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December 2011

Disciplinary proceedings

By P. N. Shah, H. N. Motiwalla
Chartered Accountants
Reading Time 2 mins
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In the case of Naresh Chandra Agarwal v. ICAI, the practitioner CA had challenged the validity of Rule 9(3)(b) of the Chartered Accountants (Procedure of Investigation of Professional and other Misconduct and Conduct of Cases) Rules, 2007, on the ground that this Rule is ultra vires the provisions of section 21A(4) of the C.A. Act. It was submitted by the practitioner that u/s.21A(4), if the Director (Discipline), (Director) is of the opinion that there is no prima facie case against the member, and if the Board of Discipline (Board) does not agree with his view, it can only direct the Director to further investigate the matter. However, under Rule 9(3)(b) the Board has been authorised to proceed under Chapter IV of these Rules if the matter pertains to the First Schedule of the C.A. Act or refer the matter to the Disciplinary Committee to proceed further under Chapter V of the Rules if the matter pertains to Second Schedule or both the Schedules of the C.A. Act.

The Delhi High Court has, by its order dated 5-9-2011, after considering the relevant provisions of the C.A. Act and Rules and after considering the legislative intent, dismissed the petition. The High Court has held that Rule 9(3)(b) is not ultra vires the provisions of section 21A(4) of the C.A. Act (C.A. Journal for November, 2011 P. 692-694).

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