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CHARTERED ACCOUNTANTS ACT 1949

ACT NO. 38 OF 1949 1*

[1st May, 1949.] WHER

1. Short title, extent and commencement. (1) This Act may be called the Chartered Accountants Act, 1949.

3*[(2) It extends to the whole of India 4***.]

(3) It shall come into force on such date 5* as the Central Government may, by notification in the Official Gazette, appoint in this behalf.

2. Incerpretation. (1) In this Act, unless there is anything repugnant in the subject or context,-- (a) "associate" means an associate member of the Institute; (b) "chartered accountant" means a person who is a member of the Institute 6***; (c) "Council" means the Council of the Institute; (d) "holder of a restricted certificate" means a person holding a permanent or temporary restricted certificate granted by a --------------------------------------------------------------------- 1 Extended to Dadra and Nagar Haveli by Reg. 6 of 1963, s. 2 and Sch. I; Pondicherry by Reg. 7 of 1963, s. 3 and Sch. I; Goa, Daman and Diu by Reg. 11 of 1963, s. 3 and Sch. and Laccadive, Minicoy and Amindivi Islands by Reg. 8 of 1965, s. 3 and Sch. It has come into force in the State of Sikkim (w.e.f. 1-9-1980); vide Notifn. No. S. O. 699 (E), dt. 1-9-1980, Gazette of India, Extraordinary, Pt. II, Sec. 3 (ii), p. 1298. 2 Subs. by Act 15 of 1959, s. 2, for "profession of accountants" (w.e.f. 1-7-1959). 3 Subs. by the A. O. 1950, for the original sub-section. 4 The words "except the State of Jammu and Kashmir" omitted by Act 25 of 1968, s. 2 and Sch. (w.e.f. 15-8-1968).

5 1st July, 1949, vide Notification No. 10A (4)/49, dated the 1st June, 1949, Gazette of India, Extraordinary, p. 904. 6 The words "and who is in practice" omitted by Act 15 of 1959, s. 3 (w.e.f. 1-7-1959). 6 State Government under the Restricted Certificates Rules, 1932; (e) "Institute" means the Institute of Chartered Accountants of India constituted under this Act; (f) "prescribed" means prescribed by regulations made under this Act; (g) "Register" means the Register of members maintained under this Act; (h) "Registered accountant" means any person who has been enrolled on the Register of Accountants maintained by the Central Government under the Auditor's Certificates Rules, 1932; (i) "year" means the period commencing on the 1st day of April of any year and ending on the 31st day of March of the succeeding year.

(2) A member of the Institute shall be deemed "to be in practice", when individually or in partnership with chartered accountants 1*[in practice], he, in consideration of remuneration received or to be received,-- (i) engages himself in the practice of accountancy; or (ii) offers to perform or performs services involving the auditing or verification of financial transaction, books, accounts, or records or the preparation, verification or certification of financial accounting and related statements or holds himself out to the public as an accountant; or (iii) renders professional services or assistance in or about matters of principle or detail relating to accounting procedure or the recording, presentation or certification of financial facts or data; or (iv) renders such other services as, in the opinion of the Council are or may be rendered by a chartered accountant 1*[in practice]; and the words "to be in practice" with their grammatical variations and cognate expressions shall be construed accordingly. Explanation.--An associate or a fellow of the Institute who is a salaried employee of a chartered accountant 1*[in practice] or 2*[a firm of such chartered accountant] shall, notwithstanding such employment, be deemed to be in practice for the limited purpose of the training of articled clerks. --------------------------------------------------------------------- 1 Ins. by Act 15 of 1959, s. 3 (w.e.f. 1-7-1959). 2 Subs. by s. 3, ibid., for "a firm of chartered accountants" (w.e.f. 1-7-1959). 7 CHAP THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA CHAPTER II THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

3. Incorporation of the Institute. (1) All persons whose names are entered in the Register at the commencement of this Act and all persons who may hereafter have their names entered in the Register under the provisions of this Act, so long as they continue to have their names borne on the said Register, are hereby constituted a body corporate by the name of the Institute of Chartered Accountants of India, and all such persons shall be known as members of the Institute.

(2) The Institute shall have perpetual succession and a common seal and shall have power to acquire, hold and dispose of property, both movable and immovable, and shall by its name sue or be sued.

4. Entry of names in the Register. (1) Any of the following persons shall be entitled to have his name entered in the Register, namely,-- (i) any person who is a registered accountant or a holder of a restricted certificate at the commencement of this Act; (ii) any person who has passed such examination and completed such training as may be prescribed for members of the Institute; (iii) any person who has passed the examination for the Government Diploma in Accountancy or an examination recognised as equivalent thereto by the rules for the award of the Government Diploma in Accountancy before the commencement of this Act, and who, although not duly qualified to be registered as an accountant under the Auditors' Certificates Rules, 1932, fulfils such conditions as the Central Government may specify in this behalf; (iv) any person who, at the commencement of this Act, is engaged in the practice of accountancy in any Part B State and who, although not possessing the requisite qualifications to be registered as an accountant under the Auditors' Certificates Rules, 1932, fulfils such conditions as the Central Government may specify in this behalf; 1*[(v) any person who has passed such other examination and completed such other training without India as is recognised by the Central Government or the Council as being equivalent to the examination and training prescribed for members of the Institute: Provided that in the case of any person who is not permanently residing in India, the Central Government --------------------------------------------------------------------- 1 Subs. by Act 40 of 1955, s. 2, for the original cl. (v). 8 or the Council, as the case may be, may impose such further conditions as it may deem fit;] (vi) any person domiciled in India, who at the commencement of this Act is studying for any foreign examination and is at the same time undergoing training, whether within or without India, or, who, having passed such foreign examination, is at the commencement of this Act undergoing training, whether within or without India: Provided that any such examination or training was recognised before the commencement of this Act for the purpose of conferring the right to be registered as an accountant under the Auditors' Certificates Rules, 1932, and provided further that such person passes the examination or completes the training within five years after the commencement of this Act.

(2) Every person belonging to the class mentioned in clause (i)

of sub-section (1) shall have his name entered in the Register without the payment of any entrance fee.

(3) Every person belonging to any of the classes mentioned in

clauses (ii), (iii), (iv), (v) and (vi) of sub-section (1) shall have his name entered in the Register on application being made and granted in the prescribed manner and on payment of the prescribed fee, which shall not exceed rupees three hundred in any case.

(4) The Central Government shall take such steps as may be necessary for the purpose of having the names of all persons belonging

to the class mentioned in clause (i) of sub-section (1) entered in the Register.

5. Fellows and Associates. (1) The members of the Institute shall be divided into two classes designated respectively as associates and fellows.

(2) Any person shall, on his name being entered in the Register, be deemed to have become an associate member of the Institute and be entitled to use the letters A.C.A. after his name to indicate that he is an associate member of the Institute of Chartered Accountants.

1*[(3) A member, being an associate who has been in continuous practice in India for at least five years, whether before or after the commencement of this Act, or whether partly before and partly after the commencement of this Act, and a member who has been an associate for a continuous period of not less than five years and who possesses such qualifications as the Council may prescribe with a view --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 4, for the original sub-section (w.e.f. 1-7-1959). 9 to ensuring that he has experience equivalent to the experience normally acquired as a result of continuous practice for a period of five years as a chartered accountant shall, on payment of the prescribed entrance fee, which shall not exceed rupees two hundred in any case, and on application made and granted in the prescribed manner, be entered in the Register as a fellow of the Institute and shall be entitled to use the letters F.C.A. after his name to indicate that he is a fellow of the Institute of Chartered Accountants.]

6. Certificate of practice. (1) No member of the Institute shall be entitled to practise 1*[whether in India or elsewhere] unless he has obtained from the Council a certificate of practice.

2*[(2) Every such member shall pay such annual fee for his certificate as may be prescribed, and such fee shall be payable on or before the 1st day of April in each year.]

7. Members to be known as Chartered Accountants. 3*[Every member of the Institute in practice shall, and any other member may, use the designation of a chartered accountant and no member using such designation shall use any other description, whether in addition thereto or in substitution therefor]: Provided that nothing contained in this section shall be deemed to prohibit any such person from adding any other description or letters to his name, if entitled thereto, to indicate membership of such other Institute of accountancy, whether in India or elsewhere, as may be recognised in this behalf by the Council, or any other qualification that he may possess, or to prohibit a firm, all the partners of which are members of the Institute and in practice, from being known by its firm name as Chartered Accountants.

8. Disabilities. Notwithstanding anything contained in section 4, a person shall not be entitled to have his name entered in or borne on the Register if he-- (i) has not attained the age of twenty-one years at the time of his application for the entry of his name in the Register; or 4*[(ii) is of unsound mind and stands so adjudged by a competent court; or] --------------------------------------------------------------------- 1 Ins. by Act 15 of 1959, s. 5 (w.e.f. 1-7-1959). 2 Subs. by s. 5, ibid., for the original sub-section (w.e.f. 1-7- 1959). 3 Subs. by s. 6, ibid., for certain words (w.e.f. 1-7-1959). 4 Subs. by s. 7, ibid., for the former clause (w.e.f. 1-7-1959). 10 (iii) is an undischarged insolvent; or (iv) being a discharged insolvent, has not obtained from the Court a certificate stating that his insolvency was caused by misfortune without any misconduct on his part; or (v) has been convicted by a competent Court whether within or without India, of an offence involving moral turpitude and punishable with transportation or imprisonment or of an offence, not of a technical nature, committed by him in his professional capacity unless in respect of the offence committed he has either been granted a pardon or, on an application made by him in this behalf, the Central Government has, by an order in writing, removed the disability; or 1*[(vi) has been removed from membership of the Institute on being found on inquiry to have been guilty of professional or other misconduct: Provided that a person who has been removed from membership for a specified period, shall not be entitled to have his name entered in the Register until the expiry of such period.] CHAP COUNCIL OF THE INSTITUTE CHAPTER III COUNCIL OF THE INSTITUTE

9. Constitution of the Council of the Institute. (1) There shall be a Council of the Institute for the management of the affairs of the Institute and for discharging the functions assigned to it under this Act.

(2) The Council shall be composed of the following persons, namely,-- (a) 2*[not more than twenty-four persons elected by members of the Institute] from amongst the fellows of the Institute chosen in such manner and from such regional constituencies as may be specified in this behalf by the Central Government by notification in the Official Gazette; and (b) 3*[six persons] nominated by the Central Government. --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 7, for the former clause (w.e.f. 1-7- 1959). 2 Subs. by s. 8, ibid., for "persons elected by members of the Institute" (w.e.f. 1-7-1959). 3 Subs. by s. 8, ibid., for "five persons" (w.e.f. 1-7-1959). 11

1*[10. Mode of election to the council. (1) Elections under

clause (a) of sub-section (2) of section 9 shall be conducted in the prescribed manner.

(2) Where any dispute arises regarding any such election, the matter shall be referred by the Council to a Tribunal appointed by the Central Government in this behalf and the decision of such Tribunal shall be final: Provided that no such reference shall be made except on an application made to the Council by an aggrieved party within thirty days from the date of the declaration of the result of the election.

(3) The expenses of the Tribunal shall be borne by the Council.]

11. Nomination in default of election or nomination. If any body of persons referred to in section 9 fails to elect any of the members of the Council which it is empowered under that section to elect, the Central Government may nominate a person duly qualified to fill the vacancy, and any person so nominated shall be deemed to be a member of the Council as if he had been duly elected.

12. President and Vice-President. (1) The Council at its first meeting shall elect two of its members to be respectively the President and the Vice-President thereof, and so often as the office of the President or the Vice-President becomes vacant the Council shall choose another person to be the President or the Vice-President, as the case may be: Provided that on the first constitution of the Council a member of the Council nominated in this behalf by the Central Government shall discharge the functions of the President, until such time as a President is elected under the provisions of this sub-section.

(2) The President shall be the Chief Executive Authority of the Council.

(3) The President or the Vice-President shall hold office for a period of one year from the date on which he is chosen but so as not to extend beyond his term of office as a member of the Council, and, subject to his being a member of the Council at the relevant time, he shall be eligible for re-election.

(4) 2*[On the expiration of the duration of the Council, the President of the Council at the time of such expiration] shall continue to hold office and discharge such administrative and other duties as may be prescribed until such time as a new President shall have been elected and shall have taken over charge of his duties. --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 9, for the original section (w.e.f. 1-7-1959). 2 Subs. by s. 10, ibid., for certain words (w.e.f. 1-7-1959). 12

13. Resignation of membership and casual vacancies. (1) Any member of the Council may at any time resign his membership by writing under his hand addressed to the President, and the seat of such member shall become vacant when such resignation is notified in the Official Gazette.

(2) A member of the Council shall be deemed to have vacated his seat if he is declared by the Council to have been absent without sufficient excuse from three consecutive meetings of the Council, or if his name is, for any cause, removed from the Register under the provisions of section 20.

(3) A casual vacancy in the Council shall be filled by fresh election from the constituency concerned or by nomination by the Central Government, as the case may be, and the person elected or nominated to fill the vacancy shall hold office until the dissolution of the Council: 1*[Provided that no election shall be held to fill a casual vacancy occurring within six months prior to the date of the expiration of the duration of the Council, but such a vacancy may be filled by nomination by the Central Government after consultation with the President of the Council.]

(4) No act done by the Council shall be called in question on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Council.

14. Duration and dissolution of Council. 2*[(1)] The duration of any Council constituted under this Act shall be three years from the date of its first meeting, on the expiry of which it shall stand dissolved and a new Council constituted in accordance with the provisions of this Act.

3*[(2) Notwithstanding the expiration of the duration of a Council (hereinafter referred to as the former Council), the former Council shall continue to exercise its functions until a new Council is constituted in accordance with the provisions of this Act, and on such constitution, the former Council shall stand dissolved.]

15. Functions of the Council. (1) The duty of carrying out the provisions of this Act shall be vested in the Council.

(2) In particular, and without prejudice to the generality of the foregoing power, the duties of the Council shall include-- (a) the examination of candidates for enrolment and the prescribing of fees therefor; --------------------------------------------------------------------- 1 Added by Act 15 of 1959, s. 11 (w.e.f. 1-7-1959).

2 Renumbered as sub-section (1) by s. 12, ibid. (w.e.f. 1-7-1959). 3 Ins. by s. 12, ibid. (w.e.f. 1-7-1959). 13 (b) the regulation of the engagement and training of 1*[articled and audit clerks]; (c) the prescribing of qualifications for entry in the Register; (d) the recognition of foreign qualifications and training for purposes of enrolment; (e) the granting or refusal of certificates of practice under this Act; (f) the maintenance and publication of a Register of persons qualified to practise as chartered accountants; (g) the levy and collection of fees from 2*** members, examinees and other persons; (h) the removal of names from the Register and the restoration to the Register of names which have been removed; (i) the regulation and maintenance of the status and standard of professional qualifications of 3*[members of the Institute]; (j) the carrying out, by financial assistance to persons other than members of the Council or in any other manner, of research in accountancy; (k) the maintenance of a library and publication of books and periodicals relating to accountancy; and (l) the exercise of disciplinary powers conferred by this Act.

16. Staff, remuneration and allowances. (1) For the efficient performance of its duties, the Council may-- (a) appoint a Secretary who may also, if so decided by the Council, act as Treasurer; (b) appoint such other officers and servants as it deems necessary; (c) require and take from the Secretary or from any other officer or servant of the Council such security for the due performance of his duties, as the Council considers necessary; (d) fix the salaries, fees, allowances and other conditions of service of the officers and servants of the Council; (e) with the previous sanction of the Central Government, fix the allowances of the President, Vice-President and other --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 13, for "articled clerks" (w.e.f. 1- 7-1959). 2 The words "chartered accountants, associates," omitted by s. 13, ibid. (w.e.f. 1-7-1959). 3 Subs. by s. 13, ibid., for "Chartered Accountants" (w.e.f. 1-7- 1959). 14 members of the Council 1*[and members of its committees].

(2) Notwithstanding anything contained in sub-section (1), on the first constitution of the Council the Secretary shall be a person appointed by the Central Government in consultation with the Council, and he shall hold office during the pleasure of the Central Government, but so as not to exceed a period of three years from the date of his appointment.

1*[(3) The Secretary of the Council shall be entitled to participate in the meetings of the Council but shall not be entitled to vote thereat.]

17. Committees of the Council. (1) The Council shall constitute from amongst its members the following Standing Committees, namely:-- (i) an Executive Committee, (ii) an Examination Committee, and (iii) a Disciplinary Committee.

2*[(2) The Council may also form such other committees from amongst its members as it deems necessary for the purpose of carrying out the provisions of this Act, and any committee so formed may with the sanction of the Council, co-opt such other members of the Institute not exceeding two-thirds of the members of the committee as the committee thinks fit, and any member so co-opted shall be entitled to exercise all the rights of a member of the committee.]

(3) Each of the Standing Committees shall consist of the President and the vice-President, ex-officio, and three other members of the Council elected by the Council: Provided that in the case of the Disciplinary Committee, out of the members to be elected, two shall be elected by the Council, and the third nominated by the Central Government from amongst the persons nominated to the Council by the Central Government.

(4) The President and the Vice-President of the Council shall be the Chairman and Vice-Chairman respectively of each of the Standing Committees.

(5) Every member of the Standing Committee other than the Chairman and the Vice-Chairman shall hold office for one year from the date of his election, but subject to being a member of the Council, he shall be eligible for re-election. --------------------------------------------------------------------- 1 Ins. by Act 15 of 1959, s. 14 (w.e.f. 1-7-1959). 2 Subs. by s. 15, ibid., for the original sub-section (w.e.f. 1-7- 1959). 15

(6) The Standing Committees shall exercise such functions and be subject to such conditions in the exercise thereof as may be prescribed.

18. Finance of the Council. (1) There shall be established a fund under the management and control of the Council into which shall be paid all moneys received by the Council and out of which shall be met all expenses and liabilities properly incurred by the Council.

(2) The Council may invest any money for the time being standing to the credit of the fund in any Government security or in any other security approved by the Central Government.

(3) The Council shall keep proper accounts of the fund distinguishing capital from revenue.

(4) The annual accounts of the Council shall be subject to audit by a chartered accountant 1*[in practice] to be appointed annually by the Council: Provided that no member of the Council or a person who is in partnership with such member shall be eligible for appointment as an auditor under this sub-section.

(5) As soon as may be practicable at the end of each year, but not later than the 30th day of September of the year next following, the Council shall cause to be published in the Gazette of India a copy of the audited accounts and the Report of the Council for that year, and copies of the said accounts and the Report shall be forwarded to the Central Government and to all the members of the Institute.

(6) The Council may borrow from a scheduled bank, as defined in the Reserve Bank of India Act, 1934, (2 of 1934.) or from the Central Government-- (a) any money required for meeting its liabilities on capital account on the security of the fund or on the security of any other assets for the time being belonging to it, or (b) for the purpose of meeting current liabilities pending the receipt of income by way of temporary loan or overdraft. CHAP REGISTER OF MEMBERS CHAPTER IV REGISTER OF MEMBERS

19. Register. (1) The Council shall maintain in the prescribed manner a Register of the Members of the Institute. --------------------------------------------------------------------- 1 Ins. by Act 15 of 1959, s. 16 (w.e.f. 1-7-1959). 16

(2) The Register shall include the following particulars about every member of the Institute, namely,-- (a) his full name, date of birth, domicile, residential and professional addresses; (b) the date on which his name is entered in the Register; (c) his qualifications; (d) whether he holds a certificate of practice; and (e) any other particulars which may be prescribed.

1*[(3) The Council shall cause to be published in such manner as may be prescribed, a list of members of the Institute as on the 1st day of April of each year, and shall, if requested to do so by any such member, send to him a copy of such list.]

(4) Every member of the Institute shall, on his name being entered in the Register, pay such annual membership fee 2*[differing in amount according as he is an associate or a fellow of the Institute,] as may be prescribed.

3*[20. Removal from the Register. (1) The Council may remove from the Register the name of any member of the Institute-- (a) who is dead; or (b) from whom a request has been received to that effect; or (c) who has not paid any prescribed fee required to be paid by him; or (d) who is found to have been subject at the time when his name was entered in the Register, or who at any time thereafter has become subject, to any of the disabilities mentioned in section 8, or who for any other reason has ceased to be entitled to have his name borne on the Register.

(2) The Council shall remove from the Register the name of any member in respect of whom an order has been passed under this Act removing him from membership of the Institute.] CHAP MISCONDUCT 4*[CHAPTER V MISCONDUCT

21. Procedure in inquiries relating to misconduct of members of

institute. (1) Where on receipt of information by, or of a complaint made to, it, the Council is prima facie of opinion that any member --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 17, for the original sub-section (w.e.f. 1-7-1959). 2 Ins. by s. 17, ibid. (w.e.f. 1-7-1959). 3 Subs. by s. 18, ibid., for the original section (w.e.f. 1-7- 1959). 4 Subs. by s. 19, ibid., for the original Chapter V (w.e.f. 1-7- 1959). 17 of the Institute has been guilty of any professional or other misconduct, the Council shall refer the case to the Disciplinary Committee, and the Disciplinary Committee shall thereupon hold such inquiry and in such manner as may be prescribed, and shall report the result of its inquiry to the Council.

(2) If on receipt of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be.

(3) If on receipt of such report the Council finds that the member of the Institute is guilty of any professional or other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding sub-sections.

(4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in the First Schedule, the Council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely: (a) reprimand the member; (b) remove the name of the member from the Register for such period, not exceeding five years, as the Council thinks fit: Provided that where it appears to the Council that the case is one in which the name of the member ought to be removed from the Register for a period exceeding five years or permanently, it shall not make any order referred to in clause (a) or clause (b), but shall forward the case to the High Court with its recommendations thereon.

(5) Where the misconduct in respect of which the Council has found any member of the Institute guilty is misconduct other than any

such misconduct as is referred to in sub-section (4), it shall forward the case to the High Court with its recommendations thereon.

(6) On receipt of any case under sub-section (4) or sub-section

(5), the High Court shall fix a date for the hearing of the case and shall cause notice of the date so fixed to be given to the member of the Institute concerned, the Council and to the Central Government, and shall afford such member, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders, namely:-- (a) direct that the proceedings be filed, or dismiss the complaint, as the case may be; 18 (b) reprimand the member; (c) remove him from membership of the Institute either permanently or for such period as the High Court thinks fit; (d) refer the case to the Council for further inquiry and report.

(7) Where it appears to the High Court that the transfer of any case pending before it to another High Court, will promote the ends of justice or tend to the general convenience of the parties, it may so transfer the case, subject to such conditions, if any, as it thinks fit to impose, and the High Court to which such case is transferred shall deal with it as if the case had been forwarded to it by the Council. Explanation I.--In this section "High Court" means the highest civil court of appeal, not including the Supreme court, exercising jurisdiction in the area in which the person whose conduct is being inquired into carries on business, or has his principal place of business at the commencement of the inquiry: Provided that where the cases relating to two or more members of the Institute have to be forwarded by the Council to different High Courts, the Central Government shall, having regard to the ends of justice and the general convenience of the parties, determine which of the High Courts to the exclusion of others shall hear the cases against all the members. Explanation II.--For the purposes of this section "member of the Institute" includes a person who was a member of the Institute on the date of the alleged misconduct although he has ceased to be a member of the Institute at the time of the inquiry.

(8) For the purposes of any inquiry under this section, the Council and the Disciplinary Committee shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908.), in respect of the following matters, namely:-- (a) summoning and enforcing the attendance of any person and examining him on oath; (b) the discovery and production of any document; and (c) receiving evidence on affidavit.

22. Professional misconduct defined. For the purposes of this Act, the expression "professional misconduct" shall be deemed to include any act or omission specified in any of the Schedules, but nothing in this section shall be construed to limit or abridge in any way the power conferred or duty cast on 19

the Council under sub-section (1) of section 21 to inquire into the conduct of any member of the Institute under any other circumstances. 22A. Appeals.

22A. Appeals. (1) Any member of the Institute aggrieved by any order of the Council imposing on him any of the penalties referred to

in sub-section (4) of section 21, may, within thirty days of the date on which the order is communicated to him, prefer an appeal to the High Court: Provided that the High Court may entertain any such appeal after the expiry of the said period of thirty days, if it is satisfied that the member was prevented by sufficient cause from filing the appeal in time.

(2) The High Court may, on its own motion or otherwise, after calling for the records of any case, revise any order made by the

Council under sub-section (2) or sub-section (4) of section 21 and may-- (a) confirm, modify or set aside the order; (b) impose any penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order; (c) remit the case to the Council for such further inquiry as the High Court considers proper in the circumstances of the case; or (d) pass such other order as the High Court thinks fit: Provided that no order of the Council shall be modified or set aside unless the Council has been given an opportunity of being heard and no order imposing or enhancing a penalty shall be passed unless the person concerned has also been given an opportunity of being heard. Explanation.--In this section "High Court" and "member of the Institute" have the same meanings as in section 21.] CHAP REGIONAL COUNCILS CHAPTER VI REGIONAL COUNCILS

23. Constitution and functions of Regional Councils. (1) 1*[For the purpose of advising and assisting it on matters concerning its functions, the Council may constitute such Regional Councils] as and when it deems fit for one or more of the regional constituencies that may be specified by the Central Government under clause (a) of sub-

section (2) of section 9.

(2) The Regional Councils shall be constituted in such manner and exercise such functions as may be prescribed. --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 20, for certain words (w.e.f. 1-7- 1959). 20 CHAP PENALTIES CHAPTER VII PENALTIES

24. Penalty for falsely claiming to be a member, etc. Any person who,-- (i) not being a member of the Institute,-- (a) represents that he is a member of the Institute; or (b) uses the designation Chartered Accountant, or (ii) being a member of the Institute, but not having a certificate of practice, represents that he is in practice or practises as a chartered accountant, shall be punishable on first conviction with fine which may extend to one thousand rupees, and on any subsequent conviction with imprisonment which may extend to six months or with fine which may extend to five thousand rupees, or with both. 24A. Penalty for using name of the Council, awarding degrees of charteredaccountancy, etc. 1*[24A. Penalty for using name of the Council, awarding degrees

of chartered accountancy, etc. (1) Save as otherwise provided in this Act, no person shall-- (i) use a name or a common seal which is identical with the name or the common seal of the Institute or so nearly resembles it as to deceive or as is likely to deceive the public; (ii) award any degree, diploma or certificate or bestow any designation which indicates or purports to indicate the position or attainment of any qualification or competence similar to that of a member of the Institute; or (iii) seek to regulate in any manner whatsoever the profession of chartered accountants.

(2) Any person contravening the provisions of sub-section (1) shall, without prejudice to any other proceedings which may be taken against him, be punishable with fine which may extend on first conviction to one thousand rupees, and on any subsequent conviction with imprisonment which may extend to six months, or with fine which may extend to five thousand rupees, or with both.

(3) Nothing contained in this section shall apply to any University established by law or to any body affiliated to the Institute.]

25. Companies not to engage in accountancy. (1) No company, whether incorporated in India or elsewhere, shall practise as chartered accountants.

(2) If any company contravenes the provisions of sub-section (1), then, without prejudice to any other proceedings which may be taken --------------------------------------------------------------------- 1 Ins. by Act 15 of 1959, s. 21 (w.e.f. 1-7-1959). 21 against the company, every director, manager, secretary and any other officer thereof who is knowingly a party to such contravention shall be punishable with fine which may extend on first conviction to one thousand rupees, and on any subsequent conviction to five thousand rupees.

26. Unqualified persons not to sign documents. (1) No person other than a member of the Institute shall sign any document on behalf of a 1*[chartered accountant in practice] or a 2*[firm of such chartered accountants] in his or its professional capacity.

(2) Any person contravening the provisions of sub-section (1) shall, without prejudice to any other proceedings which may be taken against him, be punishable with fine which may extend on first conviction to one thousand rupees and on any subsequent conviction with imprisonment which may extend to six months or with fine which may extend to five thousand rupees or with both.

27. Maintenance of branch offices. (1) Where a 1*[chartered accountant in practice] or a 2*[firm of such chartered accountants] has more than one office in India, each one of such offices shall be in the separate charge of a member of the Institute: Provided that the Council may in suitable cases exempt any 1*[chartered accountant in practice] or a 2*[firm of such chartered accountants] from the operation of this sub-section.

(2) Every 1*[chartered accountant in practice] or a 2*[firm of such chartered accountants] maintaining more than one office shall send to the Council a list of offices and the persons in charge thereof and shall keep the council informed of any changes in relation thereto.

28. Sanction to prosecute. No person shall be prosecuted under this Act except on a complaint made by or under the order of the Council or of the Central Government. CHAP MISCELLANEOUS CHAPTER VIII MISCELLANEOUS

29. Reciprocity. (1) Where any country, specified by the Central Government in this behalf by notification in the Official Gazette, prevents persons of Indian domicile from becoming members of any institution similar --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 22, for "chartered accountant" (w.e.f. 1-7-1959). 2 Subs. by s. 22, ibid., for "firm of chartered accountant" (w.e.f. 1-7-1959). 22 to the Institute of Chartered Accountants of India or from practising the profession of accountancy or subjects them to unfair discrimination in that country, no subject of any such country shall be entitled to become a member of the Institute or practise the profession of accountancy in India.

(2) Subject to the provisions of sub-section (1), the Council may prescribe the conditions, if any, subject to which foreign qualifications relating to accountancy shall be recognised for the purposes of entry in the Register.

30. Power to make regulations. (1) The Council may, by notification in the Gazette of India, make regulations for the purpose of carrying out the objects of this Act, and a copy of such regulations shall be sent to each member of the Institute.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters:-- (a) the standard and conduct of examinations under this Act; (b) the qualifications for the entry of the name of any person in the register as a member of the Institute; (c) the conditions under which any examination or training may be treated as equivalent to the examination and training prescribed for members of the Institute; (d) the conditions under which any foreign qualification may be recognised; (e) the manner in which and the conditions subject to which applications for entry in the Register may be made; (f) the fees payable for membership of the Institute and the annual fees payable by associates and fellows of the Institute in respect of their certificates; (g) the manner in which elections to the Council and the Regional Councils may be held; (h) the particulars to be entered in the Register; (i) the functions of Regional Councils; 1*[(j) the training of articled and audit clerks, the fixation of limits within which premia may be charged from articled clerks and the cancellation of articles and termination of audit service for misconduct or for any other sufficient cause;] --------------------------------------------------------------------- 1 Subs. by Act 15 of 1959, s. 23, for the original cl. (j) (w.e.f. 1-7-1959). 23 (k) the regulation and maintenance of the status and standard of professional qualifications of members of the Institute; (l) the carrying out of research in accountancy; (m) the maintenance of a library and publication of books and periodicals on accountancy; (n) the management of the property of the Council and the maintenance and audit of its accounts; (o) the summoning and holding of meetings of the Council, the times and places of such meetings, the conduct of business thereat and the number of members necessary to form a quorum; (p) the powers, duties and functions of the President and the Vice-President of the Council; (q) the functions of the standing and other committees and the conditions subject to which such functions shall be discharged; (r) the terms of office, and the powers, duties and functions of the Secretary and other officers and servants of the Council; (s) the exercise of disciplinary powers conferred by this Act; and (t) any other matter which is required to be or may be prescribed under this Act.

(3) All regulations made by the Council under this Act shall be subject to the condition of previous publication and to the approval of the Central Government.

(4) Notwithstanding anything contained in sub-sections (1) and

(2) the Central Government may frame the first regulations for the purposes mentioned in this section, and such regulations shall be deemed to have been made by the Council, and shall remain in force from the date of the coming into force of this Act, until they are amended, altered or revoked by the Council. 30A. Powers of Central Government to direct regulations to be made or tomake or amend regulations. 1*[30A. Powers of Central Government to direct regulations to be

made or to make or amend regulations. (1) Where the Central Government considers it expedient so to do, it may, by order in writing, direct the Council to make any regulations or to amend or revoke any regulations already made within such period as it may specify in this behalf.

(2) If the Council fails or neglects to comply with such order within the specified period, the Central Government may make --------------------------------------------------------------------- 1 Ins. by Act 15 of 1959, s. 24 (w.e.f. 1-7-1959). 24 the regulations or amend or revoke the regulations made by the Council, as the case may be, either in the form specified in the order or with such modifications thereof as the Central Government thinks fit.] 30B. Laying of regulations. 1*[30B. Laying of regulations. Every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation, or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.]

2*[31. Construction of references. Any reference to a chartered accountant or a registered accountant or a certified or qualified auditor in any other law or in any document whatsoever shall be construed as a reference to a chartered accountant in practice within the meaning of this Act.]

32. Act not to affect right of accountants to practise as such in Part B States. Nothing contained in this Act shall affect the right of any person who, at the commencement of this Act, is entitled to engage himself in the practice of accountancy in any Part B State under any law in force in that State, to continue to engage himself in the practice of accountancy in that State after the commencement of this Act.

33. [Amendment of section 144, Indian Companies Act, 1913.] Rep. by the Repealing and Amending Act, 1952 (48 of 1952), s. 2 and Sch. I. SCHE

See sections 21 (4) and 22 3*[THE FIRST SCHEDULE

[See sections 21 (4) and 22]

(1) allows any person to practise in his name as a chartered accountant unless such person is also a chartered accountant in practice and is in partnership with or employed by himself;

(2) pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or brokerage in the fees or profits of his professional business, to any person other than a member of the Institute or a partner or a retired partner or the legal representative of a deceased partner; --------------------------------------------------------------------- 1 Ins. by Act 20 of 1983, s. 2 & Sch. (w.e.f. 15-3-84). 2 Subs. by Act 15 of 1959, s. 25, for the original section (w.e.f. 1-7-1959). 3 Subs. by s. 26, ibid., for the original Schedule (w.e.f. 1-7- 1959). 25 Explanation.--In this item "partner" includes a person residing outside India with whom a chartered accountant in practice has entered into partnership which is not

in contravention of item (4) of this Part;

(3) accepts or agrees to accept any part of the profits of the professional work of a lawyer, auctioneer, broker, or other agent who is not a member of the Institute;

(4) enters into partnership with any person other than a chartered accountant in practice or a person resident without India who but for his residence abroad would be entitled to be registered as a member under clause (v)

of sub-section (1) of section 4 or whose qualifications are recognised by the Central Government or the Council for the purpose of permitting such partnerships, provided that the chartered accountant shares in the fees or profits of the business of the partnership both within and without India;

(5) secures, either through the services of a person not qualified to be his partner or by means which are not open to a chartered accountant, any professional business;

(6) solicits clients or professional work either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means;

(7) advertises his professional attainments or services, or uses any designation or expressions other than chartered accountant on professional documents, visiting cards, letter heads or sign boards, unless it be a degree of a University established by law in India or recognised by the Central Government or a title indicating membership of the Institute of Chartered Accountants or of any other institution that has been recognised by the Central Government or may be recognised by the Council;

(8) accepts a position as auditor previously held by another chartered accountant or a restricted State auditor without first communicating with him in writing;

(9) accepts an appointment as auditor of a company without first ascertaining from it whether the requirements of section 1*[225] of the Companies Act, 1956, (1 of 1956), in respect of such appointment have been duly complied with; --------------------------------------------------------------------- 1 Subs. by Act 52 of 1964, s. 3 and Sch. II, for "226". 26

(10) charges or offers to charge, accepts or offers to accept in respect of any professional employment fees which are based on a percentage of profits or which are contingent upon the findings or results of such employment, except in cases which are permitted under any regulations made under this Act;

(11) engages in any business or occupation other than the profession of chartered accountants unless permitted by the Council so to engage: Provided that nothing contained herein shall disentitle a chartered accountant from being a director of a company, unless he or any of his partners is interested in such company as an auditor;

(12) accepts a position as auditor previously held by some other chartered accountant or a restricted State auditor in such conditions as to constitute under- cutting;

(13) allows a person not being a member of the Institute or a member not being his partner to sign on his behalf or on behalf of his firm, any balance-sheet, profit and loss account report or financial statements. PART II Professional misconduct in relation to members of the Institute in Service A member of the Institute (other than a member in practice) shall be deemed to be guilty of professional misconduct, if he being an employee of any company, firm or person-- (a) pays or allows or agrees to pay directly or indirectly to any person any share in the emoluments of the employment undertaken by the member; (b) accepts or agrees to accept any part of fees, profits or gains from a lawyer, a chartered accountant or broker engaged by such company, firm or person or agent or customer of such company, firm or person by way of commission or gratification; (c) discloses confidential information acquired in the course of his employment except as and when required by law or except as permitted by the employer. 27 PART III Professional misconduct in relation to members of the Institute generally A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he--

(1) includes in any statement, return or form to be submitted to the Council any particulars knowing them to be false;

(2) not being a fellow styles himself as a fellow;

(3) does not supply the information called for, or does not comply with the requirements asked for, by the Council or any of its Committees. SCHE

See sections 21 (5) and 22 THE SECOND SCHEDULE

[See sections 21 (5) and 22]

(1) discloses information acquired in the course of his professional engagement to any person other than his client, without the consent of his client or otherwise than as required by any law for the time being in force;

(2) certifies or submits in his name or in the name of his firm a report of an examination of financial statements unless the examination of such statements and the related records has been made by him or by a partner or an employee in his firm or by another chartered accountant in practice;

(3) permits his name or the name of his firm to be used in connection with an estimate of earnings contingent upon future transactions in a manner which may lead to the belief that he vouches for the accuracy of the forecast;

(4) expresses his opinion on financial statements of any business or any enterprise in which he, his firm or a partner in his firm has a substantial interest, unless he discloses the interest also in his report; 28

(5) fails to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary to make the financial statement not misleading;

(6) fails to report a material mis-statement known to him to appear in a financial statement with which he is concerned in a professional capacity;

(7) is grossly negligent in the conduct of his professional duties;

(8) fails to obtain sufficient information to warrant the expression of an opinion or his exceptions are sufficiently material to negate the expression of an opinion;

(9) fails to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances;

(10) fails to keep moneys of his client in a separate banking account or to use such moneys for purposes for which they are intended. PART II Professional misconduct in relation to members of the Institute generally requiring action by a High Court A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he-- (i) contravenes any of the provisions of this Act or the regulations made thereunder: (ii) is guilty of such other act or omission as may be specified by the Council in this behalf, by notification in the Gazette of India.]