---
title: A company accused a chartered accountant of directing its consultancy vendor. The resignation had come first.
description: A company accused a chartered accountant of directing its consultancy vendor while holding a certificate of practice. The Board found the resignation predated the disputed contract, clearing him.
case_number: BOD 614/2022
file_number: PR/360/2018/DD/337/2018/BOD/614/2022
forum: board-of-discipline
institute: icai
decided_on: 2024-05-30
outcome: Not guilty
clauses: Item (11) of Part I of the First Schedule
order_pdf: https://disc.icai.org/wp-content/uploads/2024/06/13.-BOD-614-2022.pdf
published: 2026-09-09
author: Jainam Shah
keywords: bod 614 2022, item 11 part i first schedule, certificate of practice, director of private company, other business or occupation, board of discipline not guilty, skill development consultancy
source: /icai/board-of-discipline/bod-614-2022
---

# A company accused a chartered accountant of directing its consultancy vendor. The resignation had come first.

A company training candidates under a government skill-development scheme hired a management
consultancy for help winning that work. Years later it accused the consultancy's chartered
accountant of quietly running the company itself while he held a certificate of practice.[^parties]

## What happened

```timeline
A company that trains candidates for a central government skill-development scheme comes into
contact with a management consultancy run by a chartered accountant and his wife. The consultancy
offers to liaise with government officials and to help with legal and advisory work, in return for
a share of the funds the scheme disburses to the training company.

The two sides sign an agreement. The training company pays cheques worth fifty lakh rupees toward
the consultancy's fee, of which five lakh is encashed before the relationship sours.

The training company later complains to the Institute. It alleges that the accountant and his wife
misrepresented their competence to give legal advice, overcharged for placing candidates, and that
the accountant was improperly directing the consultancy company while in practice as a chartered
accountant.

A screening authority lets one allegation through to a full hearing and drops the rest at the
outset. The surviving charge is that the accountant held a directorship in a private company while
holding a certificate of practice.

At the hearing, company records show the accountant had resigned that directorship before the
disputed agreement was ever signed. The Board closes the case.
```

Company records did the deciding. The training company's own filings with the Ministry of
Corporate Affairs showed the accountant had resigned from the consultancy's board in March 2017 —
before the agreement giving rise to the complaint was signed the following year (para 7).

Two other details shaped how the Board read the file. The cheques the training company had paid
toward the consultancy's fee had themselves bounced, which the Board noted before it ever reached
the merits (para 6). And a company board resolution on record had specifically authorised the
accountant to sign documents on the consultancy's behalf — a fact the Board treated as explaining
his signature on the agreement, rather than proving he was running the company (para 8).

## The charge

**Item (11) of Part I of the First Schedule** to the Chartered Accountants Act, 1949 is what
survived to a full hearing.[^item11] A second allegation — that the same four percent commission
was itself a fee a chartered accountant could not lawfully take — was raised under Item (10) of the
same Part, and rejected before argument began, because the agreement had been signed by the
accountant in the consultancy company's name, not in his capacity as a practising chartered
accountant.

Two further allegations — that the accountant had misrepresented his competence to give legal
advice, and that the consultancy had overcharged for placing training candidates — were held not
guilty at the screening stage itself, before either side argued them (para 4).

## What the respondent said

The accountant answered on two fronts.

On the wording of the agreement itself, he argued that the clauses the complaint relied on had been
misread: the communication clause named his email address only as an additional contact, not as the
company's sole point of contact, and a standard recital about "administrators and legal
representatives" bound the company generally, not him personally (paras 3.1–3.2). He accepted, and
sought pardon for, one genuine error — he had been named as a subscriber to the consultancy's
Articles of Association alongside his wife, describing his occupation as "business" rather than
disclosing his profession (para 3.3).

On his actual role, he said the complaint rested on a single signed agreement and nothing else, and
that the agreement itself had been signed months after he had already resigned as a director — a
fact he said the complaint did not engage with (para 3.4). He explained the signature as a favour to
his wife, who ran the consultancy and needed help signing documents while recovering from a second
pregnancy, and said a company resolution had authorised him to sign in that capacity rather than as
a director or manager (para 3.5). He also asked the Board to treat the complaint itself as frivolous
and to act against the training company for bringing it (paras 3.6–3.7).

## What the Board held

The Board's own reading of the sequence carried the finding. It recorded that being a director
while holding a certificate of practice, before March 2018, would have been misconduct — but it
tied the charge to the training company's own contract, not to the accountant's history generally:

> Complainant came into contract with Respondent after the resignation of the Respondent from the
> directorial position and thus at the time the contract was made the Respondent was not at fault
> regarding Item (11) of Part I of First Schedule … and thereby Complainant is not relator to the
> charge alleged. The Board observed the cause of action arose when the Respondent was not the
> Director and not at the time when Respondent was the Director. Thereby the reasoning behind the
> charge alleged is not germane (para 7)

It then set that finding alongside the accountant's continuing paperwork with the consultancy —
invoices raised through his own chartered accountancy firm, with tax deducted at source, and a board
resolution authorising him to sign on the company's behalf — and concluded:

> the Respondent cannot be considered as a person engaged in any other occupation other than the
> profession of Chartered Accountancy rendering services related to the profession. Hence, the
> Respondent is 'Not Guilty' (para 8)

## The order

> in conclusion, in the considered opinion of the Board, the Respondent is 'NOT GUILTY' of
> Professional Misconduct falling within the meaning of Item (11) of Part I of First Schedule to
> the Chartered Accountants Act 1949. Accordingly, the Board passed an Order for closure of the
> case in terms of the provisions of Rule 15 (2) (para 9)

There was no punishment to assess: a not-guilty finding closes the file at the Findings stage, with
no separate hearing under Section 21A(3). The Board did add one line the closure did not require —
that the accountant "shall be careful in future and shall desist from doing acts which raise
suspicion in the minds of public or the clients when they deal with him" (para 8). It carries no
legal force; it is not a caution or a lesser punishment, simply a remark on the record.

## Why it matters

*This section is ours, not the Board's.*

**A directorship charge is timed to the transaction, not to your history.** The Board found that
holding a certificate of practice while also a company director would itself be misconduct — but
only measured it against the contract this complainant relied on, which came after the resignation.
Date every resignation from an outside directorship, and keep the filing that proves it.

**Signing for a company you don't direct still needs a paper trail.** What cleared the accountant
here was a board resolution authorising him, personally, to sign on the consultancy's behalf. Get
that authorisation in writing before you sign anything for a business you are connected to but do
not run.

**A complainant's own conduct gets noticed before the merits do.** The Board flagged that the
training company's cheques had bounced, unprompted, ahead of ruling on the charge itself. It is not
a defence on its own, but it is not irrelevant either.

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

[^parties]: The complainant was a director of the training company, *M/s Vision India Services
    Private Limited*, Noida — engaged in skill development under the National Skill Development
    Corporation's Udaan programme. The respondent was *CA. Jayant Kumar Harlalka (M. No. 0511645)*,
    proprietor of *Jayant Harlalka & Associates (FRN 022335N)*, Delhi, a director alongside his
    wife of the consultancy, *M/s Sankhu Management Consultant Pvt. Ltd.*

[^item11]: Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949 is
    applied in these findings to a chartered accountant who also holds a directorship in a private
    company while in practice — the Board treats holding such a directorship, without more, as
    capable of amounting to engaging in another business or occupation while holding a certificate
    of practice.