(This is one more example of alleged negligence or lack of due diligence)
Shrikrishna (S) — Yes, My dear Partha, what happened to those digital signatures misplaced in your office?
Arjun (A) — Oh Lord, you are Great and kind hearted. I realised that you were testing my devotion towards you, my Lord. I had very anxious moments; but thanks to your mercy, those small pen-drives were located in some working files! God saved me!
S — But then, did you take precautions that we discussed?
A — Of course, yes. Immediately, I obtained necessary letters from all clients who left their tokens with us. I returned most of them to the respective clients. I don’t want any more headache!
S — Good. But then, why are you again looking so tense?
A — Hey Bhagwan! It’s another true story that has frightened me.
S — What is that?
A — My friend is a company secretary. Earlier, he was in a corporate job; but now on his own. He is in deep trouble!
S — Why? What happened to him?
A — He had a client. A small private limited company. The promoters-directors were only a couple. Husband & wife.
S — It is very common. I have seen it in many CAs. But they are not aware that this may be a serious misconduct in terms of clause (11) of First Schedule.
A — Yes. We had discussed it once. But here, they were lay-persons; not CAs or CS’s. Otherwise, I know that it would amount to engaging in other business without seeking permission from the Council.
S — Ok. Then what next?
A — They inducted one more person as a director who promised them to bring some business from abroad.
S — Good. Then?
A — He remained a director for a couple of years; but nothing materialised as promised by him.
S — Then there must be unpleasantness.
A — Yes. The company spent a sizeable amount on exploring the potentials as advised by him. He was drawing a remuneration too!
S — Wasteful!
A — The company had engaged a company secretary as an adviser. He was not involved in the company’s activities on a day-to-day basis. One fine morning, the couple informed him that the third director had tendered his resignation.
S — As expected!
A — Yes. And the CS was asked to complete the formalities of ROC. He advised them that a board meeting should be held. Now that the only continuing directors were husband and wife – staying together (!) – he showed the meeting of the same date and uploaded form No.32 – recording the resignation of the third director.
S — Very normal. But in the so called Board meeting, was that third director invited?
A — No. According to the CS, there was no need. He had resigned and it was pointless calling him. It was a formality that the other directors accept his resignation. Relations were not smooth; but the reality was obvious that he did not contribute anything to the business.
S — You mean that the resignation was a natural consequence of the situation.
A — Exactly. But now that third director has turned around and says that he had not resigned! The signature on the letter is not his! He alleges that it was forged.
S — Oh! The CS had obviously not attempted to verify the signature.
A — True. In practice, we have to proceed in good faith. Everytime we cannot afford to be suspicious. We never consider it necessary to verify signatures of our clients – like a banker does.
S — So now, it is a lesson! But tell me, was the signature at least similar to that in the company’s records?
A — That’s the unfortunate part. There is a variation. But all this is revealed now. At that point of time, when a respectable business-couple produces a letter, and asks to complete the formalities, should the company secretary disbelieve them?
S — True. But this is ‘kaliyug’! Good faith has no place in today’s era. And, from a professional, expectations are more. It is perhaps the ‘professional scepticism’ that gives credibility to a professional’s work.
A — Agreed. Our CAs are also uploading company law forms. This is an eye-opener to all of us.
