Standard Operating Procedure for Arresting Chartered Accountants

Standard Operating Procedure for the Arrest of Chartered Accountants

Introduction

This memorandum outlines the standard operating procedures (SOP) for police and other relevant authorities to adhere to when making arrests of Chartered Accountants. The procedure aims to ensure compliance with legal standards and protect the rights of Chartered Accountants, thereby preserving their professional integrity.

Background

In recent times, there has been a concerning trend of Chartered Accountants being arrested in relation to cases of financial fraud, embezzlement, misappropriation, and fund siphoning. It is vital to recognize that Chartered Accountants perform their duties based on documents provided by clients and are required to act under the presumption of good faith and honesty.

Legal Framework

• Attestation Functions: Chartered Accountants are legally empowered to trust the documents presented by their clients. Their roles as agents involve taking steps in good faith based on the information provided.
• Distinction Between Negligence and Fraud: Negligence alone does not constitute a criminal offense unless it is demonstrated that there was a deliberate intent to deceive. Notably, the Criminal Procedure Code (CrPC) emphasizes terms such as cheating, forgery, and fraud, rather than mere negligence.
• Mens Rea Requirement: Criminal intent (“mens rea”) must be established to justify any criminal actions against a Chartered Accountant. Without robust evidence, there should be no arrests or searches of their premises.

Protocol for Arrest

• Arresting authorities must possess concrete evidence of criminal intent before initiating any action against a Chartered Accountant.
• A search warrant from a competent court is mandatory if allegations of fraud are involved.
• Chartered Accountants should not be treated as criminals without substantiated claims, preserving their right to be heard.

Professional Oversight

The Chartered Accountants Act, 1949 provides mechanisms for disciplinary proceedings against members proven to be negligent in their duties. The Institute of Chartered Accountants of India (ICAI) is tasked with managing such breaches through its Disciplinary Directorate, which has civil court privileges as per Section 21C of the Act.

Conclusion

To ensure the fair treatment of Chartered Accountants and uphold their professional reputation, it is essential to implement these standard operating procedures. We urge you to disseminate this memorandum to all relevant police units and district offices, including all Inspector Generals (IG), District Magistrates (DM), and Superintendents of Police (SP). Chartered Accountants deserve respect and protection under the law to prevent unwarranted harassment.