Facts of the Case

The complainant, Shri Rishi Goel, Additional Director (Investigation), Ministry of Corporate Affairs, filed a complaint against the respondent, CA R. Vinod Kumar, alleging professional misconduct arising out of statements made by the respondent on oath during investigation proceedings conducted by the Serious Fraud Investigation Office (SFIO). The respondent was associated with the incorporation and related compliances of several companies, including M/s Unigateway2U Trading Pvt. Ltd., M/s Unipay2U Production Pvt. Ltd., M/s Unipay Creative Business Pvt. Ltd. and M/s GODINDEX Tours and Travels Pvt. Ltd.

During the course of SFIO proceedings, the respondent made statements on oath which were subsequently found to be inconsistent and contradictory. Although it was established that the respondent was not the statutory auditor of one of the companies for the relevant financial year, the investigation revealed that the respondent had changed his version of facts while making statements before Government authorities. The Director (Discipline) formed a Prima Facie Opinion holding the respondent guilty of Other Misconduct under Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, which was concurred with by the Board of Discipline.

Issues Involved

Whether making contradictory and misleading statements on oath before Government authorities during investigation proceedings amounts to “Other Misconduct” under Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, and whether disciplinary action under Section 21A(3) was warranted.

Petitioner’s Arguments

The complainant contended that the respondent, being a Chartered Accountant, was expected to maintain the highest standards of integrity and truthfulness while making statements on oath before Government authorities. It was argued that the respondent deliberately changed his statements during SFIO proceedings, thereby attempting to mislead the investigation, which constituted conduct unbecoming of a Chartered Accountant and attracted disciplinary action.

Respondent’s Arguments

The respondent submitted that the findings of the Board of Discipline were without jurisdiction and that the opinion regarding disrepute could only be formed by the Council of ICAI. He further contended that the Board of Discipline did not have the proper quorum at the time of forming its opinion. The respondent also argued that SFIO had no authority to record his statement under the Companies Act, 1956, and that his statements had not caused any prejudice to the investigation nor resulted in any personal gain. He pleaded that the complaint was the first in his long professional career and that any punishment would adversely affect his livelihood and family.

Court Order / Findings

The Board of Discipline examined the statutory provisions, earlier appellate authority decisions, and the submissions made by the respondent. The Board rejected the jurisdictional objections raised by the respondent, holding that the Prima Facie Opinion of the Director (Discipline) satisfies the requirement of opinion under Clause (2) of Part IV, as clarified by the Appellate Authority in earlier cases. The Board further held that quorum requirements were duly met in terms of Rule 13(2) of the 2007 Rules.

On merits, the Board observed that making inconsistent and contradictory statements on oath before Government authorities seriously undermines the credibility of the profession. The Board held that a Chartered Accountant is expected to come clean and be truthful while making statements during investigations. The act of changing statements on oath was found to be an attempt to hide facts and mislead Government authorities, which is clearly unbecoming of a Chartered Accountant. Accordingly, the Board conclusively held the respondent guilty of Other Misconduct under Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22.

Important Clarification

The Board clarified that statements made on oath by a Chartered Accountant before Government authorities carry significant weight, and any contradiction or lack of candour in such statements directly impacts the credibility and integrity of the profession. Such conduct constitutes Other Misconduct irrespective of whether the member derived any personal benefit or caused direct prejudice to the investigation.

Final Outcome

The Board of Discipline, ICAI, held that CA R. Vinod Kumar was GUILTY of Other Misconduct under Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949. In exercise of powers under Section 21A(3), the Board reprimanded the respondent and imposed a fine of ₹25,000, payable within 60 days from receipt of the order, by order dated 20.05.2024.

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