Facts of the Case

The Respondent firm was appointed as the Statutory Auditor of M/s Lo Faro Shop Pvt. Ltd. for Financial Years 2020–21, 2021–22 and 2022–23 vide appointment letter dated 28 August 2021. Prior to this appointment, the statutory audit of the company was conducted by M/s Rakesh Doshi & Associates.

The complainant alleged that upon accepting the audit assignment, the Respondent failed to obtain the requisite No Objection Certificate from the previous auditor as mandated under the Chartered Accountants Act, 1949. It was further alleged that the Respondent exerted pressure on the complainant to procure the NOC, wrongfully retained company documents, failed to tender a formal resignation, and did not file Form ADT-3 with the Registrar of Companies, resulting in difficulties for appointment of a new auditor.

Issues Involved

Whether the complaint was maintainable in absence of a valid Board Resolution authorising the complainant to institute disciplinary proceedings on behalf of the company, and if maintainable, whether acceptance of statutory audit without written communication with the previous auditor constituted professional misconduct under Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant contended that the Respondent accepted the statutory audit without first communicating in writing with the previous auditor and failed to comply with statutory and ethical requirements. It was submitted that such conduct violated Item (8) of Part I of the First Schedule and caused prejudice to the company in appointing subsequent auditors.

Respondent’s Arguments

The Respondent denied all allegations and submitted that the previous auditor had no objection to his appointment. He stated that discussions had taken place with the previous auditor and that a written confirmation dated 10 September 2022 was subsequently obtained. The Respondent contended that any request to the complainant to assist in obtaining NOC was a fair professional practice and not coercion. He further submitted that the dispute arose only after he demanded outstanding audit fees of ₹9,500 out of the agreed ₹12,500, and alleged that the complaint was filed to avoid payment.

Court / Authority Order and Findings

The Board of Discipline examined the maintainability of the complaint as a threshold issue. The Board noted that the complainant relied upon a letter purporting to be a Board Resolution dated 1 July 2022 authorising initiation of the complaint. However, the complaint had already been filed on 27 May 2022 and received on 2 June 2022. The Board observed that the rectified Form-I itself was filed on 1 July 2022, rendering the alleged Board Resolution an afterthought.

In view of the absence of a valid Board Resolution duly passed and certified authorising the complainant to initiate proceedings on behalf of the company, the Board held that the statutory requirement of authorisation was not fulfilled. Consequently, the complaint was held to be void ab initio. The Board expressly declined to delve into the merits of the allegations.

Important Clarification

The Board clarified that compliance with statutory requirements relating to authorisation to file a complaint is mandatory. In absence of a valid authorisation, disciplinary proceedings cannot be sustained, irrespective of the nature of allegations raised.

Final Outcome

The ICAI Board of Discipline held CA Vikash Thakur (M. No. 544359) Not Guilty of Professional Misconduct falling within the meaning of Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. By order dated 08 December 2025, the Board dismissed the complaint as void ab initio and directed 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.

Source Link- https://www.mytaxexpert.co.in/uploads/1768892551_ShriAshrafGaniMumbaivsCA.VikashThakurM.No.544359New.pdf

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