JUDGMENT By the Court.—Heard Sri Vinod Swarup, counsel for petitioners, Sri Gaurav Mahajan, counsel for respondent and perused the records. 2. This is a reference received under Section 21 (5) of Chartered Accountants Act, 1949 (hereinafter referred to as Act 1949") from the Institute of Chartered Accountants of India (hereinafter referred to as “ICAI”) on the recommendations made by council of ICAI in its 268th meeting held from 30.4.2007 to 2.5.2007 at New Delhi, resolving to accept report of Disciplinary Committee and hold Sri Om Prakash Tulsyan, Fellow Chartered Accountant (hereinafter referred to as “the Respondent”) (FCA (M. No. 11165), of M/s O.P. Tulsyan and Company-C-21/88-N, Kamla Kutir, Lahaurabir, Varanasi, guilty of professional misconduct falling within the meaning of “other misconduct” under Section 22 read with Section 21 of Act, 1949 and recommending punishment of removal of his name from the Register of Members of ICAI for a period of one year. 3. Facts in brief are, that, respondent was working as an Auditor and Tax Consultant for M/s Rungta Irrigation Limited (hereinafter referrred to as “RIL”). In March, 1995, Respondent approached Sri Mangi Lal Agarwal and Smt. Parwati Agarwal (hereinafter referred to as “complainants) who were NRIs in USA, with a proposal to invest in Initial Public Offerings (in short IPOs) of RIL. Complainants invested a sum of Rs. 4,52,94,000/- in the shares of RIL through their Overseas Corporate Body (OCB), i.e. M/s Durga Finance Limited ( hereinafter referred as “DFL”). RIL did not deliver shares to the complainants. Respondent forged papers and indulged in other un -professional activities, possibly in collusion with RIL and some other persons. 4. As per the stand taken by RIL, Respondent had taken delivery of shares on behalf of Complainants, by submitting an authority letter, allegedly signed by Smt. Parwati Agarwal. Complainants said that letters were totally bogus and false. No such signed letters were handed over to Respondent. Complainants believed that Respondent had sold shares of RIL in respect whereto investment was made by Complainants to some persons/entities who in turns had submitted shares to RIL for transfer. Complainants had never sold or mortgaged shares to any one. 5. Letter dated 24.3.1998 making aforesaid complaint was received by ICAI from Complainants. Notice was issued to Respondent who submitted reply/written statement, verified on 27.8.1999. Complainants submitted their rejoinder, duly verified, on 14.10.1999. Thereafter, Respondent again submitted comments, duly verified on 29.11.1999. 6. Complainants had never sold or mortgaged shares to any one. 5. Letter dated 24.3.1998 making aforesaid complaint was received by ICAI from Complainants. Notice was issued to Respondent who submitted reply/written statement, verified on 27.8.1999. Complainants submitted their rejoinder, duly verified, on 14.10.1999. Thereafter, Respondent again submitted comments, duly verified on 29.11.1999. 6. These documents were examined by Council of ICAI in accordance with Regulation 12(11) of Chartered Accountants Regulations 1988 (hereinafter referred to as “Regulation, 1988”). In a meeting held in May, 2002 at New Delhi, Council formed its opinion that prima facie Respondent was guilty of professional and/or other misconduct, hence decided to cause an enquiry to be made in the matter by Disciplinary Committee. 7. Consequently Disciplinary Committee held its enquiry and commenced the same by fixing 17.10.2002 as the first date of inquiry. First three dates, namely, 17.10.2002, 12.3.2003 and 21.4.2003, proceedings before Disciplinary Committee were adjourned on the request made by Respondent. Thereafter on 5.8.2003, Complainants were present still Respondent was absent. Disciplinary Committee, however, commenced its proceedings and partly heard the matter and then adjourned to 4.11.2003 and 5.11.2003. On 4.11.2003, Respondent submitted an application that he has filed writ petition in High Court and requested for stay of proceedings by Disciplinary Committee. Respondent himself was not present. An application alongwith medical certificate was submitted by an Advocate appearing on behalf of Respondent. It also stated that Respondent was ill, hence could not appear. 8. Disciplinary Committee sent a fax message to Respondent asking him to send a copy of writ petition and stay order, if any, and matter was adjourned to 5.11.2003. Again it was adjourned for 26.12.2003 for enquiry on the specific issue, whether proceedings should be stayed or not. On this date also, Complainants were present. Respondent was represented through Counsel. Both advanced their submissions. Matter was then adjourned to 30.1.2004, when both Complainants were present but on behalf of Respondent a letter was received by Disciplinary Committee stating that Respondent has approached High Court hence Disciplinary Committee must stay proceedings. In the interest of justice, Disciplinary Committee adjourned the matter with the last opportunity to Respondent to remain present on the next date else it shall proceed ex parte and fixed the matter for 3.3.2004. On the next date fixed, only Complainants were present and Respondent did not appear. In the interest of justice, Disciplinary Committee adjourned the matter with the last opportunity to Respondent to remain present on the next date else it shall proceed ex parte and fixed the matter for 3.3.2004. On the next date fixed, only Complainants were present and Respondent did not appear. A fax message was received by ICAI from the office of Respondent requesting adjournment. Disciplinary Committee noted that request for adjournment was frequently accepted in the past giving sufficient opportunity to Respondent but he has not availed the same, hence there was no occasion to defer the matter further. Consquently, proceedings continued and concluded ex parte against Respondent. Disciplinary Committee thereafter submitted its report on 2.2.2005 recording its finding in paras 21 to 28 of report which read as under : 21. The Committee has considered the rival contentions, the statement of the witness and the various documents submitted before the Committee. This is a case where the allegation is that the Respondent has defrauded the Complainants. It is important to analyse the following facts which emerge out of the documents submitted by the parties and the submissions made at the time of hearings which took place before the Committee. (i) The Respondent was a Statutory Auditor of RIL. (ii) The Respondent has admitted that he had met the Complainants in the month of February/ March, 1995 and the investment was made by the Complainants. (iii) The Respondent has also admitted that he helped Mrs. Parwati Agrawal in the procedural part for the purpose of making share application in RIL. This fact has also been confirmed by RIL in their letter dated 16th June, 1999 whereby it has been informed to Delhi Police that the Respondent has completed the entire formalities for investment in shares by DFL and he was business associate of the complainants. (iv) The Respondent has taken the delivery of the Share Certificates from RIL. (v) The Respondent confirmed that he has taken the shares from Mrs. Parwati Agrawal. (vi) Shares were disposed of on the basis of the delivery taken by the Respondent from Mrs. Parwati Agrawal and he was the person through him the further delivery to the prospective buyers have taken place. (vii) That the authority letter on the basis of which delivery was taken by the Respondent was forged. Parwati Agrawal. (vi) Shares were disposed of on the basis of the delivery taken by the Respondent from Mrs. Parwati Agrawal and he was the person through him the further delivery to the prospective buyers have taken place. (vii) That the authority letter on the basis of which delivery was taken by the Respondent was forged. The Respondent as well as the Company M/s. Rungta Irrigation Ltd. has not rebutted this fact though it is being contended that this forged letter was delivered by employee of the Complainants. The Institute’s office also received a letter from office of the Assistant Commissioner of Police: CBT: EOW: Crime Branch, New Delhi mentioning that the authority letter dated 23.11.1993 purportedly signed by Mrs. Parwati Agrawal was opined to be forged according to the FSL Report dated 31.5.1999. (viii) The Respondent does not have any evidence or document that he has delivered the shares certificates to Mrs. Parwati Agrawal after taking delivery from RIL. (ix) That the Respondent does not have any evidence that he had any authority to sell these shares, which admittedly got sold and transferred in the record of the Company, besides in the name of the various shareholders, in the name of Apex Finance Ltd. from which as per his own reply he has arranged loan for Mrs. Parwati Agarwal and as such he was associated with Apex Finance Ltd. This fact gets further support from the fact that a sum of Rs. 4,10,000/- is outstanding as an advance in the Balance sheet of M/s. Apex Finance Ltd. as on 31.3.1996 in the name of the Respondent. (x) Apex Finance Ltd. was an associated company of RIL, as is evident from the fact that M/s. Rungta Irrigation Ltd. has given a substantial amount towards share application. (xi) The Respondent was a Director in Palm Global Finance Ltd. (previous name of Apex Finance Ltd.) alongwith Mr. S.K. Rungta as is evident from Form No. 32 filed with Registrar of Companies and in the annual return of the Company. (xii) The Complainants had made investments in share of RIL, through DFL and as per letter dated 13th March, 1995 written by Mr. S.K. Rungta as is evident from Form No. 32 filed with Registrar of Companies and in the annual return of the Company. (xii) The Complainants had made investments in share of RIL, through DFL and as per letter dated 13th March, 1995 written by Mr. Sanjay Rungta, Managing Director of RIL, there was a confirmation to pay 4 per cent brokerage on the investment to be made in the shares of RIL and a further guaranteed return of 2.5 per cent per month and buy back of the shares after six months. The signature on this letter has been confirmed by the Company Secretary of RIL, Mr. Bhagwan Kumar who appeared as a witness before the Committee. (xiii) That there is no explanation from the Respondent who was involved in this process of investments as well as from Company, that how this brokerage and assured return was paid to the complainants. (xiv) The Respondents in his written statement has stated that the Complainants has asked the Respondent to arrange funds for purchase of a big farm house and accordingly the funds were arranged from M/s. Apex Finance Ltd. The Respondent also enclosed a statement of account on the basis of it was contended that the outstanding amount of Rs. 70 lacs has been adjusted against the sale proceeds of the shares. The Complainants has rebutted this and has stated that only a sum of Rs. 35 lacs was received and that too accounted for as income and not on account of loan as alleged by the Respondent. (xv) The above sum of Rs. 35 lacs can be co related with the payment which the Managing Director has confirmed in his letter dated 13th March, 1995 to the Complainants for investment in the shares of Rungta Irrigation Ltd. (xvi) The Respondent in his written statement has referred to another Company M/s Vatsal Investments Ltd. of which it has been alleged, Mrs. Parwati Agarwal was also debtor, but surprisingly no amount, no details, no copy of account has been submitted. Further the sale proceeds of 5,00,000 shares @ Rs. 20 per share has been adjusted in this copy of account despite the admitted fact that there was no permission from RBI to sell these shares. Parwati Agarwal was also debtor, but surprisingly no amount, no details, no copy of account has been submitted. Further the sale proceeds of 5,00,000 shares @ Rs. 20 per share has been adjusted in this copy of account despite the admitted fact that there was no permission from RBI to sell these shares. (xvii) The Respondent has not produced any document or evidence to support his statement that loan was given by Apex Finance Ltd. The Respondent except filing a copy of statement of Mrs. Parwati Agarwal with M/s Apex Finance Ltd. on plain paper, that too without any confirmation has not submitted any other evidence. There is no material to support the explanation of the Respondent that it was a loan only. Nor there is any authorization from the Complainants to sell the shares registered in the name of M/s Durga Finance Ltd. an Overseas Corporate Body of the Complainants and to adjust the sale proceeds against the alleged loan in the name of Mrs. Parwati Agarwal. (xviii) There is no explanation from the Respondent how the other shares reached in the hands of 75 odd individual buyers and what was the mode of sale of these shares. 22. In view of above facts and analysis, the Committee noted that as per the Complainants this delivery was unauthorized as no authority letter was issued by Mrs. Parwati Agarwal. The fact that the authority letter was not signed by Mrs. Parwati Agarwal is also on record and has not been rebutted either by the Respondent or by RIL. The Respondent’s and the Company’s contention is that this letter was delivered by one Mr. Sunil Kumar but the fact remains that this letter was a forged letter and not signed by Mrs. Parwati Agarwal. In the circumstances, the delivery taken by the Respondent was unauthorized. Further as per SEBI guidelines, the share certificates have to be sent by registered post and normally should not have been delivered in the manner in which it is being contended by the Respondent as well as RIL. 23. The contention of the Respondent that he has delivered the share certificates to Mrs. Parwati Agrawal after having received the same from RIL and the same was again delivered back by Mrs. Parvati Agarwal for further sale by the Respondent cannot be accepted. 23. The contention of the Respondent that he has delivered the share certificates to Mrs. Parwati Agrawal after having received the same from RIL and the same was again delivered back by Mrs. Parvati Agarwal for further sale by the Respondent cannot be accepted. The Respondent has not been able to bring any material or evidence in support of his contention. The Respondent has received the share certificates as per his own contention from RIL after giving a receipt to the Company. If that be so, it is difficult to accept that the Respondent delivered back the certificates to Mrs. Parwati Agarwal without obtaining any receipt for the same. 24. The Respondent, as per his own contention, has submitted that the share certificates were delivered back by Mrs. Parwati Agarwal alongwith the transfer deed for selling the same. If that be so, how those shares have been sold and how the money has been accounted for in respect of the shares sold to 75 individual persons, the Respondent has failed to give any explanation and justification. Moreover, the Respondent in his letter dated 5th March, 1999 addressed to the Additional DCP, New Delhi has stated that he was willing to arrange for re-transfer of 5,75,000 shares transferred in the name of M/s provided they returned back the amount of money taken away from these Companies alongwith interest as per business practice. 25. The allegation of the Complainants is that these shares have been transferred to various persons who happen to be close associate/employees/relatives of RIL and its Directors. In this connection, the Complainants pointed out to the Committee that the witness Mr. Bhagwan Kumar, Company Secretary, RIL, who appeared before the Committee initially denied that any of these persons to whom the shares have been transferred are the employees of RIL but when he had been put a specific question in respect of one transferee, namely, Shri Baby Kaypee, the witness confirmed that he is working in the office of RIL. 26. The Committee further noted that the Respondent having admitted that the share certificates with the transfer deeds were handed over by Mrs. Parwati Agarwal to him, has not been able to produce any evidence about how the consideration received from these shareholders have been paid back to Mrs. Parwati Agarwal. These shares were allotted in the name of DFL, an overseas Corporate Body registered in Mauritius. Parwati Agarwal to him, has not been able to produce any evidence about how the consideration received from these shareholders have been paid back to Mrs. Parwati Agarwal. These shares were allotted in the name of DFL, an overseas Corporate Body registered in Mauritius. The Respondent was well aware of this fact and still in his reply has taken a stand that part of the consideration has been paid in cash though without bringing any evidence on record. 27. The Committee also noted that the Respondent alongwith the written statement enclosed a letter dated 16th June, 1999, written by RIL to the Joint Commissioner, of Police ( Crime), Delhi as part of his defence whereby it has been claimed by the Company that the dividend cheques were handed over personally to the Respondent. The Respondent has nowhere been able to explain why he took personal delivery of the dividend cheques. It is interesting to note that in this letter RIL has stated that the Respondent was having business association with the Complainants and he was enjoying authority of the complainants. 28. The Committee noted that the entire explanation of the Respondent has been that he is being falsely implicated. The facts as brought on record and as analysed above do not support the explanation given by the Respondent. The Respondent being the Statutory Auditor of RIL, has taken delivery of the shares registered in the name of DFL. He has failed to bring any evidence on record that these shares were delivered back to DFL. The Respondent has admitted that he has received back the shares from the shareholders. These shares have been disposed of by the Respondent and the Respondent has failed to bring any material or evidence on record that these shares were disposed of as per the instructions of the concerned shareholders and the sale proceeds of the same have been accounted for as per the directions or instructions of the Complainants. The Committee further noted that the Respondent has taken delivery of the shares on an authority letter which was forged and the fact which has not been rebutted by the Respondent as well as the Company. Moreover, the Committee also noted from the letter received from office of the Assistant Commissioner of Police: CBD:EOW:Crime Branch, New Delhi that the authority letter dated 23rd November, 1995 purportedly signed by Mrs. Moreover, the Committee also noted from the letter received from office of the Assistant Commissioner of Police: CBD:EOW:Crime Branch, New Delhi that the authority letter dated 23rd November, 1995 purportedly signed by Mrs. Parwati Agarwal was opined to be forged according to the FSL Report dated 31st May, 1999.” 9. In view of the aforesaid findings, Disciplinary Committee drawn its conclusion holding Respondent guilty of charges levelled by Complainants falling within meaning of “other misconduct” under Section 22 read with Section 21 of Act, 1949. It also noted the conduct of non-cooperation on the part of Respondent. 10. After receiving report dated 2.2.2005 from Disciplinary Committee, the same was forwarded to both the parties i.e. Complainants and Respondent, vide ICAI’s letter dated 18.1.2007. Both parties were directed to submit their written statement, if any, to ICAI and also to intimate whether they propose to appear before Council, either in person or through a Member of ICAI, duly authorisized by them, to make oral submissions. Vide ICAI letters dated 1.3.2007 and 29.3.2007, parties were informed that Disciplinary Committee’s report would be considered by Council of ICAI in the meeting held between 12.3.2007 to 14.3.2007 and 10.3.2007 to 11.3.2007. Complainants submitted their written statement on 7.5.2007 on the report of Disciplinary Committee but Respondent sought adjournment. ICAI accepted request for adjournement and communicated it vide letters dated 9.3.2007 and 5.4.2007, respectively. The matter was again proposed to be considered in the meeting held from 30.4.2007 to 2.5.2007. One of complainants, Mr. Mangi Lal Agarwal, appeared before Council for making oral submissions. Respondent also submitted written representation on 30.4.2007 and appeared alongwith his counsel before Council of ICAI and made oral submissions. 11. Having considered the same, Council decided to accept report of Disciplinary Committee and held Respondent guilty of “professional misconduct” and accordingly has made this Reference under Section 21(5) of Act, 1949 to this Court. 12. The facts regarding receipt of shares issued by RIL to Complainants, having been delivered to Respondent are evident from record. For taking such delivery, Respondent submitted an authority letter dated 23.11.1995 alleged to have been signed by Mrs. Parwati Agarwal and said letter was presented to RIL through a person representing himself as Sri Sunil Kumar. Shares were collected by Respondent on 16.12.1995 against a receipt issued to RIL. RIL also paid divident amounting Rs. 6,27,020/- (crores). For taking such delivery, Respondent submitted an authority letter dated 23.11.1995 alleged to have been signed by Mrs. Parwati Agarwal and said letter was presented to RIL through a person representing himself as Sri Sunil Kumar. Shares were collected by Respondent on 16.12.1995 against a receipt issued to RIL. RIL also paid divident amounting Rs. 6,27,020/- (crores). The dividend cheques and TDS certificates were also handed over to Respondent. These cheques were negotiated by DFL on 21.6.1996 and 12.12.1996 towards net divident of Rs. 5,36,100/- and Rs. 5,01,606/-, respectively. Thereafter, RIL received shares for transfer and thereafter Complainants made grievance of non-delivery of shares to them. The admission of delivery of shares has been admitted by Respondent at various places and one of such letter dated 9.3.1999, sent by Respondent to Additional Deputy Commissioner of Police, Crime Branch, New Delhi, in para 9, reads as under:- “Consequently, when I came to Delhi from Varanasi for some official work of my other clients, I collected 7,54,900 shares on 18th December, 1995 from Rungta and informed her about it.” 13. In para 10 of the said letter, Respondent said that aforesaid shares were handed over to Mrs. Parwati Agarwal personally by him at her residence at Lajpat Nagar, Delhi but no evidence to this effect has been placed on record. 14. We required repeatedly from learned counsel for Respondent to show any perversity, misreading or incorrect findings recorded by Disciplinary Authority or the view taken by Council of ICAI in accepting report of Disciplinary Committee, and making recommendation to this Court under Section 21(5) of Act, 1949 but he could not show anything. 15. Our attention was drawn by Sri Vinod Swaroop, learned counsel appearing for ICAI to the letter dated 31.7.2003 written by Respondent which is on page 585 of Paper Book, stating that since a criminal case against Respondent has been registered by Economic Wing, Delhi Police and charge-sheet has also been submitted under Sections 409, 420, 468, 471 and 120-B I.P.C., therefore, inquiry proceeding should be defered. Sri Swaroop submitted that no serious attempt was made by Respondent to clear charge levelled against him. He also drew our attention to the two letters, dated 30.3.1995 addressed by Managing Director, RIL to M/s Durga Finance Limited, and 9.2.1996 addressed by Managing Director, RIL to Respondent showing collusion between RIL and Respondent, and playing fraud with Complainants. Sri Swaroop submitted that no serious attempt was made by Respondent to clear charge levelled against him. He also drew our attention to the two letters, dated 30.3.1995 addressed by Managing Director, RIL to M/s Durga Finance Limited, and 9.2.1996 addressed by Managing Director, RIL to Respondent showing collusion between RIL and Respondent, and playing fraud with Complainants. He also placed before us report sent by Inspector, Crime Branch, Delhi Police endorcement, dated 22.6.2000, verifying that both the letters contained genuine signature of Mr. Sanjay Rungta, Managing Director, RIL as verified by G.E.G.D. Hyderabad, on a query made by one of the complainant Mr. Mangi Lal Agarwal. He, therefore, submitted that it was a clear case of “unprofessional conduct” amounting to misconduct on the part of Respondent which has been found proved on the material on record and in absence of anything otherwise shown by learned counsel appearing for Respondent, we find no reason to take a different view in the matter. 16. We, therefore, express, our agreement with the findings recorded by Disciplinary Committee and accepted by Council of ICAI that Respondent is guilty of “other misconduct” falling under Section 22 read with Section 21 of Act, 1949. 17. Now we come to the question of punishment. A Chartered Accountant has a pious duty, having fiduciary relation with his client. He indulged in financial transactions in respect whereto people have great faith in him. In the present case, Respondent had not only cheated Complainants but has also played an active role in defrauding with the huge money of more than four crores of Complainants and benefited himself in a wholly illegal manner. It is a very serious thing. In our view, such persons should not be allowed to remain on the Roll of ICAI by serving punishment for a limited period. They may again have opportunity to cheat the people after serving the sentence. Here is a Chartered Accountant, that too, a senior Chartered Accountant who was a Fellow Member and hence it deserved to be treated more sincerely and very strictly. 18. In fact, ICAI in such matters should have shown a policy of “zero tolerance”. Any person who has such a blot should not be allowed to remain a Member of ICAI for all times to come. 19. 18. In fact, ICAI in such matters should have shown a policy of “zero tolerance”. Any person who has such a blot should not be allowed to remain a Member of ICAI for all times to come. 19. We, unfortunately, find it beyond comprehension as to why a just an eye-wash attitude has been addopted by ICAI by recommending removal of name of Respondent from register of Membership of ICAI only for a period of one year so that he may again join and indulge in similar activities. ICAI is a statutory body, owe responsibility to the people at large. It is answerable and accountable to the people in general for any act of misconduct, which also amounts to a criminal offence, committed by its members. If a message is given by ICAI that it takes such illegal acts of its Members leniently, with due sympathy towards them, instead of taking care of victims, it will be cast stigma on the credibility of statutory body like ICAI. It will convey a wrong message to the entire people in general of this country. It will also erode confidence and impiety of the statutory obligations and duties imposed upon ICAI by Parliamentary enactment. 20. Looking to the entire facts and circumstances of the case, though initially we were of the view that here is a fit case where respondent’s name should be recommended to be removed from register of Membership, permanently, but since this matter has already remained pending for quite long time and Respondent is more than 70 years of age, having virtually served his professional career to a large extent, we hold that he should be awarded punishment of removal of his name from Register of Membership of ICAI for a period of five years which shall commence from the date it is so notified by ICAI. 21. We order accordingly. 22. The Reference is answered in affirmance subject to modification of punishment and stands disposed of accordingly. 23. Let a copy of this judgment be sent forthwith to ICAI for consequential action without any further delay.