Disciplinary Committee of The Institute of Chartered Accountants of India (ICAI) has reprimanded CA. Chhaviraj Tejnath Joshi for professional misconduct. The order, dated May 17, 2024, found Joshi guilty under Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949, related to negligence in performing professional duties.
The case, initiated by Shri M Shankaraiah of Andhra Bank, centered on Joshi’s concurrent audit of the bank’s Andheri Mumbai Branch. The Committee’s findings indicated that Joshi failed to report serious irregularities in the accounts of two borrowers, M/s NIPKO Engineering Services Pvt. Ltd. and M/s Signet Products Pvt. Ltd., within his Concurrent Audit Report.
During the hearing on March 28, 2024, Joshi, appearing via video conferencing, attributed his lapses to poor mental health and claimed he did not have substantial interest in his firm, M/s. J Singh & Associates. He also stated that the Branch Manager had not provided relevant documents for verification. However, the Committee rejected these pleas, asserting that if mentally unfit, he should have recused himself or handed over the audit. It also noted that any lack of documentation should have been reported in his audit report or to senior bank officials, rather than only to the RBI after a show cause notice was issued to him.
The Committee concluded that Joshi did not perform his duties diligently and was grossly negligent. Consequently, CA. Chhaviraj Tejnath Joshi has been reprimanded under Section 21 B(3)(a) of the Chartered Accountants Act, 1949.
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PR/331/18-DD/27/19-DC11414/2021
[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, 2007
[PR/331/18-DD/27/19-DC/1414/2021]
In the matter of:
Shri M Shankaraiah,
General Manager,
…..Complainant
Versus
CA. Chhaviraj Tejnath Joshi,
M/s. J Singh & Associates, Chartered Accountants,
…..Respondent.
Members Present:-
Mrs. Rani S. Nair, IRS (Retd.), Government Nominee and Presiding Officer (through VC)
Shri Arun Kumar, IAS (Retd.), Government Nominee (through VC)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Gotha S Srinivas, Member (in person)
Date of Hearing : 28th March, 2024
Date of Order : 17th May, 2024
1. That vide Findings under Rule 1807) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Disciplinary Committee was, inter-alia, of the opinion that CA. Chhaviraj Tejnath Joshi (hereinafter referred to as the Respondent”) is GUILTY of Professional Misconduct falling within the meaning of Item (7) Part I 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 28th March 2024.
3. The Committee noted that on the date of the hearing held on 28th March 2024, the Respondent was present through video conferencing and made his verbal representation on the Findings of the Disciplinary Committee, inter-alia, stating that the mistake was unintentional and was due to his poor mental health condition as a result of which he could not convey to the partnership firm about his intent to resign from the firm. Currently he is not working also. His father is admitted in the hospital. The family is going through some financial stress and mental tension. Thus, he requested for a lenient view in his case. The Committee also noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under:
a. Due to poor mental health, he could not express his viewpoints and therefore did not handover the audit work to other partners or leave the audit.
b. He doesn’t have substantial interest in the firm M/s. .J Singh & Associates (He worked on a meager salary of Rs. 30-35 thousand p.m. with 1% share in the said partnership firm) but, still he has been held responsible for not reporting the irregularities in the Audit report.
c. He requested the Committee to take a logical, practical, and liberal view in the matter, considering his past and present illness, in the interest of justice.
4. The Committee 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. The Committee held that since the concurrent audit under question had been conducted by the Respondent, he is subsequently estopped from taking the plea that he does not have a substantial interest in the firm.
5. Keeping in view the facts and circumstances of the case, material on record including verbal and written representations on the Findings, the Committee is of the view that it has already been held that despite having serious irregularities in the accounts of two borrowers M/s NIPKO Engineering Services Pvt. Ltd. and M/s Signet Products Pvt. Ltd., the Respondent remained silent and did not care to mention the irregularities in Concurrent Audit Report.
5.1 The Respondent’s plea that he was in depression during the relevant time of audit and the Branch Manager has not provided relevant documents to him for verification are not acceptable, because, if the Respondent was not mentally fit at the time of accepting or conducting audit, he should have either left the audit or handed over the audit work to other partners but the Respondent did not do the same.
5.2 Further, if the Branch Manager had not provided the relevant documents for verification, in that case, he should have pointed out the same in his audit report or written to the senior Bank Officials to the bank. Moreover, the Respondent had written to the RBI only when the Bank issued Show Cause Notice to him. Thus, the Respondent did not perform his duties diligently and was grossly negligent while performing Concurrent Audit of Andheri Mumbai Branch of the Complainant Bank.
5.3 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.
6. Accordingly, the Committee was of the view that ends of justice will be met if punishment is given to him in commensurate with his professional misconduct.
7. Thus, the Committee ordered that CA. Chhaviraj Tejnath Joshi ,be Reprimanded under Section 21 B(3)(a) of the Chartered Accountants Act 1949.
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(MRS. RAM S. NAIR, IRS RETD.)
GOVERNMENT NOMINEE AND PRESIDING OFFICER
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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
