$~11 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 14.01.2026 + CHAT.A.REF 1/2018 COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA .....Petitioner Through: Ms. Pooja M. Saigal, Sr. Advocate with Ms. Ananya Choudhary and Mr.

Ankit Mittal, Advocates.

versus SHRI S.N. SHIVAKUMAR .....Respondent Through: None.

CORAM:

HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

J U D G M E N T

DINESH MEHTA, J. (ORAL

1. The present reference has been preferred under Section 21(5) of the Chartered Accountants Act, 1949 (hereinafter referred to as ‘Act of 1949’) seeking confirmation of the punishment that has been imposed upon the respondent-a chartered accountant to the effect of removal of his name from the register of members of the Council of the Institute of Chartered Accountants of India (hereinafter referred to as ‘the Institute’) for a period of three months.

2. The facts giving rise to this reference are, that the Reserve Bank of India (hereafter referred to as ‘RBI’), sent a communication dated 20.10.2006 informing the Institute that the audit report as furnished by Escorts Finance Limited (hereafter referred to as ‘Company’) through its statutory auditors i.e. M/s N.M. Raiji & Co.(of which respondent is a partner) for the Financial Year 2004-2005, does not give true, correct and complete disclosure with respect to the liability of the company on account of public deposits and ever greening of the assets by the company.

3. Acting on the aforesaid communication, the institute issued a notice dated 04.06.2008 to the respondent. In response thereof, the firm furnished a reply dated 08.08.2008, with which, the Institute was not fully satisfied and the matter was treated as an information case and a notice dated 30.12.2008 was served upon the respondent-member.

4. In August 2009, a prima facie opinion was formed by the institute and the matter was decided to be investigated by the Disciplinary Committee. The Disciplinary Committee, in turn, took the proceedings in accordance with law. In spite of the notice, the respondent had not filed any reply/response/explanation. The Disciplinary Committee thus, considered the material available and recorded a finding, against the respondent.

5. When the matter was taken up by the Institute, as per sub Section 3 of Section 21 of the Act of 1949, the respondent took a plea that since the Act of 1949 had undergone a change his case should be governed by the amended Act, and not by the unamended Act.

6. The institute did not agree with the submission so made by the respondent and imposed the aforesaid punishment by in the meeting dated

20.04.2017-21.04.2017, being 364^th (Adj.) meeting of the institute.

7. Before proceeding further, it would be apt to record that all the three charges were framed against the respondent, which reads as under:-

“Charge no 1: It appears that the Respondent-firm as the auditors have not verified the exact liability of the Company on account of public deposits at the time of auditing Company's accounts as on March 31, 2005. Subsequently, it transpired from the Respondent-firms' reply that liability towards accrued unpaid interest on public deposits for earlier period up to March 31, 2005 was not made available to them by the Company.

Charge no 2: The Respondent-firm as the auditors could not detect 'ever-greening of assets' by the Company while finalizing the Company's Balance Sheet as at March 31, 2005.

Charge no 3: The Respondent-firm's explanation that issuing auditor's certificate for the year ended March 31, 2005 at this stage as required in terms of Para 8(2) (Part Ill- Special Provisions) of Notification No.DFC.118/DG(SPT)-98 dated January 31, 1998 issued by RBI will not serve any purpose, is in contravention of the provisions of RBTs directions as it is obligatory on the part of the auditors to submit such certificate.”

8. The said decision of the Institute has been sent before this Court by way of reference under Section 21 (5) of the Act of 19