TMI Blog2019 (8) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... dependent and objective opinion on the accounts if he has not been a part of the internal audit system. There was no material in the present case to substantiate that respondent no.3 had given any report or was placed in a position where he was called upon to comment on his own work. Respondent no. 3 was simply appointed as an auditor to audit the accounts of the Trust although, the same was termed as a statutory auditor. Mr Mehta was pointedly asked whether there was any material to indicate the scope of audit to be performed by respondent no.3. However, he was unable to show any document to indicate the same. This Court is unable to accept that the decision of the Disciplinary Committee of ICAI is erroneous or warrants any interference by this Court - present petition is dismissed with costs quantified at ₹25,000/- to be deposited with Delhi High Court Legal Services Committee within a period of two weeks from today. - W.P.(C) 9317/2014 & CM APPL. 21108/2014 - - - Dated:- 24-7-2019 - MR. VIBHU BAKHRU J. Petitioner Through: Mr. Jayant Mehta, Advocate with Mr. Kotla Harshwardhan, Mr. Arshdeep Singh, Ms. Mansi Sood, Mr. Hitesh Rai, Advocates. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly established from the record and the Disciplinary Committee had overlooked the same. Factual Background 6. The controversy in the present case relates to the professional conduct of respondent no.3 in relation to a trust known as Saraswati Educational Foundation Trust (hereafter the Trust ). 7. The petitioner states that the Trust was registered on 11.05.2001 with eight trustees acting as the Board of Trustees. The petitioner was one of the trustees. 8. It is stated that the petitioner had initiated and executed an agreement with a society known as Delhi Public School Society to establish a school known as Delhi Public School, Jalandhar as a franchisee. 9. It is stated that on 27.11.2001, M/s Bhandari Gupta and Associates, Chartered Accountants were appointed as auditors for Delhi Public School, Jalandhar. It is stated that on or about 03.03.2003, certain disputes arose between trustees which resulted in the Board of Trustees of the Trust passing a Resolution on the said date, removing Mr. Vipin Mahajan and Ms. Poonam Mahajan as trustees of the Trust. It is stated that in their place two other persons, namely, Dr T.S. Kl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report submitted by respondent no.3. Respondent no.3 was appointed as an auditor on 26.08.2004. The petitioner disputes the same. One of the allegations raised by the petitioner is that the petitioner had submitted a back dated report. He reasons that respondent no.3 could not have issued a report on 17.08.2004, which was prior to his appointment as the auditor of the Trust. 14. The petitioner filed a complaint against respondent no.3 with the Directorate of Discipline of ICAI under Section 21 of the ICAI Act levelling several allegations against respondent no.3 to the following effect: (a) that respondent no.3 had entered into a criminal conspiracy with the trustees of the Trust to conceal their misdeeds and financial frauds; (b) that respondent no.3 had accepted an assignment of internal audit without following proper rules and without confirming that the internal audit had already been completed and the statutory audit was being conducted by M/s Bhandari Gupta and Associates; (c) that respondent no.3 had issued an audit report by colluding with trustees to illegally remove the petitioner; (d) that respondent no.3 had taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd any merit in the allegation that the petitioner had conducted any tax audit or statutory audit. Before the Disciplinary Committee, it was contended on behalf of the petitioner that an internal auditor cannot be appointed as a tax auditor and respondent no.3 had acted in violation of the said Rules. The Disciplinary Committee noted that respondent no.3 had signed Form 10B which is required under Section 12A(b) of the Income Tax Act, 1961 and had not conducted the tax audit or statutory audit . 20. Insofar as the allegation that the petitioner had not communicated with the previous auditor is concerned, the Disciplinary Committee found merit in the said allegation and has imposed the punishment that it thought fit; it has reprimanded respondent no.3. Submissions 21. Mr Jayant Mehta, learned counsel appearing for the petitioner had earnestly contended that the decision of the Disciplinary Committee holding that Mr Vipin Mahajan was entitled to act as a trustee on 26.08.2004 and participate in passing of a resolution appointing respondent no.3 as an auditor, is ex facie erroneous. He contended that the Disciplinary Committee had erred in appreciating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial to show that this decision was perverse or unreasonable. 26. This Court had also pointedly asked whether the decision rendered by the Civil Judge (Senior Division), Jalandhar in Civil Suit No. 266/2004, upholding the resolution to the trust annulling the removal of Vipin Mahajan and Poonam Mahajan, had been stayed by any superior Court. Mr Mehta had responded in the negative. Plainly, the Disciplinary Committee cannot be faulted for relying on a judicial determination which has not been stayed by a superior court. 27. The contention that the petitioner had committed misconduct by accepting the appointment as a statutory auditor, is also unpersuasive. First of all, it does not appear that any such allegation had been made in the complaint filed by the petitioner. The petitioner had alleged that respondent no.3 had submitted a back dated report in collusion with the trustees. In this regard, it was explained by respondent no.3 that he had conducted an internal audit and had found certain irregularities which were reported. He claimed that, thereafter, he was appointed as a statutory auditor. It is material to note that a Trust is not a company and, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thical on the part of respondent no.3 to have conducted an internal audit and yet have accepted the appointment as a statutory auditor. In this regard, Mr Sethi, the learned counsel appearing for the respondents had pointed out that the previous auditor appointed by the Board of Trustees (M/s Bhandari Gupta and Associates) had also been appointed to conduct the internal audit as well. Concededly, the petitioner was a party to such appointment. In this view, the petitioner is in no position to contend that the same amounts to misconduct. 34. At this stage, it is relevant to note that the proceeding against a member of ICAI are in the nature of disciplinary proceedings. The object is to ensure that professional standards are maintained and Chartered Accountants maintain the professional standards, and conduct themselves in a manner, so as not to bring disrepute to the profession. Such proceedings cannot be viewed with the prism of a private lis between the Complainant and the Chartered Accountant. The complainant, essentially, acts as a realtor that provides information to the ICAI regarding misconduct. This is also the rationale for not providing a remedy of an appeal to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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