KISHORILAL DUTTA Vs. P K MUKHERJEE

JUDGEMENT

(1.) This is a Reference under Section 21 of the Chartered Accountants Act. The complainant is one Kishorilal Dutta who is described as the President of the Ananda Bazar Patrika, Hindusthan Standard and Pesh Employees Union. The complaint is against P.K. Mukherjee, a Chartered Accountant. He was appointed an auditor to check the Provident Fund Accounts for the years 1953 and 1954. The appointment was made by the Director of Ananda Bazar Patrika Ltd. The appointment letters are Exts. 17 and 18 and are dated respectively 31st March 1954 and 26th April 1955. Within a month of his appointment from 26th April, 1955, the auditor by a letter dated 25lh May 1955 addressed to the Ananda Bazar Patrika Ltd. informed the company.

(2.) Although the auditor signed the statements as early as the 14th May 1954 and 30th June 1955, nothing seemed to happen for a long time until more than a year and a half when on the 1st November 1957 the present complaint was signed by Kishorilal Dutta, President of the Union. This delay is significant. In the mean time, the State took over the Provident Fund under the Employees Provident Fund Act on the 1st January 1957. What was the occasion and the need for making thereafter on the 1st November 1957 a complaint, such as the present, has remained inexplicable. Before proceeding to discuss the motive for such complaint, it will be appropriate to state at this stage the substance of the complaint against the auditor.

(3.) The complaint is that the auditor failed to disclose material facts known to him which were not disclosed in the financial statement but disclosure of which was necessary to make the financial statement not misleading. The failure particularised by the complaint is (1) that the fund was vested in a Board of Trustees and was irrevocable save with the consent of all the beneficiaries under Rule 7 of the Provident Fund Rules, but was in fact revoked without such consent of all the beneficiaries. It is alleged that the auditor did not bring to the notice of the beneficiaries, nor was there any mention of it in the financial statement. This is the first non-disclosure which the auditor is alleged in the complaint to be guilty of; (2) that the Government securities to the extent of Rs. 2,06,937-8-0 were encashed without any resolution of the Board of Trustees and in contravention of Rule 11 of the Fund. It is also alleged that this fact was also not disclosed in the financial statement of the year which the auditor signed; (3) that the Joan granted to Ananda Bazar Patrika Private Ltd. was in contravention of Rule 12 of the Provident Fund Rules and that the auditor failed to disclose that fact in that financial statement; and (4) that the auditor had failed to invite attention to the material fact that huge amount was shown as cash in hand in the financial statement for the years 1953 and 1954 in contravention of Rule 11 of the Fund. This in short is the complaint made about two years after the auditor had signed the statement.