2015 (5) TMI 657 - SC - Indian Laws

Interpretation of Section 21D i.e. Transitional Provisions of the Chartered Accountants Act, 1949 - Pending proceedings in information case - Whether procedure prescribed by the unamended CA Act, 1949, that is section 21, 22 and 22A would be applicable to pending proceedings in information case and not the procedure prescribed after the amendment made by the Chartered Accountants (Amendment) Act, 2006 - The object and purpose, both in an information case and in a complaint case, is to find out and enquire into the allegations of professional or other misconduct. This is the purpose and the primary aim of the proceedings. Held that - It is observed by the High court that No doubt section 21, both unamended and post amendment, refers to information and complaint but it would be incorrect to hold that the legislature wanted to make a distinction between complaint or information cases in section 21D of the CA Act, 1949. Such distinction may be relevant and material as in the case of a complaint there is a complainant, a third party, who wishes to prosecute and has an interest, whereas in the case of information the action may be suo motu or information may be provided by the third party who does not want to, for various reasons, file a formal complaint; but the said distinction is not relevant for section 21D of the CA Act, 1949. In view of this difference between a complaint and information case, some specific procedures or requirements have been prescribed for complaint cases. In case of information, there is greater flexibility and latitude. Other than this, there cannot be any distinction between information which is made basis of disciplinary proceedings or enquiry and a complaint case. The object and purpose, both in an information case and in a complaint case, is to find out and enquire into the allegations of professional or other misconduct. This is the purpose and the primary aim of the proceedings. Under Regulation 13 of 1988 Regulations, the procedure prescribed is the same and no distinction in substance is made. If information cases and complaint cases are treated differently for the purpose of section 21D of the CA Act, 1949, an anomalous situation would arise, which can lead to difficulties and even challenge to the amended provisions. In a complaint case the old procedure and the punishment prescribed in First Schedule and the Second Schedule will apply, but in an information case which is still pending before the Council, the new procedure and the new (even harsher/stringent) punishments and the amended Schedules 1 and 2 will apply. It is difficult to fathom any reason and ground why any such distinction should be made or this is legislative intention, as the word complaint is mentioned in Section 21D of the CA Act, 1949. The word complaint as under in section 21D would include all pending matters including information cases on which the Council has applied its mind after they have been brought to the notice of the Council. The word complaint as used in section 21D does not refer to the complaints made by third parties but also information whether made available by a third person or comes to the knowledge and has been considered by the Institute/Council. The word complaint in section 21D has to be given a broader and a wider meaning to give full effect to the legislative intent behind section 21D. In common parlance also the word complaint means and refers to a pending matter before the prescribed authority authorised to make enquiry into the allegations. The source of information may not be relevant. We fully agree and subscribe the view taken by the Division Bench of the High Court in the Letters Patent Appeal.Hence, pending proceedings shall, no doubt, be governed under the old procedure prescribed before the Chartered Accountants (Amendment) Act which came into force in 2006. - Decided against the appellant.

Summary

Issues: Interpretation of Section 21D of the Chartered Accountants Act, 1949

Analysis:
The judgment in question revolves around the interpretation of Section 21D of the Chartered Accountants Act, 1949. The case originated from a writ petition challenging a decision of the Council, Institute of Chartered Accountants of India, which was quashed by a Single Judge of the High Court. The subsequent appeal before the Division Bench focused on the interpretation of Section 21D concerning pending proceedings under the Act. The Division Bench, after considering relevant provisions and precedents, concluded that the unamended provisions of the Act would apply to ongoing cases, rather than the amended procedures post the Chartered Accountants (Amendment) Act, 2006.

The transitional provision, Section 21D, states that all complaints, inquiries, references, or appeals initiated before the Amendment Act in 2006 shall continue under the unamended provisions. The Division Bench emphasized that the distinction between complaint and information cases is not relevant under Section 21D. It highlighted that both types of cases aim to investigate professional misconduct allegations, and the procedures under Regulation 13 of 1988 remain consistent. The Bench cautioned against treating information and complaint cases differently under Section 21D, as it could lead to inconsistencies and challenges to the amended provisions.

The Division Bench's detailed analysis underscored that the term "complaint" in Section 21D should encompass all pending matters, including information cases, where the Council has considered the allegations. It advocated for a broad interpretation of "complaint" to align with the legislative intent behind Section 21D. The judgment endorsed the Division Bench's reasoning, affirming that ongoing proceedings should adhere to the pre-amendment procedures specified in the Act. Consequently, the appeal challenging the Division Bench's decision was dismissed by the Supreme Court, upholding the application of the old procedure to pending cases as per Section 21D of the Chartered Accountants Act, 1949.