- (1.) The petitioner, having found the respondent No.1 Chartered Accountant guilty of misconduct other than any such misconduct as is referred to in Section 21(4) of The Chartered Accountants Act, 1949 (hereinafter referred to as 'the Act') as it stood prior to the amendment with effect from 17th November, 2006, has forwarded the case to this Court with its recommendations thereon.
(2.) This Court, in accordance with Section 21(6) of the Act fixed the date of hearing on 3rd December, 2012 and issued notice of the date so fixed to the respondent No.1 as well as to respondent No.2-Central Government, affording them an opportunity of being heard. The notice issued to the respondent No.1 remained unserved with the report that the premises, of which address was given, was found locked. Fresh notice was ordered to be issued to the respondent No.1, which also remained unserved with the further report that the respondent No.1 had sold the property and shifted to some other place. The petitioner filed an affidavit before this Court that it was not in possession of any other address of respondent No.1 and applied for substituted service of the respondent No.1 at his last known address. This Court, after recording its satisfaction that the respondent No.1 could not be served by ordinary process, directed service of the respondent No.1 by publication in the newspaper Statesman, Delhi Edition. The said publication stands affected. None has appeared for the respondent No.1 despite that also. The respondent No.1 is accordingly proceeded against ex-parte. We have heard counsel for the petitioner and have perused the record.
(3.) The petitioner has made this reference, pleading as follows:- (i) that the Managing Director of M/s Anghaila Housing Private Limited, Delhi filed a complaint dated 2nd September, 2004 with the petitioner with the following allegations against the respondent No.1 having Membership No. 009806 of the petitioner-Institute: (a) that the respondent No.1 was the Auditor of the complainant company and in possession of the records of the complainant company; (b) that the earlier Managing Director of the complainant company had filed a petition before the Institute highlighting the misconduct and unprofessional activities being carried out by the respondent No.1; (c) the hearing of the said complaint was fixed by the Disciplinary Committee for 27th April, 1989 when the respondent No.1 approached the former Managing Director of the complainant company and pleaded for withdrawal of the complaint and assured that he would refrain from carrying on any such activity against the complainant company in future. Believing the said representation of the respondent No.1, the complaint was withdrawn. (d) however, the respondent No.1 continued to engage himself in unprofessional activities against the complainant company, by retaining the records even after he tendered No Objection Certificate dated 26th September, 1992; (e) that upon the former Managing Director of the complainant company approaching the respondent No.1, he demanded money in return for the books of accounts and statutory records of the complainant company in his possession and also threatened that if the said consideration was not paid, the complainant company would have to suffer dire consequences. A complaint dated 21st January, 1995 was filed by the complainant company with the police in this regard, but the respondent No.1 managed to dodge the said complaint and did not return the books of accounts and other records of the complainant company; (f) that the respondent No.1, thereafter started to falsify the records of the complainant company and managed to file bogus Form 2, 32, etc. in the office of Registrar of Companies appointing Sh. Sanjay Daksha, Sh. Sofi-ur-rehman, Sh. Binod Rajhans as Directors of the complainant company and signed the balance sheets as Auditor of the company from 1995-2003 and filed the balance sheets and annual returns of the complainant company in the office of the Registrar of Companies for the years 1995-2003, altogether on 8th March, 2004; (g) the respondent No.1 also got opened accounts in the name of the complainant company in a nationalized bank and to which none of the Directors of the complainant company were signatory; (h) the respondent No.1 also falsely represented the complainant company and made false attempts to dispose off the assets of the complainant company; (i) that the complainant company also filed a petition before the Company Law Board challenging the filing of the documents and appointment of the aforesaid persons as Directors and the Company Law Board passed an order against the Directors so appointed by the respondent No.1; (j) that the respondent No.1 appeared before the Company Law Board on behalf of the Directors appointed by him and whose appointment was challenged in the said proceedings; (ii) that since the aforesaid charges made by the complainant company against the respondent No.1, if proved, would have rendered the respondent No.1 guilty of other misconduct under Section 22 read with Section 21 of the Act and Clause (7) of Part I and Clause (1) of Part II of Second Schedule to the Act, a copy of the complaint was forwarded by the petitioner Institute under cover of its letter dated 5th May, 2005 to the respondent No.1, eliciting the response of the respondent No.1 thereto, as required by Regulation 12(7) of the Chartered Accountant Regulations, 1988; (iii) the respondent No.1 submitted his response dated 21st May, 2005 and to which a rejoinder dated 22nd August, 2005 was filed by the complainant company; the respondent No.1, however despite repeated opportunities did not submit its comments to the said rejoinder; (iv) that the petitioner Council, in accordance with Regulation 12(11), in its meeting held in August, 2008, considered the complaint, response, rejoinder aforesaid and formed a prima facie opinion that the respondent No.1 was guilty of professional and/or other misconduct and decided to initiate an inquiry to be made in the matter by the Disciplinary Committee; (v) the Disciplinary Committee of the petitioner Institute heard the complainant company as well as the respondent No.1; the respondent No.1 pleaded not guilty; the matter was inquired into and the disciplinary proceedings concluded; the Disciplinary Committee vide its report dated 10th February, 2001 was of the opinion that the respondent No.1 was guilty of professional misconduct on the charges of:- A. filing of bogus Form 2, 32, etc. in the office Registrar of Companies appointing Sh. Sanjay Daksha, Sh. Sofi-ur-rehman, Sh. Binod Rajhans as Directors of the complainant company and of taking undue and false interest in the matters of the complainant company after his resignation as Auditor thereof in the year 1992, as is evident from his appearance aforesaid before the Company Law Board; and B. having audited the books of accounts of the complainant company after 1992 and having signed the balance sheets as Auditor of the complainant company from the year 1995-2003 and which were filed with the Registrar of Companies on 8th March, 2004. the Disciplinary Committee, however held the respondent No.1 not guilty of professional and/or other misconduct on the charges of, (a) having demanded consideration for return of books of accounts and statutory records of the company; (b) having opened accounts in the Nationalized Banks in the name of the complainant company; and (c) having made attempt to dispose all the assets of the complainant company; (vi) a copy of the report of the Disciplinary Committee of the petitioner was forwarded to the respondent No.1 and the respondent No.1 was given an opportunity to send his written representation, if any, thereagainst and to also appear before the petitioner Council at the time when the said report of the Disciplinary Committee was to be considered; (vii) no representation was received from respondent No.1 against the report of the Disciplinary Committee; (viii) the petitioner Council on a consideration of the report of the Disciplinary Committee and the representation made by the complainant company accepted the report of the Disciplinary Committee and held the respondent No.1 guilty of professional misconduct as aforesaid within the meaning of Clause (7) of Part I and Clause (1) of Part II of Second Schedule to the Chartered Accountants Act, 1949; (ix) the petitioner Council has recommended to this Court that the name of the respondent No.1 be removed from the register of members maintained by the petitioner Council for a period of six months.;