Case Law Details
Ramchandra Y. Kulkarni Vs Disciplinary Committee of icai (Appellate Authority)
complainant is an Asset Reconstruction Company and the only grievance of the Complainant is that the Appellant who was auditor of M/s AV Forging Private Limited, a company which had taken loans from M/s Axis Bank amounting to Rs. 22.70 Crores approximately, which were taken over by the Complainant IARC from the said Bank by way of assignment and the same was intimated by them to Company vide letter dated 11thApril, 2011, but in the balance sheets of auditee for the years ended on 31.3.2011 and 31.3.2012, the same was not properly shown by the Appellant. In those balance sheets a sum of 10.48 crores were shown as due towards IARC Limited and the balance amount was still shown as payable to Axis Bank under different facilities, which according to the complainant is violative of statutory provisions and the Appellant, despite of his knowledge of irregularity, allowed the same.
Held by Appellate Authority
Appellant diligently performed his duties inter-alia when he sent his assistant to Axis Bank to verify the loan amount. The affidavit of said assistant before Disciplinary Committee remains uncontroverted by the Institute of Chartered Accountants of India or by the Complainant. The examination of Register of Charges maintained by the company was also proper diligence. Further the AVFL has also confirmed non intimation about the assignment of loan to the Appellant which has also not been replied by the Complainant. The verification of pendency of the Charges of Axis Bank against AVFL in the records of ROC till date also shows proper and diligent enquiry made by him.
In view of the above discussion, we agree with the Appellant that it may at worst be a technical error and therefore, it cannot be said that the due diligence was not exercised or there was any negligence, much less gross negligence. Accordingly, we find the appellant “Not Guilty” under clause (7) of Part-I of the Second Schedule to the Chartered Accountants Act, 1949.
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