The Order issued by the Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) concerns a case involving CA. Hemanshu Mansukh Solanki, a member of the institute, who has been found guilty of professional and other misconduct. The case involves allegations related to Solanki’s failure to adhere to professional standards while performing his duties.
The Committee’s findings indicate that Solanki was charged with professional and other misconduct falling within the meaning of Item (2) of Part IV of the First Schedule and 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.
Solanki was provided with an opportunity to present his case before the Committee, which he did through video conferencing on March 19, 2024. During the hearing, Solanki provided verbal and written representations, contesting the allegations and providing explanations for his actions. He argued that the changes in the composition of the Committee necessitated a de-novo hearing and provided clarifications regarding the agreements and communications involved in the case.
The Committee deliberated on Solanki’s defense along with the evidence and submissions presented. It considered the observations of the Honorable Appellate Authority and concluded that there was no merit in Solanki’s contention regarding the change in the Committee’s composition. Additionally, the Committee found no fresh ground to be adduced at that stage of the proceedings.
The Committee scrutinized the facts and circumstances of the case, including Solanki’s assertions regarding the agreements and methodologies applied. It concluded that Solanki failed to work in line with the requirements of the assignment and deliberately adopted a different methodology, causing loss to the complainant. Consequently, the Committee determined that Solanki’s actions constituted professional and other misconduct.
Based on its assessment, the Committee decided that disciplinary action was warranted. It ordered Solanki to be reprimanded and imposed a fine of Rs. 1,25,000/- (Rs. One Lakh Twenty-Five Thousand only) to be paid within 60 days from the date of receipt of the Order.
In summary, the Disciplinary Committee’s Order underscores the importance of adhering to professional standards and exercising due diligence in the performance of chartered accountancy duties. It highlights the consequences of failing to meet these standards and aims to uphold the integrity and credibility of the accounting profession.
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भारतीय सनदी लेखाकार संस्थान
(संसदीय अधिधनयम द्वारा स्थाधित)
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
PR/41/18-DD/92/18] & [PR/41A/18-DD/93/18 (Clubbed)]-DC/1138/19
[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:
Shri Sandeep Tandon…. Complainant
Versus
CA. Hemanshu Mansukh Solanki (M. No. 132835)
M/s. S.K.H.D & Associates
602, Prestige
3, Baudi Cross Lane,
Orlem Kanchpada, Malad West,
Mumbai 400 064.
…. 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 Hemanshu Mansukh Solanki (M. No. 132835) (hereinafter referred to as the ‘Respondent’) is GUILTY of Professional and Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule and 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 an 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
Shri Sandeep Tandon -vs- CA. Hemanshu Mansukh Solanki (M. No. 132835) Disciplinary Committee. The Committee also noted that the Respondent in his written representation on the Findings of the Committee, inter-alia, stated as under:
(a) The change in the composition of the Disciplinary Committee would necessitate de-novo hearing.
(b) An original Mandate was issued by Quant Capital Private Limited which was later modified by Reliance Capital Ltd., with the Complainant being kept informed. He did not raise any objections to the modifications introduced. Consequently, the Complainant, in compliance with the terms of the revised mandate furnished the Definitive Agreement, which was a stipulated requirement under the altered conditions.
(c) In the Mandate letter dated 11th November 2017, the Respondent’s role was strictly limited to vetting and providing feedback, with no authority to mediate, impose, certify, or conclude on the transaction or settlement of any amount between the shareholders.
(d) The report submitted by the Respondent was eventually rejected by the Complainant and the shareholders did not act upon the numbers given in his report.
(e) The Respondent’s Report does not constitute a Certificate of NAV.
(f) Email dated 14th December 2017 and mandate letter dated 11th November 2017 have two different sets of calculations which were provided to the Respondent by Mr. Kaustubh Samant (CFO of Quant Capital Private Limited) for vetting. Calculation given in these two statements are neither comparable nor interchangeable.
(g) The comparison of the Limited Review of the Consolidated Financial Statement and the Respondent’s feedback is inappropriate, given the distinct nature of these exercises.
(h) The Complainant’s resignation was because of the majority shareholder’s decision, for which there was no need for any report.
4. The Committee considered the reasoning as contained in the Findings holding the Respondent Guilty of Professional and Other Misconduct vis-à-vis written and verbal representation of the Respondent. As regard the submission of the Respondent that since there has been a change in the composition of the Committee and thus, de-novo hearing is required in the case, the Committee keeping in view the following observations of the Honorable Appellate Authority in para 8 of its Order dated 14th June 2021 passed in Appeal no. OS/ICAI/2020 in the matter of Devki Nandan Gupta –vs- ICAI and others on the same issue was of the view that there is no merit in the contention of the Respondent:
“We find no substance in the appellant’s plea that due to change in the composition of DC who had passed the order dated 08.02.2018 the new DC with changed members could not have passed the final order dated 07.11.2019………..
We are of the view that no prejudice whatsoever was caused to the appellant due to change in the composition of the DC who had held him guilty of ‘professional misconduct’ under Clause 7 of Part – I of the Second Schedule and the one who had finally awarded punishment vide order dated 07.11.2019. In fact, the changed DC was not expected or required to hear arguments afresh on merits to find if the appellant was guilty of ‘professional misconduct’. The said findings had already been recorded by the previous DC in its order dated 08.02.2019 and attained finality qua the changed DC. The changed DC was required only to hear the appellant on the quantum of punishment/penalty and for that, the appellant was afforded reasonable opportunity of being heard.”
As regard other submissions of the Respondent, the Committee held that due consideration to the submissions and documents on record had been given by the Committee before arriving at its Findings and that no fresh ground can be adduced at this stage.
5. Keeping in view the facts and circumstances of the case, material on record including verbal and written representations on the Findings, the Committee noted that the Respondent stated that he had Shri Sandeep Tandon -vs- CA. Hemanshu Mansukh Solanki (M. No. 132835) worked according to the Definitive Agreement. However, in the said agreement it is nowhere mentioned that the net worth of Quant Capital Private Limited as per books as on 31st March 2014 should be taken as the base for calculation of Net Assets Value. The Respondent in his report given for Net Assets Value had mentioned that Preference Share Capital of Quant Capital Private Limited amounting to Rs 50 crore for the year ended 31st March 2014 were redeemed. However, the authorized preference share capital of Quant Capital Private Limited for the said year was only Rs 10 crore. Accordingly, the Committee concluded that the Respondent failed to work in line with the requirement and deliberately adopted different methodology and his actions caused loss to the Complainant and thus, failed to exercise due diligence while performing his professional assignment. Hence the 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 and Other misconduct.
7. Thus, the Committee ordered that CA. Hemanshu Mansukh Solanki (M. No. 132835) be Reprimanded and also a Fine of Rs. 1,25,000/- (Rs. One Lakh Twenty Five Thousand only) be imposed upon him payable within a period of 60 days from the date of receipt of the Order.
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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
