1997 (7) TMI 649 - SC - Indian Laws

Council may order further disciplinary report; if second report clears member, Council must record no guilt under Reg16(4) and S21(2)

INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Versus PRICE WATERHOUSE AND ANR.

SC allowed the appeal, holding that the Council lawfully may call for a further report from the Disciplinary Committee to investigate alleged professional ... Export-Import Bank of India (EXIM BANK) - Challenged the power of the Council to refer the matter to Disciplinary Committee for further enquiry - professional misconduct or other misconduct to be dealt with under the Act - HELD THAT:- It is settled rule of interpretation that all the provisions would be read together harmoniously so as to give effect to all the provisions as a consistent whole rendering no part of the provisions as surplusage. Otherwise, by process of interpretation, a part of the provision or a clause would be rendered otiose. Keeping this legal principles, perspectives, practical effect and contents of the power of the Disciplinary Committee or Council in the backdrop of our above consideration, we are of the considered view that the view expressed by the High Court is clearly incorrect and it would defeat the object of the Act of maintaining professional standards of the professional conduct or other conduct consistent with the dignity of the profession of the accountants. We, therefore, hold that the Council has the power to call for further report from the Disciplinary Committee on non-guilt of the professional or other misconduct of the respondent. In this backdrop, the proviso to sub-regulation (4) of Regulation 16 becomes relevant. In case, on the second occasion, the report of the Disciplinary Committee still holds the delinquent member not guilt holds the delinquent member not guilty, there is no option left to the Council except, by operation of proviso to sub-regulation (4) of Regulation 16 read with Section 21(2), as the Council is enjoined, to record finding of no guilt since the power of calling for further report would stand exhausted. Any other view, in our considered opinion, would defeat the object of the Act. Though Shri Rao sought to impress upon us that on a reading of the report originally taken note of from the cover of the booklet of the EXIM Bank, it does not constitute professional misconduct. We decline to go into that question for the reason that any finding recorded by this Court would adversely affect either party. Therefore, we do not propose to express any opinion in that behalf. It is for the Council to consider the same, after the receipt of further report from the Disciplinary Committee. We accordingly allow the appeal, set aside the judgment of the High Court and uphold the direction issued by the Council to Disciplinary Committee to make further enquiry and to submit a further report in that behalf. The appeal is accordingly allowed. Issues Involved:1. Whether the Council has the power to direct the Disciplinary Committee to hold further enquiry when the Disciplinary Committee finds a member not guilty.2. Whether the Council applied its mind in referring the matter for further enquiry.Summary:Issue 1: Power of the Council to Direct Further EnquiryThe Supreme Court examined whether the Council of the Institute of Chartered Accountants of India has the authority to direct the Disciplinary Committee to conduct further enquiry when the Committee finds a member not guilty of professional or other misconduct. The High Court had held that Regulation 16 does not permit the Council to direct further enquiry in such cases. The Supreme Court, however, disagreed, stating that the Council retains ultimate control over the conduct of its members and has the power to call for further reports from the Disciplinary Committee. The Court emphasized that the Council must maintain discipline among its members and that the Disciplinary Committee's findings are not conclusive. The Court concluded that the Council can direct further enquiry to ensure thorough examination of misconduct allegations, thereby reversing the High Court's decision.Issue 2: Application of Mind by the CouncilThe respondent argued that the Council had not applied its mind to the facts before referring the matter for further enquiry. The Supreme Court found that the Council had indeed considered the report of the Disciplinary Committee and the respondent's written statement, as evidenced by the detailed questionnaire it provided for further enquiry. The Court noted that the Council's decision was not mechanical but involved active consideration of various aspects related to the alleged misconduct. Therefore, the Supreme Court held that the Council had applied its mind appropriately.Conclusion:The Supreme Court allowed the appeal, set aside the High Court's judgment, and upheld the Council's direction to the Disciplinary Committee to conduct further enquiry and submit a report. The appeal was allowed without costs.