2014 (1) TMI 605 - HC - Indian Laws

Disciplinary proceedings against the member of ICAI - Stay of enquiry proceedings - Held that - The respondents had in the minutes of the proceedings interpolated reasons for their order refusing the petitioners application to stay the proceedings The court has not express any views on this aspect - It would be open to the petitioners to raise these contentions in subsequent proceedings including in support of their contention that the same evidences bias - No purpose would have been served by further delaying the matter by remanding the matter to the respondents - At the petitioners request, it is directed that the enquiry being conducted by the respondents shall not be proceeded with until and including 17.12.2013 Decided in favour of petitioner.

Summary

Issues Involved:
1. Request for a blanket stay against the respondents in conducting or proceeding further with the enquiry against the petitioners.
2. Applicability of the unamended vs. amended provisions of the Chartered Accountants Act, 1949.
3. Interpretation of the transitional provision in the Chartered Accountants (Amendment) Act, 2006.
4. Relevance and impact of the pending Supreme Court decision in P. Ramakrishna Institute of Chartered Accounts of India case.
5. Allegations of interpolation in the proceedings' minutes by the respondents.

Issue-wise Detailed Analysis:

1. Request for a Blanket Stay:
The petitioners sought a blanket stay against the respondents from conducting, proceeding further with, or passing any order in the enquiry initiated against them pursuant to two show cause notices dated 6th December 2006 and 23rd October 2007. The petitioners argued that the proceedings should be stayed until the Supreme Court decides the matter in P. Ramakrishna's appeal. The court, however, dismissed this request, emphasizing that more than ten years had passed since the financial investigation regarding the audit of a bank for the financial year ending 31st March 2003, and it was in the interest of justice that the proceedings continue to avoid further delays and potential loss of evidence.

2. Applicability of the Unamended vs. Amended Provisions:
The court noted that the petitioners did not specify whether the unamended or amended provisions of the Chartered Accountants Act applied to their case. The petitioners' counsel initially refrained from taking a stand, citing uncertainty and potential waste of time and resources if the wrong procedure was followed. The court highlighted that the procedures under the unamended and amended Acts were substantially different but did not delve into the specifics of these differences, as the primary concern was whether the proceedings should be stayed pending the Supreme Court's decision.

3. Interpretation of the Transitional Provision:
The core issue in P. Ramakrishna's appeal before the Supreme Court was the interpretation of the transitional provision in the Chartered Accountants (Amendment) Act, 2006. The Division Bench of the Delhi High Court had held that the unamended provisions applied to pending proceedings, a decision that was under appeal in the Supreme Court. The Bombay High Court noted that the Supreme Court had not stayed the judgment of the Delhi High Court or the proceedings before the Council, only restraining the passing of the final order. The court decided not to stay the proceedings, reasoning that even if the Supreme Court later determined a different procedure should apply, the evidence collected could still be useful.

4. Relevance and Impact of the Pending Supreme Court Decision:
The petitioners argued that the enquiry should be stayed until the Supreme Court's decision in P. Ramakrishna's case to avoid potential waste of resources. However, the court found that the Supreme Court's interim order only restrained the passing of the final order and did not stay the proceedings themselves. The court emphasized that staying the proceedings would result in a standstill of numerous cases, which was not justified. The court also noted that the inconvenience caused by a potential change in procedure was outweighed by the need to proceed with the enquiry to avoid further delays and loss of evidence.

5. Allegations of Interpolation in the Proceedings' Minutes:
The petitioners contended that the respondents had interpolated reasons for their order refusing the petitioners' application to stay the proceedings. The court did not express any views on this aspect, stating that it would be open to the petitioners to raise these contentions in subsequent proceedings, including in support of their contention that the same evidenced bias. The court chose not to delay the matter further by remanding it to the respondents and instead heard the petitioners' counsel at length in support of the application.

Conclusion:
The petition was dismissed with no order as to costs. The court directed that the enquiry being conducted by the respondents shall not be proceeded with until and including 17.12.2013, allowing the petitioners time to file a fresh writ petition to contend that the new procedure applies and seek interim reliefs.