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Gujarat High Court
Judgename :A.L.DAVE, R.K.Abichandani
COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INIDA - Appellant
Versus
P.C.PAREKH - Respondent
C.A.R. 1 of 1991
Decided On : 02/14/2003
Constitution of India - Article 19 (1) (c), 311 , 19 (1) (a) , 245 (1) , 19 , sub-Articles (2) and (3) of Article 19 - Chartered Accountants Act, 1949 - Section 21 (5), sub-section (4) of Section 21, Section 21 and 22, 21 (3 ), 277 and 278 - Advocates Act, 1961 - section 35 - Peoples Act, Sections 123 (5) and 124 (5) - Police Act, 1951 - Section 145 - Employment (Standing Orders) Act - Section 3 (2), 21 (2) - Indian Penal Code,1860 - Sections 107,477a,468,193,196,177,188,199 - Income tax Act - Section 193 - Council has forwarded the case to this Court after finding the respondent who is a member of the Institute of Chartered Accountants of India, guilty of misconduct other than the misconduct as is referred to in sub-section of Section of the Act and recommended removal of the respondents name from the Register of members of the Institute of Chartered Accountants of India for a period of six months - Respondent in respect of the alleged misconduct reads as under :"the respondent had, authored a book entitled - On going through the Preface as well as the contents of the book it was seen that the author had explained in detail the various methods of creation of black money followed by different sections of society and the methods legal as well as illegal generally adopted to convert the same into white. Since it appeared that the title of the book its preface its contents and in totality the book was likely to create an impression in the eyes of common man that the Chartered Accountants are experts in helping in the creation of black money and its conversion into white money though there is no direct reference as such to the Chartered Accountants - This might tend to lower the image of the profession in the public eyes - It appears that the conduct of the respondent in writing such a book was unbecoming of a chartered accountants - Respondent had committed professional and / or other misconduct under Section of the Chartered Accountants - Committee for holding an inquiry against the respondent and the Disciplinary Committee after giving an opportunity of hearing to the respondent found that the respondents argument that he had only described practices followed in the generation of unaccounted money cannot be accepted - Committee observed that a Chartered Accountant as a member of the institute - Held, Respondent has proved himself to be capable of such infamous conduct by which he will be a constant danger to the public as also to young men aspiring to enter the profession of Chartered Accountants - Recommended punishment of removal of his name for six months would, in our opinion, be a mockery of the proceedings in view of the serious nature of misconduct - Permanent removal of name from the Register would in such cases be clearly warranted - We therefore have heard the respondent who is present in the Court on the question of punishment - He has stated before us that it was never his intention to prompt anyone for tax evasion - He says that he has written what was prevailing in the society at that time and that even the government had announced many schemes for voluntary disclosure of black money from time to time - He states that he is still in the profession and is years of age having health problems such as blood pressure and teeth problem - He says that he very much regrets if there is any misconduct found on his part - He also states that he has sold away the copyright in the book in the year - He further states that he is taking medicines for cardiac problem, though it is not very serious - He also states that he has not indulged in any such writing after the book was published and he sincerely regrets about it. He states that he regrets having written such a book and he will never write such things in future - In short according to him, he feels repentant in respect of the writings in this book - Repentance that he has shown in the Court and the time-lag that has elapsed as also his statement that he has never published any such writing after the publication of the said book in our opinion interest of justice will be met if the respondent is removed forthwith from the membership of the institute for a period of five years. - Accordingly while upholding the finding of the Council holding the respondent guilty of misconduct, direct that the respondent be removed forthwith from the membership of the institute for a period of five years - Reference stands disposed of accordingly, with no order as to costs - Learned counsel for the respondent submits that the operation of this order may be stayed to enable the respondent to approach the higher forum in the facts and circumstances of the case it will be improper for us to stay the operation of this order when the removal of the respondent was due long back having regard to the serious nature of the misconduct committed by him - Ordered Accordingly.
( 1 ) THIS Reference is made under Section 21 (5) of the Chartered Accountants Act, 1949, by which the Council has forwarded the case to this Court after finding the respondent, who is a member of the Institute of Chartered Accountants of India, guilty of misconduct other than the misconduct as is referred to in sub-section (4) of Section 21 of the Act, and recommended removal of the respondents name from the Register of members of the Institute of Chartered Accountants of India for a period of six months.
( 2 ) THE Charge levelled against the respondent in respect of the alleged misconduct reads as under :"the respondent had, authored a book entitled "tax Planning for Secret Income (Black Money)". On going through the Preface as well as the contents of the book, it was seen that the author had explained in detail the various methods of creation of black money followed by different sections of society and the methods legal as well as illegal generally adopted to convert the same into white. Since it appeared that the title of the book, its preface, its contents and in totality the book was likely to create an impression in the eyes of common man that the Chartered Accountants are experts in helping in the creation of black money and its conversion into white money, though there is no direct reference as such to the Chartered Accountants, this might tend to lower the image of the profession in the public eyes. It appears that the conduct of the respondent in writing such a book was unbecoming of a chartered accountants. Thus, the respondent had committed professional and / or other misconduct under Section 21 and 22 of the Chartered Accountants Act, 1949. "
( 3 ) THE matter was placed before the Disciplinary Committee for holding an inquiry against the respondent, and the Disciplinary Committee, after giving an opportunity of hearing to the respondent, found that the respondents argument that he had only described practices followed in the generation of unaccounted money cannot be accepted. The Committee observed that a Chartered Accountant as a member of the institute, has a role to play in the society and is required to observe high standards of integrity and professional ethics and is expected to discharge his professional obligation to discourage tax evasion and not to publicise methods of tax evasion which have the effect of educating the public. It was found that, despite the respondents professed intention, the actual effect of the book authored by him was to educate the public as to how to evade tax and create unaccounted money. It was found that the respondents conduct in publicising methods of tax evasion as narrated in the said book was unbecoming of a member of the Institute. The Committee negatived the argument that the Council cannot sit in judgement over the merits and demerits of the contents of the book authored by a member. It was held by the Committee that the matter was referred to the respondent on 28th October 1985 and therefore, there was no delay on the part of the Institution in initiating the proceedings. The Committee concluded that, in its opinion, the respondent was guilty of "other misconduct" under Section 21 read with Section 22 of the Chartered Accountants Act, 1949. The Committee consisted of a President and two members.
( 4 ) THE report of the Disciplinary Committee placed before the Council, which consisted of seventeen members (excluding the members of the Committee), was taken up for consideration in its 144th meeting on 8th June 1990. The Council, after considering the written submissions of the respondent and the report of the Disciplinary Committee, reached the conclusion that the report of the Disciplinary Committee was based on correct and cogent reasons and deserved to accepted. The Council rejected the contention that the Disciplinary Committee, in its interpretation of misconduct, had gone beyond the scope of its inquiry. Taking note of the earlier order made by
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