CAs are in a tizzy over SC order on misconduct outside professional sphere

Chartered accountants are in a tizzy following a recent Supreme Court order that upheld the right of the regulator to haul them up for misconduct, not related to professional work. This makes any act by a chartered accountant that brings disrepute to the profession, whether or not in the professional domain, open to disciplinary scrutiny and action. While the SC order strengthens the hands of the Institute of Chartered Accountants of India (ICAI), the body that regulates the profession, in cracking the whip against such misconduct, many in the CA fraternity feel the same benchmark should apply to other professions too.

The apex court decision came in a case related to the recommendation of the ICAI disciplinary committee for removing the name of a chartered accountant from its rolls for “other misconduct” under Section 21 and  Section 22 of the Chartered Accountants Act, 1949.

Amarjit Chopra, a past president of the ICAI, said this was not the first time that a member had been subjected to disciplinary action for activities not related to the profession. “There have been many cases in the past where members, who acted in a manner unbecoming of a chartered accountant, were subjected to disciplinary proceedings,” said Chopra. In some cases, licenses of members have been revoked for life for committing undesirable acts that were outside the professional domain, he added.

In one such case, the institute had hauled up a member for writing a book on how to evade income tax. There were instances where disciplinary action was taken against professionals indulging in domestic violence. But such instances are fewer in number, concede many in the profession.

However, the recent order by the apex court may lead to more such disciplinary action if any act by a chartered accountant is found to bring disrepute to the profession.  “The order will help bring more credibility to the profession,” noted Nilesh S Vikamsey, another ex-president of the Institute. According to Girish Vanvari, founder, Transactions Square, an advisory services firm, being a professional means one needs to carry themselves with responsibility. “It is important that you inspire confidence in the ecosystem/ community at large as many people depend and rely on your judgement and advice,” he said.

Rakesh Nangia, managing partner, Nangia & Co, was of the view that ethical behaviour lies at the foundation of the profession of chartered accountancy. “The profession inculcates responsibility to ensure the highest level of performance since it involves stakeholders such as governments, employers, investors, clients, the business and financial community who rely on the objectivity and integrity of a chartered accountant for systematic functioning of commerce,” he said. 

Many in the profession said any action taken by the regulator in similar such cases should not be one-off and far between. “The regulator needs to take appropriate checks and measures to establish legitimate behaviour by each member,” added another practising chartered accountant.

Other professions, especially those relating to medical and advocates, too, should exercise similar benchmarks to inspire confidence in the public at large, felt several members of the chartered accountant fraternity. “Idealistically, these principles should apply to all professionals, but I am doubtful whether any other professional body would be as stringent in enforcing these norms,” noted Chopra.

Where did the SC order spring from

  • The case filed by the ICAI against Gurvinder Singh, a chartered accountant, relates to the sale of 100 shares in 1999 that were transferred to the CA’s own name
  • The ICAI disciplinary committee found the action of the CA derogatory in nature and held him guilty of ‘Other Misconduct’ under Section 21 and  Section 22 of the Chartered Accountants Act, 1949
  • The council recommended removing the name of the chartered accountant from its rolls for a period of six months
  • However, the high court in a 2016 order said the dealing was purely commercial in nature and did not relate to discharging any function as a chartered accountant
  • The SC, following an appeal by the ICAI, upheld its right to take action for acts that bring disrepute to the profession, whether or not related to professional work

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