INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA versus M. S. RATHI

Citation: [2017] 6 S.C.R. 353 · Decided: 11-07-2017 · Supreme Court of India · Bench: R.K. AGRAWAL · Disposal: Dismissed

Judgment (excerpt)

[2017] 6 S.C.R. 353 
INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 
A 
v. 
M. S. RATHI 
(Civil Appeal No. 10326 of 2011) 
JULY 11, 2017 
B 
[R.K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ.] 
Chartered Accountants Act, 1949 - ss.21 and 22; Second 
Schedule, Part I, Clauses (7) and (8) - Professional misconduct -
Allegation of manipulation of accounts and issuance of incorrect 
certificates - Disciplinary Authority found respondent guilty of C 
professional misconduct - Matter placed before Council - Council 
agreed with finding of Disciplinary Authority and recommended to 
High Court reprimand of respondent - High Court set aside the 
order of Disciplinary Authority as well as of Council - On appeal, 
held: Neither the complainant nor the Disciplinary Authority chose 
D 
to call for books of accounts available and, therefore, no adverse 
inference could be drawn against the respondent - High Court 
rightly set aside the order of Disciplinary Authority. 
Dismissing the appeal, the Court 
HELD: 
The High Court considered the statements made 
E 
on behalf of the Respondent to hold that there was no material 
on record to establish that the units had paid an amount more 
than what was mentioned in the CIF value or purchase vouchers 
and merely because the sellers from whom the units had 
purchased the goods had imported the same, it does not mean 
that the units in question had paid the custom duty. Thus, no 
F 
adverse inference can be drawn against the Respondent on this 
ground. So far as non-maintenance of books of accounts by the· 
units is concerned, the High Court held that it is also without any 
substance as it has found that the only witness examined before 
the Disciplinary Committee had stated that the books and the 
G 
record were available at Bombay. Neither the complainant nor 
the Disciplinary Committee chose to call for those books of 
accounts and, therefore, no adverse inference can be drawn 
against the Respondent on this ground. [Paras 6, 7, 8) 
[355-B-D) 
353 
H 
354 
SUPREME COURT REPORTS 
[2017] 6 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. I 0326 
B 
c 
of2011. 
From the Judgment and Order dated 12.08.2004 of the High 
Court of Judicature at Bombay in Chartered Accountant Reference No. 
5 of2000. 
K. K. Mohan, Adv. for the Appellant. 
The Judgment of the Court was delivered by 
R.K. AGRAWAL, J. I. The present appeal arises out of the 
order dated 12.08.2004 passed by the Division Bench of the High Court 
of Judicature at Bombay in Chartered Accountants Reference No.5/ 
. 2000. 
2. Disciplinary action was taken against the Respondent herein 
for issuing certificates for consumption of raw materials showing the 
value of imported raw material as CIF value to the units without seeing 
D 
the records since imported value of the raw materials should have been 
shown as value of the raw materials and not the CIF value. Further, the 
units did not maintain any record for past production, still the certificates 
were issued which shows that the figures were manipulated and the 
certificates issued were not correct. 
E 
3. After taking into consideration the reply filed and the 
submissions made by the Respondent herein, the Disciplinary Committee 
vide order dated J2'h January, 1995 held that the Respondent while issuing 
the certificates to the units had failed to obtain sufficient information to 
warrant the expression of his opinion and found him guilty of professional 
misconduct within the meaning of Clauses (7) and (8) of Part I of the 
F 
Second Schedule to the Chartered Accountants Act, 1949 read with 
Sections 21 and 22 of the said Act. The matter was thereafter placed 
before the Council of the Institute of Chartered Accountants of India, 
hereinafter referred to as the 'Council'. The Council, after considering 
the submission of the Respondent herein, vi de order dated 17'h January, 
G 
1998 agreed with the findings of Disciplinary Committee and decided to 
recommend to the High Court that the Respondent be reprimanded. 
4. We have heard learned counsel for the Appellant. Nobody 
has appeared on behalf of the Respondent despite service of notice. 
5. Learned counsel for the Appellant submitted that the High 
H 
Court had committed an error oflaw in setting aside the findings of fact 
INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA v. 
M.S. RATHI [R.K. AGRAWAL, J.] 
recorded by the Disciplinary Committee as also the Council which referred 
the matter to the High Court under the statutory prov

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