Facts of the Case

A complaint was filed by Shri Shivraj Singh against CA Kamal Jain alleging serious professional misconduct in relation to transfer of immovable property, takeover of a company, misuse of digital signatures, forgery of documents and intimidation. The complainant alleged that the Respondent, in connivance with his wife and relatives, fraudulently transferred one shop forming part of property No. 2/28, Roop Nagar, Delhi, into the name of his wife by arranging loans through relatives and fabricating documents.

It was further alleged that the Respondent illegally took over Kempty Constructions Pvt. Ltd., retained company records and digital signatures, removed the complainant as director without notice, forged board resolutions, and filed statutory forms with the Registrar of Companies without authority. The complainant also alleged misuse of resignation letters, manipulation of Memorandum of Understanding, coercion, and threats, and claimed that his shareholding was diluted from 97.84 percent to nil.

Parallel proceedings were initiated by the complainant before the Hon’ble NCLT, NCLAT, civil courts and the Hon’ble Supreme Court.

Issues Involved

Whether the Respondent committed “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 by allegedly facilitating illegal transfer of property, misappropriating company documents, forging resolutions, misusing digital signatures, manipulating shareholding, and intimidating the complainant.

Petitioner’s Arguments

The complainant contended that the Respondent abused his professional position to fraudulently acquire property and take over the company. It was argued that the Respondent retained statutory records, forged documents, misused digital signatures and orchestrated removal of the complainant as director. The complainant relied upon his pleadings before NCLT and other courts and alleged that the Respondent admitted professional misconduct during hearing.

Respondent’s Arguments

The Respondent denied all allegations and submitted that the disputes were purely civil and commercial in nature, arising out of family and business arrangements. He relied upon the Memorandum of Understanding executed in 2008, resignation letters, share transfer documents and statutory filings. The Respondent pointed out that the Hon’ble NCLT, after detailed examination, rejected the complainant’s allegations of oppression and mismanagement, upheld the validity of share transfer, director changes and statutory filings, and that such findings were affirmed by the Hon’ble NCLAT and the Hon’ble Supreme Court. It was contended that professional misconduct cannot be inferred where allegations stand adjudicated and rejected by competent judicial forums.

Court / Authority Order and Findings

The Board of Discipline examined the pleadings, documents and judicial findings on record. The Board noted that the core allegations relating to company takeover, share transfer, resignation of directors and statutory filings were comprehensively examined by the Hon’ble NCLT, which rejected the complainant’s claims on merits. The Board further noted that the NCLAT dismissed the appeal and the Hon’ble Supreme Court declined to interfere, thereby affirming the findings.

The Board observed that allegations regarding property transfer, forgery, coercion and misuse of digital signatures were not supported by independent evidence and were intrinsically linked to civil disputes already adjudicated. The Board found no material to establish that the Respondent acted in his capacity as a Chartered Accountant to commit professional misconduct. It was also observed that disciplinary proceedings cannot be used as a forum to re-litigate issues conclusively decided by competent courts.

Important Clarification

The Board clarified that where allegations against a Chartered Accountant arise out of private civil and company law disputes and have already been adjudicated by judicial forums, professional misconduct cannot be presumed in absence of independent evidence showing breach of professional duties under the Chartered Accountants Act, 1949.

Final Outcome

The ICAI Board of Discipline held CA Kamal Jain (M. No. 085247) Not Guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. By order dated 10 February 2023, the Board 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/1768899321_ShriShivrajSinghvsCA.KamalJainM.No.085247NewDelhi.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.