FIR against Chartered Accountant Firm in GSLDC Scam dismissed by High Court

The Gujarat High Court has dismissed the FIR (First Information Report) against a Chartered Accountant firm related to the GSLDC scam.

The court noted that the firm’s involvement in the matter was limited to auditing vouchers and records and was not directly linked to the misconduct in the fieldwork of the Khet Talavadi project, which was the subject of the allegations.

A single bench led by Justice Sandeep N. Bhatt stressed that if state authorities routinely implicated professionals in such cases, it would create administrative chaos and discourage leading professionals from collaborating with the government or its offices.

The applicant, a New Delhi-based Chartered Accountant, had a contract with the Gujarat Land Development Corporation for audit work. The FIR claimed that Corporation officials acted improperly in the Khet Talavadi project by submitting applications on behalf of farmers, manipulating records, and making unauthorised payments to contractors.

These alleged actions were carried out with the participation of unqualified employees from the Chartered Accountant Firm Pipara & Company, potentially in violation of the Chartered Accountant Act.

The counsel of applicant contended that the FIRs made no mention of any fraud committed by the applicant and that the allegations were solely focused on the hiring of an unqualified employee, which they claimed constituted a violation of the Chartered Accountant Act. They contended that such complaints could expose professionals to liability for the actions of their employees or officials.

The High Court found that officers and employees of the Gujarat State Land Development Corporation had submitted fraudulent applications to benefit from the State Government’s ‘Khet Talavadi’ Scheme. Importantly, the court found no direct connection between the applicant, the Corporation’s officers/staff, or the contractors, and no financial transactions were involved other than the firm’s fees.

Furthermore, the Chartered Accountant Act contains provisions that address the appointment of unqualified personnel for audit work. Based on these factors, the court determined that there was no prima facie evidence of an offence by the applicant and, as a result, quashed and set aside the FIR against the CA firm.