Facts of the Case

The complainant, Shri Amit M. Panchal, filed a complaint against the respondent, CA Tehmul B. Sethna of M/s Apaji Amin & Co. LLP, alleging serious professional misconduct arising from abuse of trust and misuse of professional relationship. The respondent was closely associated with the Environment Research & Development Centre, Ahmedabad, a charitable trust established by the complainant’s family. After the demise of the founder trustee, the respondent assumed control over the affairs of the trust and its financial matters.

It was alleged that the respondent used personal information of the complainant without consent to open a bank account in the complainant’s name with South Indian Bank in 2007, forged signatures on PAN card copies, telephone bills and cheques, and withdrew large sums of noted cash over several years. The respondent also opened and operated bank accounts of the trust without knowledge or authorization of the trustees and withdrew funds through his peon for personal benefit. Search proceedings under Section 132 of the Income-tax Act were conducted at the respondent’s premises in 2016, leading to discovery of incriminating material and reopening of assessments.

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 forging signatures, illegally opening and operating bank accounts, misappropriating trust funds, abusing professional relationship, and bringing disrepute to the profession.

Petitioner’s Arguments

The complainant contended that the respondent forged documents and signatures, illegally opened bank accounts, misused entrusted documents, withdrew trust funds through his peon, and concealed material facts from trustees and authorities. It was argued that assessment orders, charge sheets, statements recorded during search proceedings, and court records conclusively established the respondent’s misconduct. The complainant submitted that the respondent’s conduct was fraudulent, deceptive, and wholly unbecoming of a Chartered Accountant.

Respondent’s Arguments

The respondent denied the allegations and raised multiple preliminary objections including lack of jurisdiction, improper quorum of the Board, limitation under Rule 12, and pendency of criminal proceedings. On merits, the respondent relied on forensic reports claiming that signatures were not conclusively proved to be forged and argued that trustees were aware of transactions. It was also contended that income tax assessments of the trust did not attribute wrongdoing to him and that the complaint was motivated by personal disputes.

Court Order / Findings

The Board of Discipline examined extensive documentary evidence including bank account opening forms, assessment orders, affidavits, statements recorded under the Income-tax Act, charge sheets, court orders, and the respondent’s own admissions. The Board observed that the respondent abused his professional position from the inception of the trust, forged signatures, opened and operated bank accounts without authority, misappropriated funds through intermediaries, and suppressed material facts.

The Board rejected the respondent’s objections regarding quorum, jurisdiction, limitation and pendency of criminal proceedings, holding that disciplinary proceedings are quasi-judicial in nature and governed by preponderance of probabilities. The Board found that assessment orders and search proceedings conclusively established the respondent’s modus operandi and misuse of trust funds. Accordingly, the respondent was held guilty of Other Misconduct for conduct unbecoming of a Chartered Accountant and for bringing disrepute to the profession.

Important Clarification

The Board clarified that forging documents, misusing client information, illegally operating bank accounts, and misappropriating funds entrusted during professional engagement constitute grave Other Misconduct irrespective of pendency of criminal proceedings, warranting strict disciplinary action to uphold professional integrity.

Final Outcome

The Board of Discipline, ICAI, held that CA Tehmul B. Sethna was GUILTY of Other Misconduct under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22. In exercise of powers under Section 21A(3), the Board removed his name from the Register of Members for a period of one month and imposed a fine of ₹1,00,000, payable within 60 days from receipt of the order, by order dated 23.05.2024.

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