Council of the Institute of Chartered Accountants of India vs Shri Gurvinder Singh & Anr.

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11034 OF 2018 (Arising out of SLP (C) No. 19564/2017)

COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Appellant(s)

VERSUS

SHRI GURVINDER SINGH & ANR. Respondent(s)

J U D G M E N T

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 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 Accountant was

derogatory in nature and highly unbecoming and held him

guilty of ‘Other Misconduct’ under Section 22 read with Signature Not Verified Digitally signed by R NATARAJAN Date: 2018.11.22 16:58:21 IST Reason: Section 21 of the Chartered Accountants Act, 1949

(hereinafter referred to as ‘the Act’). 2

4) The Council of the Institute of Chartered

Accountants of India, 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:

“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.

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:-

“(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 3

Director (Discipline) is of the opinion that a

member is guilty of any professional or other

misconduct mentioned in the Second Schedule or

in both the Schedules, he shall place the

matter before the Disciplinary Committee.”

Schedule-I Part-IV reads as follows:-

“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-

(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.

4

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.

8) The appeal is disposed of accordingly.

.......................... J.

(ROHINTON FALI NARIMAN)

.......................... J.

(NAVIN SINHA) New Delhi;

November 16, 2018.