- (1.) THIS is a reference by the Council of the Institute of Chartered Accountants of India under Section 21 (5) of the Chartered Accountants Act, 1949 (hereafter referred to as " the Act "), with its recommendation to this court that Shri C. H. Padliya, a chartered accountant of Indore (hereinafter referred to as " the respondent "), be reprimanded on the ground that the respondent has allowed his articled clerk Shri Vijay Kumar Gupta, to engage himself in other employment during the period of his articles commencing from September 1, 1969, to August 31, 1971, without taking prior permission of the Council under regln. 36 of the Chartered Accountants Regulations, 1964 (hereinafter referred to as " the Regulations" ).
(2.) FACTS that give rite to this reference which lie in a short compass may briefly be stated. The Council of the Institute of Chartered Accountants of India received information that the respondent, Shri C. H. Padliya, had allowed his articled clerk, Vijay Kumar Gupta, to engage himself in the employment of Liberty Insurance Co. Ltd. , Indore, on a full-time basis during the period of articles from September 1, 1969, to August 31, 1971. The Secretary of the Council by his letter dated October 9, 1972, conveyed this information to the respondent and called upon him to send his written statement, if any, as required by regln. 11 (6) of the Regulations. The respondent submitted his written statement to the Council on November 27, 1972, to the effect that Vijay Kumar Gupta was serving with him as articled clerk during the period in question ; that he was devoting his full time in his office and attending the audit work during the period of his training ; that he never disclosed that he was employed in the Liberty Insurance Company Ltd. , Indore, or anywhere else ; that the office of the Liberty Insurance Company Ltd. , Indore, is situated in a separate portion of the building and the entrance of the same is from a street different from that of his office and that he was neither aware of nor had knowledge of the fact that Vijay Kurnar Gupta was serving with the Liberty Insurance Company Ltd. and, therefore, requests the Council to treat the matter as closed.
(3.) ON a consideration of the information against the respondent and his written statement, the Council opined that there was a prima facie case against the respondent and consequently referred the case to the Disciplinary Committee for enquiry as required by Section 21 (1) of the Act. Thereupon, the Disciplinary Committee met at Bombay on January 3, 1974, and held an enquiry in the presence of the respondent, who was represented by Shri S. M. Agrawal and Shri Sagarmal Jain, Chartered Accountants. Shri Vijay Kumar Gupta, the articled clerk, and the respondent were examined by the committee. Shri Vijay Kumar Gupta deposed that he started working with the respondent since August, 1968, but his articles were given only in September, 1969, and the appointment in the insurance company was given to him in May, 1969, when he was studying for M. Com. According to him, his father took charge of the affairs of the insurance company from a person, who had by his fraudulent methods, created problems to the company in the name of Gupta and was actually in charge of the branch office of the insurance company. The business of the insurance company was developed to a great extent by his father who was the de facto manager of the company, though he was shown to be the manager by his father. Though he was started on a salary of Rs. 250 per month in May, 1969, it was enhanced to Rs. 900 per month by July 1, 1969. The salary was further increased to Rs. 1,110 in December, 1970, and revised to Rs. 1,190 per month from January 1, 1971. The articled clerk, Vijay Kumar Gupta, was definite in his deposition that he was attending the office of the respondent during the regular office hours and was signing the papers of the insurance company only in the morning hours or evenings and he did not at any time inform the respondent about his appointment or drawing salary from the insurance company for the services rendered by his father, who was the de facto manager of the insurance company. The respondent reiterated his stand indicated in the written explanation. The statement of the custodian of the Liberty Insurance Company Ltd. regarding the appointment of Vijay Kumar Gupta and his drawing the salary from the insurance company was preferred to the testimony of the articled clerk and the respondent, although the custodian of the insurance company, has not been examined. The father of the articled clerk was not examined. The Disciplinary Committee came to the conclusion that the respondent was aware of the employment of his articled clerk, Vijay Kumar Gupta, with Liberty Insurance Company Ltd. , Indore, and he failed to take any steps in sending the necessary information to the Institute even after he had been informed by the Institute itself. The Committee also noticed a discrepancy and contradiction in the explanation submitted by the respondent as to when he came to know of the employment of Vijay Kumar Gupta. The report of the Disciplinary Committee was submitted, to the Council which found that the respondent, who is a member of the Institute, is guilty of professional misconduct and, consequently, submitted this reference for appropriate action under Section 21 (5) of the Act.;