2015 (9) TMI 1251 - HC - Indian Laws

Disciplinary proceedings against the chartered accountant (CA) - non-supply of the written submissions by Respondent No.2 to the Petitioner / CA - principles of natural justice - Held that - Non-supply of the written submissions by Respondent No.2 to the Petitioner would result in using the material, of which the Petitioner had no opportunity to meet. The same would not be permissible as per the principles of natural justice. However, in order to meet the principles of natural justice, learned counsel for Respondent No.1 fairly conceded that the said error would be rectified and the Petitioner will be given copies of the said statement so that he can meet the contentions raised therein. As per Regulation 16 the disciplinary committee is required to submit its report to the council. As per clause (2) of the Regulation where a finding of the disciplinary committee is against a person against whom the enquiry is conducted, a copy of the report of the disciplinary committee is required to be furnished to such a candidate and he is entitled to be given an opportunity of making a representation in writing to the council. No doubt that clause (2) of Regulation 16 only refers to the Respondent that is the person against whom an enquiry is being conducted for giving a copy of the report of the disciplinary committee so that he has an opportunity of making a representation. However, by now it is settled principle of law that every order which has an adverse effect has to be preceded by principles of natural justice, when the provision expressly or by necessary implication excludes the applicability of the same. In ordinary course we would have very well disposed of the Petition by accepting a fair and reasonable proposal as given by Respondent No.1. However, as Mr. Seervai has insisted upon interpretation of Regulation 16, we have admitted the matter. If the interim relief as sought is granted, it would be forestalling the enquiry proceedings against the Petitioner. In that view of the matter, we are not inclined to grant interim relief as prayed for. However, we make it clear that the further enquiry shall be subject to the result of the Petition.

Summary

Issues:
1. Interpretation of Regulation 16 of the Chartered Accountants Regulations, 1988 regarding reconsideration and procedural irregularities.
2. Non-supply of written submissions causing prejudice and violation of principles of natural justice.
3. Permissibility of Respondent No.2 filing submissions in the proceedings under Regulation 16.
4. Application of principles of natural justice in disciplinary proceedings against the Petitioner.

Analysis:
1. The Petitioner challenged an order seeking reconsideration under Regulation 16, alleging procedural irregularities and lack of reasons for reconsideration. The Petitioner argued that the order violated Regulation 16 and caused prejudice due to non-supply of Respondent No.2's written submissions. The Respondent offered to rectify the error by providing the Petitioner with the submissions, but the Petitioner rejected the offer.

2. The Court acknowledged that non-supply of written submissions to the Petitioner breached natural justice principles, as it deprived the Petitioner of the opportunity to respond to the material presented. The Respondent agreed to rectify this error by providing the Petitioner with the submissions for a fair process.

3. The central issue was whether allowing Respondent No.2 to file submissions under Regulation 16 was permissible. The Court examined the procedure outlined in Regulation 16, emphasizing the right of the Respondent to receive the report and make representations. The Court noted that natural justice principles must precede any adverse order, even if not explicitly stated in the regulation.

4. The Court determined that seeking views from Respondent No.2, the complainant, did not violate natural justice principles. It was deemed appropriate for Respondent No.1 to consider the complainant's perspective in the proceedings. The Court opined that this approach aligned with natural justice and would not prejudice the Petitioner. While inclined to accept the Respondent's proposal, the Court admitted the matter due to the Petitioner's insistence on interpreting Regulation 16.

5. Despite declining interim relief to the Petitioner, the Court clarified that the further inquiry would be subject to the outcome of the Petition. This decision aimed to ensure a fair process while addressing the issues raised regarding Regulation 16 and the application of natural justice principles in the disciplinary proceedings against the Petitioner.