Delhi High Court Suspends CA for One Year Over BFSL IPO Irregularities:

The reference was made by the ICAI under Section 21(5) of the Chartered Accountants Act, 1949 seeking removal of the name of Shri Kishan Gupta from the Register of Members for one year. The proceedings arose from SEBI’s directions concerning irregular allotment of shares in the public issue of Bharthari Financial Services Limited, where the respondent was Chairman and Whole Time Director.

ICAI initiated disciplinary proceedings for “other misconduct” under Section 22 read with Section 21. The Disciplinary Committee found the respondent guilty and the Council accepted the recommendation and made a reference to the High Court.

Main Issue: Whether the respondent Chartered Accountant was guilty of “other misconduct” warranting removal of his name from the Register of Members.

HC's Ruling: The Hon'ble High Court accepted the reference made by the ICAI. The Court held that the findings of the Disciplinary Committee conclusively established that the respondent had connived with another Chartered Accountant in arranging finance through ante-dated stock-invests after closure of the BFSL public issue, leading to irregular allotment of shares.'

The Court noted that the respondent, being Chairman and Whole Time Director, was fully aware of the issue closure yet accepted applications with ante-dated instruments and failed to take corrective action even after withdrawal of applications. The Court held the respondent guilty of “other misconduct.” The Court directed suspension of the respondent from ICAI membership for one year, restraining him from rendering services as a Chartered Accountant during that period, and imposed costs of Rs. 10,000 payable to the petitioner.

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