Facts of the Case

A complaint was filed by Shri Rajiv Chopra, Assistant General Manager, Bank of Baroda, Ludhiana, against CA Harinder Pal Singh alleging professional misconduct. The Respondent was a practicing Chartered Accountant and was also shown as proprietor of M/s GRD Impex, a trading concern, in documents submitted to the complainant bank.

The Respondent filed a loan application dated 11 March 2014 with Bank of Baroda on behalf of M/s GRD Impex, wherein he declared himself as the proprietor of the firm and mentioned that the firm was engaged in trading business since 2008. The application was signed by the Respondent in his capacity as proprietor. Annexures to the application also reflected the Respondent as owner of the firm.

Further, the Bank addressed a letter dated 12 August 2015 to the Respondent as proprietor of M/s GRD Impex. The Board also noted that the Respondent continued his professional practice as a Chartered Accountant during the same period, which was evident from a Tax Audit Report dated 15 September 2013 signed by him in respect of another firm. It was also observed from ICAI records that the Respondent had never intimated the Institute regarding his engagement in the said business.

Issues Involved

Whether the Respondent, while being a Chartered Accountant in practice, engaged himself in another business or occupation without obtaining permission of the ICAI Council, in violation of the Code of Ethics and Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant bank contended that the Respondent actively represented himself as proprietor of a trading firm for availing credit facilities while simultaneously continuing his practice as a Chartered Accountant, which was impermissible under the Act and Code of Ethics.

Respondent’s Arguments

The Respondent accepted that he had allowed his name to be used as proprietor of M/s GRD Impex. He submitted that he did not intend to carry on business and that his involvement was only to help the Branch Manager and AGM of the bank to prevent the account from slipping into NPA. He stated that no business activity was carried out thereafter and that it was a careless mistake on his part. The Respondent admitted his lapse during the hearing and requested leniency.

Court / Authority Order and Findings

The Board of Discipline examined the loan application, annexures, bank correspondence and the Respondent’s own admissions. The Board observed that the Respondent had clearly represented himself as proprietor of a trading firm and signed documents in that capacity. The Board further observed that under Clause 190A of the Code of Ethics, a Chartered Accountant in practice is prohibited from engaging in any other business or occupation without prior permission of the Council.

The Board noted that the Respondent had neither sought nor obtained permission from ICAI and had not even intimated the Institute about his engagement in the business. The Board also took note of the Respondent’s categorical admission of guilt both during the inquiry and before the Board.

On appreciation of the material on record, the Board concluded that the Respondent had engaged in business while continuing his practice as a Chartered Accountant, thereby violating the Code of Ethics and committing professional misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Important Clarification

The Board clarified that even temporary or purportedly non-commercial engagement in business, if undertaken while in practice and without ICAI permission, constitutes professional misconduct. Chartered Accountants are required to strictly adhere to the restrictions prescribed under the Code of Ethics.

Final Outcome

The ICAI Board of Discipline held CA Harinder Pal Singh (M. No. 094409) guilty of Professional Misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3) of the Act, by order dated 24 June 2022, the Board reprimanded the Respondent.

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