Facts of the Case

The complainant, Shri Vikram Singh Chopra, filed a complaint against the respondent, CA Raj Singh Chopra, alleging that while being a practising Chartered Accountant, the respondent was actively involved in business activities of multiple private limited companies and partnership firms without obtaining prior permission of the Council. It was alleged that the respondent acted as director in several companies, signed directors’ reports, financial statements, ROC forms, statutory filings, operated bank accounts, and exercised managerial powers far beyond the permissible limits of a Director Simplicitor. The respondent was also alleged to be a partner in M/s M L Chopra & Co. and M/s Freya Shipping Services, sharing profits and receiving salary, thereby engaging in business activities other than the profession of accountancy. The complaint arose in the background of a family dispute but was examined independently on merits by the Board of Discipline.

Issues Involved

Whether the respondent Chartered Accountant, while in practice, engaged in business or occupation other than the profession of Chartered Accountancy without prior permission of the Council by actively participating in management of multiple companies and partnership firms, 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 role was not limited to attending board meetings but extended to management, administration, statutory compliance, financial decision-making, signing of cheques, execution of contracts, representation before tax authorities, and receipt of remuneration and other incomes. It was argued that documentary evidence including directors’ reports, financial statements, ROC forms, Form 26AS, partnership deeds, and Articles of Association clearly demonstrated the respondent’s active involvement in day-to-day affairs of companies and firms, which was impermissible without Council approval.

Respondent’s Arguments

The respondent denied the allegations and contended that he acted only as a Director Simplicitor in board-managed companies and that signing statutory documents was a ministerial act required under the Companies Act. It was submitted that he did not function as a Managing Director or Whole-time Director and received only sitting fees. The respondent argued that salary received from partnership firms was in the nature of family wealth distribution and not remuneration for active business involvement. It was further contended that the complaint was motivated by family disputes, was barred by delay, and that he had subsequently obtained Council permission in 2018 to act as a sleeping partner.

Court Order / Findings

The Board of Discipline examined extensive documentary evidence including directors’ reports, financial statements, Forms AOC-4 and MGT-7, Form 26AS, partnership deeds, and Articles of Association of the companies. The Board observed that the powers vested in the respondent under the Articles of Association, receipt of remuneration and other incomes, signing of statutory and financial documents, operation of bank accounts, and participation in partnership firms clearly demonstrated active involvement in business and managerial functions. The Board held that the role and conduct of the respondent went far beyond that of a Director Simplicitor. The Board also noted that although the respondent obtained Council permission in 2018, the alleged misconduct related to the period from 2009 to 2017, during which no such permission was obtained. The plea of family dispute, delay, and locus standi was rejected, and the charge was held to be proved on the standard of preponderance of probabilities.

Important Clarification

The Board clarified that practising Chartered Accountants may act as Director Simplicitor only within strictly defined limits. Any conduct indicating active management, receipt of remuneration beyond sitting fees, participation in partnership business, or exercise of managerial powers without prior Council approval constitutes professional misconduct under Item (11) of Part I of the First Schedule.

Final Outcome

The Board of Discipline, ICAI, held that CA Raj Singh Chopra was GUILTY of Professional Misconduct falling within the meaning of Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The finding was issued pursuant to Rule 14(9) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, by order dated 20.05.2024.

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