Case Law Details

Case Name : Ashok A Jain Vs Director (Discipline), ICAI (Appellate Authority of ICAI)
Appeal Number : Appeal No. 07/ICAI/2019
Date of Judgement/Order : 05/02/2020
Related Assessment Year :

Ashok A Jain Vs Director (Discipline) (Appellate Authority of ICAI)

Now coming to the question if this Board Resolution satisfies the requirement of Rule 3 (4) of the Rules. It has been contended on behalf of the Appellant that this Resolution is a general Resolution in favour of Simon Tippet and not a specific Resolution thereby authorising Simon Tippet to file a Complaint before ICAI and specifically against him or his firm.

In this regard, this Authority finds merit in the submission of the Complainant/Respondent No. 2, to the effect that the word “specifically” appearing in Rule 3 (4) of the Rules as quoted above, is with respect to the identity of a specific individual who has been authorised to file a Complaint on behalf of the company, and not with respect to any specific authority before which a Complaint is to be filed or the specific delinquent against whom a Complaint is to be filed. The words “specifically authorising an officer or a person to make the Complaint on behalf of the company or the firm” are not further qualified or restricted with the words “before this authority/body/institute” or “against a particular individual”. The purport of Rule 3 (4) is only to the effect that an identifiable and specific individual should be there being duly authorised by a Resolution of the Board of Directors of the company to file a Complaint on its behalf.

Even as per the Explanation to Rule 3 (4), in case of a bank or financial institution, a general Resolution authorising an officer holding a particular position to file Complaint shall be deemed to be the specific Resolution. It makes it clear that in case of banks and financial institutions, an officer at a particular post or designation can be authorised by a general Resolution, without specifically identifying him by his name. Even in that case, such Resolution need not specifically authorise the said officer to file a Complaint before any specific authority/body/institute or against a specific named individual/delinquent. It implies that in case of companies / firms / bodies other than banks and financial institutions, a general Resolution in favour of an officer holding a particular post or designation shall not be sufficient and such Resolution has to be in favour of a particular individual who could be identified through his name. No other view is possible to be taken in view of the language of Rule 3 (4).

Therefore, the Board Resolution dated 10.04.2015 cannot be discarded on the ground that it is not in conformity with Rule 3 (4). This Resolution specifically authorised four individuals by their names, including Shri Simon Tippet, to file, appear and defend applications, suits, appeals, writs before any judicial and quasi-judicial authority and other judicial proceedings under all Acts, Rules, regulations, guidelines, circulars, notifications and to sign all documents including vakalat, plaint, written statement, affidavits etc. Such authorisation would certainly include authority to file a Complaint before ICAI by the named specific individuals. Therefore, this Board Resolution dated 10.04.2015 can be safely said to be a valid Board Resolution specifically authorising Simon Tippet to file Complaint on behalf of the Complainant company.

FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY

1. The matter was reserved for orders on 13th September, 2019.

2. Vide e-mail dated 3rd February,2020 the parties were informed regarding the date of pronouncement of the order.

3. The order pronounced by separate order.

4. To confirm the arguments on merits, date time and venue be communicated to all concerned.

5. A copy of the order be given to the parties.

1. During the course of hearing of the present appeal filed by the Appellant Shri Ashok A. Jain , thereby challenging the Order dated 12.01.2019 of the competent authority of Respondent No. 1 ICAI on the basis of a Report dated 15.11.2018 of the Board of Discipline arising out of the Complaint dated 06.05.2015 filed by Respondent No. 2 company M/s Renault Nissan Automotive India Private Limited (hereinafter referred to as the “Complainant”), a short question arose, which is necessary to be dealt with at preliminary stage, concerning the competency of Simon Tippet, the Alliance Legal Counsel of the said Complainant to file the Complaint. More specifically, it is to be seen if the Complaint so filed was in conformity with Rule 3 (4) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007  (hereinafter referred to as “the Rules”).

Rule 3(4) of the Rules reads as under:

“A Complaint filed by or on behalf of a company or a firm shall be accompanied by a Resolution, duly passed by the Board of Directors of the company or the partners of the firm, as the case may be, specifically authorising an officer or a person to make the Complaint on behalf of the company or the firm.

Explanation – In the case of a bank or financial institution, the general Resolution or power of attorney authorising an officer holding a particular position to file Complaints on behalf of the bank or financial institution shall be deemed to be the specific Resolution passed by the bank or financial institution concerned for the purposes of these Rules.”

2. Without going into the merits of the Complaint, for the present purpose, suffice it would be to note that the Complaint dated 06.05.2015 had been filed by Simon Tippet for and on behalf of the Complainant Company M/s Renault Nissan Automotive India Private Limited, on the letterhead and under the stamp of the said company. It was filed along with Form-I as per Rule 3 (1) of the Rules. Along with it, extract of Board Resolution dated 03.07.2014 had been filed in favour of Shri Simon Tippet, as passed by the Board of Directors of Nissan Motor India Private Limited.

3. As is apparent, the said Board Resolution dated 03.07.2014 in favour of Simon Tippet had been passed by the Board of Directors of Nissan Motors India Private Limited and not that of the Complainant company M/s Renault Nissan Automotive India Private Limited. Though it has been claimed that both the said companies fall under the umbrella of Nissan Group, yet cannot be disputed that both the said companies are separate companies and have a distinct legal Nissan Motors India Private Limited was never the Complainant and thus, the Resolution ought to be that of the Complainant Company M/s Renault Nissan Automotive India Private Limited only.

4. No Board Resolution in favour of Simon Tippet passed by the Board of Directors of the Complainant M/s Renault Nissan Automotive India Private Limited had been filed before the Disciplinary Authority by the Complainant. Record would show that the Disciplinary Directorate vide its letter dated 22.05.2015 and its email dated 13.07.2015 had requested the Complainant company to submit Authorisation Letter to enable it to proceed further in the matter. However, vide email dated 14.07.2015, the Complainant maintained that the Board Resolution authorising Simon Tippet had already been sent along with the Complaint.

5. As per record, no objection to this extent had been specifically taken by the Appellant herein in his written statement filed before the Disciplinary Authority, though he did raise this objection before the Disciplinary Authority in his additional written submissions filed during hearing on 22.05.2018. This issue was however not dealt with by the disciplinary body.

6. The fact remains that no authorisation in favour of Simon Tippet executed by M/s Renault Nissan Automotive India Private Limited is on the record of the Disciplinary Authority.

7. During the course of hearing of the present appeal, as recorded in order dated 08.06.2019, this issue was raised by the Appellant, asserting that the Complaint had not been filed by a duly authorised person in accordance with Rule 3 (4) of the Rules, and that no steps had been taken by the Complainant to rectify the mistake despite objection taken by the Appellant in his written submissions filed on 22.05.2018. At that stage, Ld. Counsel for the Complainant wished to place on record the proper Resolution by way of an application with additional evidence and this Authority allowed him to file such an application on affidavit of the Managing Director within next 10 days.

8. In terms of this order, the Complainant company moved an application dated 21.06.2019 seeking permission to place on record the authorisation in favour of Simon Tippet in terms of Board Resolution dated 10.04.2015. It has been claimed that the authorisation provided by Nissan Motor India Private Limited had been filed with the Complaint due to an inadvertent error, but after the request of the Disciplinary Directorate, the correct authorisation had been provided to ICAI (though the Complainant was unable to locate the documentary proof thereof). Submitting that no issue with respect to the authorisation had been raised by the Appellant in his written statement but had been raised for the first time in the written submissions filed during the hearing on 22.05.2018, it has been prayed that the correct authorisation in favour of Simon Tippet dated 10.04.2015 be taken on record.

9. In his reply/rejoinder, the Appellant opposed the application on the grounds, (1) that the affidavit /application had been filed after the period of 10 days granted vide order dated 08.06.2019, (2) that there is no provision under the Rules of this Authority to admit any additional evidence, (3) that there is apparent violation of Rule 3 (4) of the Rules which is a mandatory statutory requirement which cannot be waived, bypassed or ignored on the ground of inadvertence, (4) that filing a Complaint on the letterhead and under the seal of the Complainant company would not be a substitute of the requirement of filing authorisation in the form of a Board Resolution as required by Rule 3 (4) of the Rules, and (5) that the authorisation being filed now is also not as per Rule 3 (4) as the said Resolution nowhere shows authorisation in favour of Simon Tippet to file a Complaint against the Appellant.

10. We have heard Ld. Counsel for both the sides and have perused the record. On behalf of the applicant/Complainant/Respondent No. 2, it is submitted that non-filing of proper Resolution is a curable mistake and it can be cured even at the appellate stage. It has been reiterated that Simon Tippet was already duly authorised by the Complainant company vide its Board Resolution dated 10.04.2015 in consequence of which the present Complaint dated 06.05.2015 had been filed by him on the letterhead of and under the stamp of the Complainant company, and that the extract of the said Board Resolution can always be taken on record, even at this appellate stage. Additionally, the Complainant has also filed on record an extract of its Board Resolution dated 21.08.2019, clarifying and confirming that Simon Tippet had been duly authorised by it to file the Complaint on 06.05.2015 in terms of its Board Resolution dated 10.04.2015, that the Complaint had been filed with its approval and knowledge, and also that it ratifies all the acts of Shri Simon Tippet. Detailed written submissions have been filed on behalf of the Respondent No. 2, asserting that the Resolution dated 10.04.2015 was a valid Resolution in conformity with Rule 3 (4) of the Rules, that even if it was not filed before the disciplinary directorate that would not make the proceedings non-est, that the said mistake is a curable technical defect which should have been allowed to be cured by the Director (Discipline) in terms of Rule 5 (5) of the Rules and which can be cured even at this stage. Reliance has been placed on judicial pronouncements titled as Uday Shankar Triyar v. Ram Kalewar Prasad [(2006) 1 SCC 75], Varun Pahwa v. Renu Chaudhary [2019 SCC Online SC 300], Vidyawati Gupta v. Bhakti Hari Nayak [(2006) 2 SCC 777], Subbiah Pillai v. Sankarapandiam Pillai [AIR 1948 Mad 369], Welding Rods (P) Ltd. v. Indo Borax & Chemicals Ltd. [(2002) 108 Comp Cases 747 (Guj)], and Ganesh Prasad Sah Kesari v. Lakshmi Narayan Gupta [(1985) 3 SCC 53], to impress that such procedural defects can be cured by way of ratification which could be filed even at appellate stage.

11. On the other hand, on behalf of the Appellant, it has been contended that non-filing of proper Board Resolution hits at the root of the matter and the Complaint becomes invalid having been filed by an incompetent and unauthorised person. It is pointed out that the defect was not removed before the Disciplinary Directorate itself, despite the requests of the Directorate and subsequent objection taken by the Appellant. Reliance has been placed on the judgements titled as Maharashtra State Mining Corporation v. Sunil [MANU/SC/2368/2006], Parmeshwari Prasad Gupta v. Union of India [MANU/SC/0395/1973] and Goa Shipyard Ltd. v. Babu Thomas [MAN U/SC/2526/2007].

12. As far as the objection as to filing of the application beyond the period of 10 days as given by this Authority vide order dated 08.06.2019 is concerned, a delay of a few days on the ground that the Managing Director of the applicant/Complainant had been travelling and could not provide the sworn affidavit, can be suitably condoned. The said delay accordingly stands condoned and the application is being considered on its merits.

13. As already noticed, the authorisation vide Board Resolution dated 03.07.2014 filed along with the Complaint, cannot be said to be a proper authorisation, as it was never passed by the Board of Directors of the Complainant company. Instead, it was the Board Resolution dated 10.04.2015 that was supposed to be filed with the Complaint dated 06.05.2015.

14. There is no clear explanation coming as to why this Resolution dated 10.04.2015 was not filed before the Disciplinary Authority, despite the requests of the authority and also the objection raised by the Appellant herein. Prudence demanded the proper Resolution to have been filed immediately when opportunity to do so was given to the Complainant.

15. Be that as it may, the question now would be, whether the said Resolution can be taken on record at this appellate stage. It may be noted that the said Board Resolution is dated 10.04.2015, which is prior to filing of the Complaint dated 05.2015. Thus, it is not a case that there was no Board Resolution in existence in favour of Simon Tippet as passed by the competent company on the date of filing of the Complaint. There did exist a Board Resolution, the copy of which was not filed on record and instead, a copy of a Board Resolution of some other company had been filed.

16. In our considered view, when a Board Resolution in favour of Simon Tippet did exist, it deserves to be taken on record even at this appellate stage. Omission to file the proper Resolution and instead filing a different Resolution is only a procedural irregularity which can always be cured at any appropriate stage, and even at the appellate stage. The substantive rights of the parties cannot be allowed to be defeated and the case on merits cannot be allowed to be thrown away only on the ground that the copy of actual Board Resolution was not filed on record, which was in fact in existence at the time of filing of the Complaint. There is no merit in the contention that no such document can be allowed to be taken on record under the Rules of procedure of this Authority. There is no bar or prohibition provided anywhere to this effect. It cannot be said that only the Disciplinary Authority has the power of a civil court to take evidence but no such power vests in the Appellate Authority. To meet the ends of justice, such powers are inherent in this Authority, particularly when a procedural defect is sought to be cured. It is not that some unauthorised or unknown person had filed the Complaint against the Appellant. In all previous litigations against the Appellant before different fora, Simon Tippet had been representing the Complainant, to the knowledge of the Appellant. We accordingly allow the extracts of Board Resolution dated 10.04.2015 to be taken on record.

17. Now coming to the question if this Board Resolution satisfies the requirement of Rule 3 (4) of the Rules. It has been contended on behalf of the Appellant that this Resolution is a general Resolution in favour of Simon Tippet and not a specific Resolution thereby authorising Simon Tippet to file a Complaint before ICAI and specifically against him or his firm.

18. In this regard, this Authority finds merit in the submission of the Complainant/Respondent No. 2, to the effect that the word “specifically” appearing in Rule 3 (4) of the Rules as quoted above, is with respect to the identity of a specific individual who has been authorised to file a Complaint on behalf of the company, and not with respect to any specific authority before which a Complaint is to be filed or the specific delinquent against whom a Complaint is to be filed. The words “specifically authorising an officer or a person to make the Complaint on behalf of the company or the firm” are not further qualified or restricted with the words “before this authority/body/institute” or “against a particular individual”. The purport of Rule 3 (4) is only to the effect that an identifiable and specific individual should be there being duly authorised by a Resolution of the Board of Directors of the company to file a Complaint on its behalf.

19. Even as per the Explanation to Rule 3 (4), in case of a bank or financial institution, a general Resolution authorising an officer holding a particular position to file Complaint shall be deemed to be the specific Resolution. It makes it clear that in case of banks and financial institutions, an officer at a particular post or designation can be authorised by a general Resolution, without specifically identifying him by his name. Even in that case, such Resolution need not specifically authorise the said officer to file a Complaint before any specific authority/body/institute or against a specific named individual/delinquent. It implies that in case of companies / firms / bodies other than banks and financial institutions, a general Resolution in favour of an officer holding a particular post or designation shall not be sufficient and such Resolution has to be in favour of a particular individual who could be identified through his name. No other view is possible to be taken in view of the language of Rule 3 (4).

20. Therefore, the Board Resolution dated 10.04.2015 cannot be discarded on the ground that it is not in conformity with Rule 3 (4). This Resolution specifically authorised four individuals by their names, including Shri Simon Tippet, to file, appear and defend applications, suits, appeals, writs before any judicial and quasi-judicial authority and other judicial proceedings under all Acts, Rules, regulations, guidelines, circulars, notifications and to sign all documents including vakalat, plaint, written statement, affidavits etc. Such authorisation would certainly include authority to file a Complaint before ICAI by the named specific individuals. Therefore, this Board Resolution dated 10.04.2015 can be safely said to be a valid Board Resolution specifically authorising Simon Tippet to file Complaint on behalf of the Complainant company.

21. In any case, for removal of doubts and technical issues, the Complainant has now also placed on record extract of Board Resolution dated 21.08.2019, reaffirming that Simon Tippet had been duly authorised by it to file the Complaint against AMSCO (firm represented by the Appellant), and also ratifying all actions taken by him in connection with the filing and prosecution of the present Complaint. Therefore, even the Board Resolution dated 21.08.2019, thereby confirming, clarifying and ratifying the authorisation and all the acts of Simon Tippet would be sufficient for this Authority to remove any technical procedural irregularity and to proceed with the appeal on merits.

22. This Authority has been able to lay its hands on judgements titled Union Bank of India v. Naresh Kumar [(1996) 6 SCC 660], Amaan Sachdev v. Fahed Abdulrehman Ali Alkhamiri [(2016) 231 DLT 1], and Mahesh Nathani v. Sir Edward Dunlop Hospitals (India) Limited [(2005) 120 DLT 214], wherein the Hon’ble courts have held that such defect in authority or power of attorney to file, sign or verify the pleadings on behalf of a corporation is a mere procedural irregularity which can be cured at any stage and such ratification, which can be express or even implied, considering the evidence on record and the circumstances regarding the conduct of the trial, can be proved even at an appellate stage, to ensure that injustice is not done to any party.

23. Similar view can be seen in various judicial pronouncements as relied upon by the Respondent No. 2 titled Uday Shankar Triyar v. Ram Kalewar Prasad [(2006) 1 SCC 75], Varun Pahwa v. Renu Chaudhary [2019 SCC Online SC 300], Vidyawati Gupta v. Bhakti Hari Nayak [(2006) 2 SCC 777], Subbiah Pillai v. Sankarapandiam Pillai [AIR 1948 Mad 369], Welding Rods (P) Ltd. Indo Borax & Chemicals Ltd. [(2002) 108 Comp Cases 747 (Guj)], and Ganesh Prasad Sah Kesari v. Lakshmi Narayan Gupta [(1985) 3 SCC 53].

24. Even judgements relied upon by the Appellant titled as Maharashtra State Mining Corporation v. Sunil [MANU/SC/ 2368/2006], Parmeshwari Prasad Gupta v. Union of India [MANU/SC/0395/1973] and Goa Shipyard Ltd. v. Babu Thomas [MANU/SC/2526/2007], hold the same very point. It has been observed that an act by a legally incompetent authority is invalid but even such an invalid act can be subsequently rectified by ratification of the competent authority and such subsequent ratification would equivalent to a prior authority to perform such an act retrospectively which would relate back to the date of the act so ratified. The present case is still on a better footing as there was no invalid act performed by any incompetent authority. The Board of Directors of the Complainant company had all the powers and competency to authorise Simon Tippet to file and prosecute the Complaint its behalf and such authority was given to him vide board Resolution dated 10.04.2015. All such acts of Shri Simon Tippet, including filing and prosecution of the present Complaint against the Appellant herein specifically, have been clarified, confirmed and also ratified by the Board Resolution dated 21.08.2019. It is not a case that the Board of Directors was not competent to do so or that such Resolution would not have retrospective effect.

25. In view of this discussion, the application of the Complainant/Respondent No. 2 dated 21.06.2019 is allowed and the extract of proper Board Resolution dated 04.2015 is taken on record. For clarification and removal of doubts, the extract of Board Resolution dated 21.08.2019 is also taken on record. These Resolutions would make it clear that Simon Tippet had been duly and specifically authorised to file the present Complaint and the Complaint so filed therefore was in conformity with Rule 3 (4) of the Rules. The appeal therefore deserves to be heard on merits forthwith.

26. Ordered accordingly.

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