2012 (4) TMI 174 - HC - Indian Laws

Disciplinary enquiry by ICAI - statutory auditors of Satyam Computers Services Limited - Principles of natural justice - Cross examination of witness - held that - Considering the fact that the petitioner is entitled to be granted the opportunity to cross examine Sh. A.Y.V. Krishna, - permission granted to grant to the petitioner one, and only one, opportunity to cross examine the other witnesses as well, subject to the conditions. - the report prepared by the Disciplinary Committee dated 03.01.2012 set aside.

Issues Involved:
1. Whether the disciplinary proceedings against the petitioner complied with the principles of natural justice.
2. Whether the petitioner was given adequate opportunity to defend himself, including the right to cross-examine witnesses.
3. Whether the simultaneous criminal and disciplinary proceedings against the petitioner violated his fundamental rights.
4. Whether the petitioner was provided with all necessary documents in a timely manner to prepare his defense.

Detailed Analysis:

Compliance with Principles of Natural Justice:
The petitioner argued that the disciplinary proceedings did not comply with the principles of natural justice as he was not allowed to cross-examine witnesses and was not provided with necessary documents in a timely manner. Rule 18 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 mandates that the Disciplinary Committee should be guided by the principles of natural justice. The court acknowledged that while the petitioner was responsible for some delays, the denial of cross-examination opportunities and the late provision of documents constituted a breach of natural justice principles.

Adequate Opportunity to Defend:
The petitioner contended that he was not given adequate opportunity to defend himself, particularly in cross-examining witnesses. The court noted that the petitioner was provided with documents and notices of hearings, but the timing and completeness of these provisions were problematic. The court found that the petitioner was handicapped during the proceedings on 31.07.2011 because he did not have the transcripts of witnesses' statements or the documents exhibited by them. This justified granting the petitioner another opportunity to cross-examine the witnesses, subject to specific conditions.

Simultaneous Criminal and Disciplinary Proceedings:
The petitioner initially argued that simultaneous criminal and disciplinary proceedings violated his fundamental rights. However, this argument was dismissed by the court in previous judgments, and the Supreme Court directed the disciplinary proceedings to commence, recognizing the petitioner's need to manage both proceedings. The court found no merit in the argument that simultaneous proceedings were inherently prejudicial to the petitioner.

Provision of Necessary Documents:
The petitioner claimed that he was not provided with all necessary documents in a timely manner, which hindered his ability to prepare a defense. The court found that while the petitioner was given some documents, the bulk of relevant documents (around 3000 pages) were provided only ten days before a hearing, and the transcripts of witnesses' statements were given even later. This delay in providing documents was deemed to have prejudiced the petitioner, justifying the need for a re-examination of the witnesses.

Conclusion:
The court concluded that the petitioner should be granted one final opportunity to cross-examine the witnesses, subject to conditions including the deposit of Rs. 7.5 lakhs to cover expenses. The report prepared by the Disciplinary Committee dated 03.01.2012 was set aside, and the committee was directed to prepare a fresh report without being influenced by the court's observations. If the petitioner failed to comply with the court's directions, the original report would stand revived. This decision emphasized the importance of adhering to principles of natural justice in disciplinary proceedings.

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