Degree of Evidence in Professional Misconduct Cases is Higher than Balance of Probability, but Not Beyond Reasonable Doubt: Delhi High Court

The chartered accountant argued that the charges must be proven beyond reasonable doubt to establish the crime of professional misconduct under the Chartered Accountants Act. However, the petitioner/Council of the Institute of Chartered Accountants of India argued that proceedings under the Act cannot be equated with criminal proceedings and the standard of proof would be either on the balance of probabilities or little more but not beyond reasonable doubt as envisaged. by the defendant certified public accountant.

A division bench to find merit in the council’s argument Justice Vibhu Bakhru And Judge Swarana Kanta Sharma His order referred to a passage in the UK Halsbury Code dealing with the ‘Standard of Evidence’; This passage states that “in civil cases the standard of proof is met on a balance of probabilities”, while in criminal or professional misconduct cases a higher degree of proof will be required, although not to the Criminal standard.

The bench then said: “Therefore, in cases of professional misconduct, the degree of proof may be higher on the balance of probabilities but the same will not reach the criminal standard of proof beyond reasonable doubt. Maya Gopinathan – Anoop SB & Anr. case, 2024 SCC OnLine SC 609“.

Background

The court was hearing a reference filed by the petitioner/Council of the Institute of Chartered Accountants of India (Council) seeking an appropriate order under Section 21(5) of the Chartered Accountants Act, 1949 (prior to the Amendment Act, 2006). One year in respect of the Court’s order expelling a Chartered Accountant (respondent no. 1) from the Register of Members of the Institute of Chartered Accountants of India (ICAI) for a period of time.

Respondent no. CA/1 was found guilty of professional misconduct by the Disciplinary Committee after a complaint was lodged against him in 2005. After considering the disciplinary committee’s report, the Council recommended in 2013 that his name be removed from the Register of Members. ICAI for one year. An application was later made to the high court; but in 2017 the court overturned the Council’s decision and, after giving both parties the opportunity to hear, instructed the Council to reconsider the Disciplinary Board’s report at its next meeting.

Later, after both parties were given an opportunity, the Disciplinary Board’s report was re-evaluated. Finally, in 2018, the Council accepted the outcome of the Disciplinary Committee and the defendant no. 1 was found guilty of professional misconduct falling within the meaning of clause (7) of Part I of the Second Schedule to the Act. The Council also filed a petition against the defendant no. 1’s name will be deleted from the Membership Register for one year. Later another reference was referred to the high court for appropriate decisions.

Findings

The CA argued that the charges must be proven beyond reasonable doubt to prove professional misconduct under the Chartered Accountants Act. He argued that disciplinary investigations into professional misconduct are quasi-criminal in nature and therefore they must be proven beyond a reasonable doubt.

However, the Council submitted that proceedings under the Act could not be equated with criminal proceedings and that the standard of proof would be either on the balance of probabilities or slightly more, but not beyond reasonable doubt.

The court was cited Institute Chartered Accountants of India – Mukesh Gang (2011), Where the Division Bench of the Andhra Pradesh High Court observed that in disciplinary proceedings, the standard of evidence required to establish a charge is beyond probabilities and the charge cannot be equated with the standard of proof in a criminal prosecution where it is required to be proven beyond reasonable doubt.

The bench also referred to the apex court’s decision in Lalit Agrawal v. Institute of Chartered Accountants of India and Anr. (2019) where the standard of proof required in criminal proceedings is beyond reasonable doubt, the standard of proof required in disciplinary proceedings under the Act is beyond reasonable doubt.

He later noted: “However, as the weight of the authorities shows, it is beyond odds but not beyond reasonable doubt.“.

CA relied on the case HV Panchaksharappa – KG Eshwar, (2006), The Supreme Court held that under the Solicitors Act 1961 a charge of professional misconduct must be proven beyond reasonable doubt. He argued that the same standard should be followed in certified public accountants.

However, the Court did not accept this claim and distinguished between the duties and responsibilities of a lawyer and a certified public accountant. He observed that lawyers’ duties are closely linked to ethical standards of courtroom conduct, requiring them to maintain a high level of accountability to the legal system. The role of certified public accountants is to provide accurate financial information, provide taxation advice, and ensure compliance with accounting standards and regulatory requirements.

The court noted that although the profession of chartered accountant also requires honesty, integrity and honesty, the focus is more on financial honesty and regulatory compliance. He stated: “Chartered accountants with specialized expertise in financial management and auditing often deal with confidential financial information. Therefore, within each profession, the nature of the misconduct, the type of harm caused, and the expectations placed on these professionals vary significantly.”

The court therefore held that respondent no. 1’s argument that accusations of professional misconduct must be proven in a similar manner to criminal prosecution. It ruled that charges under the Chartered Accountants Act did not need to be proven beyond reasonable doubt.

Regarding the charges against respondent no. CA/1, the Court held that they had been proven with ‘reasonable certainty’ and that there was a preponderance of probabilities.

“When the materials presented to the Disciplinary Board and the Board in this case are examined, defendant n. We see that there are charges against defendant no.1. 1, proven with reasonable certainty that is greater than the standard of preponderance of probabilities and evidence.” said the bench.

The court found that the Council had not erred in finding the defendant, CA, guilty of professional misconduct. However, the Court postponed the decision to remove his name from the Membership Register for one year.

He noted that CA has been a member of the Institute of Chartered Accountants of India (ICAI) for nearly three decades, that there have been no other complaints or allegations of misconduct and that the current proceedings have been pending for 19 years.

He stated: “Therefore, the present proceedings are based on the defendant no. We believe that justice will be done by severely reprimanding the defendant no.1. He was punished under Section 1 under Section 21(6)(b) of the Act for his professional misconduct.”

The Court thus reversed the Council’s decision to this extent and dismissed the petition.

Case title: Institute of Chartered Accountants of India vs CA Shri Subhajit Sahoo & Anr

(CHAT A. REFERENCE CASE NO. 2/2019)