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TMI Blog1976 (11) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... the Regulations ). 2. Facts that give rite to this reference which lie in a short compass may briefly be stated. The Council of the Institute of Chartered Accountants of India received information that the respondent, Shri C. H. Padliya, had allowed his articled clerk, Vijay Kumar Gupta, to engage himself in the employment of Liberty Insurance Co. Ltd., Indore, on a full-time basis during the period of articles from September 1, 1969, to August 31, 1971. The Secretary of the Council by his letter dated October 9, 1972, conveyed this information to the respondent and called upon him to send his written statement, if any, as required by regln. 11(6) of the Regulations. The respondent submitted his written statement to the Council on November 27, 1972, to the effect that Vijay Kumar Gupta was serving with him as articled clerk during the period in question ; that he was devoting his full time in his office and attending the audit work during the period of his training ; that he never disclosed that he was employed in the Liberty Insurance Company Ltd., Indore, or anywhere else ; that the office of the Liberty Insurance Company Ltd., Indore, is situated in a separate portion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Liberty Insurance Company Ltd. regarding the appointment of Vijay Kumar Gupta and his drawing the salary from the insurance company was preferred to the testimony of the articled clerk and the respondent, although the custodian of the insurance company, has not been examined. The father of the articled clerk was not examined. The Disciplinary Committee came to the conclusion that the respondent was aware of the employment of his articled clerk, Vijay Kumar Gupta, with Liberty Insurance Company Ltd., Indore, and he failed to take any steps in sending the necessary information to the Institute even after he had been informed by the Institute itself. The Committee also noticed a discrepancy and contradiction in the explanation submitted by the respondent as to when he came to know of the employment of Vijay Kumar Gupta. The report of the Disciplinary Committee was submitted, to the Council which found that the respondent, who is a member of the Institute, is guilty of professional misconduct and, consequently, submitted this reference for appropriate action under Section 21(5) of the Act. 4. Shri S. N. Kohli, learned counsel for the applicant, contended that the Disciplinary C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered accountant is or is not guilty of professional misconduct within the meaning of Section 22 of the Act on the ground that he has allowed his articled clerk to engage himself in other employment during the period of his articles without prior permission of the Council as required under regulation 36 of the Regulations ? 6. The answer to this question depends upon the power and jurisdiction of the High Court vested under Sub-section (6) of Section 21 of the Act in hearing the reference under Sub-section (5) thereof, and the provisions of regln. 36 read with Part II of- the Second Schedule to the Act and their application to the facts of the present case. Before considering the facts and circumstances of the case, it is not only profitable but necessary to refer to the jurisdiction of this court in disposing of a reference under the Act. Section 21 of the Act provides a procedure for inquiries relating to misconduct of the members of the Institute. The members may be active practitioners in the profession or employees in a company, firm or any other department. In order to refer the case to the Disciplinary Committee, the Council must opine prima facie that a member of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) reprimand the member ; (c) remove him from membership of the Institute either permanently or for such period as the High Court thinks fit ; (d) refer the case to the Council for further inquiry and report. 8. The High Court is also empowered under Section 21(7) of the Act to transfer the case subject to such conditions, if any, as it thinks fit to impose, to another High Court if it appears to it that the transfer of a pending case will promote the ends of justice or tend to the general convenience of the parties. The transferee-High Court thereafter shall exercise the same powers and jurisdiction as if the case has been forwarded to it by the Council. Sub-section (8) of Section 21 of the Act invests the Council and the Disciplinary Committee with such powers as are vested in a civil court under the Code of Civil Procedure, 1908, in respect of summoning and enforcing the attendance of any person and examining him on oath; the discovery and production of any document; and receiving evidence on affidavit. This in short is the scheme of Section 21 of the Act, which provides a specific procedure for inquiries pertaining to misconduct of members of the Institute. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment : vide Council of the Institute of Chartered Accountants v. B. Mukherjea . 10. In Chief Controller of Exports v. G. P. Acharya AIR 1964 Cal 178, the learned judge, Mukharji J. (as he then was), speaking for the court, observed at page 181 thus: Wide are the powers, therefore, of this court in dealing with refer ences under Section 21 of the Chartered Accountants Act. Nevertheless it appears that some well-settled principles should guide this court in exer cising this ample power. It is essential to remember that this court in such jurisdiction as under Section 21 of the Chartered Accountants Act is dealing with not so much a private dispute or a private litigation but is dealing with the findings of a professional body of people who are intended to be the best judges of what their own standard of professional conduct should be. Unless, therefore, there is a gross violation or disregard of the provisions of the Chartered Accountants Act or the Regulations made thereunder or a gross and utter disregard of certain well known principles of natural justice and fairness or obvious disregard of essential considerations cf law or fact, this High Court should not be too eager ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitations pointed out by the learned judge, P. B. Mukharji J., for exercising the power of reference under Section 21 of the Act would only confine to questions of law. It is now well-settled that whether the finding of fact is perverse or is not supported by any evidence or is violative of the provisions of the Act or Regulations and principles of natural justice is a question of law. If the view of the Calcutta High Court is accepted, it amounts to reducing or limiting the jurisdiction of the High Court under Section 21 of the Act to only one of law and it cannot interfere with findings of fact or appreciation of the entire evidence, oral or documentary, de now from its own standpoint. We, therefore, express our respectful dissent to the opinion of the learned judge, P. B. Mukharji J. 12. This brings us to examine the evidence on record and consider whether the conduct of the respondent-chartered accountant amounts to professional misconduct within the meaning of Section 22 of the Act, which defines professional misconduct. The professional misconduct shall be deemed to include any act or omission specified in Schedules I and II. However, nothing in Section 22 shall be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Council, his articled clerk, Shri Vijay Kumar Gupta, to engage himself in the service of the insurance company during the period of his articles and has, therefore, committed misconduct within the meaning of Section 22 of the Act and is liable to be dealt with under the provisions of Section 21. It may be convenient at this stage to consider the question as to on whom the onus of proof lies in the present case. The guideline and the clue to answer this question lies upon the nature and character of the proceedings initiated against the respondent-chartered accountant. The scheme, intendment and object of Section 21 referred to earlier when read with the use of the expressions complaint , guilty of any professional or other misconduct , Disciplinary Committee , inquiry and the nature of the punishment provided to be imposed by the Council or the High Court, as the case may be, against a member who is found to be guilty of any professional or other misconduct would indicate and leave no doubt in our minds that the proceeding initiated against a member in inquiries relating to misconduct is akin to, though not in fact, a criminal prosecution. At every stage, the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide the question of misconduct of the chartered accountant. 17. In the case of A, a Pleader v. Judges of the High Court of Madras, AIR 1930 PC 144, the Privy Council laid down a broad principle that charges of professional misconduct must be clqarly proved and should not be inferred from mere ground for suspicion, however reasonable, or what may be mere error of judgment or discretion and the inquiry in a case of professional misconduct being serious should proceed on formulated charges and the evidence recorded carefully and judged according to the ordinary standard of proof. The aforesaid cardinal rule has been approved by the Supreme Court in Nageshwara Rao's case, AIR 1955 SC 223, where the appellant therein was given the benefit of doubt as the court thought that the charges 4 and 5 had not been brought home to the appellant. 18. We may also notice the decisions of the other High Courts under the Legal Practitioners Act. A Division Bench of the Allahabad High Court in Nityanartd Mathur v. Babu Ram, AIR 1937 All 506, opined that the proceedings under Section 13 of the Legal Practitioners Act are something very akin to the prosecution, though they cannot strictly be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntary. The legal practitioner has no duty to disprove the charge, if there is no material worth mentioning to prove his guilt. 21. We are unable to agree with Shri Kohli, learned counsel for the applicant, that the proceeding is of a civil nature, though quasi-judicial in character and the principles applicable to the onus of proof in a civil proceeding only can be applied to the case in hand. According to him, where a prima facie case against the chartered accountant has been made out on a charge of professional misconduct by adducing some evidence in support of the stand taken by the Disciplinary Committee and the Council, the onus shifts to the chartered accountant to disprove the same and establish his innocence. If this contention is accepted it will lead to injustice to the chartered accountant against whom disciplinary proceedings have been initiated under the Act. Innocent members, who are not really dishonest but had only some lapses on their part for which they are not accountable or responsible and which are beyond their control are likely to be punished. The intendment and object of the Act is only to maintain the standard of the profession of chartered accountant at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e articled clerk with the sole aim and object of giving full, proper and adequate training to the articled clerk, who would become future accountant and also to maintain self-discipline and code of conduct, which would enhance the prestige and dignity of the profession of the chartered accountant. 23. The evidence of Shri Vijay Kumar Gupta, the articled clerk, does not support the complaint or charge levelled against the respondent. He bas categorically deposed that he did not work in the insurance company at any time during the office hours when he was undergoing training with the respondent. According to him, his father who was sufficiently experienced in the field of insurance business was the de facto employee of the insurance company looking after the management and the work and he has lent his name at the request of his father and, therefore, used to sign the papers brought to him by his father or any other employee of the insurance company during the period either in the morning or in the evening without any hindrance to his training in the office of the respondent. Admittedly, he has checked the accounts of some of the constituents of the respondent and was also appearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent for misconduct in the present case. The charge cannot be brought home against the respondent, if it is simply established that the articled clerk was engaged in other work during the period of training but it must be proved that the respondent-chartered accountant had either connived at it or allowed or permitted knowing it to be true. There is no evidence worth mentioning to prove connivance of the respondent nor can any knowledge be attributed to him without any satisfactory evidence. The articled clerk might have played the double game. He might have attended office of the respondent during office hours in the training period and at the same time earned some more money with the active support and assistance of his father, who appears to be behind the scene, by lending his services outside the office hours in some manner or the other. The respondent would not have permitted his articled clerk to serve in the insurance company, if he really had knowledge about it. The respondent would not gain anything by his connivance or acquiescence in the conduct of his clerk. On the other hand, he must have been conscious and aware of the fact that he would be taken to task by the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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