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Judgment
This Chartered Accountant Reference has been made to this Court in terms of Sub-Section (6) of Section 21 of the Chartered Accountants
Act, 1949. The respondent was proceeded against on the following allegations:
1.1 The Respondent accepted the position as auditor of M/s. Cosco Sales & Services Ltd. and M/s. Cosco Blossoms (P) Ltd., New Delhi,
(hereinafter referred to as ""Companies"") previously held by the Complainant without first communicating in writing.
1.2 The respondent accepted the said appointment as auditors of the afore-mentioned Companies without first ascertaining whether the
requirements of Section 225 of the Companies Act, 1956 in respect of such appointments had been duly complied with or not.
1.3 The Respondent accepted the said appointment as auditor of an entity where the undisputed statutory audit fees of another Chartered
Accountant had not been paid.
The respondent pleaded guilty to all the charges aforesaid.
As far as the misconduct contained in Charges 1.1 and 1.2 is concerned, the same falls under Clauses 8 and 9 respectively of the First Schedule
of the said Act. They were considered by the Council in terms of Sub-Section (4) of Section 21 and we are informed that the respondent No. 1
has been issued a caution.
As far as Charge 1.3 aforesaid is concerned, the same has been made a misconduct vide Notification dated 28th October, 1999 gazetted on
13th November, 1999, issued in exercise of powers under Clause (ii) of Part II of the Second Schedule to the Act. With respect to such
misconduct, the Council under Sub-Section (5) of Section 21, is required to make a recommendation for consideration of this Court under Sub-
Section (6) of Section 21. The Council in the present case has recommended the punishment of reprimanding the respondent.
The counsel for the petitioner has argued that the recommendation in the present case is for the least of the punishments provided for such
misconduct. With reference to The Council of the Institute of Chartered Accountants of India Vs. Dilip Kumar De AIR 2011 Calcutta 233, it is
contended that once a member is found guilty, the Council is not authorized to totally exonerate him and is required to impose minimum penalty.
The counsel for respondent on the contrary has contended that the respondent at the relevant time was barely one year old in the profession and
the mistake committed by him was unintentional and the respondent not only immediately pleaded guilty but also made amends by ensuring the
payment of audit fee due to the complaining Chartered Accountant and also by himself giving up the appointment taken up inadvertently without
compliance with the Rules. It is contended that it is for this reason only that the complaining Chartered Accountant has also withdrawn the
complaint and given no objection to the appointment of an Auditor in his place.
We have considered the matter in the aforesaid perspective. We find that the minimum punishment prescribed for misconduct specified in First
Schedule, for which the Council itself is empowered to impose punishment, is of reprimand. On the contrary, this Court u/s 21(6) is empowered to
make any of the following orders, namely:
(a) direct that the proceedings be filed, or dismiss the complaint, as the case may be;
(b) reprimand the member;
(c) remove him from membership of the Institute either permanently or for such period as the High Court things fit;
(d) refer the case to the Council for further inquiry and report.
We find that even though the minimum punishment prescribed u/s 21(4) for misconduct specified in the First Schedule is of reprimand, the
Council has chosen to only caution the respondent. Evidently, the Council is of the view that the circumstances aforesaid, which are undisputed, did
not invite even the minimum punishment of reprimand. On the contrary, the powers of this Court u/s 21(6), enable this Court to even when finding
a member guilty of the misconduct, direct the proceedings to be filed.
We are of the view that since the Council itself, for misconduct, has chosen only to caution the respondent, the same treatment be meted out to
the respondent in these proceedings also. Accordingly, the reference is accepted; however, instead of the recommendation of reprimand, we only
direct caution to the respondent. The reference is disposed of. No costs.