- (1.) This is an application for reference under Section 21(5) of the Chartered Accountants Act.
(2.) The facts giving rise to filing of this reference may be summed up thus: a) The Institute of Chartered Accountants of India (hereinafter referred to as the Institute ) received a complaint dated 24th May, 2005 from Shri Ranjit Singh (complainant) against Shri Dipak Kumar De Sarkar, a Chartered Accountant, the respondent before us. b) A copy of the complaint was sent to the respondent with a request to send his written statement. The respondent submitted his written statement and the complainant submitted his rejoinder. c) In accordance with the provisions contained in Regulation 12(11) of the Chartered Accountants Regulations, 1988, the above papers containing the complaint, written statement, rejoinder and comments were considered by the Council at its meeting held in May, 2006 at New Delhi. The Council was prima facie of the opinion that the respondent was guilty of professional misconduct and other misconduct and accordingly, referred the case to the disciplinary committee. d) A meeting of the disciplinary committee for the purpose of enquiry was fixed on 9th August, 2006 but was adjourned. Ultimately, the copy of the report of the disciplinary committee was forwarded to the parties and they were informed that the report would be considered by the council and were requested to send their written representation, if any, in the matter. e) On consideration of the report of the disciplinary committee along with the written representation received from the complainant and the respondent, the Council arrived at the following conclusions: 1. to accept the Report of the Disciplinary Committee wherein the Respondent had been held not guilty of professional misconduct under charge nos.1, 2, 6, 7, 8 and 9 falling within the meaning of Clauses (5), (6) and (8) of Part 1 of the Second Schedule to the Chartered Accountants Act, 1949 and; 2. to accept the Report of the Disciplinary Committee to the extent wherein the Respondent was held guilty of professional misconduct under charge nos.3, 4 and 5 falling within the meaning of Clause (7) of Part 1 of Second Schedule read with Sections 21 and 22 of the Chartered Accountants Act, 1949. f) Consequently, the Council recommended to this Court that the name of respondent should be removed from the register of members for a period of three months. We, therefore, propose to consider the charge Nos.3, 4 and 5 under which the respondent has been found to be guilty by the council and those charges are quoted below: 3) An agreement was made between Mr. D. K. De Sarkar, Sri Subhash Singh and myself. According to this agreement some share certificates and transfer deeds were to be handed over to Subhash Singh after fulfilment of certain conditions. Mr. D. K. De Sarkar handed over the share certificates to Sri Subhash Singh without my consent, and without fulfilling the financial consideration as depicted in the agreement. This was a gross violation of the agreement that was made between Mr. D. K. Sarkar and me. More so consent to act as a mediator/arbitrator while holding the position of auditor constitutes a professional misconduct. (Agreement paperwork is attached as proof. Exhibit C. Point of contention duly highlighted). 4) Mr. D. K. De Sarkar lied to me and claimed that he has handed over the share certificates kept in his custody to Sri Subhash Singh on 6-01-05 by his letter of 28-01-05. In fact Mr. De Sarkar had already handed over the share certificates on 01-02-04, immediately after receipt of my objection letter dated 24-01-04. He tried to conceal his wrongful actions by not addressing my objections in his correspondence. But when the facts were exposed in the E.G.M. of 6-01-05, he made an effort to justify his actions by raising false allegations against me in his letter of 28-01-05. (Copy of the letter and the record from R.O.C. indicating the discrepancy is attached. Exhibit D1, D2, D3 Letter dated 28-01-05, Exhibit E Annual Return Submitted in R.O.C. Point of contention duly highlighted). 5) Mr. D. K. De Sarkar wrongfully alleged in his letter dated 28-01- 05 that I have failed to substantially establish my objections and thus he is handing over the share certificates to Sri Subhash Singh. Where as the fact is that an E.G.M. was held on 06-01-05 at the request of the majority shareholders. In the meeting both Sri Subhash Singh and Mr. De Sarkar were present. Sri Subhash Singh left the meeting, in a huff when questions were raised about his actions regarding affairs of the company. However the meeting was continued. It was attended by all the shareholders except three. The minutes of the said meeting states that Sri Subhash Singh is the defaulter and Mr. De Sarkar twisted the facts and alleged that I have failed to raise valid objections. (Letter Exhibit D1 and minutes of the meeting with narration of the subsequent actions/correspondence Exhibit F are attached. Point of contention duly highlighted).
(3.) The finding of the Council against the respondent in respect of charge Nos.3, 4 and 5 are quoted below: 13.5 In respect to charge no.3, that the Respondent did not perform his duties as a mediator/arbitrator and moreover he held the said position despite being the Auditor of the Company, the Committee noted that the witnesses informed the Committee that as per the Memorandum of Understanding (MOU) they have paid Rs.60 lac to Shri Viswajit Shani i.e. the son of the Complainant and for the balance of Rs.30 lac, they prepared the draft for the said sum but the Complainant did not accept the same on account of some reasons of his own. Further at the time of hearing, the Complainant denied having received the sum of Rs.60 lac either by him or by his son. The Respondent filed the copy of acknowledgement of money received by Shri Vishwajit Shahi and also filed a copy of the handwriting expert s opinion to prove that the signature on the acknowledgement was of the Vishwajit Shahi. The Committee noted that as per the MOU the money had to be paid to the Complainant and after the full payment only, the share certificate would be transferred and handed over to the Shri Subhash Singh and Shri Subrata Singh, by the Respondent as he was acting as a mediator/arbitrator. The witnesses at the time of hearing submitted that the full payment was not made and further Rs.60 lac was paid to Complainant s son and not to the Complainant, which had been denied by the Complainant. Further as per the acknowledgement within a month of amount received by Shri Vishwaji Shahi, the Complainant was supposed to issue an acknowledgement receipt for having received the money. 13.6 The Committee in detail perused the Agreement and MOU and the Committee noted that as per the terms and conditions of MOU the shares were be handed over to the resident Directors only after making the full payment and in case of any dispute all, the parties to the agreement would decide the future course of action. But the Respondent did not follow the terms and condition of the MOU and without ensuring the full payment and without taking the consent of the Complainant i.e. one of the party of the MOU handed over the shares certificate to the resident Directors. In the opinion of the Committee, the Respondent did not act in a professional manner and it appears that he adopted a biased approach towards the Complainant. Further, the Respondent did not file any final acknowledgement receipt of the money received by him as required by the acknowledgement given by the Complainant s son. Therefore, in the opinion of the Committee the Respondent was guilty of professional misconduct falling within the meaning of Clause 7 of Part 1 of Second Schedule to the Chartered Accountants Act, 1949 under this charge. 13.7 In respect of charges no. 4 & 5, that the Respondent handed over the share certificate to Shri Subhash Singh, the Committee noted that on the basis of documents placed on record and also agreed to by the Respondent, the Respondent had handed over the share certificate to the other Director, Shri Subhash Singh even on non-acceptance of money by the Complainant. Therefore, in the opinion of the Committee, the Respondent had failed to comply with the terms and conditions of the MOU. Therefore, in the opinion of the Committee, the Respondent was guilty of professional misconduct falling within the meaning of clause 7 of Part 1 of Second Schedule to the Chartered Accountants Act, 1949 under this charge. ;