Chartered Accountants Act does not empower ICAI to decide disputes between partners of CA firm; Kerala High Court upholds CA’s right to practice :

1st May,2021

Chartered Accountants Act does not empower ICAI to decide disputes between partners of CA firm; Kerala High Court upholds CA’s right to practice :

The Kerala High Court recently ruled that the Institute of Chartered Accountants of India (ICAI) cannot refuse to recognise a Chartered Accountant's (CA) retirement from a CA company, effectively barring him from forming a new firm (Joshi John v. Institute of Chartered Accountants of India). The Kerala High Court held that the Chartered Accountants Act, 1949 does not allow the ICAI Council to adjudicate inter se disputes between Institute members or disputes between partner-members of a corporation, unless such disputes fall within the ambit of Chapter V of the Act (which deals with misconduct). The High Court ruled that a CA's forcible continuation as a partner in a firm rife with partnership conflicts has civil implications and would infringe on the CA's constitutional right to freely practise his or her career under Article 19(1)(a) of the Constitution. “A Chartered Accountant's non-recording of such retirement in the Register of Partnerships (maintained by ICAI) would have significant negative implications. It would infringe on the petitioner's constitutional right to freely exercise his career, as guaranteed by Article 19(1)(g) of the Indian Constitution,” the Court ruled. Importantly, the Court held that the Indian Partnership Act governs the dissolution of a partnership company, which states that a partner may retire by giving written notice to all other partners of his intention to retire. The ICAI cannot claim that such retirement would not be recognised for the purposes of Regulation 190 of the Chartered Accountant Regulations, the Court said. Justice N Nagaresh, a single-judge, handed down the decision in response to a petition filed by a CA named Joshi John.