The main legal point established in the judgment is that while the respondent was found guilty of professional misconduct, the court considered the respondent's long-standing membership and lack of past misconduct in determining the appropriate punishment.

JUDGMENT

Pankaj Jain, J. - This is a reference at the behest of the Institute of Chartered Accountants (hereinafter referred to as 'institute') under Section 21(5) of the Chartered Accountants Act, 1949 (hereinafter referred to as 1949 Act') recommending that the name of respondent No.2 be removed from the register of members of the institute for a period of six months as a punishment on account of professional misconduct.

2. Respondent No.2 is a registered member of the petitioner- institute. A complaint was received in the prescribed Form 8 against him. Relevant portion of the complaint verified on 26.05.2006 by AGM, Indian Bank raising allegations against respondent No.2 reads as under:-

'(1) We are in receipt of two different B/s and P&L accounts alongwith Auditors Reports as on 31.3.04 in respect of our client M/s. Sitla Rice & General Mills Jagraon certified by respondent. The respondent is thus guilty of professional misconduct under Sections 21(5) and 22 Part I for following:

(a) Certified in the name of his firm a report is financial statements as on 31.3.04 without examination of such statements and related records (Clause 2 of above sections).

(b) is grossly negligent in the conduct of his professional duties (clause 7 of above sections). Two different audited balance sheets and xxx alongwith auditors reports as on 31.3.04 (both agreement 27.7.04) by the respondent.'

3. The aforesaid complaint was considered by the Council of the Institute in its meeting held in August 2008. It was resolved that:-

'1174. Asstt. General Manager, Indian Bank, Chandigarh-vs-S.D. Jain (M.No. 15674) of M/s. S.D. Jain & Associates, Ludhiana [25- CA(137)/2006] The Council was prima facie of the opinion that the Respondent was guilty of professional and/or other misconduct. It was, therefore, decided to refer the case to the Disciplinary Committee for inquiry.'

4. Disciplinary Committee in its report dated 06.04.2011 found respondent No.2 guilty of professional misconduct falling within the meaning of Clauses (6) and (7) of Part I of the Second Schedule to the 1949 Act. A copy of the report of the Disciplinary Committee was forwarded to the concerned parties soliciting their response. On 04.03.2013, written representation was received from respondent No.2, wherein he submitted:

'1. That the respondent has audited the financial statements of M/s. Sitla Rice & General Mills, Jagraon for the year ending 31.03.2004.

2. That the respondent has prepared the Auditor's Report dated 27.07.2004 on the financial statements of the said above mentioned firm showing a net loss of Rs.134585.94.

3. That the respondent has delivered the photocopy of audited Balance Sheet along with Auditor's Report thereon on 27.07.2004 in the morning and after few hours the partner of the Firm Sh. Gurbant Singh returned back and informed that the Balance Sheet prepared from the manual Books of Accounts is not correct due to some mistake due to wrong totaling and wrong posting in the accounts. The partner of the firm informed me that the accountant has already prepared the Computerizes books of accounts which may be rechecked and proper Balance Sheet may be prepared.

4. That the respondent has again prepared the fresh Auditor's Report on account made by the said firm after checking the computerized Books on the same date and got the report and signed the report 27.07.2004 showing a net profit of Rs.60572.78.

5. After preparation of Balance Sheet, the manual books of accounts maintained had been destroyed.

6. The Partners of the firm has wrongly given both the Balance Sheet to Indian Bank having their Branch at Jagraon for sanction of Working Capital Limits.

7. The affidavit from the partner of the said firm is enclosed giving the facts of the case.

3. The Differences in both the Auditor's Report showing Net Profit of Rs.60572.78 and Auditor's Report showing net loss of Rs.134585.94 is enclosed as per Annexure 'A'.

4 That there was no malafide bad intention of the respondent and the firm to