1

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11034 OF 2018 (Arising out of SLP (C) No. 19564/2017)

COUNCIL OF THE INSTITUTE OF CHARTERED  ACCOUNTANTS OF INDIA   Appellant(s)

                               VERSUS

SHRI GURVINDER SINGH & ANR.                   Respondent(s)

J U D G M E N T

   R.F. Nariman, J.

1) Leave granted.

2) The present appeal arises out of a complaint dated

16.03.2005 against Gurvinder Singh - Respondent No.1, who

is a Chartered Accountant, relating to sale of 100 shares

in  1999,  which  were  transferred  to  the  Chartered

Accountant’s own name.

3) What has been pleaded before us is that the matter

has ultimately been settled between the Complainant and

the Chartered Accountant, despite which the Disciplinary

Committee took up the case and ultimately found that the

conduct of the Respondent No.1-Chartered Accountant was

derogatory in nature and highly unbecoming and held him

guilty of ‘Other Misconduct’ under Section 22 read with

Section  21  of  the  Chartered  Accountants  Act,  1949

(hereinafter referred to as ‘the Act’).

2

4) The  Council  of  the  Institute  of  Chartered

Accountants of India, therefore, made its recommendation

to  the  High  Court  to  remove  the  aforesaid  Chartered

Accountant for a period of six months from the rolls.

The  High  Court,  by  the  impugned  judgment  dated

16.08.2016, after setting out Sections 21 and 22 of the

Act, arrived at the conclusion that:

“14. In the instant case the respondent was

acting  as  an  individual  in  his  dealings

with  the  complainant  which  were  purely

commercial.  While selling the shares held

by him the respondent was not acting as a

Chartered  Accountant.   He  was  not

discharging any function in relation to his

practice as a Chartered Accountant.  

15. The Reference is accordingly answered

by  declaring  the  law  as  above  and  not

inflicting  any  penalty  upon  the

respondent.”

5) We are afraid that the High Court has not correctly

appreciated Section 21(3) of the Chartered Accountants

Act, 1949 which states as follows:-

“(3) Where the Director (Discipline) is of the

opinion  that  a  member  is  guilty  of  any

professional or other misconduct mentioned in

the First Schedule, he shall place the matter

before the Board of Discipline and where the

3

Director (Discipline) is of the opinion that a

member is guilty of any professional or other

misconduct mentioned in the Second Schedule or

in  both  the  Schedules,  he  shall  place  the

matter before the Disciplinary Committee.”

Schedule-I Part-IV reads as follows:-

“Other Misconduct  in Relation  to Members  of

the Institute Generally

A  member  of  the  Institute,  whether  in

practice or not, shall be deemed to be guilty

of other misconduct, if he-

(1) is held guilty by any civil or criminal

court for an offence which is punishable with

imprisonment  for  a  term  not  exceeding  six

months;

(2)  in  the  opinion  of  the  Council,  brings

disrepute to the profession or the Institute

as  a  result  of  his  action  whether  or  not

related to his professional work.”

6) The Disciplinary Committee has, on facts, found the

Chartered Accountant guilty of a practice which was not

in  the  Chartered  Accountant’s  professional  capacity.

This, it was entitled to do under Schedule I Part-IV sub-

clause(2) if, in the opinion of the Council, such act

brings disrepute to the profession whether or not related

to his professional work.

4

7) This being the case, it is clear that the impugned

judgment is incorrect and must, therefore, be set aside.

We thus remand the matter to the High Court to be decided

afresh leaving all contentions open to both parties.

8) The appeal is disposed of accordingly.

  .......................... J.    (ROHINTON FALI NARIMAN)

  .......................... J.              (NAVIN SINHA)

New Delhi; November 16, 2018.