In a significant ruling affecting professional disciplinary standards within the accounting profession, the Gujarat High Court on 19 November 2025 set aside the recommendation of the Council of the Institute of Chartered Accountants of India (ICAI) seeking a five-year removal of Chartered Accountant S.N. Valera from the Register of Members. The Court found that the Council had acted mechanically and without independent application of mind while concurring with the findings of the Disciplinary Committee in a long-pending case arising from the infamous Madhavpura Mercantile Cooperative Bank (MMCB) scam.
The proceedings originated in 2001–2002, when the re-audit of MMCB exposed serious lapses in the financial statements for FY 1999–2000. The Registrar of Cooperative Societies alleged that Valera, who conducted the statutory audit, failed to disclose major irregularities, permitted advances contrary to Reserve Bank of India norms, and overlooked significant misstatements. Following a detailed inquiry, the Disciplinary Committee in November 2004 held Valera guilty on 8 out of 16 charges, recommending strict action.
Relying on this report, the ICAI Council in March 2005 forwarded the case to the High Court under Section 21(5) of the Chartered Accountants Act, 1949, recommending removal of Valera for five years. However, the High Court observed that the Council had copied the entire report of the Disciplinary Committee verbatim and failed to address Valera’s detailed written representation and oral submissions. The Court emphasized that the statutory scheme requires the Council to perform an independent, quasi-judicial evaluation of the evidence and the member’s defence before arriving at its own findings.
The Bench of Justice A.S. Supehia and Justice Pranav Trivedi held that the Council’s report lacked reasoning, displayed non-application of mind, and could not be sustained. Citing Supreme Court precedents mandating transparency and speaking orders in disciplinary adjudication, the Court emphasised that regulatory bodies cannot mechanically endorse subordinate findings.
Given the procedural lapses, the Court remitted the matter back to the ICAI Council for fresh consideration in accordance with law, directing that the long-pending proceedings—initiated nearly two decades earlier—be concluded within three months. All contentions on merits have been kept open.
The decision is expected to influence future disciplinary processes within ICAI, reaffirming the need for reasoned decision-making, adherence to natural justice, and independent scrutiny at every stage of professional misconduct proceedings.
COUNCIL OF ICAI v. S.N. VALERA, decided on 19 November 2025