COUNCIL OF THE THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Vs. LOKESH DHAWAN F.C.A
HIGH COURT OF DELHI
Council Of The The Institute Of Chartered Accountants Of India
Lokesh Dhawan F.C.A
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(1.) THIS is a reference by the Council of The Institute of Chartered Accountants of India ( Council of the ICAI ) under Section 21(5) of the
Chartered Accountants India Act, 1949 ('Act') with a recommendation that
the name of Respondent No.1 herein, who has been held to be guilty of
other misconduct in terms of the Act, should be removed from the Register
of Members for a period of three months.
(2.) THE facts leading to this reference are that the Respondent No.1 is a partner of a firm of Chartered Accountants by the name of Dhawan and
Gulati ('DandG') who were appointed as statutory auditors for the State
Bank of Hyderabad by a letter dated 9th March, 1996. Enclosed to the
letter of appointment was a copy of the Reserve Bank of India ('RBI')
guidelines regarding the eligibility of the auditors to audit fees,
lodging and travelling allowances.
After their appointment as statutory auditors, DandG drew an advance of Rs. 1,50,000/- from the SBH towards expenses. Of this a sum of Rs.
70,450/- was spent and the balance Rs. 79,550/- remained with the firm. This was later adjusted by the SBH against the audit fees payable to
DandG. Upon completion of the audit, DandG forwarded to the SBH the
statement of expenses and accounts along with copies of bills. According
to DandG, the SBH was liable to pay it a sum of Rs. 29,145/- after
(3.) THE SBH in turn wrote a letter on 12th September, 2006 to DandG calling upon it to pay, after making adjustments, a sum of Rs. 90,666.55
being the amount spent by DandG expenses towards lodging and boarding in
excess of the permissible limits stipulated by the RBI in its guidelines.
This was contested by the DandG and a series of correspondence ensued. By
a letter dated 11th February, 1997, the SBH informed DandG that an amount
of Rs. 70,808.64 is due from you to the Bank after accounting for all
admissible expenses according to the directives of RBI. DandG was called
upon to refund the said amount immediately and settle the matter without
further delay. However by its letter dated 11th March, 1997, the D&G
declined to accede to this demand and reiterated that since bank had made
all arrangements for due boarding and lodging and no specific request had
been made from our side the bank had to bear the extra expenses incurred.;
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