Disciplinary Committee (Bench-III) of the Institute of Chartered Accountants of India (ICAI), in its order dated 31st July 2024, held CA Muni Kumar Gubiligari guilty of professional and other misconduct under Item (7) of Part I of the Second Schedule and Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. The case arose from a complaint filed by the Deputy Registrar of Companies, Delhi & Haryana, concerning the incorporation of M/s NIPTR Marketing Solutions Private Limited.
The Committee found that CA Muni Kumar had certified Form INC-22 declaring he had physically verified the registered office of the company. However, he later admitted he had not conducted the verification himself, instead relying on information from a third party—Mr. Shreyas Jain, son of one of the directors. Additionally, the lease document submitted was not notarised, violating Rule 25(2) of the Companies (Incorporation) Rules, 2014. It was also found that the company was incorporated with dummy directors who were not from the state in which the company was registered.
Moreover, the respondent witnessed the digital signatures on the e-Memorandum and Articles of Association (e-MOA and e-AOA) without meeting the subscribers, in breach of Rule 13(1) of the Companies (Incorporation) Rules, 2014 and Ministry of Corporate Affairs (MCA) guidelines.
The respondent admitted to the negligence, citing his inexperience, and requested leniency. However, given the seriousness of the lapses, the Committee ordered his name be removed from the Register of Members for 60 days, with the suspension running concurrently with earlier penalties imposed in related cases.
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, 19491
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 CONDUCTOF CASES) RULES, 2007
PR-G/260/2022/DD/159/22/DCI/1733/2023
In the matter of:
Sh. Nitin Phartyal
Deputy Registrar of Companies
,….Complainant
Versus
CA. Muni Kumar Gubiligari
…..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 22nd December 2023, the Disciplinary Committee was, inter-alia, of the opinion that CA. Muni Kumar Gubiligari (hereinafter referred to as the “Respondent”) was GUILTY of Professional and/or Other Misconduct falling within the meaning of Item (7) of Part I of the Second Schedule and Item (2) of Part-IV of First 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 Form No. INC — 22 of M/s. NIPTR Marketing Solutions Private Limited (hereinafter referred as the ‘Company’). It is further alleged that the Respondent assisted in incorporation of the Company whose directors were dummy directors and were from the state other than the one in which the Company was ‘incorporated. Further e-MOA and e-AOA were witnessed by the Respondent without actually ,meeting the subscribers.
3. That pursuant to the said findings, an action under Section 216(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 2nd 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 in his submissions stated that the lapses were unintentional. He while accepting the negligence had requested for lenient view as the assignment was undertaken in initial years of his practice.
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 is of the view that the Respondent was grossly negligent in performing his professional duties. The Committee noted that the Respondent while certifying e-form INC- 22 had specifically declared that he had personally verified the registered office of the Company whereas he in his submissions Stated that he had not physically verified the registered office of the Company as the same was situated in another state and instead he had relied upon physical verification done by Mr. Shreyas Jairi (who was the son of one of the director). The Committee further noted that Leave and License Agreement enclosed with the said e-form was not notarised by the notary as per requireme,nt of the Rule 25(2) of the Companies (Incorporation) Rules, 2014.
7. As regards dummy directors, the Committee noted that Mr. Jayaraj Hegde (one of the directors and subscriber of the Company) in his statement clearly states the modus Operandi used for incorporation of the Company.
8. The Cominittee further observed that the Respondent had witnessed the SPICe MOA AOA of the Company. As per Rule 13(1) of the Companies (Incorporation) Rules, 2014 read with 0.58 of FAQs issued by the MCA, the witness is required to attest his signature ‘ after all the subscribers had attested their digital signature. However, the Respondent accepted that he had never met with the subscribers of e-MOA and e-AOA at the time of incorporation of the Company and he had received the documents through Mr. Shreyas Jain. Accordingly, it was viewed that the Respondent had carried out the professional assignment disregarding the provisions of the Rules. This conduct of the Respondent constitutes Professional Misconduct as per Item (7) of Part 1 of the Second Schedule and Item (2) of Part-IV of First Schedule to the Chartered Accountants Act, 1949.
9. The professional misconduct on the part of the Respondent is clearly established as spelt out in the Committee’s Findings dated 22nd December 2023 which is to be read in conjunction with the instant Order being passed in the case.
10. The Committee, hence, viewed that the ends of justice will be met if appropriate punishment commensurate with his professional misconduct is given to him.
11. Accordingly, the Committee, upon considering the nature of charge and the gravity of the matter ordered that the name of CA. Muni Kumar Gubiligari be removed from Register of Members for a period of 60 (sixty) days. The said punishment shall run concurrently with the punishment awarded in PR/G/90/2022/DD/92/2022 and PR/G/171/22/D D/108/2022 (clubbed)-DC/1671/2022.
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
