Karnataka HC Quashes ICAI Disciplinary Order Against Senior CA Over Mismatch in Charges

The Karnataka High Court has quashed an order passed by the Board of Discipline of the Institute of Chartered Accountants of India (ICAI) holding a senior chartered accountant guilty of “other misconduct.” The Court held that the disciplinary action was vitiated due to a fundamental mismatch between the allegations made in the complaint and the charges actually pursued during the enquiry. The bench of Justice E.S. Indiresh filed by Naginchand Khincha, a chartered accountant with over four decades of professional experience. The petitioner had challenged the ICAI Board of Discipline’s order dated February 10, 2018, which found him guilty under Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, and imposed adverse findings against him. The controversy originated from a complaint forwarded by the Central Bureau of Investigation (CBI) to the ICAI in August 2013. The CBI complaint arose out of a criminal case registered against the petitioner and an Income Tax Officer under the Prevention of Corruption Act, 1988, alleging that money was demanded and collected for settling an income tax dispute of a third party. However, while forwarding the complaint to the ICAI, the CBI specifically alleged that the petitioner had collected money from the client as “professional fees” in violation of Clause 7.7 of Chapter 7 of the ICAI Code of Ethics, which governs fee structures for practising chartered accountants. Based on this complaint, the Disciplinary Directorate of ICAI formed a prima facie opinion in September 2016 and initiated disciplinary proceedings against the petitioner for “other misconduct.” Eventually, without conducting a detailed enquiry, the Board of Discipline concluded that the petitioner’s actions brought disrepute to the profession and held him guilty. The petitioner argued that the disciplinary proceedings were fundamentally flawed. He contended that while the CBI complaint alleged violation of the Code of Ethics relating to charging of professional fees, the disciplinary proceedings effectively proceeded on allegations of acting as a conduit for bribing a public servant—an issue forming the subject matter of the pending criminal trial. The petitioner was never clearly informed of the precise charge he had to meet, resulting in violation of principles of natural justice. The petitioner also pointed out that his request for staying the disciplinary proceedings pending the criminal trial was ignored and that the Board had reached a predetermined conclusion without a proper enquiry. The ICAI, on the other hand, defended the proceedings, arguing that the disciplinary mechanism had followed the procedure prescribed under the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007. It was further contended that disciplinary proceedings could run independently of criminal proceedings and that the petitioner had an alternative statutory remedy of appeal under Section 22G of the Act. After examining the records in detail, the High Court found substantial force in the petitioner’s arguments. The Court noted that the complaint forwarded by the CBI accused the petitioner of charging excessive professional fees, whereas the disciplinary proceedings and findings were based on allegations of bribery and conduct bringing disrepute to the profession. Justice Indiresh observed that these two sets of allegations were “totally different and distinct” and could not be interchanged. The Court emphasised that a delinquent professional must be made clearly aware of the specific charge against him before being subjected to disciplinary action. The Court further held that the proceedings suffered from a serious discrepancy in the imputation of charges, rendering the entire enquiry a “misnomer.” On this ground alone, the disciplinary order could not be sustained in law. Rejecting ICAI’s objection regarding availability of an alternative appellate remedy, the Court applied the “useless formality” doctrine, holding that relegating the petitioner to an appeal would serve no purpose when the very foundation of the proceedings was legally flawed. The Karnataka High Court quashed the disciplinary order dated February 10, 2018, and the consequential communication issued by the ICAI. The Court exonerated the petitioner from the disciplinary enquiry conducted by the Institute. Case Details Case Title: Shri. Naginchand Khincha Versus Board Of Discipline Institute Of Chartered Accountants Of India Case No.: Writ Petition No.19236 Of 2018 (Gm-Res) Date: 18th December, 2025 Counsel For Petitioner: Kiran S. Javali, Senior Advocate Counsel For Respondent: S. Sriranga, Senior Advocate Click Here To Read Order Read More: Ante-Dated Stock Invest Scam in Public Issue: Delhi HC Suspends CA for 1 Year

Membership Required