COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA NEW DELHI Vs. MANI S ABRAHAM OPPOSITE PARTY

JUDGEMENT

(1.) This is a reference under S.21 of the Chartered Accountants Act, 1949 (in short 'the Act'). Brief facts necessary for disposal of the same are as follows: Alleging misconduct on the part of M/s. Mani Abraham & Associates (hereinafter referred to as the 'Auditors') a complaint was made by the State Bank of Travancore (hereinafter referred to as the 'complainant'), before the Council of the Institute of Chartered Accountants of India, in short the Institute. Allegation was that there was disclosure of information acquired in the course of professional engagement, without consent of the complainant to third parties. In response to Institute's querry auditors replied that M. S. Abraham (hereinafter referred to as 'as respondent') was answerable. This according to the complainant was misconduct in terms of clause.(1) of Part I of the Second Schedule to the Act. It was alleged that the auditors were appointed as statutory branch auditors of Thiruvalla Branch of State Bank of Travancore for the years ending on 31.12.1985, and 31.12.1986. During the course of audit, the respondent had access to certain documents. Communications were made to several persons including the Prime Minister of India, Minister for Finance and Banking and Governor of Reserve Bank of India, Bombay about some alleged irregularities committed by the complainant during course of banking transactions. Basis of the complaint before the Prime Minister, Finance Minister and the Governor of Reserve Bank of India was the information which came to be known to the respondent during the course of audit. The Disciplinary Committee of the Institute examined the matter and reported that the respondent had contravened clause.(1) of Part I of the Second Schedule of the Act, and therefore was guilty of professional misconduct under clause.(1) of Part I of Second Schedule read with S.21 and 22 of the Act. The report of the Disciplinary Committee was placed before the Council of the Institute which concurred with the findings. At the same time, however, it was found that the respondent was in a disturbed state of mind and no mala fides were involved. In other words it concluded that no mens rea was involved. The Council recommended to this Court to initiate proceedings against the respondent, but in the peculiar circumstances of the case to file the proceeding.

(2.) Learned counsel appearing for the Institute submitted that after having come to a finding about professional misconduct, the course to be adopted is left to the discretion of the Court.

(3.) Learned counsel appearing for the respondent submitted that in view of the factual conclusions arrived at by the Disciplinary Committee as well as the council, this is a fit case where no further action should be taken against the respondent. It is submitted that due to disturbed state of mind, hardly any professional work is being done by him, and even a stigma of reprimand would be harsh.