Ante-Dated Stock Invest Scam in Public Issue: Delhi HC Suspends CA for 1 Year

The Delhi High Court has ordered the one-year suspension of a Chartered Accountant (CA) Kishan Gupta from the membership of the Institute of Chartered Accountants of India (ICAI) for his role in facilitating irregular allotment of shares through ante-dated stock invests in a public issue. The Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar accepted a disciplinary reference filed by the Council of the Institute of Chartered Accountants of India (ICAI) under Section 21(6) of the Chartered Accountants Act, 1949, holding the member guilty of “other misconduct” under Section 22 read with Section 21 of the Act. The proceedings arose from serious irregularities detected by the Securities and Exchange Board of India (SEBI) in the public issue of Bharthari Financial Services Limited (BFSL) during the mid-1990s. The Chartered Accountant concerned was not only a member of ICAI but also served as Chairman and Whole-Time Director of BFSL at the relevant time. SEBI, in its investigation, found that large-scale subscriptions to the public issue were made after the issue had already closed, using stock invests that were ante-dated and issued at a later point in time. These transactions artificially created an impression of oversubscription, misleading the investing public. SEBI passed directions against the Chartered Accountant under Section 11B of the SEBI Act, 1992, following which the matter was forwarded to ICAI for disciplinary action According to ICAI and SEBI findings, the misconduct involved arranging finance in connivance with another Chartered Accountant to obtain ante-dated stock invests after closure of the public issue. Acceptance of share applications despite knowing that the issue had closed on October 5, 1995. Allotment and dispatch of shares even after applications were formally withdrawn and stock invests returned. Release of share certificates without receipt of application money, causing prejudice to genuine investors. The Disciplinary Committee concluded that such actions were deliberate and aimed at artificially inflating subscription figures, benefiting promoters at the cost of market integrity. After a detailed inquiry, the Disciplinary Committee found that the Chartered Accountant had actively connived with another professional in manipulating the public issue process. As Chairman and Whole-Time Director, he was fully aware of the closure of the issue yet permitted and facilitated post-closure subscriptions. Despite withdrawal requests from applicants, no corrective steps were taken, and shares were still allotted and issued. The conduct was unbecoming of a Chartered Accountant and squarely fell within the scope of “other misconduct” under the Act. The Committee’s report was accepted by the ICAI Council, which then recommended removal of the member’s name from the Register for one year The High Court noted that the respondent failed to effectively contest the reference and that the disciplinary process had followed due procedure. Relying on earlier precedents, including cases involving similar misconduct by co-accused professionals, the Court held that Chartered Accountants are guardians of financial discipline and market integrity, not mere private professionals. Any act that undermines investor confidence and market fairness warrants strict disciplinary action. The Court ordered suspension of the Chartered Accountant from ICAI membership for one year. A bar on rendering any services as a Chartered Accountant during the suspension period. Payment of ₹10,000 as costs to ICAI within four weeks. Case Details Case Title: Council Of Institute Of Chartered Accountants Versus Shri Kishan Gupta And Anr. Case No.: CHAT.A.REF 2/2018 Date: 23.12.2025 Counsel For Petitioner: Deepin Deepak Sahni, Advocate Counsel For Respondent: Vijendra Singh Mahndiyam Click Here To Read Order Read More: CBIC Extends Compliance Timeline Under Sea Cargo Manifest Rules Till March 31, 2026

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