Chartered Accountancy A Noble Profession, Conviction Prior To Qualification Is A Disability U/s. 8 Of CA Act - Delhi High Court
A single-judge bench of the Delhi High Court comprising of Justice Pratibha M Singh has observed that offences committed prior to the person qualifying to become a Chartered Accountant would be a disability mentioned under Section 8 of the Chartered Accountants Act, 1949. Moreover, the Court observed that there was a clear need for the ICAI to create a framework wherein there would be a proper disclosure by candidates who would apply to become Chartered Accountants, at the inception itself
In this case, the Respondent had issued a notice to show cause the Petitioner as to why action under Section 8 of the Chartered Accountants Act, 1949 should not be taken against the Petitioner in view of his conviction by the Delhi High Court under Sections 354 and 506-II of the Indian Penal Code 1860. The Petitioner after his enrolment as a CA was convicted and sentenced. He had undergone imprisonment until suspension, for approximately seven months. Thereafter, he had continued to render his services as a CA. The Petitioner had filed the Writ Petition to quash the said notice, as also the proceedings against him before the Delhi High Court.
The Petitioner appeared in person while Senior Advocate Mr Ramji Srinivasan appeared for the Respondent i.e. the Institute of Chartered Accountants in India, before the High Court.
The primary issue in this case was –
- Whether the notification issued by the Respondent ought to have been quashed?
It was contended by the Petitioner that as per Section 8(v) of the Chartered Accountants, Act, 1949, 'moral turpitude' would only include such offences which are committed in professional capacity or have a nexus with the profession. Moreover, it was claimed that since the incident qua which the Petitioner was convicted took place, much prior to him qualifying and being enrolled as a CA, the provisions of Section 8(v) of the Act would not apply to him. Additionally, it was stated that the Ministry of Corporate Affairs had clearly opined that the Petitioner's case did not fall within Section 8(v) of the Act, as the incident was not professional misconduct, and in fact took place prior to the Petitioner acquiring his professional qualification. Additionally, it was argued that the disciplinary proceedings were ultra vires as they were violative of Rule 7(3) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, read with Section 21 of the Act since the principles of natural justice were not followed. Hence, it was submitted that the notification issued by the Respondent ought to be quashed.
The Respondents, on the other hand, claimed that Section 8(v) of the Act would cover an offence 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". It was thus contended that at the time when the Petitioner's name was entered in the register itself, the Petitioner was guilty of committing an offence of 'moral turpitude,' which became very clear when the conviction took place and was also upheld by the Court. Additionally, it was stated that the disability under Section 8(v) of the Act would not be applicable. He argued that the commission of offences in professional capacity cannot be linked with offences involving moral turpitude, and both of these are separate categories. It was further submitted the profession of Chartered Accountancy required high standards of integrity to be maintained, and the provision of Section 8(v), thus, ought to be interpreted in the manner that it is crafted, i.e., to include any person convicted on any offence involving moral turpitude.
The Court held that there were two categories of misconduct contemplated under the Act – 'professional misconduct' and 'other misconduct'. These two types of misconduct were covered under Section 8 (vi) read with Section 22 and the Schedules to the Act. Moreover, the Court asserted that the conviction for an offence involving 'moral turpitude' punishable with imprisonment is a third and higher class of offence under Section 8(v) of the Act and is stipulated as a separate class of disabilities which bars a person's name from being entered or borne in/continued in the register of the ICAI.
Additionally, the Court opined that in the case of an offence involving 'moral turpitude', for which no pardon has been granted, by a strict interpretation of the Act, the matter need not even be referred to the Board of Discipline or to the Disciplinary Committee for an inquiry. Thus, in such cases dealing with the conviction for offences involving 'moral turpitude' covered under Section 8(v) the same would straight away fall within the jurisdiction of the ICAI Council, and even an inquiry, as contemplated in Section 21, would not be strictly required. However, for the purposes of complying with the principles of natural justice and fairness, a hearing to the person concerned could be provided.
It was further observed by the Court that if a person has been convicted for an offence involving 'moral turpitude', such a person's name could not be entered into the register or cannot continue in the register, and had to be removed from the register, unless a pardon in respect thereof is granted. The Court additionally held that an offence or a conviction involving 'moral turpitude', the power will be vested with the Central Government would be contrary to the spirit of the statute as also contrary to the settled judicial precedents, to the effect that `moral turpitude' would be a complete disqualification. According to the Court, the only condition upon which a person convicted could be entered into or could continue on the register of ICAI, would be if the person had been granted a pardon.
The Court asserted,"The use of the expression "entered in" contained in Section 8, also shows that offences committed prior to the person qualifying to become a CA are also within the purview of the disabilities mentioned under Section 8 of the Act. The only condition upon which a person convicted can be entered into or can continue on the register of ICAI, would be if the person has been granted a pardon, or if the Central Government has removed the disability, as applicable, on an application filed by the said person." Hence, in this case, having been convicted for offences under Section 354 and 506-II of IPC, the disability under Section 8(v) of the Act was attracted.
Additionally, the Court opined that with respect to a person being barred forever from practicing as Chartered Accountant. "There are certain professions and services which are considered to be those that require a very high standard of integrity, some of which are also considered as noble professions. Such professions, as has been held by the Supreme Court in various decisions discussed above, include Doctors, Lawyers and Chartered Accountants. A higher standard is also expected in case of appointments to public offices."
Additionally, the Court directed that there was a clear need for the ICAI to create a framework wherein there would be a proper disclosure by candidates who would apply to become Chartered Accountants, at the inception itself. The Court observed that there was also a need for a continuing disclosure, maybe 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. 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.
Hence, the Writ Petition seeking quashing of the show cause notice and the proceedings emanating therefrom were accordingly dismissed by the Delhi High Court.