Failure to perform Statutory duty cannot be excused mere on ground that CA Acted in good faith

The Disciplinary Committee of ICAI in the matter of Shri Rajashekara N. Vs. CA. G. Kumar has held that Failure to perform Statutory duty cannot be excused mere on ground that CA Acted in good faith.

The Board of Discipline vide Findings dated 02nd November 2022 was of the view that CA. G. Kumar (M. No. 025885) is Guilty of “Other Misconduct” falling within the meaning of Item (2) of Part-IV of the First Schedule to the Chartered Accountants Act, 1949 read with section 22 of the said Act.

As per the Findings of the Board as contained in its report, the Respondent as a Chairman of the Audit Committee and independent Director of the Company did not comply with the provisions of the Companies Act 1956 and failed in performance of his duties as he did not attend the concerned meetings and merely signed the Minutes of the said meetings in good faith. The Board observed that had he taken care to attend the said meetings, he could have known about the facts regarding fabricated financial statements, back dated vouchers etc. about the Company and thus, by not attending the said meeting, he in a way helped the Company and its promoters in all their wrong doings. The Respondent not only accepted his guilt before the Board but also admitted on Oath before the Court of the XVII Additional Chief Metropolitan Magistrate, Bangalore that he did not attend any Board meeting. He was not authorized to sign any cheques as authorised signatory. He did not sign any loan documents and has not taken part in day-to-day management of the company. He signed Minutes register in good faith. The Board also observed that the Respondent is a qualified experienced Chartered Accountant. Thus, he was expected to be aware of his role and responsibilities of being an Audit Committee member. The failure to perform statutory duty in the manner required cannot be excused merely on the ground that he acted in good faith or did not receive any remuneration from the company.Thus, – the Board was of the view that the Respondent did not fulfil his duties as a Chairman of the Audit Committee, member of the Remuneration Committee and Independent Director of the Company during the period from April 2006 to December 2012 and accordingly, the Board held the Respondent Guilty of “Other Misconduct” falling within the meaning of Item (2) of Part-IV of the First Schedule to the Chartered Accountants Act, 1949 read with section 22 of the said Act.

Thus, upon consideration of the facts of the case, the consequent misconduct of CA. G. Kumar (M. No. 025885) and keeping in view his written representation before it, the Board decided to remove the name of CA. G. Kumar (M. No. 025885) from the Register of Members for a period of 30 (thirty) days.

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