Facts of the Case

The complainant, Dr. Sudha Thapar, partner of M/s Gomti Parshad Thapar Hospital, Moga, Punjab, filed a complaint against the respondent, CA Ved Vrat Bhalla, alleging multiple acts of misconduct. The respondent had been associated with the hospital since FY 2007–08 as its Chartered Accountant and was also a cousin of the complainant’s husband, who was a co-partner in the hospital.

Following the death of the complainant’s husband, the complainant alleged that the respondent misused his professional position and family proximity. Seven allegations were levelled, including criminal intimidation, raising false and exorbitant professional bills, non-return of property documents, breach of confidentiality, forgery of affidavit, refusal to issue No Objection Certificate to the incoming auditor, and below-par professional work.

Issues Involved

Whether the respondent Chartered Accountant was guilty of professional misconduct under Clause (8) and Clause (9) of Part I of the First Schedule to the Chartered Accountants Act, 1949 in relation to allegations of raising false or exorbitant bills and refusal to issue No Objection Certificate to the incoming auditor.

Petitioner’s Arguments

The complainant alleged that despite all professional dues being cleared, the respondent raised exorbitant invoices amounting to ₹35 lakhs, ₹11 lakhs, ₹13.57 lakhs and ₹6.05 lakhs along with GST, after the complainant refused to comply with alleged threats. It was further alleged that the respondent deliberately delayed issuance of NOC to the incoming auditor, thereby obstructing timely filing of audited returns of the hospital. The complainant also raised concerns regarding payment of GST charged in the invoices.

Respondent’s Arguments

The respondent contested the allegations and submitted that the invoices raised were not confined to audit fees but also included fees for arbitration and other professional services rendered over a long period, which were billed subsequently. It was argued that the Director (Discipline) failed to appreciate the distinction between audit services and other professional engagements such as arbitration, which carried higher customary fees.

With respect to issuance of NOC, the respondent submitted that objections were raised bona fide on account of pending professional fees, which is permissible under the Chartered Accountants Act and the Code of Ethics. It was further submitted that the respondent promptly replied to the incoming auditor and even sought guidance from the Ethical Standards Board of ICAI, demonstrating due professional diligence.

Court Order / Findings

The Board of Discipline noted that out of the seven allegations, five were already examined at the prima facie stage and the respondent was held not guilty in respect thereof, with which the Board concurred. The proceedings were therefore confined only to Allegation No. 2 relating to raising of false or exorbitant bills and Allegation No. 6 relating to refusal to issue NOC.

In respect of the allegation concerning refusal to issue NOC, the Board observed that the dispute primarily lay between the respondent and the incoming Chartered Accountant and did not fall within the scope of a complaint by the client under professional misconduct provisions.

Regarding the allegation of raising exorbitant bills, the Board observed that the timing and quantum of invoices raised for professional services spanning multiple years were matters of contractual understanding between the respondent and the complainant or her deceased husband, and did not, by themselves, constitute professional misconduct. The Board also took note of the submission that the invoices in question had been withdrawn and no outstanding dues remained payable.

Important Clarification

The Board clarified that disputes relating to quantum of professional fees or billing of services rendered over prior years are essentially civil or contractual in nature. Unless accompanied by clear evidence of unethical conduct or statutory violation, such disputes do not fall within the ambit of professional misconduct under the Chartered Accountants Act, 1949.

Final Outcome

The Board of Discipline, ICAI, held that CA Ved Vrat Bhalla was NOT GUILTY of Professional Misconduct under Clause (8) and Clause (9) of Part I of the First Schedule to the Chartered Accountants Act, 1949. 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 dated 25.01.2025.

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