P R Suresh vs Institute Of Chartered Accountants Of ... on 20 July, 2011

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Karnataka High Court

P R Suresh vs Institute Of Chartered Accountants Of ... on 20 July, 2011

Bench: Anand Byrareddy

IN THE HIGH COURT OF KARNATAKA AT   

DATED Tms THE ZWDAY OF .IULY3--§2:Oj~.iV 7]  T @ "  

BEFORE: 

THE HUMBLE MR. JUSTICE A§\{E:.l\fD_zBYI€Zx_RE;D'D§{"".,,e,  ' 

WRIT PETITION N0. IV8'9S®..QF :i;u1_0 '<  k

BETWEEN :

PR. Suresh,

S/0 RS. Ramaswamy, _ 
Aged about 46 years,   _  '
Chartered Ace0unta":1t{_'. I

N0.137, Sm :\'Iair1;«..  __

11 Block, III S15&1g€_,- _ "
Basavesh\{va1ianéig%éi1,V1.;:____  '  '  
Bangalore M 560»:e37,9.       PETITIONER

(By Shfit AK: Ravi', J. Mirji, Shri. Siddharth B.

Muehandi, A{iv.§>VcateS}._ A

if" . "~T'_§i1:titfi'£e_e3f"C§iar§ered Ac,:<;:<:auntanis
V A or In_d.iaA,'i,_ 
'E--CAfi Bizévan,
 P.B,.N.;>,7IQ{}$
 " *a.I_ndr:ipras:ha Marg,
-   Dem ~ ; :0 002
Represented by its; President:

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partietslarly 2: Cash Bo<:>l<t it W£;'iS noticed by tiff' the  '
Deputy Dl1'€Cf{)l'£)lClfI€.3()£1T:E:--=f3X that on };'22:'i<.2t1$ ti2ites';4Ap21t_'tiet:vl_tatS€Qf

which are furnished in the Annexmfe to the Said e<)rn"--§>.l;t'ltl;t, tl":21t"%r:W

reepect of both the clients, there   and
that the petitiener had 2tucl'it::tl  ()fl2l1VCC(')'Lllf1iS and it
was evident that even the  til"  VE,§.2t§l':'V__h21la11ee to meet
payments had not he'e.n Che'C'l{et§~ll¥   gzvlselsfllaserw-'ed that even
the daily Cash "  ltilhelcked and were not
verified.    was prirna faeie, serious

professional 1fr1isAe'<}n;l.t1_c"t,e  ll

4, _v It \7l/létir'Vl'Ll1'tll€I'AAltllltigeﬁl that the Vishwahharathi Vidya

'V'*Mand.i§f~a;_SA0e..iety, xi/as--------:*unning at School, known as M/S Venkat

l'lAntern'atiQ1'1;1ll'~;Pnhl--ic School, Rajajinagar, Bangalore One

  Principal of the School. A school building

was pill let which £1 loan had been nbtained by Balakrishna
 I  Shamrzte Vittal C<)~oper3.tive Bank Limited, B&:';g£ll{)I'€,

 .___""Whi;le availing the l<>a::t he had zzddressetl a letter to the Bank

ll"/'E:



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6. The petitiorier, er: receipt {if the 1itf2:t.iee..r:{>"§""the: V'

preeeedingst had pmtieipzited in the f§ZtI1"i€"'§;i.'I-id' edntesterdv the" S.'£_'tiTI'te'.._

The second regporiderit, by an order dated i'E--3:I{).2G{)6; _ i:.ei"dTthf§itw._

the petitioner was not guilty Of"~.ft5i7Q1C€SSvt()£12ﬂ,V;gi'isCt}ttdU'Ci'  '

contemplated under Sectieris   ()f"'Ei'i€~"Ch::11"{€I'€d

Accountants Act, 1949 (hereViiiahfte'i'v ' the Act' for
brevity). ReSpc)ndeetVVti0.l  Kiihdﬁffiud(}t:"1h1tlniCa[€d the said
order to the the'-:b:Diteet0i' of Incorrietax,
Bangalore," ii ﬂtidi'6t;S€d three letters dated
 indicating that there  no

proposal to riiake any A'ft1ii"tther written representations or erai

""3.ubmif$é'it>ri.sV.. The petivt-ierier was thereafter issued a notice by the

 _0i*7_the'_'Iir1ét~itute of Chartered Accountants of India dated

31.7Q3G09,'VCdtiiirigviiipon the petitioner to appear and eoritest the

--:n2itter.'" The petititiner' aeetirdirigiy had entered appearance and

'ureéterated  deietiee. The Council had thereziftier decided that

._thei.iii3tter weuid require te be refeirred ftii' 2: :'€C()t}Si{i€E'2'i1CiOt1 by

~ "the"Diseipiiti2ii*y Ceirimittee arid ft}? it t1irthei* inquiry.

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The Diseipiinarg; Committee in turn, by an ortiei°"-a:ife..ted

3.2.2{)Q8i concluded that the charges which had heien 

which, in effeest, is the gist of the c_oi*npi":t_in'it' --t"et'e1u':."ee"' toh

he1'eiitztb<:w'e.

7. It  held that the._petit_.io'nei3_:not gittiit-y  the first
part of the allegations, but  o.theAf.:vVrni§conduct insofar
as the second partoi':   was Concerned
and this was   petitiiiionet only as on 23.7.2009

This ordeij W218_{5i£t{.§'s'3d_B€VfOi7€,t>ti1§ Council of the second respondent

for its findings and i'eco'ninf1e'1idéitions. The petitioner was issued __notic.e__§t:>f' hearingtind he was heard. it is this subsequent are initiated to address the complaint and the petitioner, that is under chaiienge in the ' ptesentpetitiont in the fist instance, this Court has granted an interim "--._oi'der of stay of fnithei' proceedings before the Cottneii of the first respondent tied the seine has been eonttinueti tiii date. The 13 E'?

...(r.

The respondents have entered zftppettranee ««j"thi_'t>_ti'gi2 counsel and have filed stzttetnent of objections. The learned Senior A(l'v'()Cat€, Sjliiiil S'.N;tg.enen<_i; i1_ppeaitwinC'g« for the respondents, contentls thatthere are ti-teliniinvztry' t)l:jec=titf>ns' 2 to the maintainability of the it is the petitioner was afforded by the Council when the /6.1iort:,.of.:','ll9C was considered petition is filed. It is hence eontentieid participated in the proceedings Committee as well as the Council, theie-gs no j_us'tifieation for the petitioner to file the ll'P1f€Se-lﬁl'p$titiG_ﬁ ElHClllfl'r€'--------S'21Ih€ is a clear abuse of process of law l'wuh'en_é1ll :{liiElli**§il7lElll"1€(l in the proceedings for the Council to suhntist its to the petitioner. It is further contended that in the Teventslthe Council should find the petitioner guilty for _l t._n*:i,sle'on't:iuct other than the rnist:ondt1et mentioned in Section 21(4) of the Act, 21 F€li:':1'€HC€ as envisaged under Section 216} eontaining 23 finding alongwith the tee<i>ininendtttit>ns of the Council is to be filed before this court, which is requireid-"to be decided in ziccordzthce with Section 21(6) where would again have full opportunity of beihg_he2;{rd inﬂ"respeict« _ thereof. It is therefore submitted that Zthcfj. alternative and efficacious rented}? "even iiit is to be'e;ccevpted§ that _ the proceedings are Vitiated and hen_ce».Vthe_Vp1'eisehtpetition would have to be dismissed as not"rriaintaliniablef'-- " --

13. It is "decision of the Council to refer the ﬁlti$IEti'i..f;{}f 21iturthieiii'inquiiryiig has taken in April 2007, before wh_ich._theVinetit_i»oner' heard by the Council. Thereafter the Discipliria_i"y conducted 21 further inquiry in

-'V.which'ii:he ipetiti(>her .h_§id'p21rticipe1ted. The present petition is ii'--V1°ile«:ii° i_thex.._report of the Disciplinary Cornrnittee was considered. arid tifter the Council had heard the submissions on 'behalf of the petitioner on the said report. Therefore, the present j §;et'iti_orif clearly an zttteiript to scuttle the proceedings and ought 2 tolie dismissed offhand.

é lrik Without prejudice to the aboxie, the leai:§fnied--«i..Se:niior_ Advocate would submit that the contentions urge-dl'_~oni'-.m--erit,s would also not warrant consideration. '"gTh'ei'contentioir: tVi1ilE~.'tVli!;i3:i Disciplinary Committee has C{)f1Cl"J_(il€{l that" the p_etiti<)ner not * guilty of professional air"other;t"rtiiscoritittct niisleading statement as the report of the is not necessarily the" --aiga'insitif_thei___}§etitioner. It is the Council which the basis of the report and its a:;sses_sme'nt:ofithevrnaterial; on record. The Council not only has the'=.power"t--o record---- finding of guilt contrary to any ..,.i'eport,«ibtlltt'~ is 'tlso,itested with the power to call for a further i°--_repiVo'rt.of the.Disciplina1'y Committee. It is then contended that the assurnptioni averrnertt that the Director of lncorne~tax, 'who was the complainant had also accepted the finding that there A Vegas_no;professional or other misconduct is misleading since it is ., from the letters of the said authority that it is indicated that " the Council may take its decision in accordance with the provisions of the Regulations. it therefore contended that E E9 Committee to have addressed the cirestrtnstences to ascertain whether the petitioner was guitty of other rntseonduet h2td.tft£i§4ed.V_tt> do so. The Council having therefore called for 21 further . the action on the part of the petitioner' an_'iotinte§fi to Viotpherp misconduct, cannot be said to be bad i1'°1'.v1a'\":r.d A"Thet*eV"wtts ..nt:_d:'s«t1_.e'ttr.. fetter on the Council to have tt£fIp»C'Vl'1'§3bSS€3d. the 'it? any h' member to ascertain guilttt Z "other misconduct". On the other Section 22, it is a duty enjoined that View of the matter? being without its jurisdiction in -A a further report with reference to other misconductt eannotrbe accepted.

_ "E8,sflnvsofar aswthe second question is concerned? the on behatt' of the petitioner that the Previso to .Reguftttit>;1i..1'6(?i) required that the report of the Disciplinary "'V.C,o'tnttn_tttee' to the effect that the petitioner not guilty of the of professiontti ttnsconduet ought to have been accepted 3 20 and that it sghait not tecetti its findings e<>ht:'a1'_yVtQ_"'the' t_e'pert ht' ' the Committee is thtiaeious. R€gLi}2iEi,{ijH I6_(%¥)gte«2;dii:'At:s;_:ft3."t}<}_\§%£éVVV:_--

"{4} The Ceuneii sghali, en the et}nsid_'ertitit>t1'efhthe report and the further r.e:pe.r__t, if atn;.t""the__V_ representation in writing aththeﬁRespenderttg'*tt*..'ah§§:

recordits fittdings: . L " h ht PROVIDED that fepert '.(1¥f,_ "Di_seiphnary Committee is that the Resgtenriettbttbis of any prefessionztté ether xCe'ut:;it shall not record et)r1t::';t1'y theuhtejjhert of the DisciPP1)z:r§' '(:»0Ih1tiit;~£3,e;5'.': ' r

19. From 21 ~1iea«d__ihgef the above, it is Clear that if the Committeve h:1?§:'i~tit1V'it.sﬁV'V--'see-:)rid"tep01't or a further report, held that 'Lt1€: de':1:i$f:q;ten't».t_was hcjtjguilty, it is only then that the Regutation 'IQ/'8'Vdt3wh"-thatthe"Ceuncii shah not record its findings to the eentfctty'. I_Fi.'{fi.:§i"t.t1S't€tf1I case, it is net in dispute that the further tepott has tgpined that the petitioner was indeed guilty of other ttZ§SG{)_ﬁtfiTUCt , if not pt't>fes3ien2ti miseehdttct ins«:>f2t1' as the Seeettd VA _;:32tr_t5 Qt' the charges was <:ettcerned. Whethet there are indeed E

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Karnataka High Court