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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

     CIVIL APPEAL NO.  10326/2011

INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA    Appellant                                 VERSUS

M.S.RATHI                                    Respondent

J U D G M E N T

 R.K. AGRAWAL, J. 1. 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  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

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correct. 3. After  taking  into  consideration  the  reply  filed and the submissions made by the Respondent herein, the Disciplinary Committee vide order dated 12th 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 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, vide order dated 17th January, 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 Court had committed an error of law in setting aside the findings of fact recorded by the Disciplinary Committee as also the Council which referred the matter

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to the High Court under the statutory provisions for the Respondent to be reprimanded.  6. From a perusal of the judgment and order passed by the  High  Court,  we  find  that  the  High  Court  has considered  the  statements  made  on  behalf  of  the Respondent to hold that there is 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 adverse inference can be drawn against the Respondent on this ground. 7. So far as non-maintenance of books of accounts by the units is concerned, the High Court has held that it is also without any substance as it has found that the only witness examined before the Disciplinary Committee Mr. Phillips, proprietor of M/s. Progressive Storage Systems had stated that the books and the record are available at Bombay. 8. Neither  the  complainant  nor  the  Disciplinary Committee  have  chosen  to  call  for  those  books  of accounts and, therefore, no adverse inference can be drawn against the Respondent on this ground. 9. We  are  in  full  agreement  with  the  findings  and observations made by the High Court. We do not find any

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good ground to interfere with the order passed by the High Court. 10. In view of the foregoing discussions the Appeal fails and is hereby dismissed. 11. However, the parties shall bear their own costs.

…....................J. [R.K. AGRAWAL]

......................J. [ABHAY MANOHAR SAPRE]

JULY 11, 2017; NEW DELHI.