JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned advocate Mr. B.S. Soparkar with learned advocate Ms. Swati Soparkar for the applicant – Council of the Institute of Chartered Accountants of India, who has made this Reference, in its 267th meeting held on 10th and 11th April, 2007 at New Delhi against the respondent – Shri Bhupesh Kumar R. Patani, by drawing the statement of his case under Section 21(5) of the Chartered Accountants Act, 1949 (hereinafter referred to as “the Act”). 2. This Court, vide order dated 20th June 2009, issued notice to the respondent. It appears that the notice was not served upon the respondent on the returnable date i.e. 17th July 2009. Therefore, the applicant was directed to take steps to serve notice upon the respondent before the next date of hearing. The cause title shows that thereafter, the notice was served upon the respondent and therefore, the matter is taken up for hearing. 3. Notice is also published in the newspapers of India and Canada in the year 2009. The affidavit of publication dated 27th October 2009 filed by the applicant states that notice of publication was served upon Shri Bhupesh Kumar R. Patani vide Electronic Mail dated 13th October 2009. A copy of publication is annexed with the affidavit. 4. The applicant – Institute has drawn the statement of case narrating the facts of the case and the proceedings conducted by the Disciplinary Committee and the decision of the Council of the Institute of Chartered Accountants accepting report of the Disciplinary Committee holding that the respondent – Chartered Accountant was guilty of professional misconduct within the Clauses (5), (6) and (7) of Part – I of the Second Schedule read with Section 21 of the Act. The Council, therefore, decided to recommend to the High Court that the name of the respondent be removed from the register of members for a period of six months. 5. The disciplinary inquiry was initiated against the respondent under Section 21 of the Act on the basis of the complaint of Dr. Jayatilal Manilal Shah, Chairman, Rahil Housing Ltd. (hereinafter referred to as “the complainant”) making various allegations against Shri Bhupesh Kumar R. Patani - respondent, Chartered Accountant, Proprietor of M/s. Bhupesh Patani and Company. 6. 5. The disciplinary inquiry was initiated against the respondent under Section 21 of the Act on the basis of the complaint of Dr. Jayatilal Manilal Shah, Chairman, Rahil Housing Ltd. (hereinafter referred to as “the complainant”) making various allegations against Shri Bhupesh Kumar R. Patani - respondent, Chartered Accountant, Proprietor of M/s. Bhupesh Patani and Company. 6. In the complaint dated 16th July 2004 filed by the complainant, following allegations were made against the respondent: “1.1 The Respondent has deduced and incorporated a false and misleading conclusion at the end of his General Search/Inspection report dated 13.11.2003 taken by him, with intent to misinform, mislead, unjustly confuse Dyaneshwar CHS Ltd (Sale Agreement Company on 8.6.95) third parties and persons who are dealing with the Complainant. 1.2 The Respondent disregarded the Form No. 32 duly signed by the Chairman, Dr. Jayantial M. Shan at document entry No. 34, which from the record appears as lodged on 12.5.2003 registered on 22.5.03 pertaining to the cessation of his client, Shri Bhogilal Atmaram Patel as a Director of the Company with effect from 30.4.2003 by the Complainant due to misleading and misconduct of affairs done by the said Shri Bhogilal Patel with the Rahil Housing Ltd (hereinafter referred to as Company) for his ulterior motives. 1.3 The Respondent regarded the subsequent pre-dated (27.11.98) Form No.25C (where by the said Bhogital A. Patel is allegedly so called appointed as Managing Director but there was no board meeting held on 7.1.98 and passed any such resolution at document entry No.35 which appears from his own search report and recorded as lodged on 22.5.2003 registered on 27.5.2003 and signed by the then Director Shri Shantial P Kachalia (since removed) as being valid. He was questioned specifically about the fact that his very same search report cogently bears out a previous document entry No.34, the fact that the said Shri Bhogial A Patel ceased to be the Director of the Company with effect from 30.4.2003. 1.4 The Respondent has regarded the document at entry No. 37 lodged on 25.6.2003, registered on 25.6.2003, pertaining to removal of Chairman (1) Shri Jayantilal M. Shah, (2) Shri Manoj J. Shah (3) Shri Jay J. Shah (4) Ms. Purnima R. Kanchanwalaand (5) Shri Shhekhar S. Girdhar with effect from 23.8.2003 to which Form No. 32 is filed and signed by the sad sacked ex-Director. Purnima R. Kanchanwalaand (5) Shri Shhekhar S. Girdhar with effect from 23.8.2003 to which Form No. 32 is filed and signed by the sad sacked ex-Director. Shri Bhogila A. Patel as being said specifically view of the fact that as per the very same record the sad Shri Bhogilal A. Patel ceased to be the Director of the Complainant with effect from 30.4.2003. 1.5 The Respondent in conspiracy with Shri Bhogilal A. Patel have also run counter to his professional ethics and dared to declare Shri Rakesh Natwarlal Patel and Shri Hashmukh Bhanuprasad Patel to have been appointed as so called Directors of the Company on 1.6.2003 by Form No.32 document at entry No.30 registered on 26.6.2003 and signed by said ex-Director Shri Bhogilal A. Patel completely turning blind eyes the fact that Shin Bhogilal Patel was duly sacked with effect from 30.4. 200. 1.6 The impugned Form No.32 signed by ex-Director Shri Bhogial A Patel was prima facie for ceasing (1) Shri Jayantital M Shah (2) Shri Manoj Shah (3) Shri Jay J. Shah (4) Miss Purnima Kanchanwala and (5) Shri Shekhar S. Girdhar as the Directors of the Company with effect from 23.6.2003 ought not to have been reckoned on 13.11.2003 by the Respondent as legally valid document since Shri Bhogilal A. Patel ceased to be Director of the Company with effect from 30.4.2003. Moreover in view of the fact that the appointment of Shri Rakesh Natwarlal Patel and Shri Hashmukh Bhanuprasad Patel has also not been made at the duly convened and held meeting of the Board of Directors of the Company and the said prescribed Form No.32 dated 1.6. 2003 are ab initio null and void. The above sad Form No.22 bearing document No. 37 and 36 are signed by the sacked ex-Director Shri Bhogilal Atmaram Patel who has no locus standi to do so. Thus the Respondent has for no purpose given false and fabricated conclusion with ulterior motive. 1.7 Shri K.H. Gandhi Advocate of the Complainant called upon by the Respondent vide his letter dated 17.2.2004 to give valid explanation (if at all any) in justification of his aforesaid alleged gross negligence and/or serious misconduct or alternately to tender his unconditional apology in writing within 15 days for incorporating false, fabricated, bogus and fraudulent conclusion at the end of his impugned search/inspection report dated 13.11.2003. The Respondent has replied vide his letter dated 23.2.2004 in only one line appreciated your investigation and say sorry for inconvenience caused to anybody but not agreed to withdraw his false and fraudulent conclusion made by him. 1.8 The aforesaid charges, proved would render the Respondent guilty of professional misconduct within the meaning of Clauses (5) (5) and (7) of Part of the Second Schedule read with Section 21 and 22 of the Chartered Accountants Act, 1949.” 7. The respondent submitted his written statement on 16th November 2004 on receipt of copy of the complaint along with letter dated 9th November 2004 issued by the Institute. The complainant submitted rejoinder on 22nd December 2004 and the respondent submitted his comments on 21st January 2005. The applicant - Council of the Institute, its meeting held in August 2005, formed the prima facie opinion on the basis of the complaint, reply and rejoinder and in accordance with the provisions contained in Regulation 12(11) of the Chartered Accountants Regulations, 1988 (for short, “the Regulations”) that the respondent was guilty of professional and/or other misconduct and accordingly, referred the case to the Disciplinary Committee constituted under the Act for inquiry. 8. After the case was fixed for inquiry before the Disciplinary Committee on 15th June 2006, the same was adjourned from time to time. The notice of hearing could not be served upon the respondent and on inquiry, it was found that the respondent was not staying at the place and he has shifted to Canada. 9. Accordingly, the Disciplinary Committee conducted the matter ex parte against the respondent and examined the complainant and after receipt of final submissions from the complainant, the case was closed. 10. The Committee submitted its report dated 3rd October 2006. After perusal of the documents on record and considering the submissions of the respondent in the written statement as well as written submissions made on 21st January 2005, the Disciplinary Committee was of the opinion that the respondent was guilty of professional misconduct falling under Clauses (5), (6) and (7) of the Act recording the following findings: “11. The Committee has gone through all the papers filed by the Complainant, detailed submission made by Complainant and the replies filed by the Respondent. The Committee has gone through all the papers filed by the Complainant, detailed submission made by Complainant and the replies filed by the Respondent. The Respondent has chosen not to even inform his latest address to the Institute wherein the notice(s) could have been served upon him and this shows his casual approach. In view of above, notwithstanding the fact that he has migrated to Canada, permanently or not, notices were sent at the last available addresses as per Institute's record, which were returned back with postal remarks left. The official who went personally at the last available address of the Respondent, also informed that there was no available and on enquiry from his neighbor, he has gone to Canada. The Committee, therefore, proceeded ex parte inasmuch as even if the Respondent would have been there the blatant incorrect search report issued him leaves no room of doubt to hold that the Respondent had blatantly issued a search report which is untrue and false. The Complainant drew the attention of the Committee to the fact that based on that false certificate the Company lost a big contract for huge financial loss and has also brought dispute to the Company. The Complainant also drew the attention on the order of the Metropolitan Magistrate in the Court of Mumbai in the Civil Complaint No. 684 filed under Section 404, 467, 467, 468, 468, 471, 471, 472 & 420 read with 120B of the Indian Penal Code by Dr. Jayanti Lal Shah against Shri Bhogilal Patel and erstwhile Directors wherein Court was satisfied prima facie about such irregularities and order the investigation. By the said order, the Court directed PSO Borivally Police Station to investigate this matter as per section 156 (3) of the Criminal Procedure Code. The Complainant drew the attention of the Committee to the fact that the other Director, Shri Bhogilal Patel was arrested on 17th March, 2005 and was in the police custody and was released on 24th March, 2005. Various correspondence and papers filed by the Complainant goes to prove that Shri Bhogilal Patel and others were correctly removed as Directors from the Company, a notice from the senior advocate Mr. D.N. Pandesay mentioning that revocable general power of attorney given to Mr. Bhogilal Patel is cancelled with immediate effect and directing him not to act and sign other papers and notices. D.N. Pandesay mentioning that revocable general power of attorney given to Mr. Bhogilal Patel is cancelled with immediate effect and directing him not to act and sign other papers and notices. All this goes to prove that Shri Bhogilal Patel had falsely filed various forms with ROC back dating them and trying to prove that he had continued in the Company as Director whereas the facts were otherwise. The forms like Form No.32 and other forms which were in the records of ROC clearly prove that the certificate issued by the Respondent was not only casual but was by wrongly relying on the incorrect documents, apparently with a view to favour the wrong doers. 12. Further, the Respondent has not been in a position to defend his case in any manner whatsoever. The reply given by him is also very lame and untenable. Notwithstanding heavy financial losses and other consequences that Company had to face, it is clear that the Respondent had issued a false and misleading conclusion instead of issuing chronological events in the Company from time to time. The false and incorrect certificate issued by the Respondent clearly goes to prove him guilty of professional misconduct falling within the meaning of Clauses of (5), (6) & (7) of Part I of the Second Schedule. Inasmuch as the practising member has failed to disclose the material fact known to him, which was not disclosed in the report, but the disclosure of which was necessary to make his report not misleading. Similarly, the practicing member has failed to report material misstatement known to him to appear in the report with which he was concerned in his professional capacity. The Respondent, is guilty under Clause (7) because as a practising member he failed to be vigilant in the conduct of his professional duty and have issued the certificate which has been proved by the Complainant convincingly to the Committee that it was incorrect, untrue and false.” 11. Thereafter, report of the Disciplinary Committee was forwarded to both the complainant and the respondent with a request to send the written representations, if any, in the matter and they were also informed that report of the Disciplinary Committee would be considered in one of the forthcoming meetings. The complainant submitted his written representation dated 4th April 2007. But the respondent did not submit any representation. The complainant submitted his written representation dated 4th April 2007. But the respondent did not submit any representation. No oral submission was made either by the complainant or by the respondent before the Council. The Council, thereafter, in the meeting held on 11th April 2007, after due deliberations, decided to accept the report of the Disciplinary Committee and accordingly, held that the respondent was guilty of his professional misconduct within the meaning of Clauses (5), (6) and (7) of Part – I of the Second Schedule read with Section 21 of the Act. The Council also decided to recommend this Court that the name of the respondent be removed from the register of members for a period of six months. 12. Accordingly, this Reference was forwarded. 13. Learned advocate Mr. B. S. Soparkar with learned advocate Ms. Swati Soparkar for the applicant – Institute of Chartered Accountants submitted that the Disciplinary Committee has given a categorical finding for professional misconduct of the respondent and therefore, it is accepted by the Council of the Institute for removing name of the respondent from the register of members for a period of six months, which is required to be accepted. It was submitted that the Disciplinary Committee, after going through all the papers filed by the complainant and the written submissions made by the respondent, has taken note of the conduct of the respondent, as he has chosen not to even inform his address to the Institute whether the notice could have been served against him. It was, therefore, pointed out that the respondent was having very casual approach in the disciplinary proceedings conducted before the Institute. 14. It was pointed out that care was taken by the Institute to serve the notice to the respondent by sending the official of the Institute personally at the last available address of the respondent, but he was not available and it was informed by the neighbor that the respondent has gone to Canada. 15. It was, therefore, submitted that the Committee was justified in proceedings ex parte against the respondent. 16. It was pointed out that the allegation of issuance of false certificate made by the complainant is proved resulting into huge financial loss to the complainant. 15. It was, therefore, submitted that the Committee was justified in proceedings ex parte against the respondent. 16. It was pointed out that the allegation of issuance of false certificate made by the complainant is proved resulting into huge financial loss to the complainant. It was submitted that the certificate issued by the respondent was very casual, but was wrongly issued relying upon incorrect document so as to favour the wrong doers, as narrated in the finding of the Disciplinary Committee. 17. It was further submitted that because of such false and incorrect certificate issued by the respondent clearly goes to prove him guilty of professional misconduct. 18. Learned advocate Mr. Soparkar invited the attention of this Court to the search report dated 13th November 2003 prepared by the respondent on the basis of the inspection taken with the office of the Registrar of Companies and the documents placed on record before the Disciplinary Committee by the complainant, to point out that the respondent has stated false information in the search report with regard to holding of shares of Bhogilal Atmaram Patel, one of the Directors of M/s. Rahil Housing Ltd. Learned advocate Mr. Soparkar, thereafter, referred to the letter dated 23rd February 2004 issued by the respondent addressed to K. H. Gandhi, Advocate regarding search report dated 13th November 2003, wherein it is admitted by the respondent that there was mismanagement in the company and there were invalid record of ROC record. 19. A reference was thereafter made to the letter written by the Senior Inspector of Police, Borivali Police Station, Mumbai to the Assistant Registrar of Companies, Ahmedabad dated 6th September 2005 on the basis of the discrepancy found in the ROC record compared with Form No.32 filed by Rahil Housing Ltd on 12th May 2003 duly signed by the Chairman, Dr. Jayantilal Shah in respect of Bhogilal Patel, who was removed by the company from the office with effect from 30th April 2003, whereas Form No.32 filed on 21st May 2003 shows that Bhogilal Patel was reappointed as Director. Jayantilal Shah in respect of Bhogilal Patel, who was removed by the company from the office with effect from 30th April 2003, whereas Form No.32 filed on 21st May 2003 shows that Bhogilal Patel was reappointed as Director. It was, therefore, submitted that the respondent has issued false certificate which has resulted into the professional misconduct, because on the basis of search report, the complainant suffered loss of contracts and there was misrepresentation by the Director Bhogilal Patel, who was removed before the Management Committee of Dhyaneshwar Society that he was entitled to deal with the development of the property of the company. 20. It was submitted by the learned advocate Mr. Soparkar, on the basis of such false report issued by the respondent, that contention raised by the complainant of causing loss to the company was even corroborated by the investigation of police officer. It was, therefore, submitted that the Disciplinary Committee and the Council have rightly held the respondent guilty for professional misconduct under Clauses (5), (6) and (7) of Part – I of the Second Schedule read with Section 21 of the Act. In support of his submissions, reliance was placed on the decisions of the Hon’ble High Court of Delhi in the case of : (1) Council of the Institute of Chartered Accountants of India vs. Manoj Kumar Sachdeva reported in [2011] 199 Taxman 64 (Delhi), (2) Council of Institute of Chartered Accountants of India vs. Kul Rattan Bhasin reported in [2012] 18 taxmann.com 273 (Delhi) and (3) Council of Institute of Chartered Accountants of India vs. R. K. Tayal reported in [2008] 167 Taxman 297 (Delhi). 21. The Hon’ble Delhi High Court in the case of Manoj Kumar Sachdeva (supra) held as under: “5. From the averments of the complainant, as have been noted above, it would be seen that the respondent, who was a professional Chartered Accountant, was engaged by Oriental Bank of Commerce for conducting regular inspection of this bank. He misused his position by persuading the complainant to discount various cheques on the false assurances. Not only that, he also persuaded the complainant bank to get car loan by presenting forged and fabricated registration certificate. All that the respondent did in his position as Chartered Accountant was beyond the realm of his duties as Chartered Accountant and were all centered towards defrauding and cheating the complainant bank by deceitful representations. Not only that, he also persuaded the complainant bank to get car loan by presenting forged and fabricated registration certificate. All that the respondent did in his position as Chartered Accountant was beyond the realm of his duties as Chartered Accountant and were all centered towards defrauding and cheating the complainant bank by deceitful representations. All his activities right from the inception of his assignment were focused towards making gains to himself and losses to the complainant bank by various acts of cheating, forgery, fraud, mis-representation, etc. In fact, the respondent succeeded in his nefarious acts. The Disciplinary Committee gave him sufficient opportunity to controvert this, but the respondent has deliberately not chosen to participate in the proceedings before the Disciplinary Committee and the Council. Even after the report of the Disciplinary Committee, respondent did not choose to send any representation not only that he did not appear in person he did not choose to file any counter affidavit in the case before us also. The respondent seems to have nothing to controvert the allegations against him. From all this, we are of the considered view that the Disciplinary Authority was right in holding the respondent guilty of other misconduct under Section 22 read with Section 21 of the Act. Keeping in view the nature and gravity of the misconduct, we are in agreement with the punishment awarded to the respondent by the Council.” 22. The Hon’ble Delhi High Court in the case of Kul Rattan Bhasin (supra) held as under: “31. The Code of Conduct issued by the Institute of Chartered Accountants of India records that it is necessary for the Institute "to guide and compel the members to live up to these high standards. The prestige and confidence enjoyed by a profession, to a great extent, is dependent on strictness and scrupulosity with which such a Code is interpreted and not necessarily by legislation or regulations as much by self-discipline". It is also stated that the Council in addition to "professional misconduct" as defined in Section 22 of the Act has been given power to inquire into the conduct of any member of the institution under circumstances other than those specified in the Schedules to the Act. The Council is not debarred from inquiring into the conduct of any member of the institute under any other circumstances, as asserted in the Code. The Council is not debarred from inquiring into the conduct of any member of the institute under any other circumstances, as asserted in the Code. This aspect is fully borne out by the expression "professional or other misconduct" occurring in Section 21. The power of the Council to inquire into "other misconduct" which is not mentioned in the Schedules is placed beyond any pale of controversy by the decision of the Supreme Court in Institute of Chartered Accountants v. B. Mukharajea (supra) in which the Supreme Court has, in terms, held that, if a member of the Institute is found, prima facie, guilty of conduct which, in the opinion of the Council, renders him unfit to be a member of the Institute, even though such conduct may not attract any of the provisions of the schedule, it would still be open to the Council to hold an inquiry against the member in respect of such conduct and a finding against him in such an inquiry would justify appropriate action being taken by the High Court. It was held that though the definition of the material expression used in Section 21(1) refers to the acts and omissions specified in the schedule, the list of the said acts and omissions is not exhaustive; and in any event, the said list does not purport to limit the powers of the Council u/s 21(1), which may otherwise flow from the words used in the said Sub-section itself. It was held that it would not be right to hold that such disciplinary jurisdiction can be invoked only in respect of conduct falling specifically and expressly within the inclusive definition given by Section 22. Members of the Institute are bound to act in a manner consistent with the Chat-A-Ref-1/2007 Page 14 of 15 good reputation of the profession. They should refrain from any conduct which might bring discredit to the institute. Members should be guided not merely by the terms, but also by the spirit of the Code of Conduct and the fact that particular conduct does not receive mention does not prevent it from being unacceptable or discreditable conduct, thus making a member liable to disciplinary action. After all, Code of Ethics draws community ethics and moral principles into the professional institutions. After all, Code of Ethics draws community ethics and moral principles into the professional institutions. There is a need to arrive at a balance between the interests of the member as a citizen in expressing views in the matters of public concern and the interest of the institution in preserving the status and dignity of the professionals rendering service as Chartered Accountants. 32. The facts of the present case reveal that the Respondent has proved himself to be capable of infamous conduct. The recommended punishment of removal of his name for two years would, in our opinion, be a mockery of the proceedings in view of the serious nature of misconduct. Taking into consideration his age as 58 years as per documents submitted before the Income Tax Office, in our opinion, interest of justice will be met if the Respondent is removed forthwith from the membership of the institute for a period of five years. We, accordingly, while upholding the finding of the Council holding the Respondent guilty of misconduct, direct that the Respondent be removed forthwith from the membership of the institute for a period of five years. The Reference stands disposed of accordingly, with no order as to costs.” 23. The Hon’ble Delhi High Court in the case of R. K. Tayal (supra) held as under: “13. It is clear from the record that the Respondent No. 1 has been grossly negligent in issuing the certificates dated 10th February, 1998 and 26th December, 1998 and he was very much aware of the purpose for which the certificate were being issued. 14. Based on these certificates of Respondent No. 1, the complainant-bank had disbursed an amount of Rs. 315 lakhs to the Company. As per certificate dated 26-12-1998 a sum of Rs. 6.61 lakhs has already been shown as amount paid to the complainant-bank for upfront fee while the said amount was received from funds inducted by the promoters before disbursement of the said amount. Further, it was mentioned that sum of Rs. 12,55,117/- and also Rs. 7,25,348/- had been paid to the complainant-bank for interest of loan of Rs. 315 lakhs but in fact the aforesaid two amounts were never received by the complainant-bank. So the Respondent No. 1 did not verify the record properly before issuing the certificates dated 10-2-1998 and 26-12-1998 and these certificates did not reflect the end use of the funds. 15. 7,25,348/- had been paid to the complainant-bank for interest of loan of Rs. 315 lakhs but in fact the aforesaid two amounts were never received by the complainant-bank. So the Respondent No. 1 did not verify the record properly before issuing the certificates dated 10-2-1998 and 26-12-1998 and these certificates did not reflect the end use of the funds. 15. The lack of responsibility displayed by Respondent No. 1 clearly shows that he had acted in a manner unbecoming of a Chartered Accountant and we agree with the conclusion of the Council recommending the removal of name of Respondent No. 1 from the register of its members for a period of three months. 16. We have examined the issue whether the punishment is justifiable in this case or not. We find that there has to be some degree of integrity and probity which is expected of a Chartered Accountant who is regularly concerned with financial transactions and on the basis of whose recommendations and certificates, financial institutions such as banks etc. disburse loans or enter into other financial transactions.” 24. Having heard the learned advocate for the applicant – Institute and considering the averments made in the allegations made in the complaint and on perusal of certificate / search report issued by the respondent on 13th November 2003, it appears that the respondent has, after narrating the details of change of Directorship along with details of Form No.32 available on 17th June 1992 on record of the Registrar of Companies, stated that “ arriving at conclusion of the existing Director as on 13th November 2003” and further stated that “ above information is taken from the records of the office of the Registrar of Companies, Gujarat State as on 13th November 2003”. It also appears that on pointing out the defects by advocate Mr. K. H. Gandhi, it was reiterated by the respondent in letter dated 23rd February 2004 that in normal course of business, he has gathered information from only the registered documents available on record at the ROC office, Ahmedabad. It appears that the Disciplinary Committee and the Council both have failed to consider the qualified certificate issued by the respondent based on the registered documents available in the office of the ROC, Ahmedabad. 25. Section 21 of Chapter V of the Act refers to misconduct of members of Institute and prescribed procedure in inquiries relating to misconduct. It appears that the Disciplinary Committee and the Council both have failed to consider the qualified certificate issued by the respondent based on the registered documents available in the office of the ROC, Ahmedabad. 25. Section 21 of Chapter V of the Act refers to misconduct of members of Institute and prescribed procedure in inquiries relating to misconduct. Accordingly, inquiry was initiated against the respondent on receipt of the complaint by the Institute from the complainant and the letter was referred to the Disciplinary Committee of the Council of the Institute. 26. Section 22 defines “professional misconduct”, which reads as under: “22. Professional misconduct defined For the purposes of this Act, the expression “profession misconduct” shall be deemed to include any act or omission specified in any of the Schedules, but nothing in this section shall be construed to limit or abridge in any way the power conferred or duty cast on the Council under sub-section (1) of Section 21 to inquire into the conduct of any member of the Institute under any other circumstances.” 27. The Second Schedule Part I reads as under: “THE SECOND SCHEDULE (See Section 21(5) and 22) PART I Professional misconduct in relation to chartered accountants in practice requiring action by a High Court A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he – * * * (5) fails to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary to make the financial statement not misleading; (6) fails to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity; (7) is grossly negligent in the conduct of his professional duties;” 28. The Disciplinary Committee and the Council have invoked Clauses (5), (6) and (7) of the Act to impose punishment of removal of name of the respondent from the register of members. On perusal of the aforesaid Clauses, Clause (5) can be invoked if the respondent would fail to disclose a material fact know to him which is not disclosed in a financial statement. This Clause (5) would not apply in the facts of the case as the allegation is about issuance of the false certificate in the form of search report prepared by the respondent. This Clause (5) would not apply in the facts of the case as the allegation is about issuance of the false certificate in the form of search report prepared by the respondent. Similarly, Clause (6) would also not apply as the respondent has not failed to report any statement known to him to appear in a financial statement with which he is concerned in a professional capacity. Only Clause (7) can be said to have applicable on the ground that the respondent was grossly negligent in conduct of his professional duties. However, on perusal of the certificate dated 13th November 2003 and the search report, it is categorically stated by the respondent that information is taken from the records of the office of the Registrar of Companies, Gujarat State as on 13th November 2003 and further clarified in the letter dated 23rd February 2004 addressed to K. H. Gandhi, Advocate that in normal course of business, he has gathered information from only the registered documents available on record at the ROC office, Ahmedabad. Therefore, the respondent could not have been held guilty for grossly negligent in the conduct of his professional duties as he has issued certificate based on the registered documents available in the office of the Registrar of Companies, Ahmedabad. The Disciplinary Committee and the Council have also not considered the written statement of the respondent and not even referred the contents of the written statement of the respondent and arrived at a conclusion of holding the respondent as guilty of his professional negligent. The respondent, in his written statement as well as the submissions made before the Council in response to the show cause notice, contended that search report dated 13th November 2003 is only based on the registered documents available at the office of the ROC and the same was prepared in ordinary course of practice. The respondent, in his written statement as well as the submissions made before the Council in response to the show cause notice, contended that search report dated 13th November 2003 is only based on the registered documents available at the office of the ROC and the same was prepared in ordinary course of practice. It was also stated that the respondent was not the auditor of the company and none of the Directors is friend or relatives on the date of report and the management has not informed that there was internal irregularity or mismanagement in the company and only the ROC can inform about the documents available on record on 13th November 2003 with regard to the correspondence in original between the company and all the correspondence between the respondent and the ROC and the complainant are submitted to ROC on 22nd November 2004. The respondent has also informed the ROC vide letter dated 22nd November 2004 about the facts narrated in the written submissions dated 21st January 2004 filed before Institute of Chartered Accountants and only because the respondent could not remain present before the Institute, ex parte proceeding cannot result in the order of punishment without taking into consideration the facts and documents available on record as well as the written submissions made by the respondent. On perusal of the finding arrived at by the Disciplinary Committee, it has not taken into consideration the statement of the respondent that he had issued search report on 13th November 2003 based on the registered documents which were available on file in the office of the ROC, Ahmedabad and in ordinary course of practice. Therefore, it cannot be said that there is a gross negligence on the part of the respondent to issue search report on the basis of the documents available in the office of the ROC. There is nothing on record to show that the documents available on record of the ROC on 13th November 2003 are not referred to in the search report by the respondent. No finding to that effect is even recorded by the Disciplinary Committee or the Council as it appears from the findings which are reproduced hereinabove. It appears that the Disciplinary Committee has been swayed away by the submissions of the complainant and the prosecution launched against the erring Directors of the company of which the complainant is another Director. No finding to that effect is even recorded by the Disciplinary Committee or the Council as it appears from the findings which are reproduced hereinabove. It appears that the Disciplinary Committee has been swayed away by the submissions of the complainant and the prosecution launched against the erring Directors of the company of which the complainant is another Director. There is no finding that the documents available in the record of the ROC on the date of certificate was not formed part of the same and therefore, finding arrived at by the Disciplinary Committee that “the Form like Form No.32 and other Forms, which were in the record of the ROC, clearly proved that the search report issued by the respondent was not on the casual, but was wrongly relying upon the incorrect documents apparently with a view to favour the wrong doers”. Such finding of the Disciplinary Committee is without any basis. In absence of any other finding recorded and the Form No.32 relied upon was on record of the ROC as registered document to form part of the search report dated 13th November 2003. 29. In view of the above facts emerging from record, the decision relied upon by learned advocate Mr. Soparkar would not be applicable as in the case of Manoj Kumar Sachdeva (supra), the Hon’ble Delhi High Court was dealing with the case of the Chartered Accountant, who was engaged by the Oriental Bank of Commerce for conducting regular inspection of the bank and he misused his position by persuading the complainant to discount various cheques on the false assurances. In such circumstances, the Hon’ble Delhi High Court confirmed the punishment imposed by the Institute of Chartered Accountants. Similarly, in the case of Kul Rattan (supra), the facts of the said case would reveal that the Chartered Accountant – respondent proved himself to be capable of infamous conduct by submitting the forged and fabricated income in the return to obtain the loan for the client. Similarly, in the case of Kul Rattan (supra), the facts of the said case would reveal that the Chartered Accountant – respondent proved himself to be capable of infamous conduct by submitting the forged and fabricated income in the return to obtain the loan for the client. In the case of R. K. Tayal (supra), the respondent – Chartered Accountant was grossly negligent in issuing certificates, on the basis of which, the complainant - bank disbursed the amount of loan, falsely stating that the company has already spent Rs.147.21 lakhs for the project till that time including an amount of Rs.6.61 lakhs paid to the complainant – bank so as to enable the complainant – bank to disburse the loan of Rs.315 lakhs to the company into installments without verifying the record and disclosing any use of fund. In such circumstances, disciplinary action taken by the Institute was confirmed by the Hon’ble Delhi High Court. However, in the facts of the present case, the respondent has categorically stated in no uncertain terms that he has issued search report on the basis of the registered documents on record of the ROC, Ahmedabad and in absence of any finding contrary thereto arrived at by the Disciplinary Committee and the complaint is decided merely accepting without verifying record of the ROC, the Disciplinary Committee could not have come to the conclusion only on the basis of the averments and the documents placed on record by the complainant to hold the respondent as grossly negligent in conducting his professional duties as per Clause (7) of Part I of the Second Schedule read with Section 21 of the Act as clauses (5) and (6) would not be applicable in the facts of the case. 30. In view of the foregoing reasons, this Reference is hereby rejected. The punishment proposed to be imposed by the Council of the Institute of Chartered Accountants for removal of name of the respondent from the register of members for a period of six months is hereby not approved under Section 21(5) of the Act. This Reference stands disposed of accordingly.