THE DISCIPLINARY COMMITTEE

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

IN THE MATTER OF COMPLAINT OF PROFESSIONAL OR OTHER MISCONDUCT

ICSIjDC: 215/2014

Date of decision: 28th December, 2015

Shri Ashok Kumar Agrawal .. ..Complainant

Vs.

Shri Anand Kumar Sahu, FCS-7670, CP No. 6023 .... Respondent

ORDER

1. A complaint dated 4fh January, 2014 in Form 'I' was filed under Section 21 of the Company Secretaries Act, 1980(the Act) read with sub-rule (1) of Rule 3 of the Company Secretaries (procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007 (the Rules) by Shri Ashok Kumar Agrawal (hereinafter referred to as the 'Complainant') against Shri Anand Kumar Sahu, FCS-7670 (CP No. 6023) (hereinafter referred to as the 'Respondent'). The Complainant has inter-alia alleged that the Respondent has certified and filed Form 32 pertaining to cessation of Shri Prabha Vaishnav, Shri Abhilasha Vaishnav, Shri Abhishek Vaishnav and Shri Ashok Kumar Agrawal from the directorship of Mis. K V Education Ventures Pvt. Ltd., wrongly and without exercising due diligence as Mr. Saurabh Kothari was not a director of the company on 3rd July, 2009. He further alleged that the Respondent was grossly negligent in signing the

16fhCompliance Certificate dated August, 2010 for the year ended on 31 sf March, 2009 pertaining to M/s. K V Education Ventures Pvt. Ltd., He further stated that as per Para 4 of the said Compliance Certificate, no meeting of the Board of Directors was held on ]sf June, 2009, whereas as on ]sf June, 2009, a Form 2 was filed for allotment of 20,000 equity shares in regard to M/s. K V Education Ventures Pvt. Ltd. He also alleged that in the said Compliance Certificate the Respondent in Annexure-B has not mentioned anything about filing of Form 2 for allotment made on 28fh March, 2009 and 1sf June, 2009.

2. Pursuant to sub-rule (3) of Rule 8 of the Rules, a copy of the complaint was sent to the Respondent vide letter dated 10fh January, 2014 calling upon him to submit the written statement followed by a reminder dated 31 sf January, 2014. The Respondent vide letter dated 30fh January, 2014 submitted the written statement. The Respondent has inter-alia stated that he had certified the alleged Form 32 after verifying the relevant documents. He further stated that the allegation that Mr. Saurabh Kothari was not a director of the company on that date is incorrect as snapshot from the MCA website taken on 3rd July, 2009 shows Mr. Saurabh Kothari as a director in the signatory details of Mis. K V Education Ventures Pvt. Ltd. He further stated that he had issued the Compliance Certificate for the year 2009-10 after verification of records of the company and as far as Form 2 for allotment of 20,000 equity shares made on 1 sf June, 2009 is concerned, he had checked 'view Public Document' facility on MCA portal and found the said Form

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2 pertaining to allotment of 20,000 shares. The Respondent further stated that he had sent a written communication to the company regarding the same and the company in reply informed that said Form 2 was filed without authority and without following the procedure as contemplated under the Companies Act, 1956. He further stated that as per the company's written communication, no Board Meeting was held on that date and even company had not received any money towards the abovementioned allotment and therefore, Form 2 and allotment of 20,000 made on 1st June, 2009 was illegal and void ab-initio, and therefore, the company has not taken the above mentioned Form 2 in its records and requested him to ignore the same. The Respondent further stated that due to typing error, in Annexure I B' of the said Compliance Certificate, filing details of Form 2 pertaining to the allotment of equity shares dated 28th May, 2009 was left out, however in point No.4 of said Compliance Certificate, the above said date i.e. 28th May, 2009 is mentioned which is the date of Board Meeting for allotment Of equity shares.

3. Pursuant to sub-rule (4] of Rule 8 of the Rules, a copy of the written statement was sent to the Complainant vide letter dated 4th February, 2014 asking him to submit the rejOinder. The Complainant submitted the rejoinder dated 12th February, 2014. The Complainant has inter-alia stated that the Respondent in the written statement has stated that Mr. Saurabh Kothari was a director of the M/s. K V Education Ventures Pvt. Ltd., on 3rd July, 2009 as per the MCA portal on 3rd July, 2009 and also stated that he had certified the alleged Form 32 after the verification of all records, documents and necessary papers. He further stated that Mr. Saurabh Kothari was appointed as director of M/s. K V Education Ventures Pvt. Ltd., on 23rd February, 2009 and had resigned from the directorship of the said company on 16th June, 2009. The Complainant further stated that as per Section 303 of the Companies Act, 1956, every company is required to maintain a Register of Directors having the information about the directors of the company. He further stated that had the Respondent verified the said register, he would have noticed that Mr. Saurabh Kothari was not a Director of M/s. K V Education Ventures Pvt. Ltd ., on 3rd July, 2009. He further stated that when Mr. Saurabh Kothari was not a director of the company on 3rd July, 2009, then how he would have had the access to Register of Directors of the company during 17th June, 2009 to 6th July, 2009? The Complainant further stated that the main contention of the Respondent for attesting the alleged Form 32 removing him along with 3 other directors of the company is that he had verified the MCA portal and the records and documents of the said company. He further stated that the information on the MCA portal cannot be taken as up-to-date recording of the facts since it reflects only the documents which have been filed with the MCA and certainly cannot show anything about the events which took place (such as in case of this Form 32 for the vacation of office of director of Mr. Saurabh Kothari on dated 17th June, 2009 was filed subsequent to 3rd July, 2009] but documents for such event are not filed with the MCA. The Complainant further stated that the Respondent being a qualified CS must be aware of the said facts that he should not have merely relied upon the MCA portal in case of Form 2 for allotment of 20,000 Equity Shares. He further stated that the Respondent has wrongly stated that he had verified the record of the company before attesting/certifying the alleged Form 32, is a false and wrong statement, as it is evident that as per the company records, Mr. Saurabh Kothari was not a director on 3rd July, 2009. He also informed that the Directors removed as per the alleged Form 32, have not received any Notice providing them an opportunity of being heard, which is mandatory under Section 284 of the Companies Act, 1956.

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The Complainant further stated that for the sake of argument, if the contention of the Respondent is accepted that he has verified the records of the company, then it can be concluded that the records of the company were forged or wrong information was given by Mr. Saurabh Kothari to the Respondent for certifying the alleged Form 32. Further, it is important to note that no one including the Respondent has denied the vacation of Mr. Saurabh Kothari as director on 17th June, 2009. If the Respondent has certified the contents of Form 32 which are not true and correct and subsequently, it came to his knowledge that he was cheated then what action he has taken against the company and Mr. Saurabh Kothari? The Complainant further stated that the reply· of Mr. Saurabh Kothari and the Respondent to his letter dated 21St July, 2013 raising certain issues is almost the same. The Complainant further questioned the Respondent as to why he accepted his appointment for issuing the Compliance Certificate to the company for the year 2009-10 to 2012-13. He further stated that it is beyond any doubt that the Respondent was involved in the planning and execution of illegal removal of the directors from the company and filling of the alleged Form 32 thereto. He also stated that the Respondent has stated that no Board Meeting was held for the allotment of 20,000 equity shares and no money has been received thereto and Form 2 was filed without any authority. The Complainant further stated that Form 2 was filed with the signature of Ms. Sangeeta Golchha, Director, M/s. K V Education Ventures Pvt. Ltd., and CS Mr. Manoj Agrawal, COP No. 5368. It is very misleading to say that Form 2 was filed without any authority as Form 2 clearly states that I have been authorized by the Board of director's vide Resolution No.2 dated 1st June, 2009 and true copy of Board Resolution dated 1st June, 2009 with list of allotees was attached with the said Form 2. The Complainant further stated that is very unbelievable that Ms. Sangeeta Golchha, Director and Mr. Manoj Agrawal, CS will file Form 2 without any authority on their part. The Respondent is absolutely shifting his wrong doing/acts on others part which is highly unjustifiable and illegal too. He further stated that if at all for sake of argument the Respondent is correct then why he has not reported the fact in his Compliance Certificate that Form 2 for allotment of 20,000 equity shares dated 1st June, 2009 was filed to ROC/MCA but the same is not appearing in the records of the company.

4. The Respondent vide letter date 11'h April, 2014 was asked to provide copies of all the documents relied upon by him for certification of Form 32 pertaining to cessation of Shri Prabha Vaishnav, Shri Abhilasha Vaishnav, Shri Abhishek Vaishnav, Shri Ashok Kumar Agrawal from the directorship of M/s. K V Education Ventures Pvt. Ltd. The Respondent vide his letter dated 24th April,2014 provided the copies of the documents relied upon by him for certification of Form 32 pertaining to cessation of Shri Prabha Vaishnav, Shri Abhilasha Vaishnav, Shri Abhishek Vaishnav, Shri Ashok Kumar Agrawal from the directorship of M/s. K V Education Ventures Pvt. Ltd.

5. Pursuant to rule 9 of the rules, the Director (Discipline) after examination of the complaint, written statement, rejoinder and other material on record, vide his prima-facie opinion dated 11 th September, 2014 observed that as per the

3rdsnapshot from the MCA website taken on July, 2009 Mr. Saurabh Kothari apparently has been shown as a director in the Signatory details of M/s. K V Education Ventures Pvt. Ltd. Further, the Respondent has certified and filed the alleged Form 32 purportedly under section 284 of the Companies Act, 1956, though he has attached the copies of the Notices sent to the complainant and the other directors pursuant to Section 284(2) of the Companies Act, 1956, but

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has not ensured to confirm as to whether the notices were actually received by them since mere posting of Notices is not sufficient but proof of delivery of the same to the addressee is essential compliance, more particularly when the business proposed to be transacted in the meeting is for removal of directors. In this case, the Complainant has denied to have received the same. Further, It is also found that the Respondent has admitted that due to typing error, in Annexure 'B' of the Compliance Certificate dated 16th August, 2010, filing details of Form 2 pertaining to the allotment of equity shares dated 28th May, 2009 was left out, however in point No.4 of said Compliance Certificate the above said date i.e. 28th May, 2009 is mentioned which is the date of Board Meeting for allotment of equity shares. The Respondent has also not stated in the Compliance Certificate about the Form 2 filed without authority and without following the procedure as contemplated under the Companies Act, 1956.

In view of the forgoing, the Respondent is prima-facie 'Guilty' of professional misconduct under Clause (7) of Part I of the Second Schedule of the Company Secretaries Act, 1980 as he did not exercise due diligence in the conduct of his professional duties while certifying and filing of Form 32 for cessation of the Directors of the company and also not taken due care while issuing the Compliance Certificate for the year ended 31 st March, 2009 of Mis. K V Education Ventures Pvt. Ltd.

6. The Disciplinary Committee at its mee"ting held on 24th September, 2014 considered the prima-facie opinion dated 1]!h September, 2014 of the Director (Discipline) and the material on record. The Disciplinary Committee agreed with the prima-facie opinion of the Director (Discipline) and decided to proceed further in the matter in accordance with the Company Secretaries Act, 1980 and the Company Secretaries (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007. Accordingly, a copy of the prima-facie opinion of the Director (Discipline) was sent to the parties vide letters dated 24th and 25th September, 2014 asking them to submit the written statement and rejoinder, respectively. The Respondent vide letter dated 8th October, 2014 submitted the written statement; however, the rejoinder from the Complainant was not received.

7. The parties vide letter dated 23rd December, 2014 were called upon to appear before the Disciplinary Committee on 12th January, 2015. On 12th January, 2015, the Complainant along with Shri Amol Chitale, Advocate appeared before the Committee. The Respondent along with Shri Satish Kumar, Advocate also appeared before the Committee. The Complainant informed that he has not received written statement to the prima-facie opinion of the Director (Discipline) from the Respondent. The Committee asked the Respondent to provide a copy of the same to the Complainant and also asked the Complainant to submit the rejoinder, if any to the written statement of the Respondent to the Disciplinary Directorate, ICSI with a copy to the Respondent. Thereafter, the Committee adjourned the matter.

8. On 14th September, 2015, the Disciplinary Committee noted that the Complainant vide letter dated 30th January, 2015 had submitted his rejoinder dated 12th February, 2014. Further, a letter dated 16th February, 2015 has been received from Mr. Satish Kumar Batra, representative of the Respondent. The Disciplinary Committee also noted that the parties vide letter dated 1st September, 2015 were called upon to appear before it on 14th September,

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2015.Mr. Ashok Kumar Agrawal, the Complainant along with Advocate, Mr. Gopal Sawal appeared before the Disciplinary Committee and made oral submissions. Mr. Anand Kumar Sahu, the Respondent along with Advocate, Mr. Satish Kumar Batra also appeared before the Committee. The Advocate for the . Respondent stated that the Respondent has received a letter from the Complainant. Thereafter, upon enquiry it was observed that the said letter has not been received by the Disciplinary Directorate, ICSI as the same was addressed to the ICAI. The Committee thereafter asked the Complainant to resubmit the same. Thereafter, the Respondent filed copies of some documents with a copy to the Complainant. The Complainant thereafter requested that he may be allowed to submit the rejoinder to the same. The Disciplinary Committee advised the Complainant to submit the rejOinder within 2 weeks with a copy of the same to the Respondent. The Disciplinary Committee further decided that the matter be listed for final arguments and the parties be called to appear in next meeting.

9. Accordingly, the parties vide letters dated 22nd September, 2015 were called upon to be appear before the Disciplinary Committee on 13th October, 2015. On 13th October, 2015, the Disciplinary Committee noted that the parties were called upon to appear before it. It further noted that the Complainant vide letter 28th September, 2015 submitted the rejoinder-cum-affidavit in support of his complaint. However, as per the request of the Respondent vide e-mail dated 8th October, 2015, the matter was postponed and the same was communicated to both the parties vide e-mail dated 9th October, 2015. Accordingly, the parties vide letter dated 3rd December, 2015 were called upon to appear before the Disciplinary Committee on 28th December, 2015. CS S K Batra, on behalf of the

19thRespondent vide e-mail dated December, 2015 inter-alia requested for adjournment as he is pre-occupied with other professional work.

10. On 28th December, 2015, the Disciplinary Committee noted the request of the Respondent. The Complainant along with his Advocate appeared before the Disciplinary Committee. The Disciplinary Committee further observed that this was a second request of the Respondent for adjournment. In this regard, the Committee relied on the Explanation to sub-rule (18) of Rule 18 of the Company Secretaries [Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007 which provides as under

(18) ...... .

Explanation: For the purpose of this rule, inability of the Complainant, advocate, authorised representative or witness, to appear shall not be treated as a valid reason for adjournment of a hearing.

3rdThe Disciplinary Committee further observed that in the letter dated December, 2015 issued to the Respondent it has been clearly stated that failure on the part of the Respondent to appear before the Disciplinary Committee; the Disciplinary Committee shall proceed ex-parte. Hence, the Committee decided to proceed ex-parte.

11. The Complainant along with his Advocate appeared before the Disciplinary Committee and made oral submissions wherein the advocate of the Complainant stated that the Respondent has certified and filed Form 32 pertaining to cessation of Mr. Prabha Vaishnav, Mr. Abhilasha Vaishnav, Mr.

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Abhishek Vaishnav and Mr. Ashok Kumar Agrawal from the directorship of Mis. K 3rdV Education Ventures Pvt. Ltd., w.e.f. July, 2009, wrongly and without

exercising due diligence as Mr. Saurabh Kothari was not a director of the company on 3rd July, 2009 as he was removed as Director on 16th June, 2009 and the Respondent had filed his form for appointment as an additional Director on 7th July, 2009. He further stated that the Respondent has failed to attach any attachment with the aforesaid Form 32 which is mandatorily required to be attached with Form 32, which clearly shows that the Respondent did not exercise any due diligence in the conduct of his professional duties while certifying of said Form 32 for cessation of the Directors of the company.

The advocate of the Complainant further alleged that the Respondent was also grossly negligent in signing the Compliance Certificate dated 16th August, 2010 for the year ended on 3jst March, 2009 pertaining to Mis. K V Education Ventures Pvt. Ltd., He further stated that as per Para 4 of the said Compliance Certificate no meeting of the Board of Directors was held on 1 st June, 2009, whereas as on 1 st June, 2009, a Form 2 was filed for allotment of 20,000 equity shares in regard to Mis. K V Education Ventures Pvt. Ltd. The advocate of the Complainant further alleged that the Respondent has not mentioned about the removal of Mr. Saurab Khotari from the Directorship of the company. Therefore, it can be said that the Respondent has hidden material facts in his Compliance Certificate.

12. The Disciplinary Committee further observed that the Respondent in his written submissions has denied all the allegations levied against him and stated that he had certified the alleged Form 32 after verifying the relevant documents. He further stated that Mr. Saurabh Kothari was a director of the company as per the

3rd snapshot taken by him from the MCA website on July, 2009.However, the Disciplinary Committee felt that the MCA provides names of the director of the company on its official portal mca.gov.in, on the basis of electronic Form 32 filed by any director and certified by professional. Further, filing of e Form 32 a period of 30 days is given from the date of passing of resolution. Hence, mere checking on the MCA portal was not sufficient to ascertain as to whether Mr. Saurabh Kothari was a director of the company or not. The Disciplinary Committee further observed that the Respondent in his written submissions had issued the Compliance Certificate for the year 2009-10 to the said company. However, has failed to disclose that a Form 2 was filed for allotment of 20,000 equity shares in regard to Mis. K V Education Ventures Pvt. Ltd. Further the Respondent failed to mention about the removal of Mr. Saurab Khotari from the Directorship of Mis. K V Education Ventures Pvt. Ltd. Therefore, it can be said that the Respondent has hidden material facts in his Compliance Certificate.

13. The Disciplinary Committee after hearing the submissions made by the Complainant and after considering the material on record and the nature of issues involved in this matter and in the totality of the circumstances related to this case found that Mr. Anand Kumar Sahu, ACS-17743 (CP No.6023) did not exercise due diligence in conduct of his professional duties while certifying of Form 32 pertaining to cessation of Mr. Prabha Vaishnav, Mr. Abhilasha Vaishnav, Mr. Abhishek Vaishnav and Mr. Ashok Kumar Agrawal from the directorship of Mis. K V Education Ventures Pvt. Ltd. The Committee also found that the Respondent was further negligent in issuing the Compliance Certificate dated 16th August, 2010 for the year ended on 3 pt March, 2009 pertaining to Mis. K V Education Ventures Pvt. Ltd.

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14. We concluded that the Respondent is 'Guilty' of professional misconduct under Clause [7} of Part-I of the Second Schedule of the Company Secretaries Act, 1980 as he did not exercise due diligence in the conduct of his professional duties. We in terms of sub-rule [1) of Rule 19 of the Company Secretaries [Procedure of Investigations of Professional and other misconduct and conduct of cases) Rules, 2007 decided to afford an opportunity of being heard to the Respondent before passing any order under Section 21 B(3) of the Company Secretaries Act, 1980.

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(S K Agrawala) (Atul H Mehta)

Member Member Presiding Officer(SK~

Date: \ ~\,l~'b

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