- (1.) These appeals raise some fundamental questions in regard to the conduct and procedure of disciplinary proceedings taken under the Chartered Accountants Act, 1949. Two of the questions are :- 1. "Whether a member of the Institute of Chartered Accountants of India is entitled to a hearing by the Council of the Institute after the Disciplinary Committee has submitted its report to the Council of its enquiry into allegations of misconduct against the member 2. When the Council proceeds to consider the Report of the Disciplinary Committee, is the proceeding vitiated by the presence of the members of the Disciplinary Committee who include the President and the Vice-President of the Council and three other members of it -
(2.) The appellant is the Institute of Chartered Accountants of India (the "Institute"). The Institute was created as a body corporate under the Chartered Accountants Act, 1949 (the "Act"), and its members are Chartered Accountants. The affairs of the Institute are managed by a body known as the Council of the Institute, which is headed by a President and a Vice-President below him. There are three Standing Committees of the Council, and one of them is the Disciplinary Committee. The Disciplinary Committee consists of the President and the Vice-President ex-officio of the Council, two members elected by the Committee from its members and a third member nominated by the Central Government. Chapter V of the Act contains provisions dealing with cases of misconduct of members of the Institute. Section 21 provides for conducting equiries relating to such misconduct and the penalties which may be imposed, and Section 22A provides for an appeal by a member against the imposition of a penalty. As the Sections are material, they may be set forth :- S. 21. Procedure in inquiries relating to misconduct of members of Institute (1) Where on receipt of information by, or of a complaint made to it, the Council is prima facie of opinion that any member of the Institute has been guilty of any professional or other misconduct, the Council shall refer the case to the Disciplinary Committee, and the Disciplinary Committee shall thereupon hold such inquiry and in such manner as may be prescribed, and shall report the result of its inquiry to the Council. (2) If on receipt of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be. (3) If on receipt of such report the Council finds that the member of the Institute is guilty of any professional or other misconduct it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding sub-sections. (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 recommendation 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 subsection (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 hearing of the case and shall cause notice of the date so fixed to be given to the member of the Institute concerned, the Council and to the Central Government, and shall afford such member, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders namely:- (a) direct that the proceedings be filed or dismiss the complaint, as the case may be; (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. (7) ............................................ (8) For the purposes of any inquiry under this section, the Council and the Disciplinary Committee shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, in respect of the following matters, namely :- (a) summoning and enforcing the attendance of any person and examining him on oath; (b) the discovery and production of any document; and (c) receiving evidence on affidavit. 22A. Appeals (1) Any member of the Institute aggrieved by any order of the Council imposing on him any of the penalties referred to in sub-section (4) of Section 21, may, within thirty days of the date on which the order is communicated to him, prefer an appeal to the High Court : Provided that the High Court may entertain any such appeal after the expiry of the said period of thirty days, if it is satisfied that the member was prevented by sufficient cause from filing the appeal in time. (2) The High Court may, on its own motion or otherwise, after calling for the records of any case, revise any order made by the Council under sub-section (2) or sub-section (4) of Section 21 and may- (a) confirm, modify or set aside the order; (b) impose any penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order; (c) remit the case to the Council for such further inquiry as the High Court considers proper in the circumstances of the case; or (d) pass such other order as the High Court thinks fit : Provided that no order of the Council shall be modified or set aside unless the Council has been given an opportunity of being heard and no order imposing or enhancing a penalty shall be passed unless the person concerned has also been given an opportunity of being heard." The Act provides for the framing of Regulations. Regulations 11 to 15 set forth the procedure for an enquiry into allegations of misconduct.
(3.) Messrs A.F. Ferguson and Co. ("Ferguson and Co.") is a reputed firm of Chartered Accountants. The respondent Lalit Kumar Ratna is a partner and the respondents Ashok Kumar Behl and P.R. Bhoopatkar are employees in the firm. All three are Chartered Accountants and members of the Institute.;