Page 427 - CA Final PARAM Digital Book.

or any of its Committees, Director (Discipline), Board of Discipline, Disciplinary Committee, Quality
Review Board or the Appellate Authority;

Part III – Case Discussion
➢ In the given case, Mr. “G”, a Chartered Accountant while applying for a certificate of practice, did
not fill in the columns which solicit information about his engagement in other occupation or
business, while he was indeed engaged in a business.

Part IV – Conclusion
➢ Details of engagement in business need to be disclosed while applying for the certificate of practice
as it was the information called for in the application, by the Institute. Thus, Mr. G will be held guilty
for professional misconduct under the Clause (2) of Part III of First Schedule of the Chartered
Accountants Act, 1949.

QNO First Schedule, Part IV,Cl,2 Disrepute to Institute (Cheques Bounced) Old Course – (M08E, PM17,
732.000 TITANIUM CNO – PE.1440 N17E, N20R, N20E)
Case 1
CA. D, a chartered accountant in practice availed of a loan against his personal investments from a
bank. He issued 2 cheques towards repayment of the said loan as per the instalments due. However,
both the cheques were returned back by the bank with the remarks "Insufficient funds".
OR
(Similar Question)
P, a Chartered Accountant availed a loan against his securities held as investments from a nationalized
bank. He issued 2 cheques towards repayment of the said loan. Both the cheques were returned
unpaid by the bank with the remark “Refer to Drawer”. Comment with reference to the Chartered
Accountants Act, 1949 as amended by the Chartered Accountants (Amendment) Act, 2006 and Schedules
thereto.
Or
Case 2
Ms. Preeto, a CA, had an account with a bank. The normal balance in this account remained at a level
below ` 5,000. The bank inadvertently credited this account with a cheque of ` 2,70,000 belonging to
another account holder. When CA. Preeto came to know about this she withdrew the amount of `
2,75,000 and closed the bank account. After 1 year the bank noticed the mistake and claimed ` 2,75,000
with interest. CA. Preeto contested this claim. Can the bank approach the Institute of Chartered
Accountants of India for disciplinary action against CA. Preeto?
Answer Part I -- Relevant Laws
▪ Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949

▪ Section 21 of the Chartered Accountants Act
▪ Negotiable Instruments Act 1881
Part II -- Requirements of Relevant Laws
➢ Clause (2) of Part IV of the First Schedule to the Chartered Accountants Act, 1949
A member of the Institute, whether in practice or not, shall be deemed to be guilty of other
misconduct, if he in the opinion of the Council, brings disrepute to the profession or the Institute as
a result of his action whether or not related to his professional work.

A Chartered Accountant is expected to maintain the highest standard of integrity even in his
personal affairs and any deviation from these standards, even in his non-professional work would
expose him to disciplinary action.

➢ Section 21 of the Chartered Accountants Act
A member is liable to disciplinary action under Section 21 of the Chartered Accountants Act, if he is
found guilty of any professional or “Other Misconduct”.
The question whether a particular act or omission constitutes “other misconduct” should be based
on facts and circumstances of each case.

➢ Negotiable Instruments Act 1881,
Where any cheque drawn by a person for the discharge of any liability is returned by the bank
unpaid, either for insufficiency of funds or the cheque amount exceeds the arrangements made by

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