In Council of the Institute of Chartered Accountants of India, New Delhi v. P.C. Parekh : AIR 2003 Guj. 334 , the Court upheld the ICAI s contention that the respondent was guilty of misconduct. In that case, the respondent had authored a book entitled Tax Planning for Secret Income (Black Money) . In that case, it was found that the said work would tend to lower the image of the profession in public eyes. The Court accepted the said contention and found that the conduct of the respondent, in associating with the methods of tax evasion rather than denouncing them, is a gross misconduct on the part of the member. 22. In view of the above, this Court is unable to accept the contention that the Board of Discipline does not have the jurisdiction to examine the alleged misconduct on the part of the petitioner. Clause (2) of Part-IV of the First Schedule to the Act is wide, and would include within its scope, any conduct that would tend to bring disrepute to the profession or the Institute. If a Chartered Accountant is found to have been guilty in outraging the modesty of a woman and/or other offences i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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