$~1 * % + IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: January 19, 2017 CHAT.A.REF12014 COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ........ Petitioner
Represented by: Mr.Rakesh Agarwal & Mr.Pulkit Agarwal, Advocates. Versus SHRI GYAN PRAKASH AGARWAL & ANR ........ RESPONDENTS
Represented by: Mr.Prakash Chandra Srivastava, Advocate for respondent No.1 with respondent in person. CORAM: HON'BLE MR. JUSTICE PRADEEP NANDRAJOG HON'BLE MR. JUSTICE YOGESH KHANNA PRADEEP NANDRAJOG, J.
(ORAL) CM No.47376/2016 1.
2. Heard learned counsel for parties. The issue raised is squarely covered in favour of petitioner as per the decision of a Division Bench of this Court, reported as 2011 (126) DRJ159 The Institute of Chartered Accountants of India & Ors vs. P. Rama Krishna & Anr.
3. The transitional provision, being Section 21D, when on November 17, 2016 the Chartered Accountants Act, 1949 was amended has been interpreted by the Division Bench. CHAT.A.REF12014 Page 1 of 5 4. Section 21D reads as under:-
"“D. Transitional Provisions. All complaints pending before the Council or any inquiry initiated by the Disciplinary Committee or any reference or appeal made to a High Court prior to the commencement of the Chartered Accountants (Amendment) Act, 2006, shall continue to be governed by the provisions of this Act, as if this Act had not been amended by the Chartered Accountants (Amendment) Act, 2006.” In para 37, the Division Bench held as under:-
"5. “37. The intention of the legislation in enacting Section 21D of the CA Act, 1949 is to draw out or make a distinction between the cases pending before the Council on a complaint or on information, and ensure that the amended provisions would apply to a fresh complaint or information and the unamended Act will apply to the pending complaints or information. It is inconceivable and there is no good reason or cause why distinction should be made between „information‟ and „complaint‟ for the purpose of deciding whether the amended or unamended provision would apply. The legislation intent behind incorporating Section 21D is to make the legal position beyond doubt or cavil so that there is no dispute. Even under Section 6 of the General Clauses Act the position is the same. In these circumstances, we would prefer the interpretation placed by the appellant on the word „complaint‟ as used in Section 21D. The word complaint information cases which were pending before the Council on 17th November, 2006. In the facts of the present matter as discussed above, proceedings or complaint in the form of information was pending before the Council on 17th November, 2006 and accordingly the unamended provisions will apply.” includes 6. Suffice it to highlight that the word ‘complaints’ in Section 21D was read to include information as well. CHAT.A.REF12014 Page 2 of 5 7. Meaning thereby if information pertaining to an alleged misconduct was pending before the Council, further proceedings have to continue as per the unamended Act.
8. The facts we need to note in the instant case are that a complaint was received by the Council on November 06, 2002. Correspondences ensued between the council and Megha & Associates, the firm of Chartered Accountants. Clarifications sought not being granted, the matter was treated as information and in accordance with regulation 12(6) of the Chartered Accountants Regulations 1988, a letter was issued by the Council on December 30, 2005 calling upon the firm of chartered accountants to disclose the name of the members answerable to the charges. The respondent submitted his written statement of defences on July 25, 2006 i.e. much before the Act was amended on November 17, 2006.
9. We accordingly hold the reference to be maintainable for the reason that matter would have to be decided as per the Chartered Accountants Act 1949 and not as amended by the Chartered Accountants (Amendment) Act, 2006.
10. The application is dismissed. CHAT.A.REF12014 1. On February 06, 2002 the Comptroller and Auditor General of India (CAG) made a complaint to the Institute of Chartered Accountants alleging that for the year 2000-01 the Joint Statutory Auditors of Cotton Corporation of India : M/s Megha & Associates had committed misconduct while performing duties as the auditors of Cotton Corporation of India (CCI).
2. After correspondence with the firm the Council of the petitioner at the meeting held on 28th and 29th August, 2008 referred the matter to the CHAT.A.REF12014 Page 3 of 5 Disciplinary Committee for inquiry.
3. In its report dated August 01, 2011 the Disciplinary Committee absolved the respondent, who was in charge of the audit, of the first and the second misconduct alleged. But held him guilty of the third misconduct, which was of claiming AC First Class fare for rail travel, and as a matter of fact travelling in a lower class during the return journey.
4. The Disciplinary Committee of the Council at the meeting held on 18th and 19th June, 2012 recommended removal of the name of the respondent from the Register of Members for one month. Reference has been made to this Court with the proposed penalty.
5. Having perused the report of the Disciplinary Committee we find that as per the Committee the respondent was entitled to AC First Class fare. He had travelled by AC Second Class due to seat in the AC First Class not being available for the return journey. The Disciplinary Committee itself noted that it was a case of casualness and not an act done with an intention to cheat. The Disciplinary Committee has noted that the travel was at a short notice and in a rush season.
6. In our opinion the proposed penalty would be disproportionate to the gravity of the wrong and especially keeping in view that there is no evidence that the respondent was paid for travel by AC First Class. The evidence is only to the effect that he travelled by AC Second Class but raised a bill for travel by AC First Class.
7. Though it may be a case where penalty of reprimand would suffice, but we refrain from imposing any penalty for the reason proceedings have dragged on for fourteen years and the sword of damocles has remained hung over the respondent. CHAT.A.REF12014 Page 4 of 5 8. Warning the respondent to be more careful in future we answer the Reference by accepting the report of the Disciplinary Committee and dropping the proceedings against the respondent without imposing any penalty.
9. No costs. JANUARY19 2017 skb (PRADEEP NANDRAJOG) JUDGE (YOGESH KHANNA) JUDGE CHAT.A.REF12014 Page 5 of 5