Frame Policy To Ensure Periodic Disclosure Of Criminal Cases By CAs: Delhi HC Tells ICAI

The Delhi High Court on Friday refused to interfere with the proceedings initiated by the Institute of Chartered Accountants of India (ICAI) against a qualified Chartered Accountant (CA) after his conviction in a criminal case and asked the Institute to frame a policy to ensure that its members periodically disclose criminal cases against them. Justice Prathiba M Singh observed that the profession requires a very high standard of integrity and said that there was a clear need for ICAI to create a framework to ensure proper disclosures with respect to convictions and pending cases by members at the inception as well as on a periodic basis. 

"The ICAI shall accordingly frame a policy and a mechanism, if not already in existence, for disclosure by members both at the inception as also on a periodic basis thereafter, of any criminal cases or convictions so that the spirit and intent of the statute is given effect to and the ICAI is not in the dark about the same until it is notified by some information or complaint," the court stated.

"There is a clear need to modify the Manual (for members) and for the ICAI to bring in a framework which includes disclosure requirements for every candidate who seeks to become a Chartered Accountant, right at the inception itself. There should also be a requirement of disclosure on a periodic basis, annually for members to inform the ICAI if there are any criminal cases/conviction etc., against them," the court observed. 

In the present case, the petitioner CA challenged the show cause notice was issued to him by the ICAI in 2018 under Section 8 of the Chartered Accountants Act, 1949. The notice asked why action should not be taken against the petitioner in view of his conviction by the Delhi High Court under Sections 354 (Assault or criminal force to woman with intent to outrage her modesty) and 506 (Punishment for criminal intimidation) of the Indian Penal Code 1860. The petitioner was convicted after his enrollment as a CA and he underwent imprisonment for approximately seven months until its suspension. Thereafter, the petitioner continued to render his services as a CA, the court said in the order. 

The court noted that after the petitioner was convicted for offences —which are grave and serious in nature, the disability Section 8(v) of the Act, with respect to having his name entered in or borne on the ICAI register, was "clearly attracted". The fact that the conviction of the petitioner did not come to the attention of the ICAI for more than 10 years would not, in any manner, bar ICAI from taking action, it added.

"There are certain professions and services which are considered to be those that require a very high standard of integrity, some of which are also considered as noble professions. Such professions, as has been held by the Supreme Court in various decisions discussed above, include Doctors, Lawyers and Chartered Accountants. A higher standard is also expected in case of appointments to public offices,” the court said.

“It is, accordingly, held that in the case of offences involving 'moral turpitude' under Section 8(v) and persons who may have been convicted of such offences and sentenced for imprisonment, the disability would be squarely attracted,” ruled the court as the petition was dismissed

With PTI Inputs