Facts of the Case

Disciplinary proceedings were initiated against CA Ankur Aggarwal on the basis of a charge sheet submitted by the Central Bureau of Investigation, Dehradun, alleging diversion and misappropriation of term loan funds sanctioned by Punjab National Bank to M/s Apex Wires and Cables in the year 2011.

The charge sheet alleged that after winding up of M/s Doon Containers Pvt. Ltd., one of its partners handed over blank signed cheque books and bill books to the Respondent for a consideration of ₹50,000/-. It was further alleged that a circuitous routing of funds took place between M/s Apex Wires and Cables, M/s Doon Containers Pvt. Ltd. and M/s Ambey Trading Co., resulting in diversion of loan funds instead of utilisation for the stated purpose.

Based on these allegations, the Respondent was accused of acting in connivance with other accused persons in furtherance of a criminal conspiracy to divert bank funds.

Issues Involved

Whether the Respondent participated in diversion of bank loan funds, facilitated fictitious transactions through related entities, or was party to criminal conspiracy as alleged by the CBI, and whether such conduct constituted “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Respondent’s Submissions

The Respondent denied all allegations and submitted that no wrongdoing had been conclusively established against him. He contended that the CBI charge sheet was yet to be tested before a court of law and that no conviction or judicial finding existed against him.

He submitted that he was not a partner of M/s Apex Wires and Cables during the relevant period when the loan was sanctioned and that his role was limited to professional engagement as auditor of M/s Doon Containers Pvt. Ltd. for certain years. He further submitted that he had no professional relationship with M/s Ambey Trading Co. and that there was no evidence of him facilitating or controlling financial transactions.

The Respondent pointed out contradictions in witness statements relied upon by the CBI and emphasized that allegations were built only on statements of co-accused persons without corroboration. He also relied upon bank statements to demonstrate that withdrawals and transactions were carried out by directors of the borrowing company and not by him.

Court / Authority Order and Findings

The Board of Discipline examined the CBI charge sheet, bank statements, audited financial statements, witness depositions and submissions of the Respondent. The Board noted that despite repeated directions, the CBI did not produce any additional corroborative evidence beyond the charge sheet and statements of co-accused persons.

The Board observed that the entire case revolved around three entities — M/s Apex Wires and Cables, M/s Doon Containers Pvt. Ltd. and M/s Ambey Trading Co. — and that commercial transactions between Apex Wires and Doon Containers were reflected in books and supported by bank payments. The Board noted that VAT returns were filed and that Doon Containers had filed proper returns in subsequent years, contradicting the allegation that it was a non-genuine entity.

The Board further observed that no documentary evidence established that the Respondent received diverted funds, operated bank accounts, or controlled financial transactions. The statements of witnesses relied upon by the CBI were found to be inconsistent and not corroborated by documentary material.

The Board emphasized that disciplinary proceedings cannot be sustained merely on the basis of an unproven criminal charge sheet and that, in absence of direct or corroborative evidence showing professional misconduct, liability cannot be fastened on the Respondent.

Important Clarification

The Board clarified that mere naming of a Chartered Accountant in a criminal charge sheet, without independent corroborative evidence or judicial findings, is insufficient to establish “Other Misconduct”. Disciplinary action must be founded on proven professional wrongdoing and not on allegations yet to be adjudicated by criminal courts.

Final Outcome

The ICAI Board of Discipline held CA Ankur Aggarwal (M. No. 407899) Not Guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22. 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/1768895092_CA.AnkurAggarwalM.No.407899Dehradun.pdf

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