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Institute of Chartered Accountants of India v. M.S. Rathi

Civil Appeal · 2017 INSC 602Decided 11 Jul 2017
Civil Appeal No. 10326 of 2011
Justice R.K. Agrawal · Justice Abhay Manohar Sapre

Background

Disciplinary proceedings were initiated against a Chartered Accountant for issuing certificates of raw-material consumption that allegedly misstated values and were issued without adequate verification of underlying records. The Institute's Disciplinary Committee and Council found him guilty of professional misconduct and recommended to the Bombay High Court that he be reprimanded, but the High Court set aside those findings, holding there was no material to show the units had actually overpaid or that non-maintenance of account books was properly established against him.

Decision Breakdown

The Supreme Court examined the High Court's reasoning and agreed with it in full, finding no evidence that the certifying accountant's underlying units had paid more than the stated CIF (cost, insurance, freight) value, and that neither the complainant nor the Disciplinary Committee had actually called for the relevant account books before drawing an adverse inference against the accountant. Finding no good ground to interfere with the High Court's judgment, the Supreme Court dismissed the Institute's appeal, with each side bearing its own costs.

Lesson Learnt

Professional misconduct findings against a Chartered Accountant must rest on concrete evidence of wrongdoing, not on inferences drawn without the disciplinary body actually examining the relevant records, which it is required to call for before penalizing a professional.

Official source (sci.gov.in)View Judgment (PDF)

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