CONTROLLER OF INSURANCE Vs. H C DAS

JUDGEMENT

(1.) This is a Reference under Section 21 of the Chartered Accountants Act, made by the Institute of Chartered Accountants against an Accountant named Mr. H. C. Das who is a member of the firm of Accountants carrying on profession under the name and style of H. C. Das & Co. That firm acted as auditors of an Insurance Company, called the Bhagya Lakshmi Insurance Company from 1936 up to 1951. The enquiry against the Accountant concerns the audit made by him of the accounts of the Insurance Company on behalf of his firm and the statutory certificates he granted in that connection.

(2.) It appears that the Central Government came to form the opinion that the administration of the Bhagya Lakshmi Insurance Company was not being carried out in a satisfactory manner and consequently by an order made on the 27th of December, 1952, under Section 52A of the Insurance Act, they appointed Mr. S. C. Roy, a person well known in the insurance world, to act as Administrator of the company. On assuming office, Mr. Roy had certain accounts of the company audited by a different firm of Auditors, namely, Mr. Mukherjee & Co., who reported several irregularities. Mr. Roy brought those irregularities to the notice of the Central Government by a letter dated the 30th of September, 1953, which he addressed to the Assistant Controller of Insurance. The report of Messrs. M. Mukherjee & Co. was annexed to Mr. Roy's letter. On receipt of that letter, the Government decided that a complaint should be made against the Auditors to the Institute of Chartered Accountants and they issued the necessary certificate on the 2nd of August, 1954. The actual complaint, however, was not made till the 12th August next.

(3.) The Controller of Insurance incorporated certain of the allegations made by the new Auditors in his complaint and asked for an enquiry in regard to the alleged irregularities. As the com-plaint was by the Central Government, no preliminary examination of the facts by the Council of the Institute was either possible or permissible. Accordingly, on receipt of the complaint, the Council referred it under Section 21 of the Act to the Disciplinary Committee for the purposes of an enquiry. Prior thereto, the Council had asked Messrs. H. C. Das & Co. to disclose the name of the particular partner of the firm who had been actually concerned in the audit of the Insurance Company. The firm had disclosed the name of Mr. H. C. Das.