The case involving CA. Tehmul B. Sethna, a Chartered Accountant practicing in Ahmedabad, showcases allegations of professional misconduct, specifically centered around the misuse of professional relationships for personal gain and forgery. The matter was brought forth by a complainant, Shri Amit M. Panchal, alleging unethical conduct by Sethna in his dealings with The Environment Research & Development Centre, Ahmedabad (Trust).
After thorough proceedings, the Board of Discipline found Sethna guilty of misconduct under the Chartered Accountants Act, 1949. The primary accusations against Sethna included:
1. Forgery and Misuse of Trust Documents: Sethna was accused of forging signatures of trustees and utilizing documents entrusted to him during his professional association with the Trust for personal gain. This included the creation of various documents and unauthorized withdrawals from the Trust’s bank account.
2. Abuse of Professional Relationship: The board concluded that Sethna had exploited his professional association with the Trust for personal benefits, thereby tarnishing the reputation of the accounting profession.
3. Legal Challenges: Sethna raised several objections during the proceedings, including questioning the composition and impartiality of the Board, disputing the jurisdiction of the disciplinary body, and casting doubt on the authenticity of documents submitted by the complainant. However, the Board dismissed these objections, deeming them either unsupported or raised belatedly in the proceedings.
4. Imposed Penalty: Considering the severity of the misconduct and Sethna’s representations, the Board opted to remove Sethna’s name from the Register of Members for one month and imposed a fine of Rs. 1,00,000 (one lakh rupees), payable within 60 days from the date of the order.
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THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PR-373/17/DD/08/2018/B00/547/2020
ORDER UNDER SECTION 21A(3) OF THE CHARTERED ACCOUNTANTS ACT, 1949 READ WITH RULE 15(1) OF THE CHARTERED ACCOUNTANTS (PROCEDURE OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007.
In the matter of:-
Shri Amit M. Panchal, Ahmedabad……Complainant
-Vs.-
CA. Tehmul B. Sethna (M.No.035476),
M/s. Apaji Amin & Co., LIP,
Chartered Accountants, Ahmedabad..…Respondent
MEMBERS PRESENT: (Through video conferencing)
CA. Prasanna Kumar D., Presiding Officer
Mrs. Rani Nair, (IRS, Retd.), Government Nominee
CA. Satish Kumar Gupta, Member
Date of Final Hearing: 5th October, 2021
Date of Order: 23-May-2024
1. The Board of Discipline vide Report dated 11th February, 2021 held that CA. Tehmul B. Sethna (M.No.035476) is Guilty of Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with section 22 of the said Act.
2. An action under Section 21A (3) of the Chartered Accountants Act, 1949 was contemplated against CA. Tehmul B. Sethna and communication dated 16’1′ September, 2021 was addressed to him thereby granting him an opportunity of being heard in person and/or to make written representation before the Board on 5th October, 2021. Thereafter, he submitted his written representation dated 28th September, 2021 on the Findings of the Board.
3. CA. Tehmul B. Sethna appeared before the Board on 5th October, 2021 through video conferencing and made his oral representation thereat.
4. CA. Tehmul B. Sethna in his written representation dated 28th September, 2021, inter-alia submitted that the Order of the Board of Discipline is not fair and proper justice was not delivered by the Board on the following grounds:-
a. Regarding the quorum of the Board of Discipline, the Respondent stated that one of the members of the Board, Ms. Rani Singh Nair, Retd-CBDT Chairperson is an interested pay.
b. The Respondent further challenged the jurisdiction of the Board of Discipline and the Director (Discipline) with respect to formation of Opinion by stating that the formation of Opinion by the Council about bringing disrepute is a pre-requisite before initiating action under Clause (2) of Part IV of First Schedule.
c. In response to Para 9 of the Report, the Respondent submitted that the Board mentioned that they had come to the conclusion based on facts and documents, however, the Board seems to have only considered the documents and facts as stated by the Complainant. The Findings by the Board is absolutely false. When the FSL report by the Government of Gujarat clearly contradicts the tampered affidavit that Respondent had not signed any of the documents, the Board cannot override that power and find the Respondent guilty of illegally opening an account and forging signatures of trustees. Also, it does not make common sense on how they found that the Respondent has withdrawn amount for personal gains, when all the Balance Sheets of the Trust have been signed by the Trustees and are uncontested. The Income Tax Authorities have not rejected the books of the Trust as per Assessment Orders of AY 2011-12 to AY 2017-18, rather the Respondent was exonerated of any wrong doing. The Respondent further requested the Board of Discipline to reconsider its decision.
d. In response to Para 10 of the Report, the Respondent submitted that the Board comes to an imaginary conclusion to show that whatever the Complainant has alleged is all true by the various Assessment Orders, Charge Sheet filed and Court Orders. The same is not true, since the Board has not taken into consideration the Assessment Orders of the Trust and the findings of the DCIT, the Assessing Officer which have been passed after the Complainant represented the Trust in the Assessment Proceedings. In all 7 Assessment Orders of the Trust, the Assessing Officer has disregarded the Affidavit of the Respondent, has accused the Trustees of wrong doings and has mentioned that the Trustees are lying and are trying to blame the Respondent.
e. The complaint filed by the Complainant in Point no. 5 of Form I is for FIR filed by the wife of the Complainant Mrs. Shivangi Panchal who is the trustee of Trust. The Complainant is in no way connected with the Trust, neither he is a trustee nor an authorized agent to produce the documents relating to the Trust or documents relating to other parties referred to. Hence, no reliance can be placed on such documents produced without proper authorisation. Further, the Complainant has sent certain documents to the Board after the final hearing on 8th February, 2021 and the Respondent had not been given an opportunity to verify the authenticity of such documents.
f. The Complaint is time barred as the account of the Complainant was opened in 2007 as per Bank Account Opening Form and as per Rule 12 of Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct Of Cases) Rules, 2007, it is more than 7 years hence the complaint filed by the Complainant should be dismissed.
g. An FIR filed against the Respondent does not hold enough ground to hold him guilty unless the guilt is proved by evidence. The Hon’ble Supreme Court has clarified in one of its judgments that when the proceedings are going simultaneously for different connotations, but based on the same FIR, documents and evidences under such circumstances matter be kept pending till the Respondent is held Guilty by the relevant Court and it is premature to hold him guilty — if held guilty by those Courts under said Indian Penal Code, or Civil Court, then at that time the case can get covered in Clause (1) of Part IV of the First Schedule if the offense is punishable with imprisonment.
h. In his 37 years career he has never faced disciplinary action and unfortunately due to greed of his ungrateful client whom he had not charged a single rupee for 25 years, he had faced the present wrong complaint.
4. The Board has carefully gone through the facts of the case and also the oral and written representation of CA. Tehmul B. Sethna. Considering the same, the Board was of the following view:
(i) As regards the plea of the Respondent that the Quorum of the Board of Discipline was not proper as Ms. Rani Singh Nair, Retd-CBDT Chairperson, the Government Nominee was an interested party, the Board observed as under:-
a. The Prima Fade Opinion dated 22′ November, 2019 formed by the Director(Discipline) in the case was considered by the Board at its meeting held on 3″I and March, 2020 wherein all the three members of the Board were present and the Board duly concurred with the reasons given against the charge(s) and agreed with the Prima Fade Opinion of the Director (Discipline). Accordingly, the case was referred for enquiry.
b. Thereafter, the hearings in the case were listed before the Board on 19th January, 2021, 29th January, 2021 and 8′ February, 2021.However, the hearing fixed for 19th January 2021 had been adjourned at the request of the Respondent. The Respondent was physically present before the Board both on 29’h January, 2021 and 8th February, 2021.
c. The Respondent duly filed his detailed written submissions/documents before the Board vide communication dated 22/07/2020, 19/08/2020, Sth February 2021,9th February 2021 and 10th February 2021 and presented his oral defense during the proceedings before the Board.
d. The Respondent raised the plea of one of the members of the Board being an interested party only on 28/09/2021 through his written representation i.e. only after receipt of the Findings of the Board dated 11/02/2021 holding him Guilty.
e. The documents brought on record by the Respondent to prove the non-independence of one of the Member of the Board was his filing of Form 1 (declaration under Section 183 of the Finance Act, 2016 in respect of Income Declaration Scheme, 2016) alleged to be received by the IT Department, Ahmedabad on 30/09/2016, Form 2 (Acknowledgment of Declaration under Section 183 of the Finance Act, 2016) dated 14/10/2016 issued by Principal Commissioner of Income Tax, Ahmedabad and Order dated 28/11/2016 passed by Principal Commissioner of Income Tax, Ahmedabad in the matter of Shri Maheshkumar Champaklal Shah, one of his clients.
f. The Board after perusing the said documents viewed that the said allegation is on the face of it is not maintainable as the subject matter of the extant proceedings emanates from the takeover of premises of Environment Research and Development Centre, Ahmedabad (Trust) allotted by the Government on lease for educational purpose and the Respondent used the personal information of the Complainant which was in his possession for wrongful benefits. However, the Respondent represented his client Mr. Mahesh Kumar Champaklal Shah before the Income Tax Department where none of the Orders/ documents issued by the Income Tax Department in 2016(as brought on record by the Respondent) even mentions the name of the Government Nominee of the Board.
g. The Board also noted that the instant complaint regarding Other Misconduct of. the Respondent had been filed by one of the clients of the Respondent who also happened to be the husband of one of the family friends of the Respondent. It was not comprehensible as to how there is conflict of Interest in the instant case with respect to IDS matter represented by the Respondent before the Income Tax Department. IDS was a scheme introduced by the Government of India when the Honorable Government Nominee of the Board was the Chairman, CBDT. The Respondent did not bring on record any material to prove any past or present relationship or interest in subject matter of the extant proceedings which is likely to give rise to justifiable doubts as to her independence or impartiality. The Board was of the view that it seems to be a tactics adopted by the Respondent to divert the attention of the Board to unwarranted issues.
h. The Board also took a serious view of the conduct of the Respondent in this respect as despite being physically present before the Board during hearing, he neither verbally nor in written form raised such objection when the Disciplinary proceedings were going on and raised the said objection at the fag end of the extant Disciplinary proceedings wherein he had already been held Guilty.
(ii) As regard the plea of the Respondent regarding non- fulfilment of the requirement stipulated in Clause (2) of Part IV of the First Schedule, the Board referred to Para 15 of the Order dated 13th May, 2017 passed by the Hon’ble Appellate Authority in the matter of Gyan Prakash Agarwal (Appeal No. 08/ICA(/2014), Rajiv Maheshwari (Appeal No. 05/ICA1/2014) and Sameer Kumar Singh Vs. ICAI (Appeal No. 07/ICAI/2014) wherein it is held as under:
“15. Based on the above and by taking note of the written submissions made on behalf of the Institute of Company Secretaries of India, the Institute of Cost Accountants of India and the Institute of Chartered Accountants of India containing the detailed Page 9 of 14 analysis of the issue in question, we are of the considered view that the proper and correct interpretation which can be given to Clause (2) of Part-IV of the First Schedule to the respective Acts, in the light of the principles laid down and having regard to the case laws of various courts and further considering the basic objects, reasons and purpose of the amendment brought in the statutes as quoted above is that, ‘Prima facie Opinion (PFO)’ formed by the Director (Discipline) in all such complaints / information cases serves the purpose for proceeding further for taking disciplinary action against the errant members as in terms of the amended mechanism for conduct of cases, it is the Director (Discipline) who has to form the first Prima Fade Opinion for the disciplinary proceedings to be initiated. Therefore, the opinion of Council as is mentioned in the clause (2) of Part-1V of the First Schedule to the Act has to be given a purposive meaning and has to be read in consonance with the letter and scheme of the enactment”.
Hence, the issue had already been decided by the Hon’ble Appellate Authority, and therefore, there is no merit in the argument of the Respondent in this regard.
(iii) As regard the plea of the Respondent regarding the authority of Complainant to file extant complaint, the Board was of the view that the complaint had been registered against the Respondent after due scrutiny in accordance with the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct Of Cases) Rules, 2007.Raising of such preliminary issues by the Respondent when the Disciplinary proceedings have already been concluded against him holding him Guilty and when the case is for award of punishment before the Board seems to have been raised to divert the attention of the Board from the core issue.
(iv) As regard the plea of the Respondent that the matter is time barred as per the provisions of Rule 12, the Board viewed that Rule 12 is attracted in a situation/ circumstance where on account of time lag, the Respondent faces any difficulty in securing proper evidence for his/her defence and it does not ipso facto render the complaint/ information as not maintainable. However, in the instant case, the Respondent did not express any difficulty being faced by him in leading the evidence in his defence despite being physically present before the Board during hearing either verbally or in written form when the Disciplinary proceedings were going on and raised the said objection at the fag end of the extant Disciplinary proceedings wherein he had already been held Guilty. Accordingly, the Board was of the view that the plea of the Respondent is not maintainable.
(v) As regards the plea of the Respondent to keep the proceedings pending referring to SC judgements, the Board opined that proceedings before the Board of Discipline are quasi-judicial in nature where the Misconduct can be proved by preponderance of probabilities having regard to the conduct of the Respondent. While coming to the said view the Board took into consideration the decision of the Hon’ble Supreme Court in the matter of “Ajit Kumar Nag —vs- General Manager (PJ) Indian Oil Corporation Limited-AIR 2005 SC 4217 wherein the Hon’ble Apex Court held as under:-
“The degree of proof which is necessary to order a Conviction is different from the degree of proof necessary to record the commission of delinquency. The rules relating to appreciation of evidence In the two proceedings is also not similar. In criminal law, burden of proof is on the prosecution and unless the prosecution is able to prove the’ guilt of the accused beyond reasonable doubt he cannot be convicted by a Court of law. in a departmental enquiry penalty can be imposed on the delinquent officer on a finding recorded on the basis of preponderance of probability.”
Similarly in the matter of Capt. M Paul Anthony —vs- Bharat Gold Mines Limited – AIR….1999 SC 1416 the Hon’ble Supreme Court held as under:-
“In departmental proceedings, factors prevailing in the mind of the disciplinary authority may be many, such as enforcement of discipline of to investigate level of integrity of delinquent or other staff The standard of proof required in those proceedings is also different from that required in a criminal case. While in departmental proceedings, the standard of proof is one of preponderance of probabilities, in a criminal case, the charge has to be proved by the prosecution beyond reasonable doubt.”
Further, it is not an inflexible rule of Law that disciplinary proceedings must be stayed in each and • every case where a trial is pending before the Criminal Court on the very same facts/charges. The stay Orders have been passed in specific cases keeping in view the facts of the case and cannot be applied in general to stay/keep in abeyance all the disciplinary proceedings before it.
(vi) As regards the plea of the Respondent that he was not been given an opportunity to verify the authenticity of documents sent by the Complainant to the Board after the final hearing on 8th February, 2021, the Board held that on 8′ February 2021, the proceedings had been concluded with the direction to provide the following with a copy of the same to the other party for their comments thereon, if any:
— To the Respondent:
(a) Gist of the case mentioning the relevant page numbers of the documents of his submission
(b) Copy of his Income Tax Assessment Order for A.Y. 2011-12 to A.Y. 2017-18
(c) Report of the Special Auditor in Form 6B issued for A.Y. 2011-12 to A.Y. 2017-18.
— To the Complainant:
(a) Gist of the case mentioning the relevant page numbers of the documents of his submission.
The Complainant vide email dated 9′ February 2021 submitted his response which was basically a gist of the case, a copy of which was also marked to the Respondent by him. Thus, the Board did not find any merit in the plea raised by the Respondent.
5. Thus, as per the Findings of the Board as contained in its report, the Respondent abused his professional relationship for personal gains from the initial period of creation of The Environment Research & Development Centre, Ahmedabad (Trust) and for wrongful benefits, the Respondent created various documents, opened bank accounts, forged signature of trustees, misused the documents entrusted with him during his professional engagement with the Trust and illegally withdrew the amount from the bank account of the Trust through his peon Mr. Vijay Solanki, thus, bringing disrepute to the profession. The misconduct of the Respondent is duly established in the charges alleged by the Complainant duly substantiated by the various Assessment Orders, Charge Sheet filed against him and Court Orders available on record. Thus, it has already been held that CA. Tehmul B. Sethna is Guilty of Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with section 22 of the said Act.
6. Upon consideration of the facts of the case, the consequent misconduct of CA. Tehmul B. Sethna (M.No.035476) and keeping in view his oral and written representation before it, the Board decided to remove the name of CA. Tehmul B. Sethna (M.No.035476) from the Register of Members for a period of 01 (one) month and also imposed a fine of Rs.1,00,000/- (Rs. One lakh only) upon him payable within a period of 60 days from the date of receipt of the Order.
This is issued pursuant to the Order dated 29th April 2024 passed by Hon’ble High Court of Delhi in W.P.(C) 5247/2024 namely ICAI Vs R. Vinod Kumar & others.
Sd/-
CA. PRASANNA KUMAR D
(PRESIDING OFFICER)
Sd/-
MRS. RANI NAIR, (IRS, RETD,)
(GOVERNMENT NOMINEE)
Sd/-
CA. SATISH KUMAR GUPTA
(MEMBER)
