Facts of the Case

A reference was received by the Institute of Chartered Accountants of India from its Legal Section alleging that CA Manmohan Khemka, New Delhi, had disseminated misleading information through a Facebook post concerning the Revised Code of Ethics applicable from 01.07.2020, particularly regarding the provision relating to revenue concentration from a single client. It was alleged that the post selectively quoted provisions, created confusion among members of the profession and caused panic within the Chartered Accountancy fraternity. A notice dated 16.05.2020 was issued to the respondent, to which he replied on 23.05.2020. Thereafter, the matter was referred to the Director (Discipline) and subsequently placed before the Board of Discipline under Section 21A of the Chartered Accountants Act, 1949.

Issues Involved

Whether the respondent Chartered Accountant was guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 for allegedly spreading misleading information on social media regarding provisions of the Revised Code of Ethics, and whether such conduct warranted disciplinary action.

Petitioner’s Arguments

The allegations, as placed by the Institute, were that the respondent selectively quoted and misrepresented provisions of the Revised Code of Ethics, particularly the 15% fee threshold from a single client group, even after issuance of clarifications by ICAI. It was alleged that such conduct was reckless, misleading and harmful to the profession, causing confusion and apprehension among members on social media platforms.

Respondent’s Arguments

The respondent denied the allegations and submitted that the Facebook post did not contain false or misleading information but merely highlighted the substance of the relevant provision and expressly referred readers to the Revised Code of Ethics for complete understanding. It was argued that the intent of the post was to create awareness and initiate professional discussion on the impact of the revised provision, particularly on small and medium practitioners. The respondent further contended that expressing an interpretation or opinion on the impact of a professional regulation cannot be treated as misconduct and that the proceedings violated his fundamental right to freedom of speech and expression.

Court Order / Findings

The Board of Discipline carefully examined the content of the Facebook post in light of Section 410.4 of the Revised Code of Ethics. The Board observed that while the post did generate discussion and debate among members of the profession regarding interpretation of fee concentration norms, there was no evidence to suggest any malicious intent or deliberate attempt to mislead or defame the Institute or the Council. The Board noted that the respondent’s stated intention was to initiate dialogue and bring attention to the practical impact of the revised provisions. The Board also took note of subsequent modifications to the relevant provision and acknowledged the respondent’s right to freedom of speech and expression in professional matters, subject to responsible communication. On the basis of the material on record, the Board found no grounds to hold the respondent guilty of Other Misconduct.

Important Clarification

The Board clarified that expression of professional opinion or interpretation of regulatory provisions, even if debatable, does not by itself constitute misconduct in the absence of mala fide intent or deliberate dissemination of false information. The ICAI disciplinary mechanism cannot be invoked to stifle bona fide professional debate and discussion.

Final Outcome

The Board of Discipline, ICAI, held that CA Manmohan Khemka was 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. The proceedings were ordered to be closed 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 07.05.2024.

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