The arrest of a Chartered Accountant has become a common practice nowadays in almost all cases involving financial fraud/embezzlement, and misappropriation of funds.
The Institute of Chartered Accountants of India (ICAI) Patna Chapter submitted a letter in front of the Directorate General of Police (DGP) and made a request to issue a directive on the Standard Operating Procedures (SoP) that should be followed by the police or any other authority for the purpose of making an “Arrest of Chartered Accountants”.
In a representation submitted by the Institute of Chartered Accountants of India (ICAI) to the Government, it has been stated that “It may be noted that documents are filed by the Chartered Accountants in the ordinary course for performing his obligatory duty, and s/he has no reason to doubt the credibility of the documents produced before him, by the clients. Chartered Accountants, in their function as agents, work on behalf of their clients. In so far attestation functions are concerned, they are empowered under law. to presume fairness and honesty on part of their clients.”
“It is not to suggest that possibility of negligence is not there. But, there is a clear difference between negligence & fraud committed in the eyes of law. Negligence does not involve a criminal offence unless it is proved that it is a deliberate action to deceive another person or act done to take undue advantage of the person/situation. The negligence is not there in CrPC in respect of financial transactions, it has terms cheating, forgery, fraud, breach of trust, misappropriations, etc, thus just negligence cannot attract criminal breach”.
Chartered Accountants cannot be charged with a crime unless they can prove their criminal intent. No officer or authority can arrest a Chartered Accountant and destroy their career unless the charges are supported by sufficient evidence that can stand up in court.
It is not allowed for them to conduct a search operation on the premises of Chartered Accountants unless they have a search warrant from a competent court proving that the charges against them are true. In order to be certified as a CA, you don’t need to know what affairs the documents have been signed under. A professional can be fined under the Companies Act for attesting documents incorrectly.
The ICAI further said that “If a CA is guilty of performing his duty, there are provisions under the Chartered Accountants Act, 1949 for disciplinary action against him. Chartered Accountant is a member of ICAI, which has been established by Parliament and provides the power to the council to establish a Disciplinary Directorate headed by an· officer of the Institute designated as Director (Discipline) for making investigations in respect of any information or complaint received by it. Sec 21C of the Act provides Disciplinary Directorate to have powers of civil court. If there is any complaint against any CHARTERED ACCOUNTANT, a letter of complaint can be sent to Director (Discipline), ICAI Bhawan Indraprastha Marg, Post Box No. 7100, NEW DELHI – 110 002,”.
The said representation also states that a CA cannot be arrested by the police and treated like a criminal without any crime or offence. By doing so, a CA is also not given a chance of being listened to. Parliament has also passed the Chartered Accountants Act, 1949 which includes a mechanism to penalize erroneous Chartered Accountants members for any delinquency in their performance on duty.
