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BOD 653/2022Not guilty

A brother accused a chartered accountant of secretly working in a family firm. Decades later, the Board found no proof.

8 min readJainam Shah

A brother accused a chartered accountant of secretly working the family firm and coercing a signature for a retirement. The Board found no evidence for either claim, years after the firm closed.

Held
Not guiltyThe charge was not made out
Forum
Board of Discipline (First Schedule)
Clauses
Item (11) of Part I of the First Schedule · Item (2) of Part IV of the First Schedule
Decided
File no.
PR/92/2016/DD/210/16/BOD/653/2022
Source
Original order (PDF)

The complainant and the respondent are real brothers, partners with their father in a family-run industrial firm. Years after that firm shut down, one brother accused the other of secretly working it as a chartered accountant should not, and of forcing his retirement from it.1

What happened#

Two brothers and their father run a family industrial firm as partners. One of the brothers later qualifies as a chartered accountant and takes a Certificate of Practice, while remaining a partner in the firm.
He seeks the Institute's permission to continue holding that partnership. A supplementary deed is drawn up to remove the firm's earlier provisions for paying him a salary and letting him operate its bank account, on the basis that he will take no active part in running the business.
The firm's books nonetheless show a salary credited to his capital account for two of the years that follow. The Firm eventually closes.
Years afterwards, his brother complains to the Institute. The complaint alleges that he worked as an active partner in violation of the chartered accountancy rules, drew a salary despite that, and, while his brother was hospitalised, obtained his signature on a stamp paper meant to force his retirement from the firm.
The Board asks for an affidavit answering whether any salary was ever paid to him. He swears that none was. Finding no documents to corroborate either allegation, and noting how long the complaint had taken to arrive, the Board closes the case and holds him not guilty.

Three things in the record decided the case.

The first was permission. The Board recorded, as an undisputed fact, that the Institute had granted the respondent permission to remain a partner in the firm as a non-working, sleeping partner, once he held a Certificate of Practice (para 10).2 A supplementary partnership deed dated 15.07.1996 had also been put on record, said to remove the original deed's provisions for paying him a salary and letting him operate the firm's bank account (para 7).

The second was the salary entry the complainant relied on. Income statements the complainant produced showed a salary credited to the respondent's capital account, but only for two of the years in question — and the firm's capital account, itself audited by a chartered accountant, did not support the wider claim that he had been paid at all (para 11).

The third was the affidavit the Board itself called for. Directed to answer squarely whether he had ever drawn a salary or had any amount credited to him by cheque or in cash, the respondent swore that he had received none, and that he had never signed any balance sheet of the firm (para 15).

The two clauses#

  • Item (11) of Part I — a chartered accountant in practice engaging in another business or occupation, without the permission the Institute's rules require.3
  • Item (2) of Part IV — the First Schedule's general clause for conduct that brings disrepute to the profession, used here for the allegation that a signature was coerced out of the complainant and misused with the bank.4

Both clauses were alleged together, on the same set of facts, and the Board found neither made out.

What the respondent said#

On the partnership itself, his case was that permission had been sought and obtained, and that the supplementary deed of 1996 had already stripped away the two clauses of the original partnership deed that dealt with a working partner's salary and bank operation — clauses written, he pointed out, at a time before he was even a chartered accountant (para 7).

On the salary entries, he said the credit had been an accounting error, a repetition of an earlier year's entry carried forward in the books by mistake, and that it was never actually paid to him. He had neither prepared the firm's books nor audited or signed any of its balance sheets, so an error made by another partner could not be attributed to him. The mistake ran for only two years, he said, and stopped a quarter of a century before the hearing (para 8).

On the RTI application the complainant had raised against him, he explained it as an attempt of his own — made because their father, who had a hip injury and could not visit the bank in person, had had his signature used on the relevant documents, and because he wanted to stop his brother from taking loans that could leave the other partners indebted (para 9).

What the Board held#

The Board weighed what was undisputed against what had actually been produced in evidence. It was not in dispute that the respondent had become a partner in 1994, before he was a chartered accountant, or that the Institute had later given him permission to remain a non-working partner once he qualified (para 10). Against that, the salary the complainant said had been paid rested on income statements covering only part of the period alleged, and the firm's own audited capital account did not bear the claim out (para 11).

The Board also weighed who was bringing the complaint, and when. It noted that the dispute "appears to stem from a family dispute between the Complainant and the Respondent, casting doubt on the impartiality of the allegations" (para 12), and that the coerced-signature allegation had no supporting document behind it at all, despite the complainant having had the opportunity to produce one (para 12). It further noted that the transactions in question ran from 1995-96 to 1998-99, while the complaint itself was filed only in April 2016 — a gap it held undermined the credibility of the allegations (para 13).

The affidavit was the last piece. Asked directly whether he had drawn a salary in any form, the respondent swore he had not, and the Board recorded no evidence to contradict him (para 15). It held:

Thus, on a detailed perusal of the submissions and documents on record, the Board noted that the Respondent is 'Not Guilty' in respect of the charges alleged (para 16)

The order#

Thus, 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 and Item (2) of Part-IV of the 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) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 (para 17)

A not-guilty finding under Rule 15(2) closes the matter at the Board of Discipline itself — there is no separate punishment hearing to follow, because there was no finding of guilt to punish.5 The transactions the complaint turned on dated back close to two decades; the complaint reached the Institute in 2016, and the Board disposed of it in 2025.6

Why it matters#

This section is ours, not the Board's.

Permission from the Institute, once granted and on record, is hard to displace with an allegation alone. The Board treated the sleeping-partner permission as undisputed and required the complainant to prove active conduct on top of it, not merely to assert it. If your own standing rests on an Institute permission, keep the letter that grants it.

A stale complaint carries its own weight against it. The alleged conduct ran through 1998-99; the complaint arrived in 2016. The Board read that gap as evidence in itself, not as a technicality. Raise what you know when you know it — delay is not neutral.

An affidavit answering a direct question can settle what years of correspondence could not. The Board's own question — did any salary ever reach him, by cash or by cheque — produced a sworn answer that the rest of the record could not contradict. A specific, answerable question closes gaps that a general denial leaves open.

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

Footnotes#

  1. The complainant was Shri Rajendra Rungta, Partner, M/s Shankar Industries, of Newai, Distt. Tonk, Rajasthan. The respondent was CA. Surendra Kumar Rungta (M. No. 057447), of M/s. S. Rungta & Co. (FRN 008589C), Jaipur, Rajasthan — the complainant's real brother. Their father, unnamed in the findings, was the firm's third partner. ↩

  2. The findings give two different dates for the letter granting this permission. The respondent's own submission, at para 3, cites "a letter dated 17.02.1997 issued by the Kolkata office of the ICAI"; the Board's own recitation of undisputed facts, at para 10, instead says "the ICAI, vide its letter dated 07.02.1997, granted the Respondent permission to act as a non-working (sleeping) partner." The two paragraphs are in the same document and the Board did not reconcile the dates. This page reports only that permission was granted, without a date, for that reason. ↩

  3. Item (11) of Part I of the First Schedule concerns a member in practice engaging in any business or occupation other than the profession of chartered accountancy, except as permitted by the Institute's rules and regulations. ↩

  4. Item (2) of Part IV of the First Schedule is the First Schedule's general "other misconduct" clause — conduct that, in the Council's opinion, brings disrepute to the profession or the Institute, whether or not it arises from the member's professional work. ↩

  5. First Schedule matters go to the Board of Discipline; Second Schedule matters, and matters falling under both, go to the Disciplinary Committee. The two carry very different punishment ceilings. ↩

  6. The findings were signed by CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty (Government Nominee) and CA. Priti Savla (Member). An earlier hearing on 7 November 2023 was adjourned for the complainant's non-appearance; the final hearing was held by video conference on 28 October 2024, when judgment was reserved with directions to the respondent to file an affidavit; the case was concluded on 27 December 2024, and the findings are dated 25 January 2025. ↩

Written by Jainam Shah. Found guilty under Item (11) of Part I of the First Schedule and 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.

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