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accountants act

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Chartered Accountants Act, 1949: ss. 2(d), 24, 24A, 25, 26 and 28 – Person qualifying the exam of Chartered Accountant but not a member of the Institute of Chartered Accountant of India – Person impersonating as Chartered Accountant, preparing audit reports and forged seals – Criminal complaint before police alleging commission of offences punishable u/ss. 419, 420, 468 and 473 – Prosecution under the provisions of Penal Code r/w ss. 24 and 26 of the Act – Trial court and High Court holding that even though prima facie case made out against the accused u/s. 24, 24A and 26, cognizance could not have been taken on the basis of the complaint because no complaint was filed u/s. 28 ;and that he could not be prosecuted under the Penal Code – On appeal, held: If the particular act of a member or a non-member or a company results in contravention of the provisions contained in s. 24 or sub- section (1) of s.24A, 25 or 26 of the Act and such act also amounts to an offence of criminal misconduct under IPC, then a complaint can be filed by or under the order of the Council u/s. 28, which may result in punishment prescribed u/s. 24 or sub-section (2) of ss. 24A, 25 or 26 – Such member or non-member or company can also be prosecuted for any identified offence under IPC – There is no bar against prosecution of such person if he is charged with the allegations constituting offences under Penal Code or under other laws – Matter remitted to trial court to consider whether allegations contained in the complaint constitute any offence under Penal Code – In the absence of a complaint u/s. 28, no charges could be framed against chartered accountant for the alleged contravention of ss. 24, 24A or 26 – Penal Code, 1860 – ss. 419, 420, 468 and 473. ss. 24A(2), 26 and 25(2) – Expression `without prejudice to any other proceedings which may be taken against him’ in ss. 24A(2), 26 and s. 25(2) – Meaning of – In the context of the Chartered Accountants Act, 1949. Criminal Law: Double jeopardy – Simultaneous prosecution of offender for contravention of ss. 24, 24A and 26 of the 1949 Act and for the offences under the Penal Code – Permissibility of – Held: Simultaneous prosecution is permissible but in view of the bar contained in Article 20(2) r/w s.26 of the 1897 Act and s.300 Cr.P.C., punishment twice for the same offence is barred – Chartered Accountants Act, 1949 – ss. 24, 24A, 26 – Penal Code, 1860 – Constitution of India, 1950 – Article 20(2) – General Clauses Act, 1897 – s. 26. Interpretation of statutes: Construction of statutory provisions – Held: When there are two possible constructions of a statute, then the one which leads to anomaly or absurdity and makes the statute vulnerable to the attack of unconstitutionality should be avoided in preference to the other which makes it rational and immune from the charge of unconstitutionality. The respondent qualified the exam of Chartered Accountant but is not a member of the appellant-Institute. The appellant- Institute filed a complaint before the police against the respondent alleging cheating by impersonation, forgery and counterfeiting of seal of the Institute, punishable under Sections 419, 468, 471 and 472 IPC. The police filed the challan before the Magistrate. The trial court held that there was no basis for framing any charge against the respondent under IPC; and cognizance of offences under Sections 24 and 26 of the Act could not be taken because no complaint was filed by or under the order of the Council of the appellant- Institute, before the Magistrate. Aggrieved, the appellant filed revisions. The Single Judge of High Court dismissed the same. Therefore, the appellant-institute filed the instant appeals. =Allowing the appeals and remitting the matter to the trial court, the Court HELD: 1.1. Section 24 of the Chartered Accountants Act, 1949 provides for punishment of a person who is not a member of the Institute represents himself as a member of the Institute or uses the designation of chartered accountant. Similar punishment can be imposed on a member of the Institute who does not have a certificate of practice but represents that he is in practice or practises as a chartered accountant. Sub-section (2) of Sections 24A, 25 and 26 provide for imposition of different kinds of punishment for violation of the provisions contained in sub-section (1) of those sections. Section 26 provides for imposition of punishment if a person other than a member of the Institute signs any document on behalf of a chartered accountant in practice or a firm of such chartered accountants in his or its professional capacity. [Para 12] 1.2. Section 28 which is couched in negative form declares that no person would be prosecuted under the Act except on a complaint made by or under the order of the Council or of the Central Government. The prohibition contained in Section 28 is attracted only when such person is sought to be prosecuted for contravention of the provisions contained in Section 24 or sub-section (1) of Sections 24A, 25 or 26 and not for any act or omission which constitutes an offence under the IPC. The use of expression `without prejudice to any other proceedings which may be taken against him’ in sub- section (2) of Sections 24A and 26 and somewhat similar expression in sub- section (2) of Section 25 shows that contravention of the provisions contained in sub-section (1) of those sections can lead to filing of complaint under Section 28 of the Act and if the particular act also amounts an offence under the IPC or any other law, then a complaint can also be filed under Section 200 Cr.P.C. or a first information report lodged with the police under Section 156 Cr.P.C. The said expression cannot be given a restricted meaning in the context of professional and other misconducts which may be committed by a member of the Institute and for which he may be punished under Section 21B(3) because the violation of Sections 24 to 26 can be committed by a person who may or may not be a chartered accountant as defined in Section 2(b). Thus, if the particular act of a member of the Institute or a non-member or a company results in contravention of the provisions contained in Section 24 or sub-section (1) of Sections 24A, 25 or 26 and such act also amounts criminal misconduct which is defined as an offence under the IPC, then a complaint can be filed by or under the order of the Council or of the Central Government under Section 28, which may ultimately result in imposition of the punishment prescribed under Section 24 or sub-section (2) of Sections 24A, 25 or 26 and such member or non-member or company can also be prosecuted for any identified offence under the IPC. The object underlying the prohibition contained in Section 28 is to protect the persons engaged in profession of chartered accountants against false and untenable complaints from dissatisfied litigants and others. However, there is nothing in the language of the provisions contained in Chapter VII from which it can be inferred that Parliament wanted to confer immunity upon the members and non-members from prosecution and punishment if the action of such member or non-member amounts to an offence under the IPC or any other law. [Para 13] 1.3. Unlike ss. 416, 463, 464, 468 and 471 of the Penal Code, the provisions contained in Chapter VII of the Act neither define cheating by personation or forgery or counterfeiting of seal, etc. nor provide for punishment for such offences. If it is held that a person acting in violation of Section 24 or contravening sub-section (1) of Sections 24A and 26 of the Act can be punished only under the Act even though his act also amounts to one or more offence(s) defined under the IPC and that too on a complaint made in accordance with Section 28, then the provisions of Chapter VII would become discriminatory and might have to be struck down on the ground of violation of Article 14. Such an unintended consequence can be, and deserves to be avoided, in interpreting Sections 24A, 25 and 26 keeping in view the settled law that if there are two possible constructions of a statute, then the one which leads to anomaly or absurdity and makes the statute vulnerable to the attack of unconstitutionality should be avoided in preference to the other which makes it rational and immune from the charge of unconstitutionality. That apart, the court cannot interpret the provisions of the Act in a manner which would deprive the victim of his right to prosecute the wrong doer for the offences defined in Sections 416, 463, 464, 468 and 471 by filing a first information report or a complaint under the relevant provisions of Cr.P.C. [Para 14] 1.4. The respondent could have been simultaneously prosecuted for contravention of Sections 24, 24A and 26 of the Act and for the offences defined under the IPC but in view of the bar contained in Article 20(2) of the Constitution read with Section 26 of the General Clauses Act, 1897 and Section 300 Cr.P.C., he could not have been punished twice for the same offence. [Para 15] Maqbool Hussain v. The State of Bombay (1953) 4 SCR 730; T.S. Baliah v. T.S. Rangarchari (1969) 3 SCR 65; State of Bombay v. S.L. Apte (1961) 3 SCR 107; V.K. Agarwal v. Vasantraj B. Bhatia (1988) 3 SCC 467; State of Bihar v. Murad Ali Khan (1988) 4 SCC 655; State of Rajasthan v. Hat Singh (2003) 2 SCC 152, referred to. 1.5. The submission that the Chartered Accountants Act, 1949 is a special legislation vis-

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NOS._________OF 2010 (Arising out of S.L.P. (Crl.) Nos.3411-3412 of 2009) The Institute of Chartered Accountants of India …….Appellant Versus Vimal Kumar Surana and another …….Respondents J U D G M E N T G.S. Singhvi, J. 1. Leave granted. 2. The question which … Continue reading

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