The Institute of Chartered Accountants of India’s Disciplinary Committee [Bench-III (2024-2025)] issued an order on July 31, 2024, regarding CA. Rahul Chillal . The committee found him guilty of professional misconduct under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. The charges stemmed from his gross negligence in professional duties while certifying e-Form SPICE for four companies: M/s Fesolo Private Limited, M/s Solosime E-Commerce Private Limited, M/s Indofa E-Commerce Private Limited, and M/s Webusi Technology Private Limited. Specifically, the respondent failed to verify the authenticity and completeness of incorporation documents, did not physically verify the companies’ registered offices, and neglected to verify ownership papers or authorization documents for the properties. Despite the respondent’s submissions, including his reliance on documents provided by a third party and not conducting physical verification himself, the committee determined that he had falsely declared personal verification of the registered offices. As a consequence, CA. Rahul Chillal’s name will be removed from the Register of Members for 60 days, and he has been fined Rs. 20,000, payable within 90 days. Failure to pay the fine will result in an additional 30-day removal from the Register of Members.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[DISCIPLINARY COMMITTEE [BENCH-III (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 216(3) OF THE CHARTERED ACCOUNTANTS ACT, 1949 READ WITH RULE 19(1) OF THE CHARTERED ACCOUNTANTS (PROCEDURE OF INVESTIGATIONS OF PROFESSIONAL AND OTHER MISCONDUCT AND CONDUCT OF CASES) RULES, 2007
PRIG/13312022/DD/113/2022 and
PRIG-148/22(Clubbed) – DC/1672/2022
In the matter of:
Ms. V Annapoorna,
……Complainant
Versus
CA. Rahul Chillal
…..Respondent
MEMBERS PRESENT:
CA. Charanjot Singh Nanda, Presiding Officer (Present in Person)
Smt. Anita Kapur, Government Nominee (Present in Person)
Dr. K. Rajeswara Rao, Government Nominee (Present through Video Conferencing Mode)
CA. Piyush S. Chhajed, Member (Present in person)
Date of Hearing: 2nd May 2024
Date of Order: 31st July, 2024
1. That vide findings under Rule 18(17) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 dated 3rdOctober 2023, the Disciplinary Committee was, inter-alia, of the opinion that Rahul Chillal (hereinafter referred to as the “Respondent”) was GUILTY of Professional Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949.
2. That charge against the Respondent was that he was grossly negligent in the conduct of his professional duties while certifying e-Form SPICE of four Companies namely M/s Fesolo Private Limited, M/s Solosime E-Commerce Private Limited, M/s Indofa E-Commerce Private Limited and M/s Webusi Technology Private Limited (hereinafter referred as the ‘Subject Companies’). It was alleged that the Respondent failed to verify the authenticity and completeness of the documents enclosed with incorporation form(s) and also failed to physically verify the registered office of the Companies in accordance provisions of the Companies Act, 2013. Further the Respondent had also failed to verify ownership papers/authorization documents from the owner of the property.
3. That pursuant to the said findings, an action under Section 2113(3) of the Chartered Accountants Act, 1949 was contemplated against the Respondent and a communication was addressed to him thereby granting an opportunity of being heard in person/through video conferencing and to make representation before the Committee on 23d May 2024.
4. The Committee noted that on the date of hearing held on 2nd May 2024, the Respondent was present through Video Conferencing Mode and made his verbal submissions on the findings of the Disciplinary Committee. The Committee noted that the Respondent had also submitted his written submissions vide letter dated 26th April 2024. The Respondent in his submissions had, inter-alia, submitted as under
a. That he had verified the electricity bill and No-Objection Certificate (NOC) from owner of the property for the purpose of the incorporation of the Company(ies). The person on whose name the electricity bill was generated and the name of the owner as per NOC was same which states that the owner gave the NOC for registration of the Company(ies).
b. Regarding the observation that the same address was used by six Companies, he stated that it was difficult to find out how many Companies were registered on the same address.
c. That to confirm the actual identity of the directors he had verified the details online through the Income Tax site, UIDAI website.
d. Since NOC from owners and utility bills were provided to him and Mr. Prasad Nitturkar (who supplied these documents to him) had confirmed that he had physically verified the address, he decided not to conduct the physical verification of the address of these Companies.
5. The Committee considered the reasoning as contained in the findings holding the Respondent Guilty of professional misconduct vis-a-vis representation of the Respondent made before it.
6. Keeping in view the facts and circumstances of the case, along with the material on record including representations on the findings, the Committee noted that the Respondent while certifying e-form SPICE+ had specifically declared that he had personally verified the registered office of the Company whereas he in his submissions had accepted that he had not done the physical verification of the registered office of the Companies. The Committee further observed that the Respondent had failed to verify the ownership papers/authorization documents from the owner of the property and had merely relied upon the documents and assurance of Mr. Prasad Nitturkar. The Committee was of the view that the professionals should not bypass the requirements of proper KYC, OTP verification, and other regulatory compliances prescribed under Companies Act and Rules framed thereunder.
7. The Committee in its findings had clearly established that there was no proof of ownership or occupancy Authorisation attached therein to show that NOC issuing individuals were owners or duly authorised occupants of the property. Accordingly, it was viewed that the Respondent was grossly negligent not only for certifying the incorrect details in SPICE+ regarding personally visiting the registered office, but also in verifying the ownership papers/ authorization documents from the owner of the property. This conduct of the Respondent establishes Professional Misconduct as per Item (7) of Part 1 of the Second Schedule to the Chartered Accountants Act, 1949.
8. The professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 3rd October 2023 which is to be read in conjunction with the instant Order being passed in the case.
9. The Committee, hence, viewed that the ends of justice will be met if appropriate punishment commensurate with his professional misconduct is given to him.
10. Accordingly, the Committee, upon considering the nature of charge and the gravity of the matter ordered that the name of Rahul Chillal be removed from Register of Members for a period of 60 (sixty) days and a fine of Rs. 20,000/- (Rupees Twenty Thousand only) be imposed upon him to be paid within 90 days of the receipt of the order and in case of failure in payment of fine as stipulated, the name of the Respondent be removed for a further period of 30 days from the Register of Members.
Sd/-
(CA. CHARANJOT SINGH NANDA)
PRESIDING OFFICER
Sd/-
(SMT. ANITA KAPUR)
GOVERNMENT NOMINEE
Sd/-
(DR. K. RAJESWARA RAO)
GOVERNMENT NOMINEE
Sd/-
(CA. PIYUSH S CHHAJED)
MEMBER
DATE: 31st JULY, 2024
PLACE: NEW DELHI
