Council of The Institute of Chartered Accountants of India Vs S.N. Shivakumar (Delhi High Court)
The Delhi High Court dealt with a reference made under Section 21(5) of the Chartered Accountants Act, 1949 seeking confirmation of the punishment imposed on a chartered accountant, namely removal of his name from the register of members of the Institute for a period of three months. The reference arose from disciplinary proceedings initiated after a communication dated 20 October 2006 from the Reserve Bank of India (RBI), which informed the Institute that the audit report of a finance company for the financial year 2004–05 did not provide true, correct, and complete disclosure regarding public deposit liabilities and alleged ever-greening of assets.
Based on this communication, the Institute issued notices to the respondent. Although replies were furnished at the firm level, the Institute was not satisfied and treated the matter as an information case. A prima facie opinion was formed in August 2009, and the matter was referred to the Disciplinary Committee. Despite notices, the respondent did not file any reply or explanation before the Disciplinary Committee, which proceeded on the basis of the available material and recorded findings against him.
Three charges were framed. The first charge related to failure to verify and disclose the exact liability of the company towards public deposits, including accrued unpaid interest. The second charge alleged failure to detect ever-greening of assets while finalising the balance sheet as on 31 March 2005. The third charge concerned the respondent-firm’s explanation for not issuing an auditor’s certificate as required under RBI directions, which was found to be contrary to mandatory requirements.
