Disciplinary Action Against CA for Unauthorised Coaching and Improper Directorship

Disciplinary Action Against CA for Unauthorised Coaching and Improper Directorship

The Disciplinary Committee of the Institute of Chartered Accountants of India (ICAI) has issued an official disciplinary order regarding a case of professional misconduct against a Chartered Accountant (CA) named Sachin Vikramrao Ghayal. It involves a complaint filed by Mr. Sunil Laxman Porje and was investigated under Section 21B(3) of the Chartered Accountants Act, 1949.

Background of Case:

• A complaint was filed by a person named Mr. Sunil Porje on March 20, 2018. The complaint was filed against CA Sachin Ghayal, who was alleged to be engaged in business activities that are not permitted for a full-time practising CA.

Specifically, these allegations were associated with:

1. Running CA coaching classes with the name Sachin Ghayal Professional Academy while being a full-time CA in practice and;
2. Being a director and majority shareholder of a private company named Sachin Ghayal Sugar Pvt. Ltd., while also being in full-time practice.

• According to Regulation 190A, a full-time practising CA cannot engage in other businesses or jobs without legal permission from ICAI.

Appendix 9 of ICAI’s regulations permits CAs to provide education or lectures on certain conditions:

• They must take legal permission from ICAI.
• Teaching hours should not exceed 25 hours per week.
• CAs can be directors in companies, but only if they are not managing or full-time directors, and they or their firm do not audit that company.

Investigation and Findings:

The ICAI’s Director of Discipline deeply examined the complaint and discovered the following:

• CA Ghayal had not complied with the rules of ICAI. This concluded in formal disciplinary proceedings.
• Multiple notices were sent to CA Ghayal by post and email; however, he did not appear before the Disciplinary Committee.
• As CA Ghayal did not appear before the authority, ICAI assumed he had no defence and decided to proceed further with the case based on available documents.

Evidence Considered:

Running Coaching Classes:

• CA Ghayal did not take any approval from the ICAI to run these coaching classes. Additionally, he did not provide proof that he was teaching under the 25-hour weekly limit.
• Hence, the Committee concluded he violated ICAI rules by engaging in full-time teaching while holding a full-time Certificate of Practice (COP) in Chartered Accountancy.

Directorship in a Company:

• CA Ghayal was a director in Sachin Ghayal Sugar Pvt. Ltd. (a private company). He owned 99% of the company’s shares, meaning he had major control over the company.
• He tried to say he was just a “director simplicitor” (a non-working or honorary director), but the evidence did not indicate the same.
• He resigned from the company only after the complaint was filed; however, he submitted this resignation months later on the MCA website.
• This clearly indicates that CA has again violated the ICAI rules here, as he was involved in managing a company and also did not take any official permission from the ICAI.

Final Order:

After analysing all the aspects, the ICAI Disciplinary Committee concluded that CA Sachin Vikramrao Ghayal is guilty of professional misconduct under the following provisions:

• Item (11) of Part I of the First Schedule, engaging in unauthorised business.
• Item (1) of Part II of the Second Schedule violates ICAI regulations.

The punishment was announced on May 17, 2024; the Disciplinary Committee gave a reprimand to CA Sachin Vikramrao Ghayal. A reprimand is a formal warning and is recorded in the official records of ICAI.

This punishment suggests that although his actions were serious, the ICAI decided not to suspend or remove him from membership of chartered accountancy.