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2021 (10) TMI 526 - SC - Indian LawsProfessional and/or other misconduct - removal of the name of the appellant from the membership of the respondent Institute for a period of five years - wrong deposit of amount in local treasury unit of Income tax Department at Agra - further, allegation is that the appellant had interpolated assessees copies of challans to show higher figures and claimed the higher amount - HELD THAT - The Institute of Chartered Accountants of India is a statutory body created by an Act of Parliament that is the Chartered Accountants Act, 1949. In accordance with Section 9 of the Act, the management of the affairs of the Institute are vested in the Central Council. The Council performs its function through three different standing committees constituted under Section 17 of the Act and various other committees. One of the standing committees of the Institute is the Disciplinary Committee. Section 21 of the Act prescribes the procedure to be followed with regard to an inquiry relating to the misconduct of the members of the Institute. Section 22 A provides for filing of an appeal by a member against imposition of penalty. The Act was amended on 08.08.2006 by Act 9 of 2006. The findings by the Council constitute the determinative decision as to the guilt of the member and because it is determinative in character, the Act requires it to be recorded. Thus, the Council has to determine that a member is guilty of misconduct and the task of recording of the findings has been specifically assigned to the Council. Sub section (4) of Section 21 mandates that where a member of the Institute has been guilty of professional misconduct specified in the First Schedule of the Act, the Council shall afford to such member an opportunity of being heard before any orders are passed against him. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. In INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VERSUS PRICE WATERHOUSE AND ANR. 1997 (7) TMI 649 - SUPREME COURT it was held by this Court that the Disciplinary Committee is a fact finding body which is subordinate to the Council as a fact finding Authority. After analysing Section 21 and Regulation 15, this Court held that the Council is required to independently consider the explanation submitted by the member and the evidence adduced in the inquiry before the Disciplinary Committee and the report of the Committee. Recording of reasons is a principle of natural justice and every judicial/quasi judicial order must be supported by reasons to be recorded in writing. It ensures transparency and fairness in the decision making process. The person who is adversely affected wants to know as to why his submissions have not been accepted. Giving of reasons ensures that a hearing is not rendered as a meaningless charade - It is a well known principle that justice should not only be done but should also be seen to be done. An unreasoned decision may be just, but it may not appear to be so to the person affected. A reasoned decision, on the other hand, will have the appearance of fairness and justice. Where the Council has found any member of the Institute to be guilty of misconduct, it is required under the Act to forward the matter to the High Court with its recommendations and the High Court has to pass final order either dismissing the complaint or penalizing the member of the Institute. The order of the Council, imposing penalty upon the member, is also appealable by the members aggrieved before the High Court. In the circumstances, it is all the more necessary that the recommendation/order of the Council should contain reasons for the conclusion - the High Court has equally erred in accepting the recommendations of the Council without applying its own logic to this aspect of the matter. The recommendations/order(s) passed by the Council of the Institute of Chartered Accountants of India are set aside - matters are remitted back to the Council for fresh consideration and disposal in accordance with law - Appeal allowed.
Issues Involved:
1. Professional and/or other misconduct by a Chartered Accountant. 2. Delay in disciplinary proceedings. 3. Validity of the Disciplinary Committee’s findings. 4. Council’s acceptance of the Disciplinary Committee’s report. 5. High Court’s confirmation of the Council’s recommendations. 6. Natural justice and procedural fairness. 7. Requirement for reasoned decisions by quasi-judicial bodies. Issue-wise Detailed Analysis: 1. Professional and/or Other Misconduct by a Chartered Accountant: The appellant, a Chartered Accountant, was alleged to have deposited only the last digits of amounts outstanding against assessees in the Income-tax Department and claimed higher amounts from them. The Disciplinary Committee found the appellant guilty of "other misconduct" under Section 22 read with Section 21 of the Chartered Accountants Act, 1949. 2. Delay in Disciplinary Proceedings: The disciplinary proceedings spanned several years, with multiple adjournments requested by the appellant. The process began with the Disciplinary Committee's meetings between 1981 and 1989, followed by the Council's consideration of the report, which was repeatedly postponed at the appellant's request until September 1994. 3. Validity of the Disciplinary Committee’s Findings: The Disciplinary Committee concluded that the appellant was guilty of misconduct based on evidence and witness testimonies. However, the appellant contended that the Committee's report was based on conjectures and surmises and was not independently considered by the Council. 4. Council’s Acceptance of the Disciplinary Committee’s Report: The Council accepted the Disciplinary Committee's report without independently evaluating the materials, written statements, and oral submissions of the appellant. The Supreme Court noted that the Council failed to provide its own findings and reasons, making the recommendations appear mechanical. 5. High Court’s Confirmation of the Council’s Recommendations: The High Court confirmed the Council's recommendation for the appellant's removal from the membership register for five years. In another case, the High Court ordered permanent removal. The appellant's review petitions were dismissed, leading to the appeals before the Supreme Court. 6. Natural Justice and Procedural Fairness: The Supreme Court emphasized that the Council's power under Section 21 is quasi-judicial, requiring adherence to principles of natural justice. The Council must provide reasons for its findings, ensuring transparency and fairness. The lack of independent reasoning by the Council violated these principles. 7. Requirement for Reasoned Decisions by Quasi-Judicial Bodies: The Supreme Court highlighted the necessity of reasoned decisions to prevent arbitrariness and ensure justice is seen to be done. The Council's recommendations lacked independent reasons, making them appear unjust. The Court cited precedents emphasizing the importance of reasoned decisions in judicial and quasi-judicial processes. Conclusion: The Supreme Court set aside the Council's recommendations and the High Court's orders, remitting the matters back to the Council for fresh consideration. The Council was directed to independently evaluate the materials and provide reasoned findings within three months, ensuring compliance with principles of natural justice. All contentions of the parties were left open, and both parties were directed to bear their respective costs.
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