logoledger
BOD 316/2017Not guilty

Two telecom executives were investigated over a mobile licence's ownership. A court had already cleared both.

9 min readJainam Shah

Two chartered accountants at a telecom conglomerate were investigated over the 2G spectrum licence case. A criminal court had already acquitted them, and the Board found nothing to add.

Held
Not guiltyThe charge was not made out
Forum
Board of Discipline (First Schedule)
Clauses
Item (2) of Part IV of the First Schedule
Decided
File no.
PPR/8/W/2011-DD/4/W/INF/2011-BOD/316/2017
Source
Original order (PDF)

Two chartered accountants held senior positions inside the same telecom group when one of its companies applied for a fresh mobile-telephony licence. Both were later accused of helping structure that company's ownership so it would look independent enough to qualify.1

What happened#

A telecom conglomerate already holds nationwide licences on one mobile technology and wants access to another. Two chartered accountants work inside the conglomerate at this time — one as group president and a director of its telecom arm, the other as company secretary of a smaller company and an authorised signatory for its bank accounts.
That smaller company applies for licences in thirteen service areas using the technology the conglomerate does not yet hold. To qualify, it cannot be under common ownership with a company that already holds licences in those areas. Investigators later allege that the conglomerate secretly owned and funded the smaller company throughout, and arranged its paperwork so it would look like it belonged to somebody else.
The Central Bureau of Investigation names both men, along with several others, as accused in a chargesheet placed before a Special Court set up to try the case. The Institute opens its own file soon after, going only on the CBI's press releases and newspaper reports, since the criminal trial itself has barely begun.
The Special Court spends years hearing the criminal case and delivers a long judgment. It finds that the smaller company had genuinely changed hands to a different business group before it ever applied for a licence, that the conglomerate's funding of it used financial instruments the rules did not prohibit, and that the prosecution's case rested on selective and incomplete reading of the record. Every accused, including both men, is acquitted.
The Board takes up the two Institute files years later. One man appears and argues his case in full; the other does not appear at the final hearing, and his file is heard alongside the first man's because the charges are so alike. Relying heavily on the criminal acquittal, the Board finds neither man guilty and closes both files.

Fourteen years passed between the CBI's press release and the Board's findings.2 Two facts, from two different sources, did the deciding work.

The first was the Special Court's own conclusion, reached after years of trial.3 Ruling on every accused together, it recorded that the prosecution had "miserably failed to prove any charge against any of the accused" and that "all accused are entitled to be acquitted and are acquitted." The Board did not reopen the underlying facts. It read the judgment, adopted its findings on the company's ownership and financing, and treated the acquittal as having effectively decided its own case too.

The second was who showed up. The first respondent appeared in person at every hearing across nearly seven years and filed a lengthy submission of his own, working through the Special Court's findings point by point. The second stopped appearing after his first hearing in 2018; his final hearing went ahead without him, because — in the words of his own Board — "the charges in both the cases are similar" (para 8, companion file). Attendance made no difference to the result.

The charge#

Both men were charged under the same clause: the catch-all in the First Schedule to the Chartered Accountants Act, 1949 that reaches conduct bringing disrepute to the profession, whether or not it has anything to do with the member's professional work.4

Neither charge accused either man of a defective audit, certificate or professional opinion. What was alleged was that they used their positions inside the conglomerate to make one of its companies look independent of licences the conglomerate already held, so the telecom regulator would treat that company as eligible for a licence of its own — and, for the second respondent, that he put a false account of the company's shareholding in writing to the regulator directly. The Institute opened its file on the strength of CBI press releases and newspaper reports alone, before either man faced a criminal trial.

What the respondents said#

The first respondent's defence went furthest into the facts. He submitted that he had never been a shareholder or director of the company under scrutiny, that the CBI's own chargesheet accepted his employer's equity investment in it stayed within the permissible ten per cent ceiling, and that the company had already passed to a different business group before it ever applied for its licence — a change of ownership the chargesheet did not dispute. He also argued that nothing in the chargesheet alleged an act carried out by him as a chartered accountant at all:

The acts alleged are clearly, acts which would be carried out by some concerned Executive or Executives of the Reliance Group and are not acts which require to be carried out by a Chartered Accountant (para 8).

The second respondent's defence, filed years before the final hearing, took a different line. He submitted that "the charge-sheet alone cannot be the basis to treat the matter as information" under the Institute's own procedural rules, and that the proceedings should be held back while the criminal trial ran its course (para 6). He cited a Supreme Court ruling that disciplinary proceedings continuing ahead of a pending criminal trial risked undermining the presumption of innocence (para 7). Neither argument persuaded the Board to wait — both men's cases were decided only after the Special Court's own judgment had already been delivered.

What the Board held#

The Board's reasoning ran in parallel across both files, and it began and ended with the Special Court's judgment.

It first adopted the trial court's factual findings outright: that the smaller company had genuinely passed out of the conglomerate's ownership before the licence applications were filed, and that the conglomerate's funding of the company — made through debt instruments and preference shares rather than equity — breached no rule, since the licensing guidelines restricted only equity crossholding (paras 13-14; paras 10-11 of the companion file). It then quoted the trial court's own conclusion on the case as a whole:

The end result of the above discussion is that I have absolutely no hesitation in holding that the prosecution has miserably failed to prove any charge against any of the accused, made in its well-choreographed charge sheet... Accordingly, all accused are entitled to be acquitted and are acquitted (para 16).

On that basis, the Board held that each man "has substantially proved his defense on the charge" against him (para 18; para 15 of the companion file), and found neither guilty.

The order#

the Respondent is Not Guilty of Other Misconduct falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 read with Section 22 of the said Act (para 19).

A not-guilty finding ends the matter; no punishment stage follows it. The Board closed the case under Rule 15(2) of the 2007 Investigation Rules.5 It reached the identical conclusion in the companion file the same day, closing that one under the same rule — the two files were heard, decided and disposed of together in every respect but the case number.6 Both hearings were held at ICAI Bhawan, Mumbai.7

Why it matters#

This section is ours, not the Board's.

A parallel criminal acquittal can settle a disciplinary charge without the Board reweighing the evidence itself. Both files here were decided by adopting the Special Court's findings, not by testing the facts afresh. If you face both a criminal case and an ICAI complaint over the same conduct, the criminal trial is likely to be the one that actually decides the outcome — contest it accordingly.

The Institute's catch-all misconduct clause does not require the conduct to be a professional act. Item (2) of Part IV covers anything that brings disrepute to the profession, done as an accountant or not. Holding the qualification carries exposure even for conduct in a role that has nothing to do with accountancy.

A file can sit open for over a decade waiting on an unrelated criminal trial. Fourteen years passed between the CBI's press release and the Board's findings, most of it while the criminal case ran its course. An open disciplinary file does not disappear because it goes quiet.

This summarises a public order and links the primary source. It is general information, not legal or professional advice.

Footnotes#

  1. CA. Gautam Doshi (M. No. 016993), Mumbai, was Group President of Reliance ADA Group and a Director/Board member of Reliance Telecom Ltd. at the time of the alleged conduct; he appeared and argued his own case in person at every hearing. CA. Hari Sethumadhavan Nair (M. No. 049747), also of Mumbai, was Company Secretary of Swan Telecom Pvt. Ltd. and an authorised bank signatory for group companies; he took the oath at his first hearing in 2018 but did not appear thereafter, and his final hearing went ahead without him. Both were named as accused, along with several others, in the CBI's chargesheet in the 2G spectrum licence case. ↩

  2. CBI press releases 2 and 25 April 2011; news items in The Times of India between 3 April and 24 May 2011; ICAI's information letter 25 May 2011. First hearing (oath taken by the second respondent; matter adjourned) 22 May 2018; next hearing (part-heard and adjourned; the second respondent absent) 29 March 2023; final hearing 18 January 2025 (the second respondent's matter heard without him); judgment pronounced 28 January 2025; findings signed 10 February 2025. The Special Court's judgment, on which both findings rest, was delivered on 21 December 2017 — years after the ICAI file was opened, and before either respondent's final hearing. ↩

  3. Special Judge O. P. Saini, CBI Court No. 4 (2G Spectrum Cases), New Delhi, delivered judgment in CC No. 01/11 on 21 December 2017, acquitting every accused in the criminal case arising from the same allegations. ↩

  4. Item (2) of Part IV of the First Schedule is a residual clause, distinct from the specific duties in Parts I-III: a member is guilty of Other Misconduct if, in the opinion of the Council, his conduct — whether or not related to his professional work — brings disrepute to the profession of chartered accountancy or to the Institute. ↩

  5. Rule 15(2) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 — where the Board finds a member not guilty, it records that finding and closes the complaint. There is no punishment hearing. ↩

  6. One CBI chargesheet, two chartered accountants, two ICAI file numbers — because each respondent's matter carries its own case number regardless of outcome. This page follows the findings recorded in BOD 316/2017 (file PPR/8/W/2011-DD/4/W/INF/2011), the file with the fully contested hearing. The companion file, decided by the same Board on the same day on materially identical reasoning, is BOD 317/2017 (file PPR/8A/W/2011-DD/4A/W/INF/2011). ↩

  7. CA. Rajendra Kumar P (Presiding Officer), Smt. Dolly Chakrabarty, IAAS (Retd.) (Government Nominee) and CA. Priti Savla (Member) heard and decided both files. ↩

Written by Jainam Shah. Found guilty under Item (2) of Part IV of the First Schedule; the Board ordered a not guilty. General information, not legal or professional advice — read the order itself before relying on it.

More orders

BOD 749/2024Not guiltyItem (2) Part IV

A co-author republished two shared textbooks under a sole byline. The publisher never came to contest it.

A chartered accountant co-wrote two textbooks with a publisher, then republished them under his own name. By the hearing the publisher had shut, and the Board found a civil dispute, not misconduct.

BOD 768/2024Not guiltyItem (8) Part I

An incoming auditor was accused of taking two audits without writing first. A 2018 email showed the letter had gone.

An incoming auditor took over a client's VAT and tax audits. Nobody proved the complainant had ever held the VAT work, an old email settled the tax audit, and both charges failed.

BOD 819/2025Not guiltyItem (2) Part IV

A cooperative director was accused of misusing a government yarn-bank grant, and repaid it before the ruling.

A chartered accountant on a cooperative's board was accused of misusing a ₹50 lakh government grant. He repaid the shortfall before the ruling, and the Board found no evidence of personal misuse.