Ramachandra Iyer, J.- This is a reference under section 21 of the Chartered Accountants Act, 1949 (Act XXXVIII of 1949). The proceedings out of which this reference arises were initiated on a complaint dated 15th September, 1953 made to the Council of the Institute of Chartered Accountants of India by the Superintendent of Police, Crime Branch (C.I.D., Madras) who was entrusted with the investigation into certain irregularities committed by the management of the Hanuman Bank, Ltd. (now under liquidation). The complainant charged the respondent who was practising as a Chartered Accountant at Thanjavur and who was the auditor of the bank with professional misconduct. The Hanuman Bank, Ltd., was incorporated in the year 1933 with headquarters at Thanjavur. It had several branches in the district and had extensive business. Most of the depositors belonged to middle class. Systematic acts of dishonesty and malversation of the bank’s funds appear to have been committed by those in charge of its management. These led to an inevitable run on the bank and culminated in an order by this Court on 5th November, 1951 in O.P. No. 192 of 1947 for the winding up of the bank. Messrs. Brahmiah & Co., auditors were appointed as the Official Liquidators. The police investigation was made by a special staff of the C.I.D. deputed for the purpose. On 19th September, 1948 a charge-sheet containing 67 charges was filed against the respondent and 27 others under section 120-B read with sections 409 and 477-A of the Indian Penal Code. A. Special Magistrate was appointed to conduct the enquiry; the enquiry lasted for nearly three years during the course of which 203 witnesses were examined and nearly 6,000 exhibits were marked. On being moved by the accused at that stage, the High Court quashed the charges on the ground that it was impracticable to try them at one trial without confusion; this Court directed a de novo trial in accordance with the provisions of section 240 of the Criminal Procedure Code. The order directing de novo trial was set aside by the Supreme Court on 12th December, 1952. The result was that the criminal proceedings initiated against the respondent and others failed. Investigation by the police revealed certain other irregularities which showed that it was the callousness of the respondent that facilitated the frauds committed by the management. The order directing de novo trial was set aside by the Supreme Court on 12th December, 1952. The result was that the criminal proceedings initiated against the respondent and others failed. Investigation by the police revealed certain other irregularities which showed that it was the callousness of the respondent that facilitated the frauds committed by the management. The investigating officer filed a complaint to which reference has been made earlier to the Council of the Institute of Chartered Accountants, setting out several acts of misconduct on the part of the respondent in relation to his duties as auditor of the bank. The Secretary of the Council promptly forwarded a copy of the complaint to the respondent and called upon him to explain. A written statement was filed by the latter in November, 1953. The enquiry was taken up by the disciplinary committee of the council but, for one reason or another, the enquiry was adjourned from time to time. During that period there was a change in the personnel of the Committee, and that necessitated a de novo enquiry. Meanwhile proceedings which were taken by the Official Liquidators, for misfeasance of the directors of the bank and the auditor, were concluded before this Court. Subrahmanyam, J., after an elaborate enquiry found that the persons in management of the bank and the auditor were guilty of several acts of malversation of the bank’s funds, gross negligence, etc. The learned Judge held that a large part of the responsibility for the failure of the bank had to be borne by the auditor, that the balance sheets prepared since the year 1943 contained false and unsustainable statements, that there were manipulations of figures taken from books and observed: “The auditor’s liability would have to be fixed at any rate at a lakh of rupees for payment, of compensation by him to the bank but he is said to be in insolvent condition and the learned counsel for the Official Liquidators agreed with me in my suggestion that no decree need be passed against him, since, if a decree were passed the only result would be that the Official Liquidators would have to come to Court again for an application for writing off the amount due under such decree.” Thus even the misfeasance proceedings came to nothing so far as the auditor (respondent) was concerned. The disciplinary committee took up the complaint against the respondent and enquired into the matter ; there can be no doubt that everybody concerned was tired of the case. The complainant selected only six of the several charges made by him for proof at the enquiry. Of the six, he did not press three. The committee found that one of the three remaining charges had not been made out. What then survived were the two charges which were Nos. 3 and 5 in the list; they were:- Charge No. 3.-Suppression of the total indebtedness of the directors in the balance-sheet for 1946. As per books the directors were owing to the bank a sum of Rs. 15,888 as on 31st December, 1946 but in the balance-sheet the figure is shown as Rs. 9,396 only. Charge No. 5.-Wilful neglect of audit by glossing over stupendous alterations and fictitious entries in the books of accounts. The charge then proceeded so specify the over-statements of the loans on the assets side of the balance-sheet for the year ending 1944, the head office overdraft balance for the year ending 31st December, 1945 and loans for the years 1945-46. Both the charges covered acts of wilful default and gross negligence. The respondent denied that there was wilful suppression of any particulars in the balancesheet. He submitted that he relied on his assistants and the officers of the bank while subscribing to the balance-sheet. As regards the failure to make any reference about the alterations and fictitious entries contained in the books, he merely stated that he was not aware of the same. The committee did not consider the question whether there was any wilful default on the part of the respondent as it was not the complainant’s case that the respondent was a party to the frauds committed by the management. The committee came to the conclusion that the respondent was grossly negligent in the performance of his professional duties. The report of the committee was considered by the Council of the Institute of Chartered Accountants in September, 1960 and it held that the respondent was guilty of professional misconduct under section 21 read with clause (7) of Part I of the Second Schedule to the Act. The report of the committee was considered by the Council of the Institute of Chartered Accountants in September, 1960 and it held that the respondent was guilty of professional misconduct under section 21 read with clause (7) of Part I of the Second Schedule to the Act. The Council, however, made a recommendation to the High Court that although the case was one for removing the name of the respondent from the register of members, in view of the plea of mercy made by him he might be dealt with leniently in the matter of punishment. Taking the third charge the correct amount of loan advanced to the directors as it stood on 31st December, 1946 was Rs. 15,888. The balance-sheet showed only Rs. 9,396 as the amount due from them. The maximum amount of loans advanced to the directors during the year was also not mentioned in the balance-sheet for the year. The explanation that his assistants did not place before him the relevant information can hardly exculpate the respondent. As regards overstatement covered by Charge No. 5, the balance sheet showed a sum of Rs. 5,34,426-2-10 as the amount of loans in the head office whereas the correct amount was Rs. 2,53,276-8-3. A mere look into the general ledger of the head office would have shown the correct amount. The respondent was unable to explain how the mistake came to be committed. Besides this, there were manipulations in the books maintained by the bank for the year 1945. The respondent was equally unable to offer any explanation why he did not notice them or appraise the shareholders about the same. There is considerable room for suspicion that the conduct of the respondent must have been something more than mere negligence. The only explanation was that his assistants did not do their duties properly. There were similar irregularities in the balance-sheet of the succeeding year as well but the complainant did not press the same. We are not quite satisfied whether the complainant was right in not pressing the charge in respect of the accounts for 1946, for if the charge were proved, one could legitimately come to the conclusion that the case was not one of mere negligence on the part of the respondent but of wilful default as well. We are not quite satisfied whether the complainant was right in not pressing the charge in respect of the accounts for 1946, for if the charge were proved, one could legitimately come to the conclusion that the case was not one of mere negligence on the part of the respondent but of wilful default as well. On the materials now available, the conclusion arrived at by the Council that the respondent has been guilty of gross negligence in the discharge of his duties as auditor of the bank is unassailable. Section 21 of the Chartered Accountants Act provides for the punishment of a chartered accountant who is a member of the Institute of Chartered Accountants if he is guilty of misconduct. Section 22 defines what misconduct is, that is conduct which if proved will render a person unfit to be a member of the Institute. The section also provides that acts and omissions specified in the Schedule to the Act should be deemed to be misconduct. Clause (q) of the Schedule refers to “being grossly negligent in the conduct of professional duties.” Having regard to the provisions of section 22 and clause (q) of the Schedule, it is unnecessary to consider whether there was any moral turpitude on the part of the respondent when he was grossly negligent in the discharge of his duties. The only plea of the respondent was that he trusted his assistants and the officers of the bank. No auditor can escape from personal liability by taking shelter under the misconduct of his own employees. The auditor occupies a special position in a company. He is no doubt not an officer of the company except for the limited purposes specified in the Indian Companies Act. As has been stated in S. Packman v. Lewis1, an auditor is in a sense the agent of the shareholders. In the case of a banking company, his responsibilities should be even greater as the audit is for the protection of not merely the shareholders but of the investing public as well. It is his duty to see that the management of the bank publishes a true statement of the bank’s financial position. In the case of a banking company, his responsibilities should be even greater as the audit is for the protection of not merely the shareholders but of the investing public as well. It is his duty to see that the management of the bank publishes a true statement of the bank’s financial position. In re London and General Bank1, Lindley, L. J., observed: “His business is to ascertain and state the true financial position of the company at the time of the audit and his duty is confined to that but then comes the question how is he to ascertain that position. The answer is by examining the books of the company but he does not discharge his duty by doing this without enquiry and without taking any trouble to see that the books themselves show the company’s true position. He must take reasonable care to ascertain that they do so Unless he does this, his audit would be worse than an idle farce.” The rule then is that the auditor should bring to bear upon his work great skill, care and caution which a reasonable auditor would use in the discharge of his duties. What is reasonable skill, care and caution must undoubtedly depend on the circumstances of each case: the auditor’s position has been picturesquely described as that of a watch dog. Callousness and irresponsible abdication of his work can never be regarded as anything but misconduct: this is more so in regard to a bank which has to handle the monies of the public. It will be the duty of the auditor to scrutinise the accounts very carefully so as to give a real picture of the financial position of the bank in the balance-sheets. An auditor who does not personally look into the accounts but merely delegates it to his assistants cannot be said to be acting with due skill and care. There is nothing in the present case to indicate the status, qualifications or capacity of his assistants. Under the circumstances the conduct of the respondent in abdicating his functions to his subordinates can only amount to gross negligence. Having regard to the seriousness of the charge the appropriate punishment would, as the Council has stated, be the removal of the name of the respondent from the register of members. Under the circumstances the conduct of the respondent in abdicating his functions to his subordinates can only amount to gross negligence. Having regard to the seriousness of the charge the appropriate punishment would, as the Council has stated, be the removal of the name of the respondent from the register of members. The Council has, in the special circumstances of the case recommended lenient punishment and having regard to the fact that the respondent is now nearly 65 years old, we consider that that penalty need not be imposed in the circumstances of the case. The learned advocate appearing for the respondent submitted that a reprimand from the Bench would meet the ends of justice. We cannot, however, accept this. In our opinion, the removal of the respondent’s name from the register of members of the Institute of Chartered Accountants for a period of three years will meet the ends of justice. We direct accordingly. No order as to costs. P.R.N. ----- Name removed from register of members for three years.