The Bombay High Court on Thursday ordered the disciplinary committee of the Institute of Chartered Accountants of India (ICAI) to provide a fair hearing to Partha Ghosh, a Price Waterhouse (PWC) partner and a senior manager, DVP Rao, in connection with a case of alleged professional misconduct.

The duo, both chartered accountants, had audited the accounts of Global Trust Bank in 2003. ICAI had, based on news reports, alleged that the external auditors had approved suspect accounts and data in RBIs annual financial inspection (AFI) report, ordered that an inquiry be conducted by the disciplinary committee for alleged professional misconduct.

We have no hesitation in holding that the disciplinary committee has failed to act in conformity with the provision... and settled cannons of natural justice and fair play, division bench of chief justice Swatanter Kumar and justice SC Dharmadhikari observed. The court also held that Mr Ghosh and Mr Rao had not been given a fair deal and their rights stand violated.

Mr Ghosh and Mr Rao contended that there was significant divergence in the report of the special auditor M Bhaskar Rao, appointed by RBI for the financial year ending March 31, 2002, and the 2002 AFI report. RBI had recommended additional provision to the extent of Rs 596.3 crore, while according to the special auditor, the provision was only for Rs 373.43 crore.

For the year ending March 31, 2003, the non-performing assets were shown in the notes at Rs 915.8 crore and accounts were qualified to the extent of Rs 311.61 crore, they added.

However, in AFI 2003 report, RBI had recommended provisioning requirements far in excess of those contained in the report of the special auditor as well as those contained in the accounts for March 31, 2003, which had been audited by Mr Ghosh and Mr Rao. When the inquiry was being conducted by the disciplinary committee, in October, last year, the petitioners sought to cross-examine RBIs witnesses who had knowledge of the facts stated in the chargesheet against them.

But the officer did not attend the hearing and no documents were submitted. Also, attempts were made to deviate from the set procedure, the PwC officials alleged.

In March this year, the members of the committee were changed and the new members did not clarify the procedure to be adopted. The order rejecting their application seeking adjournment was also not provided to Mr Ghosh and Mr Rao.

The court held that a copy of the order be provided to the petitioners and until the directions are complied with, the committee should not submit its report to the Council of ICAI.