COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS Vs. M. RAJAMANY, CHARTERED ACCOUNTANT
HIGH COURT OF MADRAS
COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS
M. Rajamany, Chartered Accountant
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(1.) THE respondent is a chartered Accountant practising at Tanjore. In October 1949, Information was received by the Council of the institute of Chartered Accountants of India that one Natarajan who was an articled clerk under the respondent from 2 -8 -1946 to 1 -8 -1949 was during that period employed in the post office at Tanjore, that he did not undergo proper training and that he was not eligible for a certificate of service. The Council called for information on the subject from the Postmaster, Tanjore, who replied on 29 -10 -1949 that
"Natarajan was in the department upto 23 -6 -1949 after which he resigned the appointment". On 18 -1 -1950, the Council enquired of the respondent whether permission had been obtained under Rule 44 of the Auditor's Certificates Rules, 1932, for the articled clerk being engaged in business as an employee in the post office. The respondent replied on 24 -1 -1950 that he was not aware that Natarajan was employed in the post office at the time he was an articled apprentice and that he performed his duties as a clerk satisfactorily. Thereupon on 3 -8 -1950 the Council referred the matter for enquiry by the Disciplinary Committee, who framed two charges against the respondent: (1) that he allowed Natarajan to work as an articled clerk while he was in employment in the post office, and (2) that he issued improperly a certificate of completion of service. The respondent filed a written statement in which he reiterated that he was not aware that Natarajan was employed in the post office, when he was an articled clerk and that he did his work as an articled clerk satisfactorily. He also raised some legal contentions which have been repeated in the arguments before us and they will be considered presently. The Committee heard the matter fully and submitted a report that the respondent must have had knowledge that Natarajan was in service in the post office while he was an articled clerk and that his conduct in entertaining him as an articled clerk was, therefore, unprofessional; that Natarajan could, not have discharged his duties as an articled clerk properly; that the training was inadequate and that the certificate of completion of service on which Natarajan was enrolled as a chartered accountant did not represent the true position. The respondent was accordingly found guilty on both the charges and held to be unfit to be a member of the Institute. The matter comes before us under Section 21, Chartered Accountants Act (Act 3B of 1949).
(2.) MR . Gopalan, 'the learned advocate who appeared for the respondent firstly contended that the proceedings before the Disciplinary Committee were vitiated by irregularities because the respondent had not been given 14 days time for filing written statement as required by R. 11A of the Regulations. There is no substance in this objection. Section 21 of the Act provides that the Council might enquire into charges of misconduct against any member of the institute either on receipt of intormation or of complaint. Where there is a complaint the procedure to be followed for enquiry thereunder is prescribed by Regulation 11 and Sub -clause (6) of that Regulation provides that a member against whom a complaint is made may file his written statement within 14 days. This regulation in terms applies only when there is a complaint and not information. In this case though the starting point for the action taken by the Council was a letter dated 9 -10 -1949 purporting to have been written by one Viswanatnan he disclaimed all knowledge of it, with the result that there was before the Council only information and no complaint; because there can be no complaint when there is no complainant. There was no regulation at that time laying down the procedure to be followed in the case of enquiries made on information received and the requirements of law would be satisfied if the rules of natural justice are observed. It is not contended that the respondent had not notice of the charges which were the subject of enquiry or that there was no proper hearing. The proceedings are, therefore, not open to any objection on this score. Regulation 11A was added later on to cover cases of enquiry on information, It provides that "the procedure prescribed by Regn. 11 shall so far as may be apply to any information received under Section 21 of the Act." This regulation came into force on 26 -5 -1950. Therefore the regulation did not affect the enquiries which had commenced before that date, as in January 1950 in the present case. Moreover Regn. 11A requires that the procedure under Regn. 11 should be followed as far as possible and on this language it is difficult to hold that in respect of proceedings under that regulation, anything more is required than that they should be in accordance with the rules of natural justice.
It is next contended by Mr. Gopalan that under the regulations it is not misconduct to take as an articled clerk one who is in employment or engaged in business, because in the schedule appended to the Act as many as 21 acts or omissions are enumerated as misconduct and this is not one of them. It is conceded and in our opinion rightly that the matters mentioned in the schedule are only illustrative and not exhaustive but it is contended that any other act or omission in order to be held to be misconduct, be specified and notified by the council in the manner provided under Clause (V) of the schedule and that in the absence of such a notification it cannot be a ground for taking disciplinary action but this contention is opposed to the plain language of Section 22 which runs as follows: "For the purposes of this Act the expression 'conduct which, if proved, will render a person unfit to be a member of the Institute', shall be deemed to include any act or omission specified in the schedule but nothing in this section shall be construed to limit or abridge in any way the power conferred on the Council under Sub -Section (1) of Section 21 to enquire into the conduct of any member of the Institute under any other circumstances."
Under this section the acts or omissions specified in the schedule shall be "deemed" to be conduct which will render a person unfit to be a member. It is not open to argument, in respect of such matters, that they are not such as to render a person unfit to be a member of the institute but in respect of matters which are not specified in the schedule, it will be for the Council and ultimately for the court to decide whether the acts or omissions complained of are such as to render a delinquent unfit to be a member of the institute. Under Section 22 there is a residual jurisdiction in respect of matters other than those specified in the schedule including therein whatever might be added under Clause (V) of the schedule. This objection must, therefore, be overruled.
(3.) IT is also contended that under Rule 41 of the Auditors' Certificates Rules, 1932, a registered accountant has to satisfy himself only whether the articled clerk is not less than 16 years of age and whether he had passed one of the examinations mentioned in the Sub -rule; that it is no part of his duties to see whether the articled clerk was employed or not; that K. 44 imposes a restriction only on the articled clerk that he should not engage in business during the period of service and Rule 45 imposes a penalty on him for breach of the Rule; that the position is the same under Regns. 35, 38 and 39 of the Act, and that the rules or regulations read as a whole do not impose any duty on the accountant with reference to a clerk who is carrying on business. It is true that the Rules 44 and 45 of the Auditor's Certificate Rules, 1932 and Regns. 38 and 39 under the Act apply in terms only to the articled clerk and not to the accountant. But the question still remains whether apart from the rules and regulations aforesaid the conduct of the respondent in taking as an articled clerk a person who was engaged in business was proper and in accordance with the traditions of the profession. The object of the Rules and Regns. imposing a prohibition against an articled clerk engaging in business is that he should train himself properly and adequately so that when he, in turn, is enrolled as a chartered accountant he might perform his duties efficiently. These regulations are prescribed in the interests of the general public who entrust their work of audit to chartered accountants relying on their qualifications. When a person is enrolled as a chartered accountant, the public have a right to expect that the authorities would have duly satisfied themselves that he is fitted by this' training and character to discharge his duties satisfactorily. If there is no proper training it is the public at large that has to suffer and so there is an obligation cast on the accountant to see that the clerks are trained and equipped adequately so that the public can safely entrust to them their work & it is only then that a certificate of completion of service should be granted. Consistently with this, it is the duty of the accountant not to take as an articled clerk one who is already in business and not to permit him to engage in business during the period of service. Any breach of this rule must be considered conduct which renders him unfit to be a member of the institute. It is immaterial that Rules 44 and 45 & Regns. 38 & 39 apply in terms only to the articled clerk. The relationship of the accountant & the articled clerk is mutual with correlative rights and obligations. If the conduct of the articled clerk in engaging in business is improper it is equally improper for the accountant to connive at such conduct and make it possible for him to break rules and regulations, framed for the benefit of the public. If, however, the accountant can show that he was not aware that the clerk was doing business, different considerations might arise and that indeed is the defence put forward by the respondent. It is, therefore, necessary to examine the facts to decide whether the respondent was or was not aware that Natarajan was employed in the post office during the period of service.;
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