[PR-188/2017-DD/24 7/2017/BOD/582/2020)

CONFIDENTIAL

BOARD OF DISCIPLINE
Constituted under Section 21 A of the Chartered Accountants Act 1949

Findi11qs under Ruic 14(9) of tile Chartered Accountants (Procedure of

Investigations of Professional and Other Misconduct and Conduct of Cases)
Rules, 2007

File No. : PR-188/2017-0O/247/2017 /BOD/582/2020

QUORUM:
CA. Prasanna Kumar D., Presiding Officer (Attended Physically)
Mrs. Rani Nair (IRS, Retd.), Government Nominee (Through Video
Conferencing)

In the matter of:

Sh. Vikram Singh Chopra, Kolkata
415, Bentinck Chambers,
37A, Bentinck Street,
Kolkata-700069 ........ . Complainant

-Vs.-

CA. Rajesh Kumar Chandak (Membership No. 054637)

37 A, Bentinck Street.
402, Bentinck Chambers,
Kolkata - 700069 ...... -.. Respondent

DATE OF FINAL HEARING 3rd January, 2022

PLACE OF HEARING New Delhi/ Through video conferencing

PARTIES PRESENT (Through video conferencing)

Counsel for Complainant CA. A. P. Singh
Respondent CA. Rajesh Kumar Chandak
Counsel for Respondent CA. Ashish Makhija alongwith his
assistant Ms. Richa Singh

Findings:

Charge alleged :
1. The Respondent was involved and engaged as Director in various body
corporates. In one of such body corporate, he along with one of the partner in his CA
firm, were the only Directors, where the Company had business activities, in which
the Respondent along with his partner participated and played an active role in its
administration. The Respondent signed the directors' report, financial statements and
various other Forms of the bodies corporate which clearly prove that he was engaged
in the business operations of those companies. The Respondent also signed the
~ Page 1 of 28
 [PR-·l 88/2017-DD/24 7/2017/BOD/582/2020]

Forms for investments made by the companies in which he was a director. That is by
no stretch of imagination the role of a Director Simplicitor. The Respondent did not
make full and fair disclosures to ICAI and did not seek the appropriate permission to
be involved in the overall activities''of the Companies.
The Con:,plainant submitted the name of following 8 companies and alleged
that the various documents in those eompanies were signed by the
Respondent and also submitted other inFormation in relation to each
of the following company: ,.
I. Mis Hare Krishna Properties Pvt Ltd
ii. Mis Kuldeepak Vanijya Pvt Ltd ·:--
iii. Mis Rachit Vanijya Pvt ltd
iv. M/s High Value Investments Pvt Ltd
v. Mis High Value Securities Pvt Ltd
vi. Mis Sigma Services Pvt Ltd
vii. Mis Sushwani Info Systems Pvt Ltd
viii. M/s High Value Management Consultants Pvt Ltd.

The Respondent was the arbitrator in the family settlement of CA Raj Si11gh
Chopra, partner in his CA firm and was aware that his partner was wholly involved in
his family business and firms. Despite this knowledge , the Respondent continued to
remain in partnership with CA. Raj Singh Chopra and thus gave false declarations
and in Formation to ICAI and brought disrepute to the profession and contravened
the provision contained in the regulations and guidelines issued by ICAI.

The Director (Discipl ine) in his Prima Facie Opinion dated 16th June, 2020 held
the Respondent Prima Facie Guilty in respect of the Charge specified at para 1
above and the Board of Discipline concurred with the said Opinion of the Director
{Discipline) holding the Respondent Prima Facie Guilty of 'Professional Misconduct'
falling within the meaning of Item (11) of Part I of the First Schedule to the Chartered
Accountants Act. 1949. Accordingly, the Respondent had been examined in respect
of the said Charge during inquiry.

The Board also noted that the Complainant has filed another complaint against
one of the partner of the Respondent Firm, CA. Raj Singh Chopra and the said case
is dealt with separately in case reference no. PR-189/2017-OO1248/2017/
800/597/2021.

Brief of Proceedings held:

2. At the time of hearing held in the case on 29th December. 2021 , the
Complainant and the Respondent alongwith their respective Counsels were present
before the Board through video conferencing .They confirmed that they have read
and understood the contents of the modalities and protocols of e-hearing and follow
them . The Complainant and the Respondent were put on oath. The charges alleged
against the Respondent were taken as read with the consent of parties present. On
being asked by the Board as to whether the Respondent pleaded guilty in respect of
the charges alleged against him, he replied in negative. Thereafter, the Counsel for
the Complainant and the Respondent made their respective detailed oral
subm issions before the Board. The Respondent was examined by the Board. To
Page 2 of 28
 IPR-188/2017-DD/247/2017/BOO/582/2020)

counter the submissions of the Counsel for the Respondent, the Counsel for the
Complainant needed some time and requested for adjournment of the hearing as he
had to catch the flight. Looking into the request of the Counsel for the Complainant,
the Board decided to adjourn the hearing in the case with the direction to the
Respondent to provide the signatory details of the companies under question.

3. Thereafter. at the hearing held in the case on 3rd January, 2022, the Counsel
for the Complainant and the Respondent alongwith his Counsel were present before
the Board through video conferencing. Further to the hearing held in the case on
28th December 2021 , the Counsel for the Complainant made his detailed oral
submissions before the Board. The Counsel for the Respondent also made his
submissions before the Board. On consideration of the documents and submissions
on record, the Board decided to conclude the proceedings in the case.

4. After the conclusion of hearing in the case, the Respondent has filed further
submissions dated 141h January. 2022 before the Board and the same were also
considered by the Board while arriving at its Findings in the case.

Brief su bmissions of the Respondent:

5. The Board noted that the Respondent, in his defence, inter-alia, submitted as
under:- " ·~
a. The Respondent signed MBP-1 and submitted that the said Form is
required to be signed by the individual director himself. Further, ll1ere is no
exceptions for Director Simplicitor for any statutory compliance violations
and as compliance with the requirement of law cannot be construed as
involvement in 'day to day activities, when the same is done on exigencies
in the capacity of Director Simplicitor. There is no bar on Director
Simplicitor to sign the documents, required by law.
b. The use of digital signature for uploading the Forms requ ired by the
Statutes is for complying with requirements of law and in no circumstances
can be construed that the person whose DSC has been used, occasionally,
in uploading the Forms, is involved in day-to-day activities.
c. Interest income on loan given to a Company for purchase of property, has
been considered as receipt of remuneration.
d. There is a difference between Director Fees and Director Remuneration.
Director Fees are paid for attending Board meetings whereas in case of
Director Remuneration, there is a relation of employer and employee. The
Respondent has received Director Fees for attending Board meetings
which has been considered as receipt of remuneration . Even, Director
Fees received for attending Board Meetings of Mis. JJ Exporters Ltd and
M/s. JJ Spectrum Silks Ltd (both listed Companies) was considered as
receipt of remuneration.
e. The ROC Form certification charges received from Mis Highvalue
Management and Consultants P Ltd. for certifying various Forms uploaded
at ROC has been considered as receipt of remuneration and an activity
which requires specific permission from the Council.
• f. Regarding the submissions that Respondent had never received any
remuneration from any of the Companies, the Respondent reiterated that
~age3of28
 [PR-188/2017-DO/24 7/2017/800/582/20_20]

from his accounts submitted for FY 2006-07 to FY 2015-16, it is clear that

Respondent has not received any remuneration from any of the
Companies other than Director sitting fees for attending Board Meetings.
Interest on Loan and Fees for certifying ROC Forms in the capacity of a
practising Chartered Accountant.
g. Regarding Form MGT-7 the Respondent submitted that the said Form
requires -"Details of Directors and Key Managerial Personnel as on the
closure of financial year''. The details of Directors given in Section VIII of
the Form MGT-7 are treated as details of "Key Managerial Persons".

Part VIII of Form MGT-7 deals with ''DETAILS OF DIRECTORS AND KEY
MANAGERIAL PERSONNEL", where\h ;

Section "A" requires Composition of Board of Directors, segregating

between numbers of executive & Non-Executive Directors.

The preface of Section B, requ ires ,1 - "Number of Directors and Key

Managerial Personnel as on the financial year end date" - meaning that
details of Directors as well as KMP needs to be given.

Section B (i). requires details of Directors & Key Managerial Person ne l as

on the closure of financial year. The various options for designations in
drop down facility in the Form MGT-7 are

a) Director

b) Manager

c) Managing Director

d) Company Secretary

e) Alternate Director

f) Additional Director

g) Director appointed in Casual Vacancy

h) Nominee Director

i) Whole Time Director

j) CEO
k) CFO

As per Section 2(51) of the Companies Act 2013, the KMP has been
defined to be a CEO or MD or Company Secretary or WTD or CFO.

If wrong nomenclature in respect to designation is given, then the Form is

liable to fail the pre scrutiny test by MCA 21 and will not be allowed to be
uploaded.

Page 4 of 28
 [PR-188/2017-DD/247/2017/BO0/582/2020]

Section B(ii) requires - Particulars of Change in director(s) and Key

Managerial Persons.

It has been deliberately ignored that, in the multiple MGT-7 annexed &
referred to by the Complainant:

in the Section "A" dealing with Composition of Directors. the directors are
stated as "Non-Executive" directors except for one Company where there
is one Executive Director (Who is not the Respondent).

The Preface of Section B requires Number of Directors Key Managerial

personnel as on the financial year end date - meaning that the details of all
the Directors as well as Key Managerial persons (As given in page 3 under
requirement of Section 8 (i)) detailing the options available in are to be
given in Section (B)(i)

In the options available in Form MGT-7 requiring designation of the person,

''Director" is the only designation which is the nearest resembling
designation that of Director Simplicitor.

The Respondent has not been designated as any other Designations for
which options are available in Form MGT 7, Part VIII B. In the list of options
availabl,~ and in absence of option for Director Simplicitor, the nearest
resembling option is that of "Director" and as such the Respondent has
been shown as "Director", though being Director Simplicitor.
The number as inserted in Box for providing -"Number of Directors and Key
Managerial Personnel as on the financial year end date" is the total
number of Directors (Executive & non-executive) + Key Managerial
Person, as mentioned in Section Vilt (A)- Composition of Directors & Key
Managerial Persons.
h. Signing of various documents in relation to Harekrist,na Properties P
Ltd, Kuldeepak Vaniiva P Ltd, Rachit Vaniiva P Ltd, Hiqhvalue Investments
. P Ltd, Hiqhvalue Securities P Ltd, Sushwani lnfosvstems P Ltd, Highvalue
Management & Consultants P ltd and Sigma Services P Ltd. :
a) All the above-mentioned Entities are Body Corporates governed by the
Companies Act and are Board Managed Companies. There are certain
compliances which are required to be done, every year, with ROC, Income
Tax and other statutory bodies. Default in these compliances, leads to
Prosecutions and other penalties and all the Directors are individuaffy and
collectively held responsible for non-compliance.

b) The Respondent signed on the purported documents only in extreme

exigencies like non availability of the other signatory at the then point of
time/ non availability of the DSC of other Director etc. Merely signing of
Compliance related documents does not mean that he is not a director
Simplicitor or that he is a fu ll time Director involved in day to day activities

~ Page 5 of 28
 (PR-188/2017-DD/247/2017/BOD/582/2020]

of the Companies, ignoring the fact that neither he was a Whole time
Director or Managing Director or Key Managerial Person.

c) None of the above-mentioned Companies have Managing Director or

Whole time Director. In many Companies there were only two Directors.
Tl1e Directors Report and the financial statements were signed by the
available two Directors, as per requirement of the law and in case of
Highvalue Investments P ltd., one of the signatories was Executive
Director.

d) Even the other Documents mentioned as signed by the Respondent

were occasionally signed by him in the Capacity of Director Simplicitor, as
tile same were required for statutory filing purposes and does not imply his
involvement as a working Director of the Company.The same were
sometimes signed by him, when the other directors were not available.

e) All the Companies mentioned by the Complainant, where the

Respondent was a Directof ' Simplicitor, are engaged in the activity of
Investments in Shares & Properties. Both these activities cannot be
categorized as Business activity and are permitted to be carried on by a
Practicing Chartered Accountant. •

Some of the Companies, in which the Respondent was a director

Sirnplicitor, were family-owned Companies and were Formed/purchased as
a "SPV'' to deploy funds of the family. The Respondent was inducted, by
virtue of being a family member, to be a Director Sirnplicitor, so that his
interest in the family assets was protected and ensure smooth transition.
The Companies do not have any business. The Activity of the Companies
are Investments in Shares, Securities and Property.
If the Corporate veil is lifted, the fact will emerge that the Companies are of
SPV nature for investing in Shares and Properties and for ensuring
protection of stakeholders and his involvement as only the beneficiary. In a
family, no person will like to lose control over his assets during his life time
and also like to plan heritance through smooth transition and as such the
route of Corporate entities have been adopted.
A Director Simplicitor is also a Director and the duties and Rights of the
Directors are defined in the Companies Act. A Director is duty bound to act
in a fiduciary capacity and no such acts done by any person in a fiduciary
capacity can be termed as illegal or termed as Professional misconduct..
i. MOA and AOA are the charter of the Company entailing what is to be
done and how it is to be done i.e. how the Company will function.
Moreover, the AOA are taken, as is, from the standard table as
detailed/given in the Schedule to Companies Act.The content of MOA and
AOA does not define the function of the Director Simplicitor. These
documents are incorporating document of the company and only defines
what is to be done and how it is to be done as prescribed by the

Pa~e 6 of 28
 [PR-188/2017-OO/24 7/2017 /BOD/582/2020J

Companies Act (as amended from time to time). It is sole decision of the
Board Members among themselves to delegate the duties which is done
after the incorporation of the Company.Contents of MOA and AOA cannot
be taken as evidencing document that whatever mentioned therein also fall
within the duty of "Director Simplicitor". It is the Board which defines the
duties of Director.

j. How can it be presumed that statutory documents of a company will be

governed by a definition of a post (Director Simplicitor) which exists only for
the members of ICAI. These documents are filed as per law of the land and
for the benefit of its' shareholders. There is no designation in Companies
Act as "Director Simplicitor.
k. Company wise issues raised are dealt in the paragrapt,s below:
I. Harekrishna Properties P Ltd
The Company was formed by practicing professionals to Purchase office
Property and is a Board Managed Company.

a) There were 3 directors on the Board as on the date of EGM, all of whom
were practicing professionals. In such case, extract of Minutes of EGM for
ROC filing is required to be signed by at least one Director, certifying the
authenticity of the extracts, and therefore the same was signed by the
Respondent, in the capacity of Director Simplicitor. Attending EGM is in the
fiduciary capacity of a Director Simplicitor, is permissible as per guidelines for
practicing Chartered Accountant, not requiring any specific permission (in view
of Clause 2.14 ..1.11 (iv)(b) of the Code of ethics) and consequently, it also
covers certifying the extract of resolution passed at EGM attended by the
. Respondent.

b) Regarding declaration u/s 33(1) signed on Formation of the Company

signed by the Respondent as promoter Director:
Clause 2.14.1 .I 1 (iv)(b} of the Code of Ethics, Volume II (Revised 2020)
staies " There is no bar for a member to be a Promoter/Signatory to the
Memorandum and Articles of Association of any Company. There is also no
bar for such a Promoter/Signatory to be a Director Simplicitor of that Company
irrespective of whether the objects of the Company include areas which fall
within the scope of the profession of Chartered Accountants. Therefore,
members are not required to obtain specific permission of the Council in such
cases. It must be clarified that under Section 25 of the Chartered Accountants
Act, no Company can practise as a Chartered Accountant."
The declaration is required to be signed by a promoter Director, declaring the
fulfillment of requirement of Companies Act, 1956 and It was signed by the
Respondent for incorporation of the Harekrishna Properties P Ltd and has
been conveniently considered in day-to-day activity of a Company wh ich was
not in existence (Under incorporation) on the date of signing the declaration.

~ Page 7 of 28
 [ PR-188/2017 -DD/247/2017/BOD/582/2020]

c) The Form 32 filed alongwith incorporation documents and Formalities of

Forming the company, as referred to, needs to be signed by the prospective
promoter director.The Respondent, as one of the promoter director, to comply
with the requiren1ent of the Companies Act, 1956 for Formation of the
Company has digitally signed Form 32. This is well within the permission as
per Clause 2.14.1.1 1 (iv)(h) of the Code of Ethics, Volume 11 (Revised 2020).

It has been deliberately ignored that the Form was for Formation of a new
Company. as stated in point 1 of Form 32. Again, a document of a non-
existent company (Under incorporation) on the date of signing the Form 32
and has been conveniently considered in day-to-day activity of a Companv
which was not in existence (Under incorporation) on the date of signing the
Form.
II. Kuldeepak Vanijya P Ltd
The Company is owned by JMr. Sanjay Mundra. The Respondent_ was
appointed as a simple non-executive Director, to comply with the requirement
of minimum directors in a private limited Company, as prescribed by the
Companies Act, 1956. The Activities of the Company is investments and are
carried out in Mumbai, by the other Director Mr. Sanjay Mundra. Evidence .for
the same are attached vide Annexure D (which includes Proof of residence of
Mr. Sanjay Mundra, Address of Depositary, Evidence of Bank account in
Mumbai. Resolution for opening Bank Account}.
The Company is a NBFC Company regulated under Guidelines issued by the
Reserve Bank of India and had only two Directors, namely Mr. Sanjay Mundra
and the Respondent. Any addition of Director needs prior approval of the
Reserve Bank of India. Application for appointment of another Director is
pending with the RBI under NBFC Regulations.

a) As no Managing Director was appointed by the Company, the Respondent

was one of the two directors who signed the Directors report in the capacity of
Director Simplicitor.

b) The Company being a private Company, has not appointed any Managing
Director and hence the financial statements were signed by the only two
directors of the Company i.e the Respondent (in the capacity of Director
Simplicitor} and the other director.

c) The MOA of the Company was signed as certified to be true copy for
Compliance with ROC, Kolkata.

It is to be noted that the Registered Office of the Company is in Kolkata. ·As

the other Director is based in Mumbai and therefore in the absence of tt1e
other director in Kolkata. the MOA was signed by the Respondent to certify it
to be true, which is allowed as per Clause 2.14.1.11(iv)(b) of the Code of
ethics, Volume II.

Page 8 of 28
 [PR-188/2017-OO/247/2017/8OO/582/2020]

d) The Respondent has been stated as a non-executive director in MGT-7

which has been deliberately ignored while framing allegations against him.
e) No such appointment of KMP has been made by the Company.
Ill. Rachit Vanijya P Ltd

a) In the said case, as no Managing Director was appointed by the Company,

. the Respondent was one of the two directors who signed the Directors report
in the capacity of Director Simplicitor.

b) The Company being a private Company, has not appointed any Managing
Director and hence the financial statements were signed by the then available
Director i.e the Respondent (as Director Simplicitor) and the other director.
However, another Director has been appointed on 30.4.2018 and thereafter all
financial statements have been signed by Mrs. Anjana Chopra and Mr.
Subhash Sharma .

c) The declaration in MGT -7 clearly establishes Respondent as Non-

Executive Director.

d) It has been alleged that "Copy of resolution adopted by the Board of

Director of Rachit Vanijya P Ltd" on 30th August 2008 to authorize the
Respondent to make investments on behalf of the Company and to sign all
necessary documents in this regard and signed by the Respondent".
(i) The resolution attached for the Board Meeting states that the Boa rd
Meeting was held at 4pm on 30.8.2008, whereas the meeting was held at I
lam.(Copy of Minutes of the meeting held on 30.8.2008 attached vide
•Annexure "E" 2 thereby raising a question on the authenticity of the document
attached.

(ii) Authenticity of the document attached in the Complaint needs verification in

light of the facts detailed herein below dealing with opening of Bank account
with forged documents & false signature.

{iii) Name of Mr. Subhash Sharma. director being authorized, has been
deliberately suppressed. Copies of Application Forms of the investments made
by Rachit Vanijya P Ltd can be produced, if required, as an evidence that the
Forms were not signed by the Respondent.

(iv) The Copy of minutes attached vide Annexure "E" clearly states that no
such resolution was passed in the said meeting. Mr. Subhash Sharma,
Director was authorized in earlier meeting for making investments and signing
Application Forms, thereafter no resolution was passed to supersede the
resolution authorizing Mr. Subhash Sharma for making investments.
(v) The allegation implies that the Respondent has self-authorized himself in a
Board Managed Company, to deal with the transactions of the Company and
the investee Company has accepted the" void ab initio Form".

Page 9 of 28
 (PR-188/2017-00/24 7/2017 /80D/582/2020]

This further strengthen the fact that this is a forged document.

(vi) Even if such type of document exists, they are null and void, ab initio, as
Respondent was never authorized by the Board for the said purpose.

IV. Highvalue Investments P Lid

a) The Directors of the Company were Late Ramanlal Chandak -

Respondent's Father, Respondent and Mrs, Rashmi Chandak. Respondent's
Father, who expired on 24.1 .2018, was suffering from Parkinson Disease
since 2004 and as such he was not in a position of signing the financial
statements and related papers. As such, the Respondent had no option but to
get the Board Report signed by the ~ther. 2 directors including him.
Mr. Harsh Chandak, who became major on 10.11.2014, was appointed
Director of the Company on 1.3.2018, on completion of 21 years of age and
obtaining approval from the RBI under NBFC Regulations, and all the
accounts thereafter has been signed by Mr. Harsh Chandak and Mrs. Rashmi
Chandak. •

b) In the said case, as no Managing Director was appointed by the Company.

the Respondent was one of the two directors who signed the Directors report
in the capacity of Director Simplicitor.
c) As regarding the Board Report wherein , it has been mentioned that "the
Company does not have any key managerial person other than present
Directors", the Respondent stated that the disclosure in the Director Report
has been misinterpreted, as in practice, a standard Format of Board Report
with specific applicability pertaining to respective companies are adopted.
However, the said clause in respect to KMP is not applicable to a private
limited Company.
This reporting disclosure is void, is also corroborated by the MGT-7, Part VIII
(B){i) wherein the designation of the persons has been mentioned as
"Director" and not MD/WTD/CEO/CFO/Company Secretary, Manager etc
However, from subsequent years onward, the said clause has been suitable
amended as per requirement of law.
d) Only Mrs. Rashmi Chandak was an executive Director.
Certain compliance needs to be done by the Company to designate a person
to be KMP. As the Company does not have any key managerial person, there
was no need to making, such compliances.
e) The Company being a private Company, has not appointed any Managing
Director and hence the financial statements were signed by the then available
Director i.e the Respondent (as Director Simplicitor) and the other one being
executive director.

Page lOof 28
 [PR-188/2017-DD/24 7/2017/BOD/582/2020}

However, another Director has been appointed on 1.3.2017 and thereafter all
financial statements are signed by Mrs. Rashmi Chandak, Executive Director
and Mr. Harsh Chandak.

f) "Extract of Minutes of the BOD meeting required for uploading Form 2 for
allotment of shares was signed by the Respondent, for compliance of the
statutory regulations".

As per Companies (Issue of Share Certificate) Rules, 1960 specifies that

Every share certificate shall be signed by two directors and one authorized
signatory and shall be issued under the seat of the Company.

Both the Directors, the Respondent and Mrs. Rashmi Chandak were
authorized to do all such acts relating to allotment of shares. Probably, the
Complainant has intentionally not mentioned the name of Mrs. Rashmi
Chandak.

As already explained about the illness of the 3rd director namely Late Raman
Lal Chandak and his inability to sign due to shivering of hands pursuant to
Parkinson Disease, the names of the remaining two directors were mentioned
in the resolution.

Further increasing of Share Capital cannot be termed and included in day-to-

day activities.

g) The declaration in MGT-7 clearly establishes Respondent as Non-Executive

Director.

h) In order to comply with the statutory requirements in time, the Form was
•digitally signed by the Respondent due to unavailability of Digital Signature of
the other Director. •

i) AOC-4 is, a compliance related filing and has been digitally signed under
Respondent's signature, as the other director were not having active digital
signature. This was one of the events and subsequently all such Forms are
signed generally by other Directors.

j) Copy of application Forms for investments in equity shares of other Bodies

Corporate and signed by the Respondent:The Copies of Forms attached were
not the Forms through which investments were made in Freya Shipping
Agencies P Ltd. They appear to be forged documents.The Complainant has
stated in one of his affidavits before the High Court at Calcutta that all the
Documents of M/s Freya Shipping Agencies P. Ltd are not with him but are in
possession of his brother Mr. Raj Singh Chopra. Copy of Affidavit attached.
The Complainant vide letter dated 10.3.201 7, attached vide Annexure" F-24 &
F25" addressed to Mr. Raj Singh Chopra has affirmed that " The allegation
with regard to possession of statutory records and accounting records are
completely false and all the documents of the company have always been in
your possession.'' That is, Complainant stating that the Statutory & Accounting
. documents of the Freya Shipping Agencies P Ltd were not in his possession.

~ - -- Page 11 of28
~~
 {PR-188/2017-DD/24712017/BOD/58~/2020)

As the Complainant is in litigation with his brother Mr. Raj Singh Chopra and
he has stated under OATH before the High Court Calcutta that he had no
access to the documents of Freya Shipping Agencies P ltd and therefore
authenticity of the Forms attached is doubtful and needs verification. Under
the said facts, either the affidavit given by the Complainant before the High
Court at Calcutta is false or the Form attached is forged. Therefore. no
reliance can be made on any such document. the authenticity of which is
questionable. This matter ought to be reported to High Court, Calcutta, as
making a false statement under oath is a contempt of the Court.
k) The Respondent was never authorized by the Board to make decision
regarding making investments or sign the application Forms for investments
on behalf of the Company.Mr. Ramanlal Chandak, Director of the Company
was authorized to make investments, as per resolution passed in the meeting
of Board of Directors held on 30.6.1993. Subsequently, Mrs. Rashmi Chandak,
Director of the Company was also authorized to make investments, as per
resolution passed in the meeting of Board of Directors held on 30.3.1999.The
Company has made many investments since Incorporation and the papers
have been signed by other Director. Few of the Application' Forms (Including
the true copy of the application Forms for making investments in Fr~ya
Shipping Agencies P ltd) are attached as evidence.

Even. if at all, there is an existence of such a Form, it is a dummy Form and is

void "ab-initio" owing to the fact that the Board never authorised Respondent
to make decision regarding making investments or sign the application Forms
for investments. Any such Form, even if in existence, would have been
immediately rectified before the investee Company processed the application.
The Complainant, with a mala-fide intention has intentionally misstated the
facts.
V. Hiqhvalue Securities P Ltd
a) Both the promoter Directors were the Practising Chartered Accountants.
There were only two directors of the Company and the Company was a Board
Managed Company. For Increase in Capital, Form 2 was required to be signed
by one of the Directors and accordingly Form 2 was signed. by Respondent as
Director Simplicitor.
However, subsequently, another Director was inducted on the Board. w.e.f
29.9.2017.
b) The declaration in MGT -7 clearly establishes Respondent as Non-
Executive Director.
c) As a matter of Practice and as per requirement of Companies Act, 2013
Directors need to Sign the financial Statements and as the Company had only
2 Director. both of them signed.
The Company being a private Company, has not appointed any Managing
Director and hence the financial statements were signed by both the two

Page 12 of 28
 [PR-188/2017-DD/24 7/2017/BO0/582/2020)

Directors as Director Simplicitor.However, another Director has been

appointed 29.9.2017 and thereafter all accounts are signed by Mrs. Anjana
Chopra & another Director.

VI. Sushwani lnfosystems P Ltd

The Company was Formed on 27.5.2011 to Purchase Office/ Property by Mr.

•Sajan Surana and Mr. Subir Jain. Subsequent to purchase of the property by
Respondent's family, the Company got transferred to Respondent's family and
Respondent, Mrs Rashmi Chandak and Mr. Harsh Chandak were inducted as
Director on 5.5.2015.

a) As no Managing Director was appointed by the Company, Respondent was

one of the two directors who signed the Directors report in the capacity of
Director Simplicitor. The erstwhile owners, the other Directors, logically did not
sign the same.

As regarding the Board Report wherein, it has been mentioned that "the
Company does not have any key managerial person other than present
Directors", the Respondent stated that the disclosure in the Director Report
has been misinterpreted, as in practice, a standard Format of Board Report
with specific applicability pertaining to respective companies are adopted.
However, the said clause in respect to KMP is not applicable to a private
limited Company. This reporting disclosure is void. is also corroborated by the
MGT-7, Part VIII (B)(i) wherein the designation of the persons has been
mentioned as "Director" and not MD/WTD/CEO/CFO/ Company Secretary,
Manager etc.

However, from subsequent years onward, the said clause has been suitable
amended as per requirement of law. Directors report for year ending March
2017 to March 20, copies of which are enclosed for reference.

Certain compliance needs to be done by the Company to designate a person

to be KMP. As the Company does not have any key managerial person, there
was no need to making such compliances.
b) Financial Statements for year ending March 2016, were signed by the
Respondent as a Director Simplictor. This was the first year after acquisition,
for abundance precautions, the same was signed by the Respondent (As
Director Simplicitor) and Mr Harsh Chandak. Thereafter the financial
statements were signed by Mr. Harsh Chandak & Mrs Rashmi Chandak.

The Company being a private Company, has not appointed any Managing
Director and hence the financial statements were signed by the then available
Director i.e Respondent (as Director Simplicitor} and the other director. The
erstwhile owners, Mr. Sajan Surana and Mr. Subir Jain. the other Directors,
logically did not sign the same .

. c) Form MBP-1 deals with "Notice of Interest by Director" and as such the
Respondent has informed the Company of his interest in other Companies

Page 13 of 28
 (PR-188/2017-OO/247/2017/BOD/582/2020)

pursuant to Section 184(1) of the Companies Act and Rule 9(1 ). The notice
has to be given by the individual and accordingly, the Respondent has signed
the Form as it is a declaration to be given in his individual capacity.

d) It has been alleged that the name of Respondent has been shown as
"Director and key Managerial Person" in MGT-7 filed for the year ended 31st
March 2016.The declaration in MGT -7 clearly establishes Respondent as
Non-Executive Director.
VII. Highvalue Management & Consultants P Ltd
This Company is the owner of the office property located at 402 Bentinck
Chambers, 37 A Bentinck Street, Kolkata 700069, which was taken on rent by
MIS R K Chandak 8 Co, as its office since 2002 to 2019. R K Chandak & Co,
is a Partnership firm and. a Chartered Accountant firm.
a) The Respondent and his father were the promoter director of the Company.
Pursuant to his father's illness. another director, his wife was inducted as
Director in the Company on 17.11.2003 and since then the Respondent and
his wife both are signing the documents, as required by law. Accordingly,
Director's report, Financial statements were signed by him and his wife.
Subsequently, Harsh Chandak, Respondent's son was appointed as director
in the Company on 28.05.2018 on completion of 21 years of age and since
then Rashmi Chandak & Harsh Chandak are signing all documents.
As no Managing Director was appointed by the Company, Respondent was
one of the two directors who signed the Directors report in the capacity of
Director Simplicitor.
As regarding the Board Report wherein, it has been mentioned that "the
Company does not have any key managerial person other than present
Directors", the Respondent stated that the disclosure in the Director Report
has been misinterpreted, as in practice, a standard Format of Board Report
with specific applicability pertaining to respective companies are adopted.
However; the said clause in respect to KMP is not applicable to a private
limited Company.
This reporting disclosure is void, is also corroborated by the MGT-7, Part VIII
(B)(i) wherein the designation of the persons has been mentioned as
"Director" and not MD/ WTD/ CEO/ CFO/ Company Secretary, Manager etc.
However, from subsequent years onward, the said clause has been suitable
amended as per requirement of law. Directors report for year ending March
2017 to March 20, copies of which are enclosed for reference.

Certain compliance needs to be done by the Company to designate a person

to be KMP. As the Company does not have any key managerial person, there
was no need to making such compliances.
b) The Company being a private Company, has not appointed any Managing
Director and hence the financial statements were signed by the then available
Page 14 of 28
 [PR-188/2017-DD/24 7/2017 /BO0/582/2020)

Director l.e the Respondent (as Director Simplicitor) and the other director. For
subsequent years. the financial statements were not signed by the
Respondent but were signed by Mr. Harsh Chandak & Mrs. Rashmi Chandak.

c) As regarding MGT -7 & AOC-4, which is again statutory compliance, digital

signature is essential for filing of the Forms, Respondent's DSC was used in
absence of availability of DSC of other Directors. Subsequently, all such
Forms are signed by other Directors.
d) The Respondent relinquished the post of Director w.e.f 1.10.2019.
VIII. Sigma Services P Ltd

H has been alleged that the name of Respondent has been shown as "Director
and key Managerial Person" in MGT-7 filed for the year ended 31 51 March
2016.The declaration in MGT -7 clearly establishes Respondent as Non-
Executive Director.

Signing documents in the capacity of Director Simplicitor, which are

compulsorily to be signed by a Director, does not tantamount to Professional
Misconduct and construing Respondent as Director involved in day to day
activities.

I. The complaint is barred by laches and delay - the complaint contains

allegations relating to 2004 onwards and the present complaint has been
filed in 2017. The genuineness of the Complaint is under grave doubt in as
much as the Complainant was aware of all these facts since 2004 and did
not choose to file the complaint till 2017. It also goes on to demonstrate
that the present complaint is mischievous and has been filed merely to
harass the Respondent. The first complaint was filed on 17.11.2016 vide
case no. PR-282/2016-0D/08/2017 and the present complaint with case
no. PR 188/2017/DD/247/2017 has been filed on 19.06.2017.
m. The Respondent was one of the Arbitrator in the family dispute of the
Complainant. It was only after the award was passed, which was not to the
liking of the Complainant, that the Complainant filed this complaint. The
Respondent was nominated as an Arbitrator by the father of the
Complainant. In this sense, the present complaint is a clear case of counter
blast. The complainant Is a habitual litigant having filed frivolous complaints
in various quorums.
n. The Complainant has no locus standi to file the present complaint in
relation to the companies in which the Respondent is the director and has
not rendered any professional services to the Complainant. Such a practice
of filing frivolous complaints with no locus are to be discouraged by the
Institute of Chartered Accountants of India. The Respondent has been in
practice as a Chartered Accountant since 1989 and no complaint was ever
filed against him except by the Complainant herein and that too after
passing of the Family Award by the Respondent, which was not in favor of
the Complainant.
o. A Chartered Accountant is entitled to become a director of a company for
which no permission of the Institute of Chartered Accountant of India (ICAI)
Page 15 of 28
~
 [PR-188/2017-DD/247I2017/8OD/582/2020]

is required. The only restriction is that the Chartered Accountant cannot

l1old the position as a Managing Director or Wholetime Director of any
company. A further restriction is for a Chartered Accountant from becoming
a director of a company if he or any of his partners in a Chartered
Accountant Firm are the auditors of such a company. The Council of the
ICAI considered the question of permitting members in practice to become
a director, Managing Director, full time/executive director and referred to
Para 2.14.1.11 (iv) on Page 86-87 of Code of Ethics Vol-II (Revised 2020).
Further, the ICAI requires obtaining of the specific and prior approval of the
co uncil in case a member of the Institute in practice is being appointed to
the office of the Managing Director or a whole-time director of a body
corporate. This is clearly stated in Appendix No. (9) attached to The
Chartered Accountant's Regulations, 1988 (CA Regulations).
p. The Chartered Accountants in practice are permitted to become a director
of the company, besides being permitted to be named as director,
promoter, promoter/director or subscriber to the Memorandum and Articles
of Association of any company. The only bar is to become a Managing
Director or Wholetime director of.a company. The other condition that must
be fulfilled is that the Member in practice who is a director, promoter,
promoter/director or subscriber should not receive any remuneration
except for attending meetings of the Board of directors or any of its
committees of which he is a member. In the present case, the Respondent
was a Director Simplicitor in a few companies and was neither a Managing
Director nor a Whole-time director of any such company. It is also pertinent
to state that the Respondent did not receive any remuneration from any of
these companies except sitting fees for attending the Board/Committee
meetings.
q. The Respondent further referred to the judgment of Division Bench Hon'ble
Delhi High Court in Yogeshwari Kumari vs The Institute of Chartered
Accountants of India & Anr, {2010)160 CompCas11(Delhi) dated
13.09.2010 LPA 455 of 2010, wherein Clause (11) was considered by the
Hon'ble Delhi Higl1 Court and it was held as under:
"9. On a perusal of Clause (11 ), it is quite vivid that the
RespondentNo.2 was not a whole-time director of LSPH; he was
not engaged in any business or occupation and, therefore, the First
part of the Clause does not get attracted to his case. As far as the
proviso is concerned, a Charlered Accountant is not disentitled
from becoming a director of a company. The only rider is that he
should not be interested in such company as an auditor. The terms
which have been laid emphasis upon and correctly so are "such
company" and the RespondentNo.2 is not the auditor of LSPH. He
is the auditor of LPHM which is a separate corporate entity. Regard
being had to the concept of different Juris entity and f(eeping in view •
the concept of disqualification which has to be strictly construed, we
are of the considered opinion that the analysis made by the learned
Single Judge is absolutely impeccable."

Page 16 of 28
 (PR-188/2017-OO/24 7/2017 /B0O/582/2020]

r. Mere signatures on the Director's Report. Financial Statements and other

forms do not change the status of the Respondent as Director Simplicitor.
Though the Respondent has signed Financial Statements, Directors' report
in pursuance of the provisions of Companies Act, 2013, yet it cannot be
construed that the Respondent was engaged in managing the affairs of
such companies. By affixing his signatures as per the statutory provisions,
the Respondent was primarily complying with the statutory provisions.
Signing of the Forms, Financial Statements and Directors' report is a
ministerial act which tags along with the position of a Director. It does not
tantamount to the Respondent managing the affairs of the company. This
was done by the Respondent merely to make annual mandatory
compliances. It may also be noted that there is a difference between
annual compliances as per the legal requirement and carrying on day to
day business operations. Under no circumstances, annual compliances of
Jaw can be considered as carrying on day to day business operations.
s. The Respondent further referred to Para 100.3 of Code of Ethics Volume 1
(Revise 2019) and submitted that as one of the directors of the company,
the Respondent was under an obligation to ensure compliance with the
provisions of the Companies Act, 2013. Merely complying with the
provisions of the Companies Act cannot be considered as managing the
operations of the company. It is a regular practice in the companies to get
the signatures of the Directors including independent directors on the
Financial Statements, Directors Report and other documents. Mere signing
of such statutory papers or other documents which are signed in terms of
the authority given by the Board of Directors does not amount to managing
the company.
t. All the information relating to his Income Tax returns for Assessment Year
2006-07 to 2016-17 along with Form 26AS have been furnished by the
Respondent to the Disciplinary Directorate. All these documents clearly
indicate that the Respondent has not received any income from these
companies except the sitting fees.
u. The Director (Discipline) has erred by relying upon several clauses of the
Articles of Association of Highvalue Management and Consultants Private
Limited and Sushwani lnfosystems Private Limited.
v. The Respondent was not key managerial personnel of any of the
companies mentioned in the complaint.
w. The Disciplinary enquiry cases relating to professional misconduct are
quasi criminal in nature in as much as member of the profession can have
penal consequences which affects his right to practice the profession as
also his honour.
x. The Respondent brought on record the copy of the appointment letters
issued by the respective Companies, appointing CA Rajesh Kumar
Chandak as Simple Director and the minutes of the meeting of Board of
Directors of those Companies.
y. No remuneration was received by the respondent in any of the companies
- the Respondent has received only the sitting fees for attending the board
meetings/committee meetings from these compan ies as reflected in
Income Tax Returns for Assessment years 2006-07 to 2012-13. The

~ Page17of28
 [PR-188/2017-DD/24 7I2017/BOD/582/2020]

Director (Discipline) has pointed out that the Respondent has receiv.ed
certification charges for certification of ROC Forms from High Value
Management and Consultants Pvt Ltd. in three Assessment years from
2013-14 to 2015-16. The reply by the Respondent that these amounts
were received by the Respondent in his professional capacity for certifying
the ROC Forms of the clients of High Value Management and Consultants
Pvt Ltd. The Companies Act, 2013 does not bar payment of professional
fee to the directors and such payment is not considered as ren,uneration of
the directors. In this connection, the attention of Board of Discipline is
drawn to section 197(4) First Proviso wh ich clearly states that if the
services rendered by a director are of a professional nature, the same shall
not be considered as remuneration. Hence, receipt of professional fees by
the Respondent cannot partake the character of remuneration. In addition
to the above, the Respondent has also received interest on the loans given
to Sushwani lnfosystems Pvt Ltd. The payment of interest is also not
remuneration .
z. Harerishna Properties P Ltd and Kuldeepak Vanijya P Ltd. were not
involved in any business. As regards, Highvalue Securities Pvt Ltd. it is
stated that the company has only 2 directors and both are practicing
Chartered Accountants. None of the director is a managing or a whole-time
director or KMP of the Company. In that sense, the company is a board
managed company. The following points merit consideration: -
i. As explained that the Company belonged to Chopra Family
ii. CA Rajesh Chandak was holding only 100 shares out of 120,200
shares issued by the Company. These 100 shares were allotted to
him, as being the Subscriber to the MOA & AOA.
iii. The management of the whole of companies belonging to Chopra
family was managed by the Chopra Family headed by Mr. Jagat
Singh Chopra, the staff of operating Companies of Chopra Family and
Professionals.
iv. The issue of Trading of Sarees was carried out in almost all the
Companies belonging to Chopra Family including in those Companies
in which neither CA Rajesh or CA Raj Singh were Director and were
managed by Mr. Jagat Singh Chopra, being the head of Chopra
Family. No salary was paid in private investment companies of
Chopra Family, which were looked after by the family and the staff of
operation Companies. The Companies with no salary also includes
the companies in which the Complainant & his father are the only
Directors. For reference the total salaries/service
charges/professional charges etc in companies of Chopra fam ily were
as follows:
·~· - · -- ------'--•-- - .. --·
Financial '(ea! _Am.o~r:i.t (R_s.)....
?01_Q_-JJ ____ ,___ 1~L~?,~36
- - 2011-1_2 --- -··-·- ·-23.10,994__
_____ _2012-13 _______ 62.07.885
2013-14 86,51,354
- -2014-15 91,27,0-~ff

Page 18 of 28
 [PR-188/2017-DD/247/2017/BOD/582/2020I

i.---20·1~-16 - [ ---- _9~_. 87.'.3~~7

Once the Company was handed over to CA Raj Singh Chopra, as per family
settlement, there were no trading transactions.
Submissions of the Complainant:
6. The Board noted that the Counsel for the Complainant stated before the Board
during the hearing that the involvement of the Respondent was in 8 Private ltd.
Companies. There are certain companies in which no salary payment is there to any
employee. He also pointed out the Director's Report of a few private companies
wherein it was categorically stated that the Respondent was one of the directors of
the company and the company did not had any Key Managerial person other than
them. The Respondent has openly admitted in a number of instances in his own
Rejoinder that he has not signed the Financial Statements/Director's report of certain
companies regularly. He has signed the Financial Statements/Director's report of
certain companies when other directors were not available and then he says that
from 2018 onwards he is not signing them. From the various documents brought on
record , it is evident that he is signing various documents and then he says that he is
not involved in the administration of that particular company which is totally not
maintainable.

Observations and Findinqs of the Board:

7. . The Board, upon overall examination of the facts of the case, submissions and
documents on record observed as under:-.

7 .1 . At the outset, the Board noted that after the conclusion of the hearing on 3rd
January 2022, the Counsel of the Respondent made a passing observation
that at the time of last hearing held in the case on 29th December, 2021, the
three member bench heard his case whereas today, it was heard by a two
member bench .In this regard , the Board observed that Rule 13(2) of the
Chartered Accountants (Procedure of Investigations of Professional and Other
Misconduct and Conduct of Cases) Rules, 2007 provides as under:
"The quorum for any meeting of the Board of Discipline shall be two
members.".

Further, there had been no change in the composition of the Board. Thus, the
Board held that it had been validly constituted and was well within its powers
to conduct and conclude the Disciplinary proceedings. The Board also
observed that adequate opportunities were provided to both the parties to the
case to represent their case and raising of such plea on the conclusion of the
proceedings by the Respondent seemed to be an effort to divert the attention
of the Board from the merits of the case.

7.2 . As regards the plea of the Respondent that the extant complaint is not barred
by principle of laches and delay, the Board held that Rule 12 of CA Rules 2007
. is attracted in a situation/circumstances where on account of time lag, the
Respondent faces any difficulty in securing proper evidence for his/her
defence and it does not ipso facto render the complaint / information as not
maintainable. However, in the instant matter, the Respondent has not

- ~ Page 19 of 28
 [PR-188/2017-DD/247/2017/BOD/582/2020]

expressed any difficulty to lead evidence. Therefore, this plea of the

Respondent is not sustainable.

7.3 As regards the plea that the Complainant has no locus standi to file the
complaint in relation to the companies in wh ich the Respondent is the director
and has not rendered any professional services to the Complainant, the Board
observed that in the instant case. it is the conduct of the Respondent that has
to be examined based on the documents and submissions on record and the
Oirector(Discipline) is duly empowered to investigate any complaint/
information received against any Member of the Institute in terms of the
provisions of the Chartered Accountants Act, 1949 read with CA Rules,
2007.The locus standi of the Complainant is not germane to the examination
of the conduct of the Respondent. _.,. •

7.4 The Board further opined that proceedings before it are quasi-judicial in nature
where the misconduct can be proved by preponderance of probabilities having
regard to the conduct of the Respondent which is di~tinct from Criminal
proceedings where the misconduct has to be proved beyond reasonable
doubt. While coming to the said view, the Board took into consideration the
decision of the Hon'ble Supreme Court in the matter of "Ajit Kumar Nag -vs-
General Manager (PJ) Indian Oil Corporation Limited-AIR 2005 SC •4217
wherein the Hon'ble Apex Court held as under:-

''The degree of proof which is necessary to order a conviction is

different from the degree of proof necessary to record the commission
of delinquency. The rules relating to appreciation of evidence in the
two proceedings is also not similar. In criminal law, burden of proof is
on the prosecution and unless the prosecution is able to prove the guilt
of the accused 'beyond reasonable doubt he cannot be convicted by a
Court of Jaw. In a departmental enquiry penalty can be imposed on the
delinquent Officer on a finding recorded on the basis of
'preponderance of probability'."

Similarly, in the matter of Capt. M Paul Anthony -vs- Bharat Gold Mines
Limited-AIR. ... 1999 SC 1416 the Hon'ble Supreme Court held as under:-

"ln Departmental proceedings, factors prevailing in the mind of the

Disciplinary authority may be many, such as enforcement of discipline
of to investigate level of integrity of delinquent or other staff. The
standard of proof required in those proceedings is a/so different from
that required in a criminal case. While in Departmental proceedings,
the standard of proof is one of preponderance of probabilities, in a
criminal case, the Charge has to be proved by the prosecution beyond
reasonable doubt."

7.5 Thus, the Board viewed that the plea raised by the Respondent is not
sustainable. Accordingly, the case was dealt with on its merits by the Board of
Discipline, keeping in view, the submissions and documents on record.
Page 20 of 28
 (PR-188/2017-DD/2'17l201 7/BOD/582/2020]

8. As regards the charge that the Respondent was engaged in any business or
occupation other than the profession of Chartered Accountant unless permitted by
the C'?uncil, the Board observed that the intent behind having the restrain provided
under Item (11) of part I of the First Schedule as stated hereunder has been
expressly provided in the Code of Ethics:

"The objective is to restrain members from canying on any other business in

conjunction with the profession of accountancy and combining such work with any
.business vvhich is not in keeping with the dignity of the profession. Another reason for
the introduction of such prohibition is that a Chartered Accountant, if permitted to
enter into all l<inds of business, would be able to advertise for his other business and
thereby secure an unfair advantage in his professional practice."

Thereafter, the Board took into view Regulation 190A of Chartered Accountants
Regulations, 1988, wh ich deals with the provision for Chartered Accountants in
practice not to engage in any other business or occupation, and the same reads as
below:
"A Chartered Accountant in practice shall not engage in any business or
occupation other than the profession of accountancy, except with the
permission granted in accordance with a resolution of the Councif'.

The permissible categories of engagements approved by the Council under

. Regulation 190A, are available in Appendix No. 9 to the Chartered
Accountants Regulations, 1988. Further, a member in practice shall be
permitted to be a Director (Director Simplicitor), Promoter/Promoter Director.
Subscriber to the Memorandum and Articles of Association of any company
including a Board Managed Company. Further, the expression 'Director
Simplicitor' shall be used for an ordinary/simple Director, who fu lfills the
following conditions :

(a) he is requ ired to attend the Board meetings only.(emphasis provided)

(b) He will not be paid any remuneration except the sitting fees for
attending the Board meetings; and
(c) He will be devoting his time for the company only to attend Board
meetings and not for any other purpose. (emphasis provided)

A Member in practice is permitted generally to be a Director Simplicitor in any

Company including a Board-Managed Company and as such he is not
required to obtain any specific permission of the Council in this behalf
irrespective of whether he and/or his relatives hold substantial interest in that
Company. Further, there is no bar for a member to be a Promoter/Signatory to
the Memorandum and Articles of Association of any Company. There is also
. no bar for such a promoter/signatory to be a Director Simplicitor of that
Company irrespective of whether the objects of the Company include areas
which fall within the scope of the profession of Chartered Accountancy.
Therefore. members are not required to obtain specific permission of the
Council in such cases.
Page 21 of 28
 (PR-188/2017-DO/24 7/2017 /BOD/582/2020]

9. On perusal of the copies of various documents / evidences in relati'on to

alleged companies, brought on record by the Complainant it is noted that the
following documents were signed by the Respondent as its Director:

Copy of extract of the minutes of EGM of 'Hare Krishna Properties Pvt

ltd' held on 28th Feb 2014.
ii. Copy of declaration submitted u/s 33(1) and (2) of Companies Act 1956
in respect of 'Hare Krishna Properties Pvt Ltd' .
iii. Copy of Form 32 regarding particulars of appointment of directors of
'Hare Krishna Properties Pvt Ltd' (digitally signed).
iv. Copy of directors' report of 'Kuldeepak Vanijya Pvt ltd' for the year
ended on 31st March 2016. ''
v. Copy of financial statements of 'Kuldeepak Vanijya Pvt ltd' for the year
ended on 31st March 2016.
vi. Copy of Memorandum of Association of 'Kuldeepak Vanijya Pvt Ltd' filed
with ROC on 21st March 1995.
vii. Copy of directors' report or 'Rachil Vanijya Pvt lld' for the year ended on
31st March 2016.
viii. Copy of financial statements of 'Rachit Vanijya Pvt Ltd' for the year
ended on 31st March 2016.
ix. Copy of the resolution adopted by the Board of Directors of 'Rachit
Vanijya Pvt Ltd' on 30th August 2008 to authorize the Respondent to
make investments on behalf of the Company and to sign all necessary
documents in this regard .
x. Copy of directors' report of 'High Value Investments Pvt Ltd' for the year
ended on 31st March 2016. The said report also includes the name of the
Respondent as 'Director and Key managerial Personnel'. The Directors
report also mentions that the Company does not have any key
managerial person other than the present directors.
xi. Copy of financial statements of 'High Value Investments Pvt Lld' for the
year ended on 31st March 2016 .
xii. Copy of extract of the minutes of board meeting of 'High Value
Investments Pvt ltd' held on 21st August 2017 was signed by the
Respondent where the said minutes authorized the Respondent to do all
acts as may be required in collection of allotment of equity shares, sign
the share certificates and affix the common seal.
xiii. Copy of Form AOC-4 in relation to 'High Value Investments Pvt ltd' for
the year ended 31st March 2016(digitally signed).
xiv. Copy of application Forms for investments in equity shares of other
bodies corporate and signed by the Respondent. .
xv. Copy of Form 2 for allotment of shares in relation to 'High Value
Securities Pvt Ltd' for allotment on 28th March 2009 and 31st March
2010(digitally signed)
xvi. Copy of financial statements of 'High Va lue Securities Pvt Ltd' for the
year ended on 31st March 2016.

Page 22 of 28
 [PR-188/2017-DO/247/2017I8OO/582I2020J

xvii. Copy of directors' report of 'Sushwani Info Systems Pvt Ltd' for the year
ended on 31st March 2016. The said report also includes the name of the
Respondent as 'Director and Key managerial Personnel'.
xviii. Copy of financial statements of 'Sushwani Info Systems Pvt Ltd' for the
year ended on 31st March 2016.
xix. Copy of directors' report of 'High Value Management & Consultants Pvt
Ltd' for the year ended on 31st March 2016. The said report also includes
the name of the Respondent as 'Director and Key managerial Personnel'.
xx. Copy of financial statements of 'High Value Management & Consultants
Pvt Ltd' for the year ended on 31st March 2016.
xxi. Copy of Form AOC-4 for the year ended on 31st March 2016 in relation
to 'High Value Management & Consult.ants Pvt Ltd' (digitally signed).

10. From the above documents, it is noted that the Respondent signed various
documents including directors' report and financial statements of aforesaid 8
companies being the Director of those companies. It is also noted that the
Respondent in his defence stated that the activities carried on by the Companies had
no bearing or bar on him being appointed as Director Simplicitor where he was
neither a Managing Director nor Whole time director in any of the Companies.
Further. he had not been entrusted to look after wholly or substantially, the whole of
the management of the affairs of the Companies as mentioned in the Complaint and
had never received any remuneration from any of the Companies as mentioned in
the Complaint for the post of Director Simplicitor. The Respondent also mentioned
that the papers/ documents signed by him in respect to various companies were only
of procedural nature for meeting the compliance of law and all documents were
signed by him as Director Simplicitor since at some times, he was the only available
director at that point of time. The Board noted that Section 134(1 ), (6) and (7) of
Companies Act, 2013 provides as under:

134. Financial statement, Board's report, etc

(1) The financial statement, including consolidated financial statement, if any,
shall be approved by the Board of Directors before they are signed on behalf
of the Board at least by the chairperson of the company where he is
authorised by the Board or by two directors out of which one shaft be
managing director and the Chief Executive Officer, if he is a director in the
company, the Chief Financial Officer and the company secretary of the
company, wherever they are appointed, or in the case of a One Person
Company, only by one director, for submission to the auditor for his report
thereon (emphasis added).

(6) The Board's report and any annexures thereto under sub-section (3) shall
be signed by its chairperson of the company if he is authorised by the Board
and where he is not so authorised, shall be signed by at least two directors,
• one of whom shall be a managing director, or by the director where there is
one director.

(7) A signed copy of every financial statement, Including consolidated financial

~ - Page 23 of 28
"'d-~
 [PR-188/2017-OD/247/2017/80D/582/2020)

statement, if any, shall be issued, circulated or published along with a copy

eac/7 of-
(a) any notes annexed to or Forming part of such financial statement;
(b) the auditor's report; and
(c) the Board's report referred to in sub-section (3).

11. From the above. it is clear that in case of company having more than one
director, the financial statement shall be signed by:
- Chairperson of the Company {if authorised by the board of directors) or
- Two Directors (out of which one shall be Managing Director) and
- Chief Executive Officer/ Company Secretary I Chief Financial Officer (if they
are appointed in the Company)

However, in case of alleged companies, the financial statements were signed

by the directors of the Companies including the Respondent. But the
Respondent has fa iled to submit any evidence / document on record that the
financial statements were signed by him only as the Director of the Companies
and by the other signing director as the Managing Director of the Companies.

12. The Board further noted that there were no salary payments in the company
Kuldeep Vanijyak Pvt. ltd. as per the audited Financial Statements of the company
for the F.Y. 2015-16. the Director's Report for the company Kuldeep Vanijyak Pvt.
Ltd. for the F.Y. 2015-16 specifically provided as under:

"Directors & Key Managerial Personnel

Dun·ng the year, Mr. Sanjay Gopalal Mundra and Mr. Rajesh Kumar Chandal<
were the Directors of the Company. There was no appointment or resignation of
directors or key managerial personnel during the year and the company does not
have any key managerial person other than present directors."

The Director's Report for the company Highvalue Investments Pvt. Ltd. for the
F.Y. 2015-16 specifically provided as under:

"Directors & Key Managerial Personnel

During the year, Mr. Rajesh Kumar Chandak, Mr. Raman/al Chandak and Mrs.
Rashmi Chandak were the Directors of the Company. There was no appointment
or resignation of directors or key managerial personnel during the year and the
company does not have any key managerial person other than present directors."

Similar disclosures were there with respect to the Director's Report 'Sushwani Info
Systems Pvt Ltd' for the year ended on 31st March 2016. The Board further noted
that there were no salary payments in the company Sushwani Info Systems Pvt
Ltd' as per the audited Financial Statements of the company for the F.Y. 2015-16.

Thus, the Board observed that the role of the Respondent in the afores.aid
companies was clearly beyond that of the Director Simplicitor.

Page 24 of 28
 [PR-188/2017-DD/247/2017 /8OD/582/2020]

13. Further, from the copy of Income Tax returns submitted by the Respondent, it
is noted that the Respondent had disclosed the various income / receipts in specific
years in his ITRs, computation sheets and Income & Expenditure account annexed
with ITRs which are mentioned as under:

! NS~- 1
L ..
Ass~==~ent
··-
Description
- --------l--,-- - -·- --- - -- - --,c---- - - -
!_ __1 , AY 2006-07 ___Director.Fees ~f-~s. 1.?0.00Q/- (D-7 & D-9).__ ..._
_ 2_L__AY 2007-08 __ Director Fees of Rs 20,000/-(D-12&_O-15)
3 l AY 2008-09 Director Fees of Rs. 20,000/- (D-26& D-30)
4 ; AY 2009-10·- Oi~~s_~ees of Rs. 52.500/- (D-55& D-58)
__§_j__ _Ay_~0!.Q:.!..~- -- Director Fees of Rs. 52,500/-(0-83& D-86) __
6 I
AY _1
2011 2
Director Fees of Rs. 1,50,000/- (D-11 2& D- !
l-----'--- - - - - -1-11 5) -- - -- · . j
Director Fees of Rs. 75,000/- (D-141 & D- '
7 I AY 2012-13
144)
-
I ;
I
Certification charges of ROC Forms from High
l 8 AY 2013-14 Value Management& Consultants Pvt Ltd of
i; ! ..,. Rs. 89.900/-_( D-172) _______ ----------·-·- - --·-· ·- -
I
l
: Certification charges of ROC Forms from High
i 9 I
AY 2014-15 Value Management& Consultants Pvt Ltd of
I
I Rs. 95.400/- (D-2031

10 i I AY 2015-16
Certification charges of ROC Forms from High
Value Management& Consultants Pvt ltd of
i Rs. 1,1 1.900/- (D-238)
Interest income from Sushwani Info System~
11 AY 2016-17
Pvt Ltd of Rs. 283.008/- (D-271 & D-275)
Interest income from Sushwani Info Systems
12 AY 2017-18
.. -·-
Pvt Ltd of Rs. 284, 165/- (D-309& D-312)_ _ ___

14. Further, from the copy of Form 26AS for the various financial / assessment
years submitted by the Respondent, it is noted that the tax had been deducted at
Source by the alleged Companies before making payment to the Respondent in

differer! t s~~rs:::::~~:!~-~lf
No. Years
:~=.h~::!::::::~:d::::~~
"t'~:y%~:.
deducted the tax at source made
d:~~~.!:·., •·
Source

~- , - ·--·AY2009=1Cl-
[______ ..
High - Value Management & ;
(D-52)_____ __Consultants Pvt Ltd
;!~;;-----,~::~ -
1
10
' ' ' __ i!
: 2 AY2010-11 High Value Management & ; 78 .400/- , _
7 8401
!-- - ,---·-- _(D-80) ______.. Consultants_P _v_t _Lt_d_____...___ _ _ _- ; - - - - - - - ,
1
3 AY 2011-12 High Value Management & • , _ 9,990/-
99 9001
' _ ___ ,.. _ __ (D-1 O?L__ Consultants Pvt Ud - - ------- -i - -- -- --1· _ _ __
4
AY 2013-14 High Value Management &
89,900/- 8,990/-
(D-166) Consultants Pvt Ltd
--1- ----:-:-";:--:::-:-:-~:::----t-. . . . , . . . . . . - - - - c- - - - --- t - - - - - - t-- - ·- - -- - -
AY 2014-15 High Value Management & , _
5 95 4001 9,540/-
__ (D-196) _____ Consultants_Pvt Ltd __ ______ , _ _ _ __
6 AY 2015-16 High Value Management & I 1, 11 ,SOO/- 11, 190/-
f----+--_JD-231) _____ Consultants Pvt Ltd
7 AY.2016_17
(D-268)
Sushwani Info Systems Pvt Ltd ·,•
· _ 2,83.008/-
--,---·-=-.,....,-,-c-+- 28.301/-
j
i___§____~Y_2_0_1_7_ - 1_8___._Sushwani Info Svstems Pvt Ltd ! •2,8..,..4.-=-1=s5=-,c-_----ic----::- 28.4171-___

Page 25 of 28
~ ~---
 (PR-188/2017-DD/247/2017/8OD/582/2020)

15. Thus, from the copy of Income Tax Returns and Form 26AS submitted by the
Respondent, it is amply clear that the Respondent had received the director fees and
other incomes from the Companies i.e. High Value Management & Consultants Pvt
Ltd and Sushwani Info Systems Pvt Ltd.

16. The Board also perused the various provisions of the Articles of Association of
those two companies in relation to the role and powers of the directors of the
Companies. From the copy of Articles of Associati_on of High Value Management &
Consultants Pvt Ltd and Sushwani Info Systems Pvt Ltd, the Board noted that the
Respondent was appointed as the first director of High Value Management &
Consultants Pvt Ltd along with one other director in the Company. Further, the other
relevant paragraphs of the Articles of Association of both Companies read as under:

u14. The Board of Directors may meet together for the despatch of the
business or may adjourn or otherwise regulate their meeting in such manner
as they think fair subject to the provisions of Section 285 of the companies
Act, 1956. Each director may receive out of the funds of the Company the
sitting fee for each and every meeting attended by him as may be decided by
the Board and further sums as the Company in General Meeting may from
time to time determine. The Directors will also receive out of the funds of
the company such sum per month as remuneration as will be decided by
the Board of Directors subject however, to the rectification of the members in
the Annual General Meeting held immediately after such fixation or any
change or any change in the amount of remuneration payable (emphasis
added).

15. Subject to the provisions of the Act, the control of the Company shall be
vested in the Board of Directors and the business of the company shall
be managed by the Board of Directors who in addition to the powers of the
authorities by these presents or otherwise expressly confirmed upon them,
may be exercised or done by the company. The Board of Directors, if they like,
may enter into a contract with any person or business expert to advise them in
any or all matters on such terms and conditions and for such period as may be
determined by the Board of Directors for the benefit of the Company
(emphasis added).

16. The powers and responsibilities of the Directors of the Company shall be
as in the Companies act, 1956 and the table 'A' thereof excepting so far as
they stand modified by the provisions of the Articles.

17. The Director shall have the powers, jointly and severally, of
engagement and dismissal of the staff and of general direction and of
management and superintendence of the business of the company with
full powers to do all acts, matters and things deemed necessary, proper
and expedient for carrying on the business of the company with full
powers to do all acts, matters and things deemed necessary, proper and

Page 26 of 28
 [PR-188I2017-DD/24 7/2017/800/582/2020)

expedient for carrying on the business of the company and to make and to
draw, accept, endorse and negotiate on behalf or /he company in General
Meeting. All such powers of the directors shall be subject to Supervision and
control of the Boards, which may entrust powers of specific nature to a
particular director or employee of tile company (emphasis added)

18.(a) To purchase or otherwise acquire for the company and property

rights or priv;Jeges which the company as authority to acquire at such price
and on such terms and conditions as they think fit and to sell let, lease,
exchange or otherwise dispose of absolutely or conditionally any pa,t of the
property. privileges and undertaking of the company upon such terms and
• conditions and for such consideration as they may think fit (emphasis added).

(b) Subject to the provisions of the Act, to invest and deaf with any money
of the company, not immediately required for the purpose thereof upon such
securities, shares (not being shares in thins company) deposits or loans in
such manner as they thin!< fit and from time to time vary or realise such
investment (emphasis added)

19. The Board of Directors may from time to time raise or borrow any sums
of money for and on behalf of the company from the members or other
persons, companies or banks or they may themselves advance money to
the company on such terms and conditions as may be approved by the Board
of Directors (emphasis added).

20. The Board of Directors may from time to time secure the payment of
such money in such manner and upon such terms and conditions in all
respects as they think fit and in particular by issue of debentures or bonds of
the Company or by mortgaging or charging of all or any part of the Company's
property and of the uncalled capital for the time being (emphasis added).

• 21. Subject to the provisions of the Companies Act, any debentures, bonds
or other securities may be issued at discount, premium of otherwise and
with special privileges as to the redemption surrender, drawing and
otherwise as the Board thinks fit (emphasis added)

22. The Board shall cause proper books of accounts to be kept in accordance
wifh section 209 of the Company Act, 1956. ''

17. . From the above points in the Articles of Association of the aforesaid two
Companies, it is amply clear that role and powers entrusted to the Respondent being
the director of the Companies by the Articles of Association, was far away from the
role of Director Simplicitor. The Respondent being the director of the Companies was
entrusted with the various duties and powers relating to day to day affairs of the
Companies.

Page 27 of 28
 (PR-188/2017-DD/247/201 7/BOD/582/2020]

18. As regards the plea that the Respondent is Director Simplicitor and only
involved in annual compliances as per Companies Act, the Board observed as
under:-
a. As per Companies Act, private limited companies are opened and operated
by atleast two directors.
b. As per submissions of the Respondent, both the directors in the alleged
private limited companies were non-executive Independent Directors and
none amongst them were involved in the executive functions of those
companies.
c. The concept of independent directors was evolved to regulate the public
limited and listed companies as the stake of general public and
stakeholders in those companies were generally at inherent risk. There is
no such requirement for private limited companies.

The Board examined the Respondent in this respect that how the said
companies were being run by non-executive directors when there is none who
holds managerial position and also sought explanation/ clarifications with
respect to employee details employed with such alleged companies, how the
day to day operations were carried out, the exact details of operations of said
companies and mode of execution of banking operations of said companies.
However, the Board observed that the Respondent was unable to provide any
justifiable clarifications/ explanations with respect to the same.

19. Considering the attendant circumstances, the evidence put forth during the
proceedings and the submissions on record. the Board, viewed that it is conclusively
proved that the role of the Respondent in the alleged companies clearly exceeded
beyond that of the Director Simplicitor and he ought to have sought the prior
permission of the Council before engaging himself in any business or occupation
other than profession of Chartered Accountant. Accordingly, the Respondent is held
Guilty in respect of the Charge alleged.

CONCLUSION:
20. The Board of Discipline, in view of the above, is of the considered view that
the Respondent is Guilty of Professional Misconduct falling within the meaning of
Item (11) of Part I of First Schedule to the Chartered Accountants Act 1949.

This is issued pursuant to the Order dated 29th April 2024 passed by Hon'ble
High Court of Delhi in W.P.(C} 5247/2024 namely ICAI Vs R. Vinod Kumar &
others.

Sd/- Sd/-
CA. PRASANNA KUMAR D MRS. RANI NAIR (IRS, RETD.)
(PRESIDING OFFICER) (GOVERNMENT NOMINEE)

DATE: 20-May-2024
fir.i"T r,JQ ffntm /B!~wJt ~loth 11..,_,.art
~r~ ;;;-P.,,.,,-~ / Exea,ttv~ om= Page 28 of 28
:1,-jllRS=• t'.¢.Tn<'!ll / o;,o:-J.nor, O,,octcno.
t'f1~~:q_~ )l';t;t \:.li"1-t {!~J~ ~--fl ~.1·,r, ~f,!.~ ,:
n~ ! l"Y'..-1!(1b. cl OlW:.rn: O: Ai.r~-IIC.A'-•\J ( i.4 lt0-1
.i ~i.<°l C:-'Wr:: 'if f :'•A. ~mlfi l>fJ'!il "tffr,"?.'~ r.: j-;;-1; . 110032
! O J e.,"'-..,Yt, V ,.:tw,M r~ . SJ,-~.ii. ~ht•t ! 0.032.