--- title: A consultant to a bankrupt corporate group raised suspect invoices, then chased the fees through two courts at once. description: A consultant billed a collapsing corporate group under suspect agreements, then pursued the fees in two courts at once without disclosing either. He was removed for three months and fined ₹1 lakh. case_number: BOD 294/2017 file_number: PR-138/2013-DD/130/2013/BOD/294/2017 forum: board-of-discipline institute: icai decided_on: 2021-02-11 punished_on: 2024-05-23 outcome: Removal clauses: Item (2) of Part IV of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2024/05/6.-BOD-294-2017.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 294 2017, item 2 part iv first schedule, other misconduct disrepute, fabricated service agreements, suppression of court proceedings, winding up and recovery suit, board of discipline removal from register source: /icai/board-of-discipline/bod-294-2017 --- # A consultant to a bankrupt corporate group raised suspect invoices, then chased the fees through two courts at once. A Bengaluru chartered accountant took on advisory work for two Indian subsidiaries of a corporate group. When the group collapsed into bankruptcy and his fees went unpaid, he pursued the money in two different courts at the same time, without telling either what he was doing in the other.[^parties] ## What happened ```timeline A chartered accountant is introduced to two Indian companies through a business contact, travels to meet their management, and signs on to advise them on foreign exchange matters for a fee running into tens of lakhs. A second, separate engagement follows soon after, for ongoing representation before government authorities and accounts work. It is signed on the companies' side by their general manager, who the case describes as not yet a company director. Both sets of agreements carry unusually large fees, and one binds the companies not to remove any director, or change their own rules on removing one, without the consultant's written consent. The group's overseas parent is declared insolvent, and a receiver is appointed over it. Bills go out under both engagements, several of that year's carrying a stray letter in their invoice numbers that, on inspection, turns out to belong almost entirely to these same two clients. When payment does not come, legal notices go out and the firm moves in two directions at once: a winding-up case against the companies in one city, and a recovery suit freezing their board and assets in another, two days apart, with neither court told about the other. The winding-up order is granted. The recovery suits go nowhere — one part of the record says they lapsed for want of appearance, another that the consultant applied years later to withdraw them himself. By then the group's receiver has already complained to the Institute. The receiver twice tries to call the complaint off, saying the dispute has settled. The Board declines both times and finds the consultant guilty on its own reading of the facts. Punishment follows months later, and the order recording it is not released for years after that. ``` Two events, two days apart, anchor the finding. On 15 February 2012 the firm's own recovery suits at the Patiala House Courts in Delhi drew an ex parte order freezing the companies' board, their articles and their assets. Two days later, on 17 February 2012, the Andhra Pradesh High Court at Hyderabad ordered the same two companies wound up, on a winding-up petition the same firm had already set in motion with statutory notices of its own a month earlier. Neither court had been told about the other case (para 7(d)-(f)). The agreements themselves invited suspicion before any of this happened. The contracts signed in June 2011 bound the companies not to remove any director, or change their own rules on removing one, without the consultant's written consent — a condition the Board found nowhere in ordinary commercial practice: > generally such conditions are not made part of service agreements in common business parlance > and the same also shows that such conditions are not reasonable and contrary to business > practice and entering into such an agreement itself raises suspicion/doubt on the genuineness > of the said agreements (para 7(a)) Billing added to the doubt. Of all the invoices that year carrying a stray letter "A" in their numbering, the Board found: > around 65% of the billing was in respect of the said 2 companies only which were not received > by it (para 7(c)) — bills to two clients who never paid, marked apart from everybody else's. And when the Board checked what had actually become of the two companies, it found reason to doubt the whole premise of the winding-up case: years on, both were still listed "Active Compliant" on the government's company register, with no winding up ever carried through (para 7(k)). ## The clause **Item (2) of Part IV** of the First Schedule is the catch-all: "Other Misconduct" that brings disrepute to the profession or the Institute, whether or not it has anything to do with a member's professional work.[^item2] It asks only whether the conduct is bad enough for the profession's own disciplinary body to say so — it needs no other rule in the Schedule to have been broken first. The Board found the charge made out. It never conclusively decided that the agreements were forged or the invoices false — its own language throughout is "doubt is raised" and "suspicion", not a finding of forgery. What it did decide was that a member who structures his fee arrangements this way, then fights his own client in two courts at once without telling either, has behaved in a way unbecoming of a chartered accountant. ## What the respondent said His account began with how the work came about. A business contact introduced him to the companies in April 2011; he met their management in Hyderabad, submitted a proposal, and signed a foreign-exchange advisory engagement on 4 May 2011 for fees of ₹45 lakh and ₹9 lakh from the two companies respectively. He said he did the work — examining voluminous transaction records and advising on a compounding application that was in fact filed with the Reserve Bank of India — and raised his invoices strictly under the agreed terms. A second engagement, for representation before government authorities and accounts outsourcing, followed in June 2011 and ran for two months before the companies stopped paying that too. On the stray letter in his invoice numbers, he said there was no significance to it at all — merely his Bangalore office's own convention for keeping its numbering straight, something his Accounts Department could explain better than he could (para 7(c)). On fighting the companies in two forums, his defence was chronology and hardship rather than denial. Both the recovery suits and the winding-up notices were sent only after repeated reminders had gone unanswered; the companies could not pay because their own ownership was in turmoil as the wider group collapsed; and by the time he gave up on recovering anything, close to a quarter of what he might have collected had already gone on his own legal costs.[^costs] He pointed out that his engagements pre-dated the receiver's appointment altogether, that two much larger professional firms had been paid handsomely out of the same collapse while he alone was left out of pocket, and asked the Board for leniency given what the case had already cost him. ## What the Board held The Board did not treat any one fact as decisive on its own; it read the pattern as a whole. The lock-in clauses, the invoice anomaly, the timing of the two court cases and what became of them afterwards all pointed, in the Board's reading, the same way. On the litigation itself, it held: > the Respondent in a pre-planned manner and within short span of time approached two different > Forums and did not submit proper facts before the said Forums in order to create unnecessary > complications for the Complainant and other stake holders of the said companies (para 7(f)) On what followed — recovery suits pursued hard enough to freeze a company's board, then said in one place to have lapsed for non-appearance and in another to have been formally withdrawn two years afterwards — the Board saw a party trying to have it both ways, taking one position and its opposite in the same dispute (para 7(g)).[^status] Taken together, the Board held: > the conduct of the Respondent in twisting the facts of the matter while trying to recover the > alleged dues from his clients is clearly unbecoming of a chartered accountant (para 8) and concluded that he had brought disrepute to the profession and was guilty of "Other Misconduct" under Item (2) of Part IV of the First Schedule, read with Section 22 of the Act (para 9). ## The order Guilt was recorded in February 2021. The Board heard the respondent again that November on what punishment should follow, reserved its decision, and returned in December 2021 with: > the Board decided to remove the name of [the Respondent] from the Register of Members for a > period of 3 (three) months and also imposed a Fine of Rs.1,00,000/- (Rs. One Lakh only) upon > him payable within a period of 60 days from the date of receipt of the Order[^order-bracket] Three months' removal, on top of a fine, sits in the middle of the Board's punishment scale — well short of a permanent strike-off, but heavier than a reprimand or a fine alone.[^removal] The written order recording this decision was not released for another two and a half years: it carries a note that it issues pursuant to a Delhi High Court direction in an unrelated writ petition, one of a batch of stayed Board orders cleared for release in 2024.[^coram] ## Why it matters *This section is ours, not the Board's.* **A clause restraining a client's own board is a warning sign, not a service term.** These agreements barred the companies from removing any director without the consultant's consent. Treat such a demand from a client as a reason to look harder at the deal, not to accept it. **An invoice numbering quirk can outlive the dispute that created it.** Nearly two-thirds of one year's oddly numbered bills traced back to two unpaid clients alone, which alone raised doubt about when they were issued. Keep your invoice sequence unbroken and explainable. **Fighting the same client in two courts, unannounced to each other, reads as coordinated even if it wasn't.** A recovery suit freezing a company's board in one city and a winding-up petition against it in another, two days apart, read as one plan. Disclose a parallel proceeding to every forum you are in. **A client's change of heart does not end a disciplinary case.** The complainant tried twice to call off this complaint, and the Board carried on regardless. A settled dispute is not the same as a settled complaint. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: The complainant was *Shri Leif Baecklund*, Bankruptcy Receiver of *Quinn Investments Sweden A.B.*, *Quinn Logistics Sweden A.B.* and *Quinn Hotels Sweden A.B.*, all declared insolvent by a Swedish court in 2011. The respondent was *CA. Raghu Marwah (M. No. 502305)* of *M/s R.N. Marwah & Co.*, Bengaluru. The two Indian companies at the centre of the dispute, *Quinn Logistics India Pvt. Ltd.* and *Quinn Lodgings India Pvt. Ltd.*, were subsidiaries of the Swedish group under the receiver's charge; the complaint against the respondent was filed by the receiver on their behalf. [^item2]: Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 holds a member guilty of "Other Misconduct" if they are, in the opinion of the Council, guilty of any act or omission that brings disrepute to the profession or the Institute, whether or not it arises out of professional work. It is the general clause, catching conduct no more specific item in the Schedule describes. [^costs]: The respondent told the Board that legal fees, expenses and travel had consumed almost 20-25% of the amount he was trying to recover, and separately produced bills for legal costs of over ₹16 lakh. [^status]: The record is not consistent about how these two recovery suits actually ended. One part of the findings states they were dismissed by the Delhi court in April 2012 for the respondent's non-appearance; another part states the respondent applied to withdraw the same two suits in July 2014, after the Institute complaint had already been filed, and that the courts permitted the withdrawal. Both statements appear in the same document and are not reconciled. Nothing on this page turns on which is correct: the Board's finding rests on the fact of pursuing, then abandoning, the litigation, not on the precise mechanism by which it ended. [^order-bracket]: The order's operative line names the respondent in full and gives his membership number; the quotation above substitutes "[the Respondent]" for that name. Nothing else in the quoted text was altered. [^removal]: Section 21A(3) gives the Board a graduated set of punishments — a reprimand, a fine, or removal of the member's name from the Register for a period it fixes — and these are not mutually exclusive; the Board combined removal with a fine here. Check the current sub-section before relying on any figure — the amounts have been amended over the years. [^coram]: The findings, delivered 11 February 2021, were signed by CA. Prasanna Kumar D. (Presiding Officer) and Mrs. Rani Nair (IRS, Retd.), Government Nominee. The punishment decision of 9 December 2021, and the order finally issued on 23 May 2024, were signed by the same two members together with CA. Satish Kumar Gupta, Member.