ICAI's Refusal To Recognise CA's Retirement From Previous Firm And Register New Firm Offends Article 19(1)(g): Kerala High Court

Allowing the writ petition, the Court through a Bench Justice N Nagaresh observed that the decision of the ICAI would cause prejudice to the petitioner. It was therefore held,

"The decision of the 1st respondent-Institute not to recognise 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."

Justice Nagaresh's ruling came in response to a petition filed by one Joshi John through Advocate VM Krishnakumar.
Joshi's petition stated that the petitioner was the working partner of a three-member partnership at will and that the other two members were not taking an active role in the running the partnership.
Following a dispute with the other partners, Joshi applied to the ICAI to dissolve the partnership. Instructing him to obtain an OTP confirmation from the other partners, the application process was stalled. Later, when Joshi sought to register his new partnership firm on the portal, he was informed that the same could not be allowed since he continued 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 couched the question before it in this manner -

"The question arising for consideration is whether the 1st respondent-Institute for Chartered Accountants of India can force a Chartered Accountant to continue in a partnership of Chartered Accountants even after dissolution of the Partnership Firm or retirement of the Chartered Accountant, by retaining such unwilling partner in the Partnership Firm"

The court pointed out that the role of the ICAI, as evidenced from the statute, was only intended to regulate trade name or firm name and changes to them. Other aspects related to registration and regulation of a partnership firm of chartered accountants, like any other partnerships, would be governed by the Partnership Act of 1932, the court underscored.

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

"The legal position under the Indian Partnership Act being so, the 1st respondent-Institute (ICAI) cannot take a stand that they will not recognize such retirement for the purpose of Regulation 190 of the Chartered Accountant Regulations," the Court remarked.

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.

CASE: Joshi John v. ICAI and Ors.

COUNSEL: Advocate VM Krishnakumar for Joshi, M/s Menon and Pai Advocates for ICAI.

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