---
title: A chartered accountant sat on company boards without the Institute's permission. A supplier's dues went unpaid.
description: A chartered accountant held directorships without the Institute's permission, and a supplier's dues went unpaid. The Board found her guilty and removed her name from the Register for thirty days.
case_number: BOD 704/2023
file_number: PR/317/2021/DD/335/2021/BOD/704/2023
forum: board-of-discipline
institute: icai
decided_on: 2024-06-12
punished_on: 2025-01-25
outcome: Removal
clauses: Item (11) of Part I of the First Schedule; Item (2) of Part IV of the First Schedule
order_pdf: https://disc.icai.org/wp-content/uploads/2025/02/37.-BOD-704-2023.pdf
published: 2026-09-09
author: Jainam Shah
keywords: bod 704 2023, other business or occupation, item 11 part i first schedule, other misconduct, item 2 part iv first schedule, section 22 chartered accountants act, directorship without permission, unpaid trade debt, board of discipline removal from register
source: /icai/board-of-discipline/bod-704-2023
---

# A chartered accountant sat on company boards without the Institute's permission. A supplier's dues went unpaid.

A distributor kept a hardware shop supplied with adhesive on credit, and struggled for years to
collect what it owed her. One of the shop's three directors was a practising chartered
accountant, holding the post — like several others she held at the same time — without ever
asking the Institute's permission.[^parties]

## What happened

```timeline
A small distributor supplies branded adhesive to a hardware shop on credit, as she has supplied
other retailers before. The shop trades under one name, but is legally owned by a private company
with three directors, one of them a practising chartered accountant. The GST registration for the
business sits in her name.

The company pays back only a fraction of what it owes, then stops a cheque it had issued for the
rest. The distributor keeps following up, without success.

The shop shuts overnight, the stock inside it gone, and the balance is never paid. The distributor
goes to the police, who confirm in a preliminary enquiry that the material was in fact supplied and
not fully paid for.

She complains to the Institute, naming the director as someone who holds a full-time certificate of
practice while also sitting on the boards of several other companies and limited liability
partnerships, without the Council's permission.

At the hearing, the director admits to holding these directorships. Asked whether the Council had
approved any of them, she offers a letter from decades earlier and asks for time to produce more.
The letter, once it arrives, turns out to cover something else entirely. She and her counsel then
miss further hearings, and the Board goes on to find her guilty on both counts — the directorships,
and the unpaid debt behind them.
```

Two details in that sequence did the deciding.

The first was the letter she produced as proof of permission. It was genuine, and decades old — an
Additional Secretary of the Institute had written to her in 1993 permitting her "to continue her
salaried employment as a 'General Manager, Opera House Exports Limited' besides the practice of the
Profession of Accountancy" (para 7). It said nothing about a directorship. It was the only document
of its kind she ever placed before the Board.

The second was the police's own account of the debt. A preliminary report to the Senior
Superintendent of Police, Ghaziabad, recorded that "during the enquiry the material was found
supplied by the Complainant to Respondent's Company and the amount towards such material was not
fully paid" (para 11) — the debt, confirmed independently of anything either side had said to the
Institute.

## The two clauses

Both sit in the First Schedule to the Chartered Accountants Act, 1949.

- **Item (11) of Part I** — a member holding a full-time certificate of practice engaging in any
  other business or occupation without the Council's specific permission.[^item11]
- **Item (2) of Part IV, read with Section 22** — the general "other misconduct" clause, for conduct
  that discredits the profession and is not covered by a more specific item.[^item2]

The Board found her guilty under both and, at a separate hearing months later, removed her name
from the Register of Members for thirty days.

## What the respondent said

In her written reply, she called the complaint baseless and unrelated to her conduct as a chartered
accountant. She said she took no active part in running the company behind the hardware shop — that
was left to her two co-directors — and that she had never performed any work for the complainant in
her capacity as a chartered accountant, so the complaint fell outside the Institute's jurisdiction
altogether. She was, she said, the managing director of a different company and had nothing to do
with this one's day-to-day operations. And in any case, she argued, an unpaid trade debt was a
matter for a civil recovery suit, not a disciplinary complaint (para 5).

At the hearing itself, she went further and admitted holding the directorships the complaint named.
Asked whether the Council had approved any of them, she said she had written to the Institute and
would produce the letter granting permission. The Board gave her ten days to do it (para 6).

## What the Board held

What she produced did not help her. The 1993 letter permitted salaried employment as a general
manager — nothing more. The Board put it plainly: "The Permission granted by the Institute, which
she does have, is the permission exclusively to continue her employment as a General Manager and
not for Directorship in any Company" (para 9). Holding a full-time certificate of practice while
also serving as a managing or whole-time director, without that specific permission, was itself the
violation:

> in absence of grant of the required specific permission to the Respondent by the Council of the
> Institute to act either as a Managing Director or a Whole Time Director while holding a full time
> Certificate of Practice simultaneously, is a violation within the meaning of Item (11) of Part-I
> of the First Schedule to the Chartered Accountants Act, 1949 and thus the Respondent is 'Guilty'
> of the said violation (para 10)

On the debt, the Board's reasoning was shorter: the police's own preliminary enquiry had already
confirmed that the material was supplied and not paid for (para 11). It did not spell out how that
default amounted to misconduct beyond stating the finding — its conclusion holds her guilty under
Item (2) of Part IV alongside Item (11), without separately explaining why the unpaid debt itself
discredited the profession (para 12).

By the concluding hearing, the respondent was not there to answer for any of it. Two advocates
appeared without an authorisation or a signed vakalatnama from her, and the Board declined to let
them argue on her behalf (para 8).

## The order

> the Board decided to remove the name of [the Respondent] from the Register of Members for a
> period of 30 (thirty) days (para 6, order)[^bracket]

Removal from the Register is the most severe of the Board of Discipline's three punishments, ahead
of a reprimand and a fine.[^removal] Getting to that order took seven months of its own. The
respondent or her counsel sought adjournments twice; a third hearing was adjourned because her
counsel had appeared without her having first sought the Board's permission for a representative to
attend; a fourth was adjourned when she did not appear at all and gave no word why. Only after a
notice was hand-delivered to her, posted and emailed did the matter conclude — her counsel telling
the Board, at that last hearing, that she was unwell and unable to speak, and asking on her behalf
for leniency because she was a senior member with no other complaint against her.[^timeline]

## Why it matters

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

**A letter permitting one thing does not permit another.** The 1993 approval covered salaried
employment as a general manager; it was produced as if it covered a directorship, and it did not.
If you hold a certificate of practice and take up a board seat, get the Council's permission for
that seat specifically, in writing, before you take it.

**Being a director on paper is enough — active involvement is not the test.** The defence that she
was not running the company's day-to-day affairs went nowhere. Item (11) asks whether you hold the
post without permission, not how hands-on you were once you held it.

**An unrelated commercial dispute can still reach the Institute.** The debt behind this case was
between a company and its supplier, and the respondent argued it belonged in a civil court. The
Board disciplined her over it anyway, once her position as a director tied her to it.

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

[^parties]: The complainant, Ms. Namika Singhal of Ghaziabad, proprietor of a distribution business
    trading as M/s Tirupati Marketing, was not a chartered accountant. The respondent was
    *CA. (Ms.) Rakesh Verma (M. No. 082388)*, then of Noida, a director of *M/s Opera Global Pvt.
    Ltd.* and, among the businesses named in the complaint, of the company legally known as
    *GVR Impex Private Limited*, which traded as the hardware shop at the centre of the dispute.

[^bracket]: The order's operative sentence names the respondent directly: "the Board decided to
    remove the name of CA. (Ms.) Rakesh Verma (M. No. 082388) from the Register of Members for a
    period of 30 (thirty) days." This page substitutes "[the Respondent]" for the name and
    membership number to keep the same anonymisation used throughout; nothing else in the quotation
    is altered.

[^item11]: Item (11) of Part I of the First Schedule to the Chartered Accountants Act, 1949, covers
    a member in practice engaging in any business or occupation other than the profession of
    chartered accountancy, unless the Council has specifically permitted it.

[^item2]: Item (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949, read
    with Section 22 of the Act, covers "other misconduct" — conduct that discredits the profession
    but is not captured by the more specific items listed elsewhere in the Schedule.

[^removal]: Section 21A(3) gives the Board of Discipline a graduated set of punishments — a
    reprimand, removal of the member's name from the Register for a period, or a fine. Check the
    current sub-section before relying on any figure; the amounts and periods have been amended
    over time.

[^timeline]: Final hearing on the merits held over two dates, concluding 30th May 2024; findings
    signed 12th June 2024. On punishment, hearings were listed and adjourned on 15th July 2024, 27th
    August 2024 and 25th September 2024. A further hearing on 10th January 2025 was adjourned when
    the respondent did not appear and sent no word; the Board directed a last notice, delivered by
    hand on 15th January 2025 and acknowledged, and separately sent by speed post the same day and
    by email on 17th January 2025. The order was passed on 25th January 2025, the coram of the
    findings unchanged: CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty (Government
    Nominee) and CA. Priti Savla (Member), the last of whom sat by video conference for the
    findings.