--- title: A no-objection certificate stalled over an unpaid fee. The complaint came from someone with no stake in the audit. description: A retiring auditor withheld his no-objection certificate, citing an unpaid audit fee. The incoming firm walked away, and the Board found the man who complained had no stake in the company at all. case_number: BOD 655/2022 file_number: PR/291/2020/DD/288/2020/BOD/655/2022 forum: board-of-discipline institute: icai decided_on: 2025-02-10 outcome: Not guilty clauses: Item (2) of Part IV of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2025/02/40.-BOD-655-2022.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 655 2022, item 2 part iv first schedule, no objection certificate audit, outgoing auditor incoming auditor, locus standi complainant, auditor resignation casual vacancy, board of discipline not guilty source: /icai/board-of-discipline/bod-655-2022 --- # A no-objection certificate stalled over an unpaid fee. The complaint came from someone with no stake in the audit. A chartered accountant resigned as a private company's statutory auditor, and the firm the company chose to replace him could not get a no-objection certificate out of him. The dispute reached the Institute as a complaint about professional ethics, filed by a man who turned out to hold no position in the company at all.[^parties] ## What happened ```timeline A chartered accountant resigns as the statutory auditor of a private company and formally notifies the Registrar of Companies of it. The company turns to another firm to fill the vacancy left behind. Before accepting the assignment, the incoming firm writes to the outgoing auditor by email and by registered post, asking whether he has any objection. When nothing comes back, it sends a reminder. The outgoing auditor replies only to ask for papers of his own: the minutes appointing the incoming firm, its appointment letter, and its filings with the Ministry of Corporate Affairs. The incoming firm supplies everything the same day and explains what it is checking for: any reason the appointment should not proceed, and whether any audit fee remains unpaid. The outgoing auditor writes back refusing the certificate, objecting to the company's board resolution as not in order under company law. The incoming firm presses the point once more on the same grounds; the outgoing auditor repeats his objection. The incoming firm then tells the company it will not take up the audit. A complaint reaches the Institute accusing the outgoing auditor of deliberately obstructing the certificate out of ill will toward the company. Years pass before the case comes up for a final hearing. The person who filed the complaint does not turn up for the hearing; a notice sent to him had gone unaccepted. The outgoing auditor appears and explains that the real hold-up was an unpaid audit fee, cleared before the certificate was finally issued. Examining who had brought the complaint, the Board finds he held no position in the company at all. ``` Two details did not fit into that sequence but decided how the case ended. The first was the refusal itself. Pressed for the certificate, the outgoing auditor did not raise any objection to the incoming firm — he pointed instead at a defect in the company's own paperwork: > "We are unable to issue the NOC on the basis of attached BR. Please readout the provision > of Companies Act, 2013 and rules made thereunder carefully before passing any resolution > as said BR (dated 13 Aug'20) issued by the company is not as per the provision of Act." He repeated the same objection four days later, on the same ground, and the incoming firm withdrew rather than take up the audit without a certificate (para 3–4). The second was who had actually filed the complaint. The company's two directors were both women; the man who signed the complaint as complainant was neither of them, nor any other officer of the company. The single letter authorising him to complain on the company's behalf carried only one of the two directors' signatures, and no minutes of the board meeting it referred to were ever produced (para 8). ## The charge - **Item (2) of Part IV** — the First Schedule's general "other misconduct" clause, used when the conduct alleged doesn't fit a more specific item elsewhere in the Schedule.[^item2] No item in the Schedule addresses a retiring auditor's own conduct in giving or withholding a no-objection certificate; it fell to this residual clause instead. The complainant alleged that the respondent had ignored the Institute's professional ethics and deliberately created difficulty over the certificate, out of malice, so as to keep the company from appointing a new auditor. The Board did not agree — it closed the case, for reasons that had as much to do with who had brought the complaint as with what he alleged. ## What the respondent said His account of the certificate dispute was straightforward: the delay, he said, was a hold-up over an unpaid audit fee of ₹11,800. He said he had followed up by email more than once and issued the certificate once the fee was paid. Whatever had happened between him and the incoming firm, he argued, was a matter between two chartered accountants and had no bearing on the complainant at all (para 9). ## What the Board held The Board first dealt with who was in the room. The complainant had not appeared despite being served notice — the notice was in fact refused when it reached him — so the hearing went ahead without him, while the respondent explained himself in person, over video (para 7). Examining the paperwork behind the complaint, the Board found real gaps. The complainant was neither a director of the company nor any kind of officer in it. The one document authorising him to complain on the company's behalf bore only one of its two directors' signatures, and no minutes of the board meeting it referred to were ever produced (para 8). On that footing the Board held the complainant had no standing to bring the case at all: the underlying dispute, in its view, ran between the respondent and the incoming firm, and the complainant was neither an affected nor an aggrieved party to it (para 10). Weighing that alongside what it called a lack of substantive evidence for the allegations, it held the respondent not guilty of the charge (para 11). ## The order > in conclusion, in the considered opinion of the Board the Respondent is Not Guilty of > Other Misconduct falling within the meaning of Item (2) of Part-IV of First Schedule to > the Chartered Accountants Act, 1949 (para 12) No punishment follows a not-guilty finding. The Board ordered the complaint closed under Rule 15(2) of the Investigation Rules.[^rule] A hearing fixed more than a year earlier had already been adjourned once, at the respondent's own request, before the case was finally heard and decided.[^coram] ## Why it matters *This section is ours, not the Board's.* **Answer a certificate request with your own reason, not a critique of someone else's paperwork.** The refusal email here pointed only at a defect in the client's board resolution, not at any objection to the incoming firm. State your own ground plainly when withholding a certificate — pointing at someone else's document invites exactly this kind of scrutiny. **Standing gets checked before conduct does.** The Board never had to decide whether withholding the certificate was proper, because it decided first that the man who complained had no right to raise it. Anyone filing a complaint on a company's behalf needs a board authorisation signed by more than one director, with minutes to back it up. **A fee dispute needs a paper trail from the start, not just at the hearing.** The unpaid audit fee behind months of correspondence only came out properly once the case reached final hearing. Keep the invoice, the reminders, and the date it was paid on record as you go. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: The complainant was *Shri Ambuj Sharma* of Ghaziabad, who held no position at *M/s Bensfurt Internet Private Limited*, the company at the centre of the dispute; its two directors were neither party to this case nor named in this account. The respondent was *CA. Heetendra Kumar Jain (M. No. 096077)* of *M/s Heetendra Jain & Co.*, Alwar, Rajasthan, the company's retiring auditor. The incoming firm that declined to take up the audit was *M/s Vishnoi & Co.* [^item2]: Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949 is the Schedule's general "other misconduct" clause — conduct that discredits the profession but does not fall under one of the more specific items named elsewhere in the Schedule. [^rule]: 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 orders the complaint closed. There is no punishment hearing. [^coram]: CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty, IAAS (Retd.) (Government Nominee) and CA. Priti Savla (Member), all present in person. An earlier hearing on 7 November 2023 was adjourned at the respondent's request; the final hearing was held at ICAI Bhawan, Jodhpur, on 25 January 2025, and the Findings were signed on 10 February 2025.