ICAI not empowered to Conduct Disciplinary Proceedings without Written Allegations: Gujarat HC [Read Judgment]

The Gujarat High Court has held that the Institute of Chartered Accountant of India (ICAI) is not empowered to conduct any disciplinary proceedings without written allegations.

In the case of Manubhai & Shah LLP Chartered Accountants vs. Secretary, Institute of Chartered Accountant of India, the High Court observed that in the absence of any information as prescribed under Rules 7 of the Rules 2007 the prima facie opinion derived by the authority lacks jurisdiction and has no foundation.

The petitioner namely Manubhai & Shah LLP Chartered Accountants is a Limited Liability Partnership (LLP) is registered under the Institute of Chartered Accountant of India (ICAI). The ICAI published the rules pertaining to the Network and Merger. The petitioner entered into the agreement, which was not secured under HLBI. As a consequence the respondent communicated the requirement of the details pertaining to the profit-sharing, sharing of human resources and infrastructure. The agreement between the petitioner and HLBI was invalidated as per the report of the High Powered Committee.

The main issue before the High Court was that whether the information given falls under the ambit of ‘information’ as per Rule 7 of Rules 2007 or not?

The single bench of High Court of Gujarat consisting of Justice Bhargav Karia held that in the absence of any information as prescribed under Rules 7 of the Rules 2007, the prima facie opinion derived by the authority lacks jurisdiction and has no foundation. Further, the Institute of Chartered Accountant of India (ICAI) is not empowered to conduct any disciplinary proceedings without written allegations.

Accordingly, the high court quashed and set aside the prima facie opinion of the respondent as it had no base and the word ‘information’ as per Rule 7 of the Rules, 2007 as the allegations were unwritten.