Mere negligence, innocent mistake, or errors of judgment in the performance of professional duties do not constitute professional misconduct unless ill-motive is established.

PRANAB KUMAR CHATTOPADHYAY, J. :- This is a reference under Section 21(5) of the Chartered Accounts Act, 1949 (hereinafter referred to as the 'said Act') by the Council of the Institute of Chartered Accounts of India. The Council of the Institute of Chartered Accountants of India (hereinafter referred to as the 'said Council') has found the respondent, a member of the said Institute and a partner of the firm of Basu Dey Kapur, guilty of certain misconduct which was found to have been committed by him by the disciplinary committee of the said Council.

2. Certain irregularities in Securities and Call Money Transactions of UCO Bank during the year 1991-92 were reported by the Joint Parliamentary Committee (JPC) and a committee was set up to enquire into irregularities in Securities and Banking Transactions and the committee thereafter enquired into Securities Transactions of banks and financial institutions (Janakiraman Committee). In the first interim report and report No. 5 and the annual audited accounts of UCO Bank for the year 1991-92, certain irregularities and deficiencies were observed and by letters dated 20th May, 1994 and 2nd May, 1995, the respondent's firm was asked to submit comments and/or clarifications.

3. The respondent's firm sent its clarifications vide letter dated 31st October, 1994 and 9th May, 1995 respectively. Since those clarifications were not found satisfactory, the matter was treated as 'information' in terms of Section 21(1) of the C.A. Act and an 'information letter' dated 15th May, 1997 framing certain charges of misconduct was sent to the firm of the respondent. The said firm was asked to name the member answerable for the said charges. The said firm replied to the 'information letter' by its letter dated 7th November, 1997. Upon a perusal of the written statement, the Council was prima facie of the opinion that the respondent was guilty of professional misconduct and decided to refer the case to the Disciplinary Committee for enquiry. The Disciplinary Committee enquired into the matter and submitted report on 4th February, 2003.

4. A copy of the aforesaid report of the Disciplinary Committee was sent to the respondent, Shri Somnath Basu and he was informed that the said report would be considered by the Council at one of its forthcoming meetings. The respondent submitted his written representation on 16th July, 2003 and further written representation on 10th September, 2003.

5. On consideration of the report of the Disciplinary Committee along with the aforesaid written representations of the respondent dated 16th July, 2003 and 10th September, 2003 the Council decided to accept the report of the Disciplinary Committee and accordingly held that the respondent was guilty of professional misconduct falling within the meaning of :

(i) Clauses (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 with regard to charges 3, 4, 5 and 10.

(ii) Clauses (6), (7) and (8) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 with regard to charges 6 and 7; and

(iii) Clauses (5), (6) (7), (8 and (9) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 with regard to charge 8; and

(iv) Clauses (7), (8) and (9) of Part I of the Second Schedule to the Chartered Accountants Act, 1949 with regard to charge 11.

6. The Council, accordingly, decided to recommend to the High Court that the name of the respondent be removed from the Register of Members for a period of one year. Therefore, the Council applied before this Court for approving the aforesaid recommendation regarding removal of the name of the respondent from the Register of Members for a period of one year.

7. On examination of the findings of the disciplinary committee which were accepted by the petitioner Council it appears that the respondent was found guilty in respect of the Charges 3, 4, 5, 6, 7, 8, 10 and 11.

8. Charges 3, 4 and 5 arise out of irregular entries in the Security General