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High CourtDivision BenchRemand to High Court; appeal disposed of.

COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA v. SHRI GURVINDER SINGH & ANR.

Case / Petition Number:Civil Appeal No. 11034 of 2018
Neutral Citation:[2018] 14 SCR 321

Case Details & Bench

Court
High Court
Hon'ble Judges
  • R. F. Nariman
  • Navin Sinha
Judgment Date
2018-11-16
Court Decision / Holding
The appeal is disposed of; the impugned High Court judgment set aside and the matter remanded to the High Court for fresh consideration with all contentions left open to the parties.
Final Disposition
Remand to High Court; appeal disposed of.

Parties to the Case

Appellants / Petitioners

  • Council of the Institute of Chartered Accountants of India

Respondents

  • Shri Gurvinder Singh
  • Anr.

Legal Representation & Advocates

Counsels for Petitioners

  • • Rana Mukherjee, Sr. Adv.
  • • Pramod Dayal
  • • Nikunj Dayal
  • • Ms. Payal Dayal

Counsels for Respondents

  • • Balaji Srinivasan
  • • Ms. Pallavi Sengupta
  • • Ms. Garima Jain
  • • Siddhanth Kohli
  • • Ms. Lakshmi Rao

Case Synopsis & Summary

This Civil Appeal concerns a complaint dated 16.03.2005 against Gurvinder Singh, a Chartered Accountant, alleging that in 1999 he sold 100 shares and transferred them to his own name. The Disciplinary Committee of the Institute of Chartered Accountants of India found the conduct to be “Other Misconduct” under Section 22 read with Section 21 of the Chartered Accountants Act, 1949, and the Council recommended removal from the rolls for six months. The High Court of Delhi, in its 16 August 2016 judgment, held that the respondent acted as an individual in purely commercial dealings and not in discharge of his professional duties, and therefore not punishable under the Act, declining to impose any penalty. The Supreme Court, exercising its jurisdiction under Leave, held that the High Court did not correctly appreciate Section 21(3): where the Director (Discipline) believes the member is guilty of professional or other misconduct listed in the First Schedule or Second Schedule, the matter must be referred to the Board of Discipline. Schedule I Part IV(2) empowers the Council to hold a member guilty of “Other Misconduct” if the act brings disrepute to the profession, even if not connected to professional work. Consequently, the impugned judgment was set aside and remanded to the High Court for a fresh decision, with all contentions left open to both sides. The appeal is disposed of.

Provisions of Law Cited

Chartered Accountants Act, 1949 – Section 21(3)Chartered Accountants Act, 1949 – Section 21Chartered Accountants Act, 1949 – Section 22Schedule I Part IV – Sub-clause (2)First ScheduleSecond Schedule

Submissions & Arguments

Contentions of Appellants / Petitioners

The Council submits that under Section 21(3), when the Director (Discipline) forms the opinion that a member is guilty of professional or other misconduct described in the First Schedule or Second Schedule, the matter must be referred to the appropriate Board/Disciplinary Committee. Schedule I Part IV(2) authorises the Council to hold a member guilty if his act brings disrepute to the profession, irrespective of whether the act occurred within professional practice. The Disciplinary Committee correctly found ‘Other Misconduct’ under Section 22 read with Section 21 for acts that bring disrepute; the conduct need not be in professional duties. The High Court's view that the respondent's sale of shares was an individual, purely commercial action and not in discharge of professional functions misreads the statute. The High Court’s emphasis on whether the act occurred in the course of professional work narrows the scope of ‘disrepute’ to professional acts. A six-month removal is a measured, proportionate penalty to protect the profession; the High Court’s order undermines the Act’s protective aim. The Supreme Court should set aside and remand to decide afresh.

Contentions of Respondents

Respondents contend that the sale of shares in 1999 was a personal transaction and not connected with the CA’s professional duties. The Disciplinary Committee’s jurisdiction over conduct not pertaining to professional work is misapplied; the Council cannot rely on ‘disrepute’ from a private, non-professional act to discipline a member after a long interval. The High Court correctly held that no penalty should be imposed since the act did not involve professional practice. Absent a direct breach of professional obligations, the remedy under the Chartered Accountants Act cannot be used to penalise him. The purpose is to protect the profession’s reputation, and the High Court’s decision does not contravene the Act. The appeal should be dismissed.”},

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Extracted Judgment Text

Exact text extracted from official judgment records.

321 [2018] 14 S.C.R. 321 ## COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA A v. SHRI GURVINDER SINGH & ANR. (Civil Appeal No. 11034 of 2018) NOVEMBER 16, 2018 B ## **[R. F. NARIMAN AND NAVIN SINHA, JJ.]** _Chartered Accountants Act, 1949 : s.22 read with s.21, Schedule I Part IV – Other misconduct – Complaint against Chartered Accountant relating to sale of shares, transferred to the_ C _Chartered Accountant’s own name – Disciplinary Committee found his conduct derogatory in nature and held him guilty of ‘Other Misconduct’ u/s. 22/21 – Recommendation made by the Council of the Institute of Chartered Accountants to the High Court to remove the Chartered Accountant for a period of six months from the rolls,_ D _however, the High Court did not impose any penalty – Correctness of – Held: High Court did not correctly appreciate s. 21(3) – Disciplinary Committee found the Chartered Accountant guilty of a practice which was not in the Chartered Accountant’s professional capacity – Under Schedule I Part-IV sub clause(2), the Council_ E _can hold Chartered Accountant guilty if their act brings disrepute to the profession whether or not related to his professional work – Thus, the order of the High Court is set aside and the matter remanded to the High Court to be decided afresh._ D CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11034 of 2018. F From the Judgment and Order dated 16.08.2016 of the High Court of Delhi at New Delhi in Chat. A. Ref. No. 4.2012. Rana Mukherjee, Sr. Adv., Pramod Dayal, Nikunj Dayal, Ms. Payal Dayal, Advs. for the Appellant. G Balaji Srinivasan, Ms. Pallavi Sengupta, Ms. Garima Jain, Siddhanth Kohli, Ms. Lakshmi Rao, Advs. for the Respondents. H 321 322 SUPREME COURT REPORTS [2018] 14 S.C.R. A The Judgment of the Court was delivered by **R. F. NARIMAN, J.** 1. Leave granted. 2. The present appeal arises out of a complaint dated 16.03.2005 against Gurvinder Singh - Respondent No.1, who is a Chartered Accountant, relating to sale of 100 shares in 1999, which were transferred B to the Chartered Accountant’s own name. 3. What has been pleaded before us is that the matter has ultimately been settled between the Complainant and the Chartered Accountant, despite which the Disciplinary Committee took up the case and ultimately found that the conduct of the Respondent No.1-Chartered C Accountant was derogatory in nature and highly unbecoming and held him guilty of ‘Other Misconduct’ under Section 22 read with Section 21 of the Chartered Accountants Act, 1949 (hereinafter referred to as ‘the Act’). 4. The Council of the Institute of Chartered Accountants of India, D therefore, made its recommendation to the High Court to remove the aforesaid Chartered Accountant for a period of six months from the rolls. The High Court, by the impugned judgment dated 16.08.2016, after setting out Sections 21 and 22 of the Act, arrived at the conclusion that: E “14. In the instant case the respondent was acting as an individual in his dealings with the complainant which were purely commercial. While selling the shares held by him the respondent was not acting as a Chartered Accountant. He was not discharging any function in relation to his practice as a Chartered Accountant. F 15. The Reference is accordingly answered by declaring the law as above and not inflicting any penalty upon the respondent.” 5. We are afraid that the High Court has not correctly appreciated Section 21(3) of the Chartered Accountants Act, 1949 which states as follows:- G “(3) Where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the First Schedule, he shall place the matter before the Board of Discipline and where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct H mentioned in the Second Schedule or in both the Schedules, he shall place the matter before the Disciplinary Committee.” COUNCIL OF THE ICAI v. SHRI GURVINDER SINGH & ANR. 323 [R. F. NARIMAN, J.] Schedule-I Part-IV reads as follows:- A “Other Misconduct in Relation to Members of the Institute Generally A member of the Institute, whether in practice or not, shall be deemed to be guilty of other misconduct, if he- B (1) is held guilty by any civil or criminal court for an offence which is punishable with imprisonment for a term not exceeding six months; (2) in the opinion of the Council, brings disrepute to the profession or the Institute as a result of his action whether or not related to his professional work.” 6. The Disciplinary Committee has, on facts, found the Chartered Accountant guilty of a practice which was not in the Chartered Accountant’s professional capacity. This, it was entitled to do under Schedule I Part-IV sub-clause(2) if, in the opinion of the Council, such act brings disrepute to the profession whether or not related to his professional work. 7. This being the case, it is clear that the impugned judgment is incorrect and must, therefore, be set aside. We thus remand the matter to the High Court to be decided afresh leaving all contentions open to both parties. C D E 8. The appeal is disposed of accordingly. Nidhi Jain Appeal disposed of. F G H