Maheshwar Hiremath Vs CA Ajit Kothari (ICAI Disciplinary Committee)
ICAI Fines CA ₹3 Lakh for Uncompleted Assignment, Unrefunded Advance and Bounced Cheques
Summary: The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI), Bench-II, in Maheshwar Hiremath Vs CA Ajit Kothari, by its final order dated 15 October 2026, reprimanded CA Ajit Kothari (Membership No. 101832), Surat, and imposed a fine of ₹3,00,000 for professional and other misconduct arising from his failure to complete a professional assignment, refund money received from a client and honour repayment cheques. The order followed findings pronounced on 29 August 2026 in Case No. PR/553/2022-DD/687/2022-DC/1904/2024. The Committee held the respondent guilty under Clause (7) of Part I of the Second Schedule and Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. The fine was directed to be paid within 60 days from receipt of the order. The decision concerned both the respondent’s failure to discharge his contractual and professional obligations and his subsequent conduct in issuing cheques which were dishonoured for insufficient funds.
The complaint was filed by Maheshwar Hiremath, Managing Director of Swati Airport Support Services Private Limited. The respondent’s firm accepted an engagement through a letter dated 8 September 2021 covering two assignments: revival of a cancelled airport-related tender, described in the disciplinary record as the DSITC of PBB bid involving approximately ₹100 crore, and obtaining permissions for opening an Indian rupee account for Shenzhen CIMC-TianDa Airport Support Ltd., China, to receive contractual payments of approximately ₹3.5 crore. The agreed professional fee was ₹1.55 crore, of which ₹15 lakh was payable as an advance. The mandate was to remain valid for 30 working days, and the engagement letter expressly provided that the advance would be returned if the assignment was not completed within the stipulated period. The refund condition was significant because the Committee was not examining merely an unsuccessful professional assignment; it was examining the respondent’s failure to comply with an express contractual obligation after admitting that the work had remained incomplete.
The disciplinary record disclosed payments aggregating ₹34,51,075 received in connection with the engagement. These comprised ₹15 lakh towards professional fees, ₹7.50 lakh stated to be required for opening an ICBC bank account, ₹2,01,075 for administrative expenses associated with regulatory approvals and ₹10 lakh towards the minimum bank deposit. The findings also discussed the original fee invoice of ₹17,70,000, representing ₹15 lakh plus GST, and the corresponding TDS adjustment. Although the initial complaint referred to ₹35,51,075, the Committee’s operative findings and punishment order proceeded on the aggregate of ₹34,51,075. The Committee examined email correspondence, bank transaction details and WhatsApp communications, including acknowledgements of receipt and requests for additional payments. The respondent did not dispute that he had received the money or that the assignment had not been completed.
A central issue was whether the respondent could retain the money after failing to perform the agreed services. The Committee found that the engagement letter expressly contemplated refund upon non-completion within 30 working days. It therefore held that the respondent was required either to complete the assignment in accordance with its terms or to return the amount received when the assignment remained unperformed. His repeated acknowledgements of the outstanding liability reinforced this conclusion. During the proceedings, he expressed willingness to repay by different dates, including 31 August 2025, 15 December 2025 and 30 June 2026. He also referred to a proposed sale of property in Rajasthan to arrange repayment. However, the complainant pointed out that earlier commitments had not been fulfilled, and the Committee recorded that the amount remained unpaid. The failure to honour these commitments was treated as evidence of inadequate professional due diligence and accountability.
The respondent attributed his financial difficulties to illnesses affecting his parents and submitted that these circumstances prevented him from completing the assignment and making repayment. The Committee considered that explanation but rejected it as a justification for retaining client funds. It held that personal financial hardship, even if genuine, could not absolve a Chartered Accountant of obligations undertaken towards a client or justify retention of money received for services that remained unperformed. The Committee emphasised the importance of integrity, diligence and accountability in professional engagements. Its reasoning was that a member’s personal circumstances did not extinguish the contractual refund obligation or the duty to conduct professional affairs in a manner consistent with the ethical standards applicable to chartered accountants.
The second major charge concerned dishonoured repayment cheques. The complainant produced copies of cheques and corresponding bank return intimations. These included a cheque dated 13 February 2022 for ₹34,51,075, another cheque of the same date for ₹1 lakh and a cheque dated 27 June 2022 for ₹24.01 lakh. The Committee recorded that the cheques had been returned unpaid because the respondent’s bank account contained insufficient funds and that he had not disputed issuing them. The complainant also produced a legal notice dated 28 February 2022 referring to action under Section 138 of the Negotiable Instruments Act, 1881. The disciplinary finding, however, concerned the respondent’s professional conduct and failure to honour admitted financial commitments; the Committee did not adjudicate criminal guilt under the Negotiable Instruments Act.
At the punishment stage, the Committee issued opportunities to the respondent to make representations on 3 October and 15 October 2026. He neither appeared nor filed a written representation on the findings. The Committee referred to Rule 19(1) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, under which it could proceed after the respondent failed to avail himself of the opportunity to make representations. It also considered an email dated 18 September 2026 in which he had stated that repayment would be made by 15 October 2026. Having considered the findings, the documentary record and the respondent’s earlier submissions, the Committee imposed a reprimand and a fine of ₹3 lakh. No removal from the Register of Members was ordered in this case. The decision illustrates that disciplinary accountability extends beyond technical audit or certification work to the honest performance of professional engagements, proper handling of client money and fulfilment of admitted repayment obligations.
