Facts of the Case

A complaint was filed by CA Akhilesh Agarwal against CA Radhey Shyam Bansal alleging professional misconduct arising from investment transactions in real estate projects at Dehradun and Behror. The complainant alleged that the respondent induced him and his relatives to invest money in projects of certain builders by projecting himself as a facilitator and assuring guaranteed returns.

It was alleged that substantial sums aggregating to ₹50,00,000 were paid by the complainant and his relatives in cash for investment purposes. The respondent allegedly acted as an intermediary between the complainant and the builders, facilitated meetings, received monies on behalf of the builders, and assured return of funds with profits. When the investments failed to materialise and money was not returned, the complainant alleged cheating, misrepresentation and abuse of professional position by the respondent.

Issues Involved

Whether the respondent, while being a Chartered Accountant in practice, acted as an intermediary and facilitator in investment and construction projects, engaged in business activities beyond the scope of professional practice, and whether such conduct amounted to “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant contended that the respondent misused his professional status to gain trust, facilitated cash transactions, acted as guarantor of returns, and played an active role in inducing investments. It was argued that such conduct was incompatible with the role of a practicing Chartered Accountant and amounted to serious professional misconduct.

Respondent’s Arguments

The respondent denied allegations of cheating and submitted that he merely introduced the complainant to the builders and did not receive any money for himself. He contended that the investments were made directly with the builders and that disputes were civil in nature. The respondent also raised technical objections regarding limitation, evidentiary value of recorded conversations, and maintainability of the complaint, and relied on judicial precedents relating to standard of proof in disciplinary proceedings.

Court / Authority Order and Findings

The Board of Discipline examined extensive material including written submissions, recorded conversations, documentary evidence and admissions made by the respondent at various stages. The Board noted that the respondent had admitted to acting as an intermediary and facilitator between the complainant and the builders and had arranged meetings and negotiations.

The Board observed that a Chartered Accountant is prohibited from engaging in any business or occupation other than the profession unless specifically permitted. Acting as an intermediary in real estate investment projects, facilitating cash transactions and assuring returns was held to be a clear departure from professional conduct. The Board rejected the respondent’s contention that absence of documentary proof of receipt of money absolved him, holding that disciplinary proceedings are governed by the standard of preponderance of probabilities.

The Board further noted that although the complainant failed to substantiate allegations of cheating beyond reasonable doubt, the respondent’s admitted role as facilitator and intermediary was sufficient to establish misconduct under the Act.

Important Clarification

The Board clarified that Chartered Accountants must maintain strict professional independence and must not involve themselves, directly or indirectly, in investment schemes, business facilitation or intermediary activities unrelated to professional practice. Even without proof of personal monetary gain, acting as a facilitator in such transactions constitutes serious professional misconduct.

Final Outcome

The ICAI Board of Discipline held CA Radhey Shyam Bansal (M. No. 091903) guilty of “Other Misconduct” under Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3) of the Act, by order dated 19 April 2023, the Board directed removal of the name of the Respondent from the Register of Members for a period of one month and imposed a monetary penalty of ₹1,00,000 (Rupees One Lakh only).

Source Link- https://www.mytaxexpert.co.in/uploads/1768819918_CA.AkhileshAgarwalM.No.093916GurgaonvsCA.RadheyShyamBansalM.No.091903Delhi.pdf

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