IMPORTANT POINT
Chartered Accountants must exercise due diligence and integrity in their professional duties, and failure to do so constitutes professional misconduct under the Chartered Accountants Act, 1949.

JUDGMENT/ORDER

NEELA GOKHALE, J. - This is a reference made by Petitioner-The Institute of Chartered Accountants of India under the provisions of Sec. 21(v) of the Chartered Accountants Act, 1949 (pre-amended as applicable to the present case) against Respondent, viz., the Chartered Accountant concerned. The Institute received a complaint dtd. 28/7/2006 from the Superintendent of Police, CBI, Bank Securities and Fraud Cell, Mumbai ("Complainant") informing the Institute that Respondent had assisted various companies in availing credit facilities of huge amounts from various banks by issuing false documents certifying valuation of work undertaken and completed by the accused companies. Complainant also alleged that Respondent had also certified the sales registers and list of supply bills of the accused companies without verifying facts and figures to facilitate loans being sanctioned to the said companies.

2. The Institute called upon Respondent to send his response and by a written statement dtd. 9/7/2007, Respondent defended himself by referring to the complaint as frivolous, without offering any documentary evidence and even went on to refer to the complaint as being premature on the ground that criminal complaints against the main accused were yet pending before the Criminal Court. He also asserted that the certificates were issued by him after due checking of relevant records and obtaining necessary explanations and verification. Complainant rebutted the written statement by its own rejoinder dtd. 27/7/2007 and Respondent once again submitted his additional comments on the rejoinder. The Council of the Institute ("Council"), prima facie, found Respondent guilty of professional misconduct and accordingly referred the case to Disciplinary Committee ("Committee") constituted under the Chartered Accountants Act, 1949 ("the Act").

3. The Committee held various meetings on 7/10/2008, 25/11/2008, 13/6/2009 and 16/7/2009 for the purpose of enquiry. After hearing the parties, recording evidence and on perusal of the documents produced before the Committee, the Committee gave its report on 3/2/2010 holding Respondent guilty of professional misconduct under Clauses (7) and (8) of Part-I of the Second Schedule to the Act read with Ss. 21 and 22 of the Act. The Council considered the report at its 297th meeting held between 4th to 6/8/2010 at New Delhi. The Council on the basis of the contents of report and also the oral submissions made by the Counsel of Respondent, referred the matter back to the Committee for further enquiry on specific issues.

The issues flagged by the Council were generally to reconsider the documentary evidence including working papers of Respondent, examining employees of the accused banks as well as the basis on which Respondent had satisfied himself about the existence and the valuation of assets as mentioned in the certificates issued by him and alleged to be false.

4. The Committee once again convened hearings on 22/4/2013 and 7/5/2013. Respondent presented himself but sought more time on the first date. On the second date of hearing, Respondent conveyed through e-mail his inability to attend the hearing on the pretext that it was time consuming and that he did not wish to waste money and effort and cause inconvenience to himself and his witnesses. The Committee then concluded the hearing and submitted its further report dtd. 10/1/2015 to the Council reiterating its earlier findings. Respondent was given the copy of Committee Report and was requested to send his written representation to the Council or to appear in person or through a duly authorized representative. His authorized representative CA, Mr. Sashikant Barve appeared on behalf of Respondent and filed written representations dtd. 10/3/2016. He also made oral submissions. The Council after hearing Mr. Barve and considering the report of Committee held Respondent guilty of professional misconduct falling within the meaning of Clauses 7 and 8 of Part-I