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The Council of the Institute of Chartered Accountants of India Vs. K. Ramanathan - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1967)2MLJ450
AppellantThe Council of the Institute of Chartered Accountants of India
RespondentK. Ramanathan
Excerpt:
- .....is guilty of 'professional misconduct' even if the consideration received for entertaining the articled clerk was expressed to be and mutually regarded by the parties as not premium. the council has recommended the name of the chartered accountant to be removed from membership of the institute for a period of three years.2. the case arose on a complaint by one l.k.v.s. money before the council that the respondent, the chartered accountant, received a premium of rs. 2,000 in july, 1961 for entertaining the complainant's son l.v. panchappakesan as an articled clerk, and that after returning a sum of rs. 1,000 and failed to return the balance in terms of regulation 34 on the termination of the articles of apprenticeship. the plea of the chartered accountant was that the premium charged.....
Judgment:
ORDER

M. Natesan, J.

1. Council of the Institute of Chartered Accountants, on a reference under Section 21(6)(d) of the Chartered Accountants Act of 1949 for further enquiry and report has now forwarded its finding that the Chartered Accountant in question is guilty of 'professional misconduct' even if the consideration received for entertaining the articled clerk was expressed to be and mutually regarded by the parties as not premium. The Council has recommended the name of the Chartered Accountant to be removed from membership of the Institute for a period of three years.

2. The case arose on a complaint by one L.K.V.S. Money before the Council that the respondent, the Chartered Accountant, received a premium of Rs. 2,000 in July, 1961 for entertaining the complainant's son L.V. Panchappakesan as an articled clerk, and that after returning a sum of Rs. 1,000 and failed to return the balance in terms of Regulation 34 on the termination of the articles of apprenticeship. The plea of the Chartered Accountant was that the premium charged was only Rupee one and that it had been duly returned. As regards the sum of Rs. 2,000 he pleaded that a sum of Rs. 2,000 was left with him by the articled clerk for safe custody to be drawn by the articled clerk for his expenses in monthly installments of Rs. 100 each. A sum of Rs. 1,000 had been taken return of in October, 1961 itself and the balance received by the articled clerk in ten installments.

3. Having regard to the original findings of the Council, we gave careful and anxious consideration to the defense and found that the Chartered Accountant while taking a sum of Rupee one as premium has retained his plea of discharge by returning the amount in installments to the articled clerk was false, and that apprehending that it would be unprofessional to take any amount from the articled clerk as consideration for taking the articled clerk as apprentice apart from the premium, the Chartered Accountant had attempted to camouflage the true nature of the transaction by false stories.

4. The Council while forwarding the case to us in the first instance, held that the Chartered Accountant was guilty of professional misconduct under Section 21 of the Act read with Clause (1) of the Part II of the Second Schedule of the Act read with Regulation 34 of the Chartered Accountant Regulation. He matter had to be sent back as the sum of Rs. 1000, was not taken as premium for its non-return to amount to contravention of Regulation 34. Under Clause (i) of Part II of the Second Schedule a member of the Institute would be guilty of professional misconduct if he contravened any of the provisions of the Act or the Regulations made thereunder. The impugned conduct of the Chartered Accountant as found by us could not be related to contravention of any specific provision of the Act or Regulations. But disciplinary jurisdiction over Chartered Accountants is not confined to misconduct specified in the Schedules. Section 22 which defines professional misconduct begin with the worlds that professional misconduct for the purpose of the Act.

shall be deemed to include any act or omission specified in any of the Schedules, but that nothing in the section shall be constructed to limit or abridge in any way the power conferred or duty cast on the Council under Sub-section (1) of Section 21 to inquire into the conduct of any member of the Institute under any other circumstances.

5. The definition of professional misconduct under Section 22 is not an exhaustive definition and acts of omission and commission specified in the checked are only illustrative. Primarily the professional body charged with the task of maintaining the standards and discipline of the members of the profession is the best judge to determine what the conduct and standard of its member should 'be. The Council has now expressed its view that the impugned conduct amounts to professional misconduct, though there is no contravention of any specific provision of the Act or the Regulations framed thereunder. We are in entire agreement with the view of the Council in the matter and we may say that learned Council appearing for the Chartered Accountant does not contend otherwise.

6. Though there is no specific provision against receiving any consideration for entertaining an articled clerk, when Regulation 34 provides only for non-refundable premium, impliedly the collection of any other fee must be deemed to be prohibited. The Council has set out the history with reference to the charging of premium from articled clerks. It is seen that prior to the Chartered Accountants' Act of 1949, taking of any amount as non-refundable premium was permissible under the Auditor's Certificates Rules of 1932. The Chartered Accountants Regulations by Regulation 34 prescribed the maximum and minimum rates of premium that could be charged from an articled clerk, of Rs. 3,000 and Rupee one respectively. However, the premium thus charged had to be refunded in full to the articled clerk in such installments as the Chartered Accountants deemed fit, but not later than 14 days after the date of the completion or termination of the articles, as the case may be, subject to satisfactory service and good conduct of the articled clerk. In 1961 further restrictions were imposed in the matter of taking premium from articled clerks. The maximum premium that could be charged from an articled clerk was Rs. 2,000 under the amended Regulation of 1961 with a further provision that where the premium charged exceeded. Rs. 500 it should be deposited in a separate account with a Scheduled Bank. Where such premium was to be refunded in a lump, the amount was to be invested in a Fixed Deposit Account with a Scheduled Bank and the Fixed Deposit amount together with the interest accrued thereon was to be refunded to the articled clerk not later than 14 days after the date of completion or termination of the articles, as the case may be, subject to satisfactory services and good conduct of the articled clerk. The Council points out that in July, 1964 the Regulation Was further amended by introducing a clause that 'no premium shall be charged or payable in the case of articled clerks entering into preliminary service on or after the 18th day of July, 1964'. The Council, it is seen, has always taken a serious view of any attempt to circumvent its regulations directly or indirectly and has been strongly condemning any attempt on the part of the member of the profession to extort money from articled clerks outside what has been permitted under the Regulations. There can be no two views on the matter that the attitude of the Council is in accordance with the high traditions of such professional bodies.

7. The only matter that now calls for consideration is the penalty that has to be imposed on the Chartered Accountant. Learned Counsel appearing for the Chartered Accountant pleads for leniency in the matter having regard to the practice that appeared to have been prevalent previously. But here the Chartered Accountant at the earlier stages of the proceedings showed no contrition and persisted in maintaining his case with regard to the amount of Rs. 1,000 and his plea of discharge in relation thereto. The Council has recommended that the respondent's name should be removed from membership of the Institute for a period of three years. Having regard to the slow evolution of the rules in this regard, we would have, but for the attitude adopted by the Chartered Accountant, contented ourselves with severe reprimand. It was stated by learned Counsel appearing for the Council chat that it is the first case of the kind coming before this Court. This is a circumstance that we may properly bear in mind in awarding penalty. But the profession, expects from all its members-and quite properly and necessarily-the highest standards of integrity and honesty. That has been lacking in this case and the Chartered Accountant was found wanting in frankness and candour. He appears to have gone into the inquiry on his own without taking any advice or had been ill-advised. But there is one factor to be considered in his favour, that apart from this straying from the path of rectitude in the attempt to cover up a departure from high standards of professional ethics-may be in the first instance in the erroneous view that it would not be 'professional misconduct'-we have heard nothing against the respondent. To a certain extent the complainant himself is responsible for the unfortunate position in which the respondent found himself. Bearing all these in mind, and the offer of his Counsel that the amount of Rs. 1,000 would be paid by his client to the complainant without delay, it would be sufficient, in our view, if the respondent is removed from membership of the Institute for a period of six months. For a member of a professional body from whom the highest standards of integrity, honesty and unblemished record are expected, this, in our view, would be sufficient deterrent. There will be an order accordingly directing the removal of the respondent from membership of the Institute of Chartered Accountants for a period of six months. There will be no order as to costs.


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