2012 (4) TMI 174 - HC - Indian Laws

Petitioner granted final cross-examination chance with conditions. Disciplinary report set aside for fresh review.

The court granted the petitioner a final opportunity to cross-examine witnesses, subject to conditions, including a deposit for expenses. The Disciplinary ... Principles of natural justice - right to cross-examine witnesses in disciplinary proceedings - prima facie opinion and procedural disclosure - obligation of a disciplinary committee to afford opportunity of being heard - remand for fresh consideration of disciplinary reportPrinciples of natural justice - right to cross-examine witnesses in disciplinary proceedings - prima facie opinion and procedural disclosure - Whether the petitioner was entitled to an opportunity to cross examine witnesses whose evidence had been recorded earlier and whether failure to provide transcripts and documents vitiated the disciplinary proceedings - HELD THAT: - The Court held that Section 21B(3) of the C.A. Act read with Rule 18 imposes an obligation on the Disciplinary Committee to follow principles of natural justice and to afford the member an opportunity of being heard. The Court found that the petitioner had been given repeated opportunities and that documents relied upon for formation of the prima facie opinion (notably the CBI charge sheet, the SEBI report and balance sheets) had been supplied by letter dated 15.06.2011; the petitioner's non-participation on 09.07.2011 was therefore unjustified and he cannot claim relief in respect of witnesses examined on that date. However, the Court found that the petitioner was not supplied, until December 2011, the transcripts of statements and the voluminous exhibits tendered at hearings on 09.07.2011 and 31.07.2011; as a result the petitioner was handicapped in effectively cross-examining the witness A.Y.V. Krishna whose examination-in-chief was on 31.07.2011. To prevent breach of natural justice, the Court granted the petitioner one, and only one, opportunity to cross-examine the witnesses, subject to specified conditions. The Court also accepted the petitioner's undertaking to bear expenses and noted that recall of witnesses is burdensome but permissible where natural justice requires it. [Paras 43, 44, 48, 50, 51]One single opportunity to cross-examine the witnesses is granted, but relief in respect of witnesses examined on 09.07.2011 is denied; the petitioner shall be permitted to cross-examine A.Y.V. Krishna and other witnesses subject to conditions.Obligation of a disciplinary committee to afford opportunity of being heard - remand for fresh consideration of disciplinary report - Whether the Disciplinary Committee's report dated 03.01.2012 should be set aside and the matter remitted for fresh consideration - HELD THAT: - Because the Court granted a further opportunity to the petitioner to cross-examine the witnesses, it concluded that the report prepared on 03.01.2012 could not stand. The Court set aside that report and directed the Disciplinary Committee to reassemble and make a fresh report after hearing the parties afresh, without being influenced by the Court's observations. The Court imposed conditions for recall of witnesses (deposit towards expenses, mutually agreed dates not later than one month, and no adjournments after cross-examination) and made clear that if the petitioner failed to act in accordance with these directions, the earlier report would be revived. [Paras 59, 60]Report dated 03.01.2012 set aside and the Disciplinary Committee directed to make a fresh report after permitting the single opportunity to cross-examine, subject to conditions; failure by petitioner to comply will revive the earlier report.Final Conclusion: Writ petition disposed of: petitioner granted one, and only one, opportunity to cross-examine the respondent's witnesses (including A.Y.V. Krishna) subject to conditions (deposit of costs, scheduling within one month, and no further adjournments); the Disciplinary Committee's report dated 03.01.2012 is set aside and the Committee directed to make a fresh report after reconvening; if the petitioner fails to comply with the directions, the earlier report shall stand revived. Issues Involved:1. Whether the disciplinary proceedings against the petitioner complied with the principles of natural justice.2. Whether the petitioner was given adequate opportunity to defend himself, including the right to cross-examine witnesses.3. Whether the simultaneous criminal and disciplinary proceedings against the petitioner violated his fundamental rights.4. Whether the petitioner was provided with all necessary documents in a timely manner to prepare his defense.Detailed Analysis:Compliance with Principles of Natural Justice:The petitioner argued that the disciplinary proceedings did not comply with the principles of natural justice as he was not allowed to cross-examine witnesses and was not provided with necessary documents in a timely manner. Rule 18 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 mandates that the Disciplinary Committee should be guided by the principles of natural justice. The court acknowledged that while the petitioner was responsible for some delays, the denial of cross-examination opportunities and the late provision of documents constituted a breach of natural justice principles.Adequate Opportunity to Defend:The petitioner contended that he was not given adequate opportunity to defend himself, particularly in cross-examining witnesses. The court noted that the petitioner was provided with documents and notices of hearings, but the timing and completeness of these provisions were problematic. The court found that the petitioner was handicapped during the proceedings on 31.07.2011 because he did not have the transcripts of witnesses' statements or the documents exhibited by them. This justified granting the petitioner another opportunity to cross-examine the witnesses, subject to specific conditions.Simultaneous Criminal and Disciplinary Proceedings:The petitioner initially argued that simultaneous criminal and disciplinary proceedings violated his fundamental rights. However, this argument was dismissed by the court in previous judgments, and the Supreme Court directed the disciplinary proceedings to commence, recognizing the petitioner's need to manage both proceedings. The court found no merit in the argument that simultaneous proceedings were inherently prejudicial to the petitioner.Provision of Necessary Documents:The petitioner claimed that he was not provided with all necessary documents in a timely manner, which hindered his ability to prepare a defense. The court found that while the petitioner was given some documents, the bulk of relevant documents (around 3000 pages) were provided only ten days before a hearing, and the transcripts of witnesses' statements were given even later. This delay in providing documents was deemed to have prejudiced the petitioner, justifying the need for a re-examination of the witnesses.Conclusion:The court concluded that the petitioner should be granted one final opportunity to cross-examine the witnesses, subject to conditions including the deposit of Rs. 7.5 lakhs to cover expenses. The report prepared by the Disciplinary Committee dated 03.01.2012 was set aside, and the committee was directed to prepare a fresh report without being influenced by the court's observations. If the petitioner failed to comply with the court's directions, the original report would stand revived. This decision emphasized the importance of adhering to principles of natural justice in disciplinary proceedings.