Kerala HC: ICAI’s refusal to recognize CA’s retirement from previous firm and register new firm offends Article 19(1)(g)

Lekha G

The Kerala High Court through a Bench of Justice N Nagaresh observed in a recent judgment that the refusal of the Institute of Chartered Accountants (ICAI) to recognize the retirement of a Chartered Accountant from his earlier firm and allow registration of his new firm would violate his right to practice his profession.

“The decision of the 1st respondent-Institute not to recognize and record the retirement of the petitioner from … will therefore cause unnecessary and unwarranted hindrance to the professional advancement of the petitioner. It will offend the fundamental right of the petitioner to practice a profession freely, guaranteed to him under Article 19(1)(g) of the Constitution of India,” the Court held.

Joshi John through Advocate VM Krishnakumar filed a petition stating that following a dispute with other partners in the firm, Joshi applied to the ICAI to dissolve the partnership.

The application was stalled ordering him to obtain an OTP confirmation from the other partners. Later, when Joshi sought to register his new partnership firm on the portal, he was informed the same could not be done as he continues to be in charge of the other partnership.

A second attempt at registering the firm as a sole proprietorship was also denied by the ICAI citing the same reason.

The Court pointed out that the role of ICAI as per the statute, was only to regulate trade or firm name and make changes to them. Other aspects relating to registration and regulation of a partnership firm of chartered accountants would be governed by the Partnership Act of 1932.

Section 32 of the Partnership Act, 1932 allows the dissolution of a partnership-at-will when any partner of a firm gives notice in writing to other partners, the Court pointed out.

The Court also stated, “It has to be noticed that the Chartered Accountants Act does not empower the Council to adjudicate inter se dispute between members of the Institute or disputes between partner-members of a Firm, unless those disputes fall within the ambit of Chapter V of the Act, 1949. Though the decision of the Council to evolve a mechanism of Alternate Dispute Resolution (ADR) to resolve inter se disputes between their members/Firms is laudable, availability of such ADR mechanism cannot be a reason not to record the current status of a Chartered Accountant in a Firm, in the registers maintained under Regulation 190”.

On these terms, the petition was allowed.

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