The Institute of Chartered Accountants of India (ICAI) Disciplinary Committee, in an order dated September 30, 2024, found Chartered Accountant Gaurav Kumar Bedi guilty of professional misconduct. The case stemmed from a complaint by Mr. Neeraj Sharma, Senior Vice President of National Spot Exchange Limited (NSEL), regarding the audit of M/s Suvaity Trading Company Pvt. Ltd. for the financial year 2013-14. The committee determined that CA. Bedi was guilty on multiple charges, including failing to verify the genuineness of sale transactions, incorrectly reporting on the applicability of the Companies (Auditor’s Report) Order, 2003, and not reporting mandatory disclosures required by the Companies Act, 1956. Despite the CA’s plea for a lenient view, citing his 20-year unblemished career, the committee dismissed his arguments and submissions, noting that he had admitted his mistakes on two of the three charges. The committee, after considering all facts and representations, ordered that CA. Gaurav Kumar Bedi’s name be removed from the Register of Members for a period of one year and imposed a fine of ₹1,00,000.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
[PR/PI/177/18-DD/201/18/DC/1489/2021]
[DISCIPLINARY COMMITTEE [BENCH-II (2024-2025)]
[Constituted under Section 21B of the Chartered Accountants Act, 1949]
ORDER UNDER SECTION 21B (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, 1007
In the matter of:
Mr. Neeraj Sharma,
Sr. Vice President,
National Spot Exchange Limited (NSEL)
Versus
CA. Gaurav Kumar Bedi
M/s Arora Bedi and Associates
Members Present:-
CA. Ranjeet Kumar Agarwal, Presiding Officer (in person)
Mrs. Rani S. Nair; IRS (Retd.), Government Nominee (through VC)
Shri Arun Kumar, lAS (Retd.), Government Nominee (in person)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Cotha S Srinivas, Member (through VC)
Date of Hearing: 10th April 2024
Date of Order: 30th September, 2024
1. That vide Findings under Rule 18(17) of the Chartered Accountants (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee was, inter-alia, of the opinion that. Gaurav Kumar Bedi (hereinafter referred to as the “Respondent”) is. GUILTY of Professional Misconduct falling within the meaning of Item (6), (7) and (8) of Part I and Item (3) of Part II of the Second Schedule to the Chartered Accountants Act, 1949.
2. That pursuant to the said Findings, an action under Section 21B (3) of the Chartered Accountants (Amendment) Act, 2006 was contemplated against the Respondent and a communication was addressed to him thereby granting opportunity of being heard in person / through video conferencing and to make representation before the Committee on 10th April 2024.
3. The Committee noted that on the date of the hearing held on 10thApril 2024, the Respondent as present in person and made his verbal representation on the Findings of the Disciplinary, Committee, inter-alia, stating that the Company is not working right now but his client is connected with him. He had 20 years of unblemished professional career and that he had already suffered for. 6 years. Thus, he requested the Committee to take a lenient view ih the case. The Committee also noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under:
(i) With res ect to the first charge: –
a) Evidence to substantiate missing sales of Rs 31.04 Crores in the name of M/s Suvaity Trading Company Pvt. Ltd. (STCPL) is disputed.
b) Alleged Transactions of Rs 31.04 crores are disputed and not accepted by M/s. Shree Radhey Trading Company (SRTC) as sales of M/s Suvaity Trading Company Pvt. Ltd. (IS CPU).
c) It is app rent that the Complainant on the one hand has not been able to establish the figure of Rs. 31.04 crores as sales of M/s Suvaity Trading Company Pvt. Ltd. (STCPL) through M/s. Shree Radhey Trading Company (SRTC) and on the other hand, denied and did not accept the figure of Rs. 45.60 Crores reflected as Sales in the Financial Statements without any basis
d) The Respondent referred to the decision of the Disciplinary Committee in a similar complaint filed by the same Complainant against CA. PSC Nageswara Rao alleging that du ling the financial year 2013-14, SSPL (auditee company) failed to reflect transactions in the financial statements that it had allegedly traded in aggregate Rs.135 43 Crores turnover being Rs.77.70 Crores as BUY turnover and Rs. 57.73 Crores as SELL turnover on NSEL platform as client of M/s NCS Sugars Ltd (broker membe) of NSEL). In the said case, the Committee held the Respondent as Not Guilty on the ground that the broker concerned intervened in the matter and had stated that the contentious sales were disputed.
(ii) With respect to the second charge: –
a) Although there is a slight deviation in compliance with the requirement, but the fact remains that the said deviation is not material in nature and at the same time it neither affects the user(s) of the Financial Statements substantially nor vitiates the true and fair view of the Financial Statements.
(iii) With respect to. the third change: –
a) It is correct that the requirements of the Schedule VI to the Companies Act, 1956 was mandatorily required to be followed by the Company while preparing its financial statements for the Financial Year. 2013-14 but it is a fact that the observations are technical in nature and there is no material effect on the financial statements so as to affect its “true and fair view”.
4. Keeping in view the facts and circumstances of the case, material on record and representation of the Respondent before it, the Committee decided to reserve the decision on the quantum of punishment to be awarded to the Respondent in the instant case
5. Thereafter, the Committee at its meeting held on 15t July 2024, considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional Misconduct vis-a-vis written and verbal representation of the Respondent. As regard the submission of the Respondent regarding comparing the instant case with an earlier decided case, the Committee is of the view that comparing two distinct disciplinary cases as ‘eye to eye’, is not warranted as each case is decided on merits on the basis of documents and submissions on record. After due consideration of all the facts, submissions and documents on record, the Committee arrived at its Findings holding the Respondent guilty in respect of the charges alleged against him in Form The Committee also noted that the Respondent admitted his mistake with respect to the second and the third charge during the hearing as, well as in his written submissions.
6. Keeping in view the facts and circumstances of the case, material on record including verbal and written representations on the Findings, the Committee noted as under:
(i) First Charge: The Complainant brought on record an e-mail dated 8th July 2013 from the director of the auditee Company to NSEL wherein the said director had mentioned M/s Suvaity Trading Company Pvt. Ltd.(STCPL) as client of M/s. Shree Radhey Trading Co. (SRTC) with client id STC. Thus, the said fact clearly shows that the auditee Company had made the transactions through NSEL. Further, the Respondent was involved in filing all tax returns and Tax Audit of the Company and accordingly, he had access to all the documents / records of the Company. Furthermore, the Respondent failed to bring on record sufficient evidence on record to show that he had taken proper steps to verify the genuineness and accuracy of the purchase and sales in view of the aforementioned circumstances. Hence, the contention of the Respondent that there had been nothing on record to find out about the sale transactions that took place through NSEL platform was not acceptable and tenable. Despite the circumstances as prevailed at the time of audit requiring the auditor to apply extra checks and audit procedures, the Respondent did not bother to apply appropriate and extra audit procedures to check the genuineness and completeness of the sale transactions made by the Company during the financial year 2013-14. Moreover, the non-compliance of the requirements of Accounting Standards, (AS 9) was clearly visible on the face of the Financial Statements and unsigned Notes to Accounts.
(ii) Second Charge: As per Section 227(4A) of the Companies Act, 1956 requiring an auditor to include a Statement specified by the Central Government under this section, tile Respondent was required to include a Statement on the matters as specified in Companies (Auditor’s Report) Order, 2003 but he failed to include the same and made incorrect reporting by mentioning in his audit report that the Companied (Auditor’s Report) Order 2003 was not applicable to the Company. Further, the Respondent on this charge accepted his mistake.
(iii) Third charge: As per Section 227 of the Companies Act, 1956, it was the duty of the auditor to report that whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information as required by the Companies Act in the manner so required and give a true and fair view of the financial statements of the Company. Despite the violation of the mandatory ‘requirements of disclosures as per revised Schedule VI of the Companies Act 1956 as pointed out in para 18.1 of the Findings, the Respondent remained silent and did not point out the same in his audit report. Also, the Respondent admitted his mistake in respect of the said charge.
6.1 Hence, professional :misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 7th February 2024 which is to be read in consonance with the instant Order being passed in the case.
7. Accordingly, the Committee was of the view that ends of justice will be met if punishment is given to the respondent in commensurate with his professional misconduct.
8. Thus, the Committee ordered that the name of CA. Gaurav Kumar Bedi be removed from the Register of Members for a period of 01(One) Year and also imposed a Fine of Rs. 1,00,000/- (Rupees One Lakh only) upon him payable within a period of 60 days from the date of receipt of the Order. The punishment in the Instant case shall run concurrently with the punishment awarded in Case no. PR/PI/178/18-DD/202/18/DC/1488/2021.
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(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER
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(MRS. RANI S. AIR, IRS RETD.)
GOVERNMENT NOMINEE
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(SHRI ARUN KUMAR, IAS RETD.)
GOVERNMENT NOMINEE
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(CA. SANJAY KUMAR AGARWAL)
MEMBER
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(CA. COTHA S SRINIVAS)
MEMBER
