Delhi HC directs ICAI to Frame policy to ensure Periodic disclosure of criminal cases by CAs

Delhi HC directs ICAI to Frame policy to ensure Periodic disclosure of criminal cases by CAs

The Delhi High Court directed the Institute of Chartered Accountants of India (ICAI) to frame a policy to ensure periodic disclosure of criminal cases by CAs.

The FIR was lodged against the Petitioner, at PS Rohini for offences punishable under Sections 365/376/342/354/34 of the IPC. At that time, the Petitioner had cleared his CA Foundation and had received the certificate in respect thereof. Post the FIR having been registered against the Petitioner, investigation was conducted, and after the completion of investigation, charges under Section 366 IPC, Section 376(2)(g) IPC and Section 506-II IPC, were framed against him. In the meantime, he had appeared in the next level of examinations and qualified as a Chartered Accountant. He was enrolled on 25th January 2008. 

After his enrolment, the Petitioner was convicted by the Trial Court for the offences punishable under Sections 376 (2) (g) read with Explanation 1 and Section 506-II of the IPC.

The Petitioner contended that the wife of the Petitioner, who is a professional CA, had some disputes with one Mr. Atul Gupta Respondent, who later on went on to become the President of the ICAI. 

He further argued that it is at his behest that a decision was taken to debar the Petitioner from practicing as a CA in view of the disability provided under Section 8(v) of the Act.

Advocate Srinivasan, appearing along with Advocate Pooja Sehgal, appearing for the ICAI, contended that a reading of Section 8(v) of the Act would clearly show that it covers an offense involving moral turpitude which could have taken place at the time when the name of the Petitioner was “entered in or borne on the register”.

The single judge bench of Justice Prathiba M. Singh while issuing the directions to the ICAI stated that the Petitioner, despite a criminal case being pending at the time of his enrolment as a Chartered Account and thereafter his conviction, was enrolled and was permitted to practice as a CA. This Court has not been shown any policy or disclosure requirements that are asked for from candidates or CAs either at inception or thereafter.

“There is a clear need for the ICAI to create a framework wherein there is proper disclosure by candidates who apply to become Chartered Accountants, at the inception itself. There is also a need for a continuing disclosure, may be on an annual basis for members to inform the ICAI if there are any criminal cases / conviction etc., against them, so that the ICAI is not kept in the dark. The power, discretion and duty of ensuring the purity of the Register of Members is upon the ICAI. Thus, in the case of convictions, the factum of the said conviction and the offences qua which the applicant was convicted ought to be disclosed,” the court remarked.

The court stated that in the case of an FIR or a Criminal Complaint having been filed, there ought to be an obligation upon the applicant to keep the ICAI informed and updated, as to the progress in the said Complaint/Case. ICAI shall accordingly frame a policy and a mechanism, if not already in existence, for disclosure by members both at the inception as also on a periodic basis thereafter, of any criminal cases or convictions so that the spirit and intent of the statute is given effect to and the ICAI is not in the dark about the same until it is notified by some information or complaint.

Case title: Mohit Bansal v/s Institute of Chartered Accountants of India & Anr. 

Citation: W.P.(C) 6819/2020 & CM APPL. 23588/2020 

Click here to read the Order/Judgment

Tags- ICAI, CA, Policy, Judgment, Jurishour, law

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