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TMI Blog2021 (10) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O R D E R S. ABDUL NAZEER, J. 1. Leave granted. Civil Appeal No. 6337 of 2021 (Arising out of SLP (Civil) No. 24350 of 2017, and Civil Appeal No. 6338 of 2021 (Arising out of SLP (Civil) No.5652 of 2018) 2. The appellant D.K. Agrawal is a chartered accountant having his Office as M/s, Dinesh K. Agrawal Co., Chartered Accountants, 46 A, Madhav Kunj, Pratap Nagar, Agra. Information was received by the Institute of Chartered Accountants of India (for short, the Institute ) from the Office of the Inspecting Assistant Commissioner of the Income Tax alleging that the appellant had deposited in local treasury unit of Income tax Department at Agra a total sum of ₹ 2514/ being the last digit of amount, outstanding against the assessees. The Office of the Inspecting Assistant Commissioner of the Income Tax further alleged that the appellant had interpolated assessees copies of challans to show higher figures and claimed the higher amount from them. The said information was conveyed to the appellant vide Institute s letter dated 14.02.1980 and he was requested to send his written statement in response. The appellant submitted his duly verified written stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Disciplinary Committee might not be placed before the Council in March 1991 which was scheduled to be held at Bangalore. His request was acceded to. The appellant was further informed vide Institute s letter dated 8th July, 1993 that the report of the Disciplinary Committee would be considered by the Council at its meeting scheduled to the held from 5th to 7th August, 1993. The appellant appeared before the Council on 06.08.1993 and made his oral submissions that his counsel was out of Delhi and in his absence, it was not possible for him to proceed with the case. He again requested for postponement of the hearing. This process went on till the month of September 1994. On 02.09.1994 the appellant appeared before the Council and made his oral submissions. The Council passed the following orders: On consideration of the report of the Disciplinary Committee, written representations and the oral submissions made by the respondent D.K. Agrawal before the Council on 2nd September, 1994, the Council accepted the Report of the Disciplinary Committee and found that the respondent was guilty of other misconduct under Section 22 read with Section 21 of the Chartered Accountants A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as well, the appellant went on taking time on one pretext or another before the Disciplinary Committee. The Disciplinary Committee on perusal of the documents produced before it, upon recording the evidence of the witnesses and after hearing the submission made by the complainant and the appellant, submitted its report to the Council on 12.09.1989. The Disciplinary Committee was of the opinion that the appellant was guilty of other misconduct under Section 21 read with Section 22 of the Act. A copy of the report of the Disciplinary Committee was forwarded to the appellant as also to the complainant vide Institute s letter dated 08.08.1991 and they were informed that the report would be considered by the Council at one of its forthcoming meeting and that they were required to send their written representations, if any, and also if they so desired, to appear before the Council either in person and/or through a member of the Institute duly authorized by them at the time of the consideration of the report. 8. The report of the Disciplinary Committee was fixed for consideration by the Council at its meeting scheduled to the held from 5th to 7th August, 1993. At the request of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of doubt. The Council was under an obligation to record a finding that the guilt of the appellant was beyond reasonable doubt which, it was argued, is not so in the instant case. It was further argued that the High Court ought to have accepted the submissions of the appellant and set aside the recommendations, considering the fact that the recommendation of the Council was violative of the principles of natural justice. He has also attacked the report of the Disciplinary Committee which, according to him, was made with a pre determined mind and that it is perverse and contrary to the materials placed on record. 13. On the other hand, learned counsel appearing for the respondent Institute has submitted that taking into consideration the materials on record and also the written statements and submissions of the appellant, the Council had come to the conclusion that the appellant was guilty of misconduct. The High Court has very rightly confirmed the recommendations of the Council and has allowed the references accordingly. There is no error in the report of the Disciplinary Committee or in the order of the Council. Therefore, the appellant cannot find fault with the judgment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in the First Schedule, the Council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely : (a) reprimand the member; (b) remove the name of the member from the Register for such period, not exceeding five years, as the Council thinks fit: Provided that where it appears to the Council that the case is one in which the name of the member ought to be removed from the Register for a period exceeding five years or permanently, it shall not make any order referred to in Clause (a) or Clause (b), but shall forward the case to the High Court with its recommendations thereon. (5) Where the misconduct in respect of which the Council has found any member of the Institute guilty is misconduct other than any such misconduct as is referred to in Sub section (4), it shall forward the case to the High Court with its recommendations thereon (6) On receipt of any case under sub section (4) or sub section (5), the High Court shall fix a date for the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity of being heard. 16. Regulation 13 of the Chartered Accountants Regulations, 1964 (for short Regulation ) provides for the procedure of an inquiry before the Disciplinary Committee. Regulations 14 and 15 which are relevant for the purpose of this case are as under: 14. Report of the Disciplinary Committee (1) The Disciplinary committee shall submit its report to the Council. (2) The Council shall consider the report of the Disciplinary Committee and if, in its opinion, a further enquiry is necessary, shall cause such further enquiry to be made whereupon a further report shall be submitted by the Disciplinary Committee. (3) The Council shall, on the consideration of the report and the further report, if any, record its findings. (4) If the finding is that there is no case for passing one of the orders specified in clauses (a) or (b) of subsection (4) of section, the complainant and the respondent shall be informed accordingly. 15. Procedure in a hearing before the Council. (1) If the Council, in view of its findings, is of opinion that there is a case for passing one of the orders specified in clauses (a) or (b) of sub sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against him. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. The recording of the finding by the Council is the jurisdictional springboard for the penalty proceedings which follow. 18. In Institute of Chartered Accountants of India v. L.K. Ratna and Ors. 1986 4 SCC 537 this Court considered the duties of the Council as under : 12. Now when it enters upon the task of finding whether the member is guilty of misconduct, the Council considers the report submitted by the Disciplinary Committee. The report constitutes the material to be considered by the Council. The Council will take into regard the allegations against the member, his case in defence, the recorded evidence and the conclusions expressed by the Disciplinary Committee. Although the member has participated in the inquiry, he has had no opportunity to demonstrate the fallibility of the conclusions of the Disciplinary Committee. It is material which falls within the domain of consideration by the Council. It should also be open to the member, we think, to point out to the Council any error in the procedure adopted by the Disciplinary Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us. 19. Similarly, in Institute of Chartered Accountants of India v. Price Waterhouse and Ors. (1997) 6 SCC 312 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. It was held thus: 14. A combined reading of relevant provisions in Section 21 and Regulation 16 does indicate that the recording of a finding of guilt or non guilt by the Council is mandatory to take further action or to dismiss the complaint or for further process. The Council is required to consider independently the explanation submitted by the member and the evidence adduced in the enquiry before the Disciplinary Committee and the report of the Disciplinary Committee. It provides an in built mechanism under which the Council itself is required to examine the case of professional or other misconduct of a member of the Institute or associate mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airness 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. Unless an adjudicatory body is required to give reasons and make findings of fact indicating the evidence upon which it relied, there is no way of knowing whether the concerned body genuinely applied itself to and evaluated the arguments and the evidence advanced at the hearing. Giving reasons is all the more necessary because it gives satisfaction to the party against whom a decision is taken. 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. 23. In M/s. Woolcombers of India Ltd. v. Woolcombers Workers Union and Ors. (1974) 3 SCC 318, while dealing with an award of an Industrial Tribunal, this Court found that the award stated only the conclusions and did not providing the supporting reasons. The matter was remitted back to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable man would, on given facts and circumstances, come to the conclusion reached by the appellate authority on the basis of the evidence on record, certainly this Court would oversee whether the findings recorded by the appellate authority is based on no evidence or beset with surmises or conjectures. Giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review. Reasoned decision is not only for the purpose of showing that the citizen is receiving justice, but also a valid discipline for the Tribunal itself. Therefore, statement of reasons is one of the essentials of justice. 25. As noticed above, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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