Kerala HC rules against ICAI on CA's right to practice

May 1st 2021

The Kerala High Court recently held that Institute of Chartered Accountants of India (ICAI) cannot refuse to recognise the retirement of a Chartered Accountant (CA) from a CA firm thereby preventing him from registering a new firm (Joshi John v. Institute of Chartered Accountants of India).

Chartered Accountants Act, 1949 does not empower the Council of ICAI to adjudicate inter se dispute between members of the Institute or disputes between partner-members of a firm, unless such disputes fall within the ambit of Chapter V of the Act (which deals with misconduct), the Kerala High Court held.

Importantly, the Court held that dissolution of a partnership firm is governed by the Indian Partnership Act as per which partner may retire by giving notice in writing to all other partners of his intention to retire.

The ICAI cannot take a stand that they will not recognise such retirement for the purpose of Regulation 190 of the Chartered Accountant Regulations, the Court made it clear.

The judgment was delivered by single-judge Justice N Nagaresh in a petition preferred by a CA, Joshi John.

The forcible continuance of a CA, as a partner of a firm which is loaded with partnership disputes, has civil consequences and will impinge upon the fundamental right of the concerned CA to practice a profession freely under Article 19(1)(a) of the Constitution, the High Court ruled.

“Non-recording of such retirement in the Register of Partnerships (maintained by ICAI), will have serious adverse consequences on a Chartered Accountant. 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.

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