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TMI Blog2012 (4) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner also seek a writ of mandamus to direct the respondent to provide adequate and effective opportunity to the petitioner to defend himself and to permit him to cross examine the witnesses, who have deposed against him in the aforesaid disciplinary case. 2. In the year 2000, M/s. Price Water House, Chartered Accounts were appointed as the statutory auditors of Satyam Computers Services Limited (referred to as 'Satyam'). The petitioner, who was working with M/s Price Water House, submits that for the years 2001-2007, the audit of Satyam was conducted by one Mr. Gopalakrishnan, and the audit for the financial year 2007-08, and for the quarters ended 30.06.2008 and 30.09.2008 of the financial year 2008-09 were conducted by him. 3. On 07.01.2009, the then Chairman of Satyam, Mr. B. Ramalinga Raju informed the Board of Directors of Satyam of the systematic fudging of accounts of the said company by him. This disclosure, which was widely publicized, was acted upon as information against the petitioner under Section 21 of the Chartered Accountants Act, 1949 (CA Act). 4. The CID Hyderabad registered a criminal case under Section 120B read with Sections 406, 420, 467, 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Council shall constitute a Disciplinary Committee consisting of the President or the Vice- President of the Council as the Presiding Officer and two members to be elected from amongst the members of the Council and two members to be nominated by the Central Government from amongst the persons of eminence having experience in the field of law, economics, business, finance or accountancy: Provided that the Council may constitute more Disciplinary Committees as and when it considers necessary. (2) The Disciplinary Committee, while considering the cases placed before it shall follow such procedure as may be specified. (3) Where the Disciplinary Committee is of the opinion that a member is guilty of a professional or other misconduct mentioned in the Second Schedule or both the First Schedule and the Second Schedule, it shall afford to the member an opportunity of being heard before making any order against him and may thereafter take any one or more of the following actions, namely: - ( a ) reprimand the member; ( b ) remove the name of the member from the Register permanently or for such period, as it thinks fit; ( c ) impose such fine as it may think fit, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion and the committee shall cause a notice to be sent of such date, hour and place to the Director, respondent and complainant and require them to appear before it in person to make oral submissions, if any. Explanation. - For the purpose of this rule, the appearance includes, unless and otherwise directed, appearance by an advocate or through any authorized representative, who may be a Chartered Accountant, Cost Accountant or Company Secretary. (7) During the first hearing, the Committee shall read out the charge or charges to the respondent along with the summary of prima facie opinion arrived at by the Director, and ask the respondent whether he pleads guilty to the charge or charges made against him: Provided that if the respondent does not appear for the first hearing even after one adjournment, the reading out of charge or charges along with the summary of prima facie opinion shall be made in his absence and the case proceeded with in accordance with the provisions of this Chapter. (8) If the respondent pleads guilty, the Committee shall record the plea and take action as per provisions under rule 19. (9) If the respondent does not plead guilty, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the parties before it or due to other reasons, and on such terms as it thinks fit, and at any stage of the proceedings, adjourn the hearing: Provided that such adjournment shall not be given more than once at any stage of the proceedings. Explanation. - For the purpose of this rule, inability of the complainant, advocate, authorized representative or witness, to appear shall not be treated as a valid reason for adjournment of a hearing." (Emphasis supplied). 9. The Disciplinary Committee after considering the prima facie opinion dated 17.09.2009 in its meeting held on 23.09.2009, decided to proceed further in the matter under Chapter V of the Rules. 10. The respondent sent a letter dated 08.10.2009 to the petitioner, calling upon him to submit his written statement alongwith supporting documents, if any, and a list of witnesses, if any, that the petitioner may desire to examine under Rule 18(4) of the Rules. The petitioner did not respond to the said communication, presumably because he was still behind bars, and was granted bail by the Supreme Court only on 04.02.2010. 11. After the petitioner was released on bail, as aforesaid, he was served with a letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Discipline) while forming prima facie opinion viz. SEBI investigation report, CBI main charge sheet, two supplementary charge sheets, along with the list of witnesses which were likely to be examined on 09.07.2011 were also enclosed with the aforesaid letter. However, once again, on 04.07.2011, the petitioner sought deferment of the enquiry on the same ground, as aforesaid. This letter was received by the respondent on 08.07.2011 and the said request was rejected by the respondent on the same day. 18. On 09.07.2011, the petitioner appeared before the Disciplinary Committee through his authorized representative. During the hearing also, the representative of the petitioner sought deferment of the hearing, which was rejected by the respondent. The respondent proceeded with the examination of 12 witnesses and thereafter gave the counsel for the petitioner an opportunity to cross examine them. However, the counsel for the petitioner opted not to participate in the hearing and withdrew himself. 19. The petitioner was again issued notice by the respondent on 18.07.2011 informing him that the next hearing had been fixed for 31.07.2011. In the meantime, on 25.07.2011, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prima facie opinion. The petitioner also demanded the transcripts of the statements of witnesses whose evidence had been recorded on 09.07.2011 and 31.07.2011. 24. On 16.10.2011, the petitioner was represented through his representative before the Disciplinary Committee. The petitioner requested for recall of witnesses who had already deposed before the Disciplinary Committee along with copies of "Notes of Hearings", wherein examination of witnesses had taken place. The request for supply of the aforesaid documents was reiterated. The respondent informed the petitioner's representative that the documents requested for would be supplied and that his submissions would be appropriately considered. However, at the same time, it rejected the request for cross examination, as it considered that adequate opportunities had been given to the petitioner, which were not availed of by him. 25. Vide notice dated 02.12.2011, the proceedings were again fixed on 18.12.2011. On 05.12.2011, the petitioner was served with documents running into more than 3000 pages. The petitioner was also provided transcripts of some of the hearings. 26. On 14.12.2011, the petitioner moved two app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts these documents, running into about 3000 pages, were provided for the first time on 06.12.2011, i.e. ten days before the date of hearing which was fixed for 18.12.2011. He submits that the petitioner could not understand the relevance of the said documents as these had not been identified. Consequently, the petitioner moved two applications on 14.12.2011, i.e. to seek permission to cross examine the witnesses produced by the Director (Discipline) in the earlier enquiry proceedings, and for identification of documents supplied by the Director (Discipline) to the petitioner. 31. Mr. Kaul submits that Rule 18(2)(b) specifically provides that the Disciplinary Committee, which shall be guided by principles of natural justice, shall "expeditiously cause to deliver to the respondent and the complainant, a copy each of the following, - ( a ) . . . ( b ) particulars or documents relied upon by the Director, if any, during the course of formulation of prima facie opinion", if the Committee decides to proceed under Rule 9(2)(b), i.e. where the Committee agrees with the prima facie opinion of the Director (Discipline). 32. Mr. Kaul submits that Rule 18(2)(b) was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opportunity to cross examine them. 36. Mr. Nigam submits that even thereafter the petitioner did not cooperate with and participate in the disciplinary proceedings. He has not filed his written statement till date, despite expiry of the period within which the same could be filed. The proceedings were fixed on 09.07.2011, sufficiently in advance, vide notice dated 15.06.2011. Despite that, the petitioner did not participate in the proceedings on that date to cross examine the witnesses. 37. Mr. Nigam submits that these witnesses are officers who have investigated the case, and they are posted all over the country in different positions. With great difficulty and at substantial costs, these witnesses could attend the hearing at Hyderabad. He submits that the proceedings were being conducted at Hyderabad only for the convenience of the petitioner, as he is based in Hyderabad and the criminal trial also is proceeding at Hyderabad. Mr. Nigam submits that Mr. A.Y.V. Krishna, Chief Investigating Officer in the Satyam trial is presently posted as D.I.G, Assam. He is not easily available looking to the disturbance in the said State. Even earlier he could appear before the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal trial. At the highest, the petitioner may be permitted to rely upon their statements i.e. examination- in-chief and the cross examination of these witnesses recorded during the criminal trial, as even according to the petitioner, the charges in the criminal case and the disciplinary proceedings are over lapping and identical. 40. Mr. Nigam submits that the petitioner has been given sufficient opportunity in terms of Rule 18. He further submits that the petitioner has a statutory right of appeal, in case the Disciplinary Committee decides to impose any of the penalties referred to in sub- section (3) of Section 21A, and subsection (3) of Section 21B. Mr. Nigam submits that all the issues raised by the petitioner in the present petition can also be raised before the appellate authority constituted under Section 22A of the C.A. Act. Mr. Nigam submits that the petitioner has an efficacious alternative remedy available to him and this Court should, therefore, not interfere with either the disciplinary proceedings or the report formulated by the Disciplinary Committee during the pendency of the writ petition, at this stage. Reliance is placed on the judgments of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 30.03.2010 and 15.12.2010. 42. When the arguments were concluded, I had asked learned counsel for the respondents to provide to this Court the expenditure that may be incurred, in case the petitioner was to be permitted to cross examine the witnesses. The respondents have tendered a sheet showing the extent of expenses that is likely to be incurred in case the 12 witnesses are recalled for their cross examination once again. The said statement reads as follows:- "A. Expenses on the travelling, boarding and lodging of five members of Disciplinary Committee Rs. 2,50,000 B. Expenses on the travelling, boarding and Lodging of the staff of Disciplinary Directorate Rs. 2,00,000 C. Expenses on the travelling, boarding and Lodging of witnesses @ Rs. 30,000 per head Rs. 3,60,000 D. Other Misc Expenses including recording and Incidental costs Rs. 50,000 Rs. 8,60,000" 43. Having heard learned counsel for the parties, perused the provisions of the C.A. Act and the rules framed thereunder, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so provided with the documents, including those relied upon by the Director (Discipline) while forming the prima facie opinion, namely, the SEBI investigation report, the CBI main charge sheet and the two supplementary charge sheets along with the list of witnesses who were likely to be examined on 09.07.2011. The petitioner again sought an adjournment of this hearing vide letter dated 04.07.2011. This request was rejected. 47. On 09.07.2011, though the representative of the petitioner appeared, he refused to participate in the proceedings and to cross the witnesses whose examination-in-chief was recorded. 48. The submission of Mr. Kaul that the petitioner was not provided with the documents relied upon by the Director (Discipline) while forming the prima facie opinion dated 17.09.2009 does not appear to be correct. Inter alia, the said documents were provided, as aforesaid, by the respondent vide letter dated 15.06.2011. 49. Firstly, I may note that It is the categorical case of the respondents that the only document relied upon by the Director (Discipline) while forming the prima facie opinion were, firstly the charge sheet filed by the CBI and the SEBI investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e position with regard to the cross examination of the last witness i.e. Shri A.Y.V. Krishna on 31.07.2011, however, stands on a different footing. The petitioner was not provided the transcripts of the statements of the witnesses whose examination took place on 09.07.2011 and the said transcripts were provided to the petitioner vide forwarding letter dated 05.12.2011. The three thousand odd pages/documents which were provided to the petitioner on 06.12.2011 had been exhibited by the witnesses whose examination took place on 09.07.2011 and 31.07.2011. It is, therefore, apparent that when the petitioner/his representative appeared before the Disciplinary Committee on 31.07.2011, the petitioner was clearly handicapped, because the petitioner was not possessed of the statements of the witnesses, whose evidence had been recorded on 09.07.2011 and also of the documents which the said witnesses (12 in number) had exhibited. Without the said witnesses statements and copies of the exhibits, the petitioner could not have effectively cross examined the last witness, Sh. A.Y.V. Krishna on 31.07.2011. 51. To that extent, the grievance of the petitioner appears to be justified and the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for the present purposes. 55. In Chanan Singh ( supra ) and Jagmal Singh ( supra ) writ petitions had been preferred when the matter was only at the initial stage of show cause, and for such reasons, the same came to be dismissed as premature. Moreover, these cases did not consider the impact on the maintainability of the Petition under Article 226 of the Constitution in case of breach of principles of natural justice. 56. In Kanhaiya Lal ( supra ) writ petition had been preferred against notice issued by the Assistant Registrar, directing the borrower to hand over of the possession of mortgage properties on account of non-payment of secured debt. Similarly in Nerbududda Valley ( supra ) writ petition had been preferred against order passed by the Nazul Officer, rejecting the application for grant of No Objection Certificate (NOC) to raise construction on the leased land after changing the land use from industrial purpose to commercial purpose. The writ petitions, in both these cases, came to be dismissed on account of existence of alternate efficacious remedy of appeal. However, it is relevant to note, that in neither of these petitions, was the plea of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceedings at Hyderabad. The said amounts shall be deposited by the petitioner within two weeks from the date hereof. The said amount has been stipulated on the assumption that the petitioner shall takes steps to summon the witnesses without default and the said witnesses shall be cross examined on the dates they are summoned for and that the petitioner shall not seek any deferment or adjournment. If the overall expenses exceed the amount of Rs. 7.5 lakhs, the same shall be borne by the respondent. However, if it is less than the said amount, the petitioner shall be refunded the excess amount after adjusting the actual expenses incurred. (2) The dates for holding the proceedings shall be mutually agreed upon between the petitioner, the respondent and the witnesses and, in any event, shall not be later than one month from the date of hereof. (3) Soon after the cross examination of the witnesses is concluded, the hearing shall take place before the Committee without any adjournment being sought by the petitioner. 60. In the light of the aforesaid, the report prepared by the Disciplinary Committee dated 03.01.2012 is set aside. It is, however, made clear that the Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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