If complainant not interested in pursuing case, holding CA guilty of misconduct not justified

Once dispute settled and complainant not interested in pursuing case, ICAI was not justified holding CA guilty of professional misconduct – Supreme Court dismisses SLP of ICAI

ABCAUS Case Law Citation
ABCAUS 3605 (2022) (08) ICAI

A complaint was filed before ICAI by a Chartered Accountant against another CA under section 21 of the ICAI Act 1949 alleging that the respondent CA accepted the appointment as an Auditor previously held by another Chartered Accountant without first communicating with him in writing despite there being undisputed fee of previous Chartered Accountant unpaid.

Before the Disciplinary Committee of ICAI, the complainant CA never presented himself for hearing despite notice. However, the ICAI held the respondent CA guilty of professional misconduct and as required a reference was made to the Hon’ble High Court.

Before the Hon’ble High Court, the respondent CA submitted that the complainant CA by a letter addressed to the ICAI Institute clearly stating that the dispute regarding the professional fee was settled to the satisfaction after filing the case and he was not interested in pursuing the case. However, Disciplinary Committee failed to consider the impact of the same.

The Hon’ble High Court opined that once the erstwhile auditor accepted that the dispute regarding professional fee was settled to their satisfaction and he was not interested in pursuing the case, there was no reason that the respondent CA could have been held guilty of professional misconduct and apparently, the findings of ICAI were vitiated for non-consideration of material piece of evidence.

Further, the Hon’ble High Court observed that the respondent CA did communicate the complainant CA vide registered letters making enquiries about the outstanding professional fee, if any, or any objection to the appointment of the respondent as statutory auditor of the company. However, the aforesaid two letters were never replied by the complainant. This fact itself showed that the respondent made all best possible efforts to verify the facts from the complainant in this regard but for want of reply from them proceeded under the assumption that there were no outstanding fees of the complainant due towards the company and that there was no objection to the appointment of the respondent as statutory auditor of the company.

Also, the Hon’ble High Court opined that when the complainant himself did not appear to support the complaint, the Council of ICAI could not have upheld any part of the complaint to be proved unless there was an admission on the part of the respondent. Thus. the Council committed error in law in proceeding to act on the basis of the complaint.

Accordingly, the Hon’ble High Court declined to upheld the findings of ICAI holding the respondent guilty of professional misconduct.

The ICAI took the matter to the Hon’ble Supreme Court by way of a Special Leave Petition.

The Hon’ble Supreme Court observed that even after the incoming auditor sent an intimation to the earlier Chartered   Accountant/Auditor, there was no response and/or objection raised by the first Auditor.

No need to say that SLP was dismissed.

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