What are the important rules of professional misconduct for chartered accountants in India?

When on receipt of information by, or of a complaint made to it, the Council is prima facie of opinion that any member of the Institute has been guilty of any professional or other misconduct, the council shall refer the case to Disciplinary Committee, and the Disciplinary Committee shall thereupon hold such inquiry and in such manner as may be prescribed, and shall report the result of its enquiry to the Council.

If on receipt of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be. But if the Council finds that the member of the Institute is guilty of any professional or other misconduct, it shall record a finding accordingly that he has been guilty of a professional misconduct specified in the First Schedule and shall afford thereafter an opportunity of being heard before the orders are passed against him in the case and may thereafter make any of the following orders, namely;

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(a) Reprimand the member;

(b) Remove the name of the member from the Register for such period, not exceeding five years, as the council thinks fit.

It the Council decides to remove the name of the member from the Register for a period exceeding five years or permanently, it shall not make any order referred to in clause (a) or clause (b), but shall forward the case to the High Court with its recommendations thereon.

If the misconduct in respect of which the Council has found any member of the Institute guilty is misconduct or other than any such misconduct as is referred to in sub-section (4), it shall forward the case to the High Court with its recommendations thereon.

On receipt of any case, the High Court shall fix a date for the hearing of the case and shall cause notice of the date so fixed to be given to the member of the Institute concerned, the Council and the Central Government, and shall afford such members, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders, namely:

(a) Direct that the proceedings be filed, or dismiss the complaint, as the case may be;

(b) Reprimand the member;

(c) Remove him from membership of the Institute either perma­nently or for such period as the High Court thinks fit.

(d) Refer the case to the Council for further inquiry and report.

Where it appears to the High Court that the transfer of any case

pending before it to another High Court will promote the ends of justice or tend to general convenience of the parties, it may so transfer the case, subject to such conditions, if any, as it thinks fit to impose, and the High Court to which such case is transferred shall deal with it as if the case had been forwarded to it by the Council.

If the cases of two or more members of the Institute have been forwarded by the Council to different High Courts, the Central Government shall, having regard to the ends of justice and the general convenience of the parties, determine which of the High Court to the exclusion of others shall hear the cases against all the members.

The Council and the Disciplinary Committee shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, in respect of the following matters, namely:

(a) Summoning and enforcing the attendance of any person and examining him on oath;

(b) The discovery and production of any document, and

(c) Receiving evidence on affidavit.

Any member of the Institute (under section 22-A) aggrieved by any order of the Council imposing on him any of the penalties referred to in sub-section (4) of section 21, may, within thirty days of the date on which the order is communicated to him, prefer an appeal to the High Court.

The High Court may entertain any such appeal even after the expiry of the staid period, if it is satisfied that the member was prevented by sufficient cause from filing the appeal in time.

The High court may revise any order made by the Council and May-

(b) Impose penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order;

(c) remit the case to the council for such further inquiry as the High Court considers proper in the circumstances of the case; or

(d) Pass such other order as the High Court thinks fit.

It is provided that no order of the Council shall be modified or set aside unless the Council has been given an opportunity of being heard and no order imposing or enhancing a penalty shall be passed unless the person concerned has also been given an opportunity of being heard.

Removal of a member’s name from the Register:

We have discussed above the procedure of enquiry into the misconduct of members as laid down in section 21 of the Chartered Accountants Act 1949. Section 22 of the said Act lays down the definition of the work.

“Professional misconduct” and besides this, the Act contains two Schedules – the first Schedule deals with misconduct by a member whose case can be decided by the Council.

This Schedule has 3 parts – I, II and III. In the Second Schedule there are certain important rules of conduct and if there is a breach of rules by a member, it requires a decision by the High Court.

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