The Delhi High Court has upheld the decision of the Institute of
Chartered Accountants of India (ICAI) to bar an auditor for Global
Trust Bank (GTB) from practising accountancy for five years, according
to the national professional accounting body.
It was last year that the capital-headquartered ICAI decided to
blacklist P Ramakrishna after the institute’s disciplinary committee
found that him guilty of professional misconduct as auditor for the
troubled GTB during 2000-01. That was when the 1993-formed bank was on
the verge of collapse due to reckless lending.
Soon after, a single bench of the High Court had quashed the ICAI
order. Ramakrishna had argued that the ICAI had not followed its laid
down procedures while conducting the disciplinary proceedings against
him.
The 1949-formed institute then appealed against the single-bench
decision before the division bench of the High Court. Its verdict,
upholding the institute’s position, came on September 30, according to
ICAI president G Ramaswamy.
“Ramakrishna had argued that we conducted the inquiry under old
disciplinary norms. He wanted it to be carried out afresh following
the new norms,” Ramaswamy said.
“The court has upheld our view and said the changes in the amended
norms were only meant to fine-tune certain technical issues.
The bench noted that it could not be a reason to turn our inquiry
invalid,” he told Business Standard.
The court has now clarified that the procedure prescribed by the
unamended Chartered Accountants Act, 1949, that is Sections 21, 22 and
22A would be applicable to all pending proceedings in information case
— and not the procedure prescribed after the amendment made by the
Chartered Accountants (Amendment) Act, 2006, he explained.
ICAI can initiate inquiry against an accused on the basis of
information or complaint. An inquiry that was initiated against
Ramakrishna was on the basis of information — and not complaint.
Ramakrishna was associated with Lovelock & Lewes, a network-affiliate
of PricewaterhouseCoopers, when he audited accounts of GTB promoted by
Ramesh Geli, the first banking executive to have received a Padma
award.
The bank’s networth was wiped off due to accumulated losses to the
tune of Rs 265 crore as of March, 2003. If the bank had made
provisions for the entire gross non-performing assets of Rs 916 crore,
the accumulated loss would have escalated to Rs 552 crore.
As the management failed to infuse capital in GTB, the RBI placed a
moratorium on the bank’s operations on July 24, 2004, to protect the
depositors’ interest. On July 26 that year, RBI announced the merger
of GTB with Delhi-based public sector lender Oriental Bank of
Commerce.
Chartered Accountants of India (ICAI) to bar an auditor for Global
Trust Bank (GTB) from practising accountancy for five years, according
to the national professional accounting body.
It was last year that the capital-headquartered ICAI decided to
blacklist P Ramakrishna after the institute’s disciplinary committee
found that him guilty of professional misconduct as auditor for the
troubled GTB during 2000-01. That was when the 1993-formed bank was on
the verge of collapse due to reckless lending.
Soon after, a single bench of the High Court had quashed the ICAI
order. Ramakrishna had argued that the ICAI had not followed its laid
down procedures while conducting the disciplinary proceedings against
him.
The 1949-formed institute then appealed against the single-bench
decision before the division bench of the High Court. Its verdict,
upholding the institute’s position, came on September 30, according to
ICAI president G Ramaswamy.
“Ramakrishna had argued that we conducted the inquiry under old
disciplinary norms. He wanted it to be carried out afresh following
the new norms,” Ramaswamy said.
“The court has upheld our view and said the changes in the amended
norms were only meant to fine-tune certain technical issues.
The bench noted that it could not be a reason to turn our inquiry
invalid,” he told Business Standard.
The court has now clarified that the procedure prescribed by the
unamended Chartered Accountants Act, 1949, that is Sections 21, 22 and
22A would be applicable to all pending proceedings in information case
— and not the procedure prescribed after the amendment made by the
Chartered Accountants (Amendment) Act, 2006, he explained.
ICAI can initiate inquiry against an accused on the basis of
information or complaint. An inquiry that was initiated against
Ramakrishna was on the basis of information — and not complaint.
Ramakrishna was associated with Lovelock & Lewes, a network-affiliate
of PricewaterhouseCoopers, when he audited accounts of GTB promoted by
Ramesh Geli, the first banking executive to have received a Padma
award.
The bank’s networth was wiped off due to accumulated losses to the
tune of Rs 265 crore as of March, 2003. If the bank had made
provisions for the entire gross non-performing assets of Rs 916 crore,
the accumulated loss would have escalated to Rs 552 crore.
As the management failed to infuse capital in GTB, the RBI placed a
moratorium on the bank’s operations on July 24, 2004, to protect the
depositors’ interest. On July 26 that year, RBI announced the merger
of GTB with Delhi-based public sector lender Oriental Bank of
Commerce.
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