ICSI should keep uniformity in awarding the punishment for professional misconduct

ICSI should keep uniformity in awarding the punishment for professional misconduct in the interest of justice-Appellate Authority reduces punishment

ABCAUS Case Law Citation:
ABCAUS 2270 (2018) (04) AA

The appellant in the instant case was a practicing company secretary who was aggrieved of the order passed by the Disciplinary Committee of the Institute of Company Secretaries of India (ICSI) under sub-section (3) of Section 21B of the Company Secretaries Act, 1980 (“Act”) read with Rule 19 (1) of the Company Secretaries (Procedure of Investigations of Professional and other misconduct and conduct of cases) Rules, 2007 ( “Rules”)

A Complaint had been made before the Institute of Company Secretaries of India under Section 21 of the Act against the Appellant.

ICSI should keep uniformity in awarding the punishment for professional misconduct

The following allegations were alleged:

(1) Non-exercise of due diligence while certifying two Forms 32, due to which name of four Directors were removed from the website of the Ministry of Corporate Affairs.

(2) Wrong certification of Form 20B-Annual Return, and

(3) Issue of wrong certificate to the Statutory Auditors regarding shareholding pattern of the company.

The Director (Discipline) found the petitioner Prima-Facie guilty of professional misconduct under clause (7) of Part-I of the Second Schedule of the Act for certifying two Forms 32 pertaining to the removal of Directors without exercising due diligence which was expected from a professional. However, he was not found guilty of professional misconduct regarding certifying Form 20B.

The Disciplinary Committee agreed with the Prima Facie opinion of the Director (Discipline) and decided to proceed further. Accordingly, after hearing of all the related parties and examining of the complaint, written statement and various other documents on record, the Disciplinary Committee passed an Order whereby, the Appellant was held guilty and awarded the punishment of removal of name from the Register of members for a period of one year and also fine of Rs.1,00,000/-.

Before the Appellate Authority, it was submitted that the punishment awarded by the Disciplinary Committee to the Appellant was not justified considering the nature of the professional misconduct on the part of the Appellant as alleged and awarded by the Disciplinary Committee in other cases of the violation of the said clause or for the similar nature of Professional misconduct, wherein the Disciplinary Committee of the Company Secretaries of India awarded the punishment of either reprimand or reprimand with fine. Whereas, in this case the Disciplinary Committee awarded an exorbitant punishment of removal of the name of the Appellant from the Register of Members of the Institute for a period of one year along-with a fine of Rs. 1,00,000/-.

The Appellant argued on the issue of quantum of punishment without pressing on the merits of the case relating to professional misconduct. It was submitted that the punishment awarded to the Appellant was too harsh and the Disciplinary Committee had not been fair in awarding the punishment as it had taken a different view in this case as compared to similar nature of default in other cases.

The Appellate Authority, noted the details of punishment awarded by the Disciplinary Committee in three similar matters wherein the punishment awarded was not so hard and was limited to reprimand with or without meagre fine.

On the other hand, the Institute did not object for review of quantum of punishment and submitted that the Authority might decide the same considering the merit of the case

The Appellate Authority observed that in the said three cases, the Disciplinary Committee had taken a different view in the instant case though the nature of professional misconduct was related to certification of Forms.

The Appellant Authority opined that the punishment awarded to the Appellant was certainly on the higher side, enormous and harsh in comparison with the punishment awarded to the errant members of the Institute by the Disciplinary Committee for the violation of same professional misconduct in other cases. Therefore, the Appellate Authority reduced the punishment as reprimand and fine of Rs.50000/-.

The Authority also advised the Disciplinary Committee to keep uniformity in awarding the punishment in similar nature of professional misconduct in the interest of justice in future, of course the ultimate impact of the negligence caused by the Appellant be given the appropriate weightage besides considering other facts and circumstances involved in the matter for deciding the punishment for violation of any professional duty expected to be carried out by the members of the Institute.

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