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March 24, 2022

Know Proposed New Timelines of Disciplinary Proceedings in ICAI

by Mahesh Mara in Circular and Notifications, ICAI

Know Proposed New Timelines of Disciplinary Proceedings in ICAI

The Chairperson of the Standing Committee on Finance having been authorised by the Committee present this Forty-fifth Report on ‘The Chartered Accountants, The Cost And Works Accountants And The Company Secretaries (Amendment) Bill, 2021’

‘The Chartered Accountants, The Cost And Works Accountants And The Company Secretaries (Amendment) Bill, 2021’, introduced in Lok Sabha on 17 December, 2021 was referred to the Committee on 22 December, 2021 for examination and report thereon, by the Speaker, Lok Sabha under Rule 331E of the Rules of Procedure and Conduct of Business in Lok Sabha.

An independent witness submitted the following suggestion: “Establishment of Indian Institutes of Accounting. This proposal is for establishing a string of Indian Institute of Accounting (HA) that will raise the standards of accounting education and offer competition to the Institute of Chartered Accountants of India.

Regarding timeline for completion of disciplinary proceedings in BoD and DC, the existing provisions vis-a-vis the proposed amendments are as under:

Existing Provisions  Proposed amendments
No specific          timelines for investigation/ adjudication of disciplinary cases.  Section 21 (3) While making investigation into a case which is found to be actionable, Director (Discipline) shall give opportunity to the member or the firm, as the case may be, to submit a written statement within twenty-one days, which may further be extended by another twenty-one days on specific request giving reasons for seeking further extension. 21A(4) The Board of Discipline shall conclude its inquiry within ninety days of the receipt of preliminary examination report from the Director (Discipline). 21B (4) The Disciplinary Committee shall conclude its inquiry within one hundred and eighty days of receipt of the preliminary examination report from the Director (Discipline).

On the issue of timelines completion of disciplinary proceedings, the ICAI submitted the following suggestion:

“Timelines for pleadings and undertaking various activities by Director (Discipline) including the procedure to be followed are given in the proposed Bill itself. It is a cardinal principle of legislative drafting that the substantive law deals with or provides for substantial and enabling provisions and the procedure part, to maintain flexibility, is prescribed in the delegated legislation i.e. in Rules. Proposed Bill focus upon I emphasizes more on procedural aspects whereas procedure should be defined in Rules rather in the substantive legislation.

It is pertinent to mention that the Board of Discipline and Disciplinary Committee  are part time bodies that adjudicates the disciplinary cases. Thus the, timelines needs to be realistic and practical. One would also agree that any judicial or quasi-judicial forum is required to adhere to the principles of natural justice by giving a fair and reasonable opportunity to all the parties by following due procedure. For the sake of procedure or for expeditious disposal, the basic principle of natural justice cannot be overlooked.

Therefore, ICAI is of the view that time line, if any for various stages of disciplinary proceedings should only be provided in the Rules. At the most in this Section an upper limit of time for disposal of a case can be provided.”

On the above issue, the High Level Committee had recommended as under:

” The High Level Committee recommends a carefully calibrated schedule of time ceilings starting from receipt of complaint, such that final disposal in each complaint does not exceed 365 days i.e one year, from the date the complaint is received in the Directorate of Discipline.”

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