Disciplinary action against Chartered Accountant & the Limitation provided under Rule 12 of the CA (PIPAMAO) Rules, 2007

There was an interesting issue before the Delhi High Court in the case of Ashish Agarwal Vs The Institute of Chartered Accountants of India involving the limitation in the disciplinary proceeding against a practising CA. The issue was whether complaint made against a Chartered accountant in respect of an alleged misconduct committed in audit of accounts for the year 2003-04 to 2007-08 is barred by limitation as per Rule 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 which prescribes a time limit on entertaining complaint or information.

The matter was related to the complaint made by the Serious Fraud Investigation office (SFIO) on 15-4-2021 in respect of audit of accounts of an entity conducted for the year 2003-04 to 2007-08 and alleged irregularities committed.

The petitioner pleaded that the complaint was barred by limitation as per the aforesaid rules which prescribed 7 years as the time limit. Moreover, as per the relevant audit standards as well as Income-tax Act,1961 the petitioner was not required to maintain the audit records for the relevant years and was thus unable to defend itself and hence the complaint was not maintainable.

The ICAI contended that the writ petition was premature as the disciplinary committee would take a view in accordance with the rules including regarding the objections raised by the petitioner.

The Court while rejecting the contention of the petitioner that the Disciplinary committee was obliged to reject all complaints the moment it found that it was related to an issue which was 7 years old but at the same time the court noted that the Disciplinary committee having summarily rejected the preliminary objections of the petitioner was not correct and therefore directed the DC to consider the objections afresh by passing a speaking order in accordance with the law.

This judgement will be helpful to all the professionals who are doing the attest functions. The copy of the same is as under:

Disciplinary action against Chartered Accountant & the Limitation provided under Rule 12 of the CA (PIPAMAO) Rules, 2007