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2019 (8) TMI 475

..... parate companies mentioned in the complaint had not been prepared in compliance with the provisions of the Companies Act, 1956 and directions issued by the Reserve Bank of India (RBI) in respect of a non-banking financial company - HELD THAT:- Since, the petitioner is a company, this Court had called upon the learned counsel appearing for the petitioner to respond as to whether the Memorandum of Association of the petitioner company permitted the petitioner to pursue such complaints against various Chartered Accountants wholly unconnected with its business. The learned counsel had answered in the affirmative. He has also produced the Memorandum of Association of the petitioner company, in compliance with the orders passed by this Court on 26th July, 2019. The issue whether the petitioner company is permitted to carry on the activity of filing complaints against various Chartered Accountants was considered by this Court in the decision rendered today in WHOLESALE TRADING SERVICES P LTD. VERSUS THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND ORS. [2019 (8) TMI 413 - DELHI HIGH COURT]. This Court rejected the contention that the activity of the petitioner in pursuing complaints ag .....

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..... ofessional misconduct falling under Clause 7 of Part-I of Second Schedule to the Chartered Accountants Act, 1949 (hereafter the Act ). 2. JMG is a member of ICAI and is a practicing Chartered Accountant. The petitioner, inter alia, alleges that the accounts and audit report in respect of seven separate companies mentioned in the complaint had not been prepared in compliance with the provisions of the Companies Act, 1956 and directions issued by the Reserve Bank of India (RBI) in respect of a non-banking financial company. It is relevant to note that the audit reports and the accounts referred to by the petitioner were for four financial years, viz. 2005-06, 2006-07, 2007-08 and 2008-09. These accounts pertain to seven private companies and were certified by a firm of Chartered Accountants, M/s N.M. Raiji & Company. At the material time, JMG was a partner of the said firm. 3. The petitioner claims that it became aware of the alleged irregularities in the audit reports and the financial accounts of the said companies in the year 2015. 4. On 11th May, 2015, the petitioner caused its advocates to send a legal notice to M/s Raiji & Company as well as JMG, calling upon them to re .....

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..... f the continuing partners and he felt constrained in accessing information and relevant audit files. However, he had managed to obtain the audit papers available with the said firm in March, 2018. 7. The Director (Discipline) examined the complaint. The petitioner was provided an opportunity to file a rejoinder to the response submitted by JMG and it did so, on 2nd June, 2018. 8. The Director (Discipline) examined the records and concluded that the complaint made by the petitioner was beyond the period of seven years and JMG would be inconvenienced in the said case, as he had already retired from the firm of auditors ‒ M/s N.M. Raiji & Company. He also noted that several complaints had been filed by warring partners of M/s N.M. Raiji & Company and the same had been dealt with by the Disciplinary Directorate. In view of the aforesaid, the Director (Discipline) formed a prima facie opinion that JMG was not guilty of professional misconduct as alleged and forwarded the opinion to the Board of Discipline. As noted above, the Board of Discipline accepted the same and concurred with the said opinion. Reasons and Conclusion 9. It is relevant to note at the outset that the pe .....

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..... cases where the Director was satisfied that there would be difficulty in securing proper evidence of alleged misconduct. He submitted that in this case, JMG had responded to the allegations and therefore, Rule 12 of the Rules could not be invoked. 14. At this stage, it would be relevant to refer to Rule 12 of Rules, which is set out below:- 12. Time limit on entertaining complaint or information. - Where the Director is satisfied that there would be difficulty in securing proper evidence of the alleged misconduct, or that the member or firm against whom the information has been received or the complaint has been filed, would find it difficult to lead evidence to defend himself or itself, as the case may be, on account of the time lag, or that changes have taken place rendering the inquiry procedurally inconvenient or difficult, he may refuse to entertain a complaint or information in respect of any misconduct made more than seven years after the same was alleged to have been committed and submit the same to the Board of Discipline for taking decision on it under subsection (4) of section 21 A of the Act. 15. A plain reading of the aforesaid Rule indicates that there are several gr .....

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..... ing made after seven years of the last audit report being signed. He had stated that the last of the reports were signed in June, 2009 and the complaint was dated 26th June, 2016, although it was filed subsequently. In addition to submitting a response, JMG would also be required to lead evidence to defend himself if the complaint had been escalated further. He had already expressed, in unequivocal terms, the constraints that he would suffer in defending himself. 19. The decision of the Director Discipline to not to entertain the complaint and the decision of the Board of Discipline to concur with the aforementioned opinion cannot be faulted. 20. Before concluding, it is also relevant to note that the petitioner has been filing various petitions before this Court in respect of complaints made before ICAI, despite having no particular interest in the matter. As noticed above, the petitioner has no connection or dealing with the Chartered Accountants or the companies in respect of which complaints have been made. An earlier petition filed by the petitioner (being W.P. (C) 10536/2017) was also dismissed with costs quantified at ₹10,000/-, however, the imposition of costs has not .....

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