Facts of the Case

The proceedings arose pursuant to press releases issued by the Central Bureau of Investigation in April 2011 and news reports published in various editions of The Times of India, alleging involvement of the respondent, CA Gautam Doshi, Group President of the Reliance ADA Group and Director/Board Member of Reliance Telecom Limited, in the structuring and funding of M/s Swan Telecom Private Limited and M/s Tiger Traders Private Limited in connection with grant of Unified Access Service Licences in the 2G Spectrum matter.

It was alleged that the respondent played an active role in structuring shareholding and funding arrangements to conceal association with Reliance ADA Group and thereby enable Swan Telecom to appear eligible for grant of licences, in violation of Clause 8 of the UASL Guidelines. These allegations were also part of the charge sheet filed by the CBI before the Special CBI Court in the 2G Spectrum case.

Issues Involved

Whether the respondent Chartered Accountant was guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 for allegedly playing an active role in structuring and funding companies to circumvent telecom licensing guidelines, as alleged in the 2G Spectrum case.

Petitioner’s Allegations

The allegations, based on CBI press releases and charge sheet, asserted that the respondent, along with other executives of the Reliance ADA Group, was involved in structuring the ownership and funding of Swan Telecom and Tiger Traders in such a manner that their association with Reliance would not be detected by the Department of Telecommunications. It was alleged that the respondent took key commercial decisions relating to fund transfers, investments and restructuring with the intent to secure GSM licences indirectly.

Respondent’s Arguments

The respondent denied all allegations and submitted that he had no role or association with Swan Telecom or Tiger Traders in relation to grant of licences. It was submitted that he neither held shares nor acted as a Director in Swan Telecom and that the CBI charge sheet itself acknowledged that Reliance Telecom’s equity investment in Swan Telecom was within the permissible limit of less than 10%.

The respondent further contended that the acts alleged were not acts performed in the capacity of a Chartered Accountant but were executive or commercial decisions, and that in any event, the Special CBI Court had examined these allegations in detail and acquitted all accused, including the respondent. Reliance was placed on the detailed judgment dated 21.12.2017 passed by the Special CBI Court, which held that Swan Telecom was owned and controlled by the DB Group on the date of application and that there was no violation of Clause 8 of the UASL Guidelines.

Court Order / Findings

The Board of Discipline examined the submissions of the respondent, the charge sheet, and the detailed judgment of the Special CBI Court in CC No. 01/11 dated 21.12.2017. The Board noted that the Trial Court categorically held that Swan Telecom stood transferred to the DB Group by 03.03.2007 and that Reliance ADA Group held only a minority shareholding of 9.9%, rendering the company fully eligible to apply for UAS licences.

The Board further noted that the Trial Court held that funding of Swan Telecom through preference shares and debt instruments was within permissible limits and that Clause 8 of the UASL Guidelines restricted only equity investment beyond 10%, not other forms of funding. The Trial Court also held that the prosecution’s case was based on misreading, selective reading and non-reading of official records, and that there was no evidence of conspiracy, illegality or criminal intent.

Relying on these findings, the Board observed that the respondent had substantially proved his defence and that there was no evidence to establish professional or other misconduct under the Chartered Accountants Act, 1949.

Important Clarification

The Board clarified that disciplinary proceedings cannot be sustained merely on the basis of allegations or media reports when the competent criminal court, after detailed examination of evidence, has acquitted the respondent and found no illegality. Acts performed in executive or commercial capacity, without evidence of unethical conduct as a Chartered Accountant, do not constitute professional or other misconduct.

Final Outcome

The Board of Discipline, ICAI, held that CA Gautam Doshi was NOT GUILTY of Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22. Accordingly, the Board ordered closure of the case under Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, by order pronounced on 28.01.2025.

Source Link - https://www.mytaxexpert.co.in/uploads/1768894387_CAGautamDoshiBoardofDisciplineICAI.pdf

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