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The Order issued by the Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) pertains to a case involving CA. Ravish Shashikant Maniyar, who has been found guilty of professional misconduct. The case centers on Maniyar’s failure to report a SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest) action against a client in his audit report.

The Committee’s findings indicate that Maniyar was charged with professional misconduct falling within the meaning of Item (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. This finding prompted the Committee to initiate disciplinary action against him under Section 21B(3) of the Chartered Accountants Act, 1949.

Maniyar was provided with an opportunity to present his case before the Committee, both verbally and in writing, during a hearing held on March 19, 2024. In his defense, Maniyar argued that there was no motive or bad intention on his part and that he had not completed even five years of professional practice at the relevant time. He also highlighted certain technicalities and procedural issues regarding the complaint.

The Committee deliberated on Maniyar’s defense along with the evidence and submissions presented. It considered Maniyar’s arguments regarding the alleged procedural irregularities but ultimately concluded that they did not invalidate the complaint or the disciplinary proceedings.

The Committee found that Maniyar, despite being aware of the SARFAESI action against the client, failed to disclose this material fact in his audit report. It determined that this constituted a lack of diligence on Maniyar’s part and amounted to professional misconduct.

Based on its assessment, the Committee decided that disciplinary action was warranted. It ordered Maniyar to be reprimanded under Section 21B(3)(a) of the Chartered Accountants Act, 1949.

भारतीय सनदी लेखाकार संस्थान
(संसदीय अधिधनयम द्वारा स्थाधित)
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)

PR/369/2018-DD/70/2019-DC/1360/2020

[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

In the matter of:
Dr. Rajkumar Kaluram Gaikwad ….Complainant

Versus

Ravish Shashikant Maniyar (M.No.145322) …..Respondent

Members Present:-
CA. Ranjeet Kumar Agarwal, Presiding Officer (in person)
Mrs. Rani S. Nair, IRS (Retd.), Government Nominee) (through VC)
Shri Arun Kumar, IAS (Retd.), Government Nominee (in person)
CA. Sanjay Kumar Agarwal, Member (in person)
CA. Cotha S Srinivas, Member (in person)

Date of Hearing: 19th March, 2024
Date of Order: 9th May, 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, the Disciplinary Committee was ,inter-alia, of the opinion that Ravish Shashikant Maniyar (M.No.145322) (hereinafter referred to as the Respondent”) is 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 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 19th March 2024.

3. The Committee noted that on the date of the hearing held on 19th 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 neither there was any motive or bad intention on his part nor was he benefitted due to alleged misconduct. He had not completed even 5 years of his professional practice at the relevant time. He is practising in a firm of two partners and any adverse action would affect the existing and new professional work. The Committee also noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under:

(a) One time settlement was known to the Respondent only based on his enquiry with the Management about the repayment defaults and the matter of repayment defaults was sorted out before the signing of the audit report.

(b) Payment against one time settlement against the cheques due till the audit report were duly made. All alleged notices in respect of SARFESAI were after the year end i.e. Subsequent Event. Disclosures made when the matter became known.

(c) Though the name of the Bank is not mentioned in Audit report, but, in the Financials, the name of the Bank- The Saraswat Co-operative Bank has been mentioned.

(d) Wrong calculation of materiality: It has been wrongly concluded that 65% of the long-term borrowings was a default amount of repayment by assuming that the entire loan balance of Rs. 1462.87 lacs outstanding as on 31st March 2018 represented the defaulted repayment, instead of considering only the amount of instalments due but not paid.

(e) Management Representation letter confirmed the remarks.

(f) In terms of Item No. 1 of Companies (Audit and Auditors) Rules, 2014, the requirement was to disclose the impact of pending litigation, if any, on the financial position in the financial statement. The Company gave Management Representation letter to the effect that there were no litigation pending having any major financial impact and the Company was a going concern.

(g) The principles of natural justice have not been followed as no opportunity of hearing for the purpose of the cross examination of the Complainant as well as for arguing in respect of the response from the Complainant on the matter after the hearing on 23rd August 2023 was given to Respondent.

(h) It is only a conjecture on the part of Hon’ble Disciplinary Committee that the Respondent was aware of SARFESAI action.

(i) The Complainant has not indicated in item number 5 of Form-1 of his complaint, the particulars of the allegation serially numbered together with corresponding clause/part of the relevant schedule under which the alleged act of commission / omission would fall. The Hon’ble Disciplinary Committee had agreed with Prima Facie opinion for a charge which was not applied at all in the Prima Facie Opinion i.e. Clause (1) of Part 1 of Second Schedule.

(j) All the promoters were aware of the developments in business and interest of none of them has been affected due to alleged misconduct of disclosure. The Respondent had given all the necessary qualification in the audit report of subsequent year when he became aware of the SARFESI proceedings.

4. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional Misconduct vis-à-vis written and verbal representation of the Respondent. As regard the submission of the Respondent that specific clause of the misconduct had not been defined by the Complainant, the Committee is of the view that it is trite that a Complainant is required as per law to state the allegations which are to form a factual foundation for an Adjudicating Authority to exercise jurisdiction and even if an incorrect provision of law/no clauses is mentioned by the Complainant in FORM I, that alone cannot be a ground to dismiss a complaint if otherwise the Authority has the jurisdiction to entertain the complaint. As regard the submission of the Respondent that no opportunity of hearing after the hearing on 23rd August 2023 was given to the Respondent, the Committee noted that pursuant to conclusion of the hearing held on 23rd August, 2023 and in compliance with its direction given in the said meeting, both the parties had submitted the written submissions/documents which were duly considered along with the other submissions and documents on record by the Committee before arriving at its Findings.

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 the Respondent, despite being aware of SARFAESI action against the client, had mentioned in his audit report that no litigation was pending against the Company which shows a lack of diligence by the Respondent in the conduct of his professional duties and thus, he failed to exercise requisite due diligence while auditing and was grossly negligent in reporting material fact and misstatement. 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. Ravish Shashikant Maniyar (M.No.145322), Sangamner be reprimanded under Section 21B(3)(a) of the Chartered Accountants Act 1949.

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(CA. RANJEET KUMAR AGARWAL)
PRESIDING OFFICER

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(MRS. RANI S. NAIR, 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

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