Facts of the Case

The complainant, Shri Vikram Singh Chopra, filed a complaint against the respondent, CA Rajesh Kumar Chandak, alleging that while being a practising Chartered Accountant, the respondent was actively involved in the business and administration of multiple private limited companies. It was alleged that the respondent, along with another partner of his CA firm, acted as director in several companies and signed directors’ reports, financial statements, ROC forms, resolutions, investment documents and other statutory filings. The complainant alleged that such conduct went far beyond the permissible role of Director Simplicitor and amounted to engagement in business or occupation other than the profession of Chartered Accountancy without prior permission of the Council, in violation of the Chartered Accountants Act, 1949 and the Code of Ethics.

The complaint named eight companies in which the respondent was allegedly involved, including Hare Krishna Properties Pvt. Ltd., Kuldeepak Vanijya Pvt. Ltd., Rachit Vanijya Pvt. Ltd., High Value Investments Pvt. Ltd., High Value Securities Pvt. Ltd., Sigma Services Pvt. Ltd., Sushwani Infosystems Pvt. Ltd. and High Value Management Consultants Pvt. Ltd. The Director (Discipline) formed a prima facie opinion holding the respondent guilty of professional misconduct under Item (11) of Part I of the First Schedule, which was concurred with by the Board of Discipline, leading to a detailed inquiry.

Issues Involved

Whether the respondent Chartered Accountant, while in practice, engaged in business or occupation other than the profession of accountancy without Council permission by actively participating in management and statutory affairs of multiple companies, and whether such conduct constituted professional misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949.

Petitioner’s Arguments

The complainant contended that the respondent’s involvement was not limited to attending board meetings but extended to active participation in administration, compliance, financial decision-making and investment activities of various companies. It was argued that the respondent signed directors’ reports, financial statements, board resolutions, ROC filings, investment application forms and other documents, demonstrating operational control and management involvement. The complainant submitted that such acts violated the restrictions imposed on practising Chartered Accountants and brought disrepute to the profession.

Respondent’s Arguments

The respondent denied the allegations and contended that he acted strictly as a Director Simplicitor in board-managed companies. It was argued that signing statutory documents, directors’ reports, financial statements and ROC forms was a statutory obligation of a director and did not amount to participation in day-to-day business operations. The respondent submitted that he did not receive any remuneration except sitting fees, professional fees for certification work, and interest on loans, which were permissible under law. It was further contended that many documents relied upon by the complainant were forged or misinterpreted and that the complaint was motivated by personal and family disputes.

Court Order / Findings

The Board of Discipline examined extensive documentary evidence, statutory filings, directors’ reports, financial statements, resolutions and submissions of both parties. The Board observed that the role of Director Simplicitor is narrowly defined and restricted to attending board meetings without involvement in management or administration. On evaluation of the material on record, the Board found that the respondent’s conduct was not confined to a passive directorship but demonstrated active and repeated involvement in corporate affairs, statutory compliance and decision-making across multiple companies over several years.

The Board held that mere nomenclature of “Director Simplicitor” cannot override the substance of conduct. It was observed that the respondent failed to make full and fair disclosures to ICAI and did not obtain the requisite permission of the Council while engaging in such activities. Applying the standard of preponderance of probabilities applicable to disciplinary proceedings, the Board concluded that the respondent had contravened the provisions of the Chartered Accountants Act, 1949, the Regulations and the Code of Ethics.

Important Clarification

The Board clarified that while practising Chartered Accountants are permitted to act as Director Simplicitor, such permission is conditional and limited. Any conduct indicating active involvement in management, administration or business operations of companies, even without formal designation as managing or whole-time director, attracts professional misconduct under Item (11) of Part I of the First Schedule.

Final Outcome

The Board of Discipline, ICAI, held that CA Rajesh Kumar Chandak was GUILTY of Professional Misconduct under Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The matter was disposed of in accordance with law under Section 21A of the Act, holding that the respondent had violated the permissible limits of directorship while being in practice.

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