TaxTMI 
TaxTMI 
TaxTMI 
1997 (7) TMI 649
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....applicable Legal provisions believed to be reliable for which, however, both Exim Bank and Price Waterhouse (India) are unable to assume any Liability. For further information, clarifications and assistance, interested parties may communicate with Price Waterhouse offices located at: 1102/1107, Raheja Chambers, Nariman Point, Bombay - 400021. Telephones : 235138/2870466. Talex : (011) 5791. B-102, Himalaya House, 23, Kasturba Gandhi Marg, New Delhi - 110001. Telephones : 3313591/3312656. Telex : (031) 63070." The appellant-Council had at treated the said publication as amounting to solicitation of professional attainments, violating clauses (6) and (7) of Part I of First Schedule to the Chartered Accountants Act, 1949 (for short, the 'Act') and called upon the respondent by proceedings dated December 13, 1990 to send the name of the members who were answerable to the charge of misconduct. On January 26, 1991, respondent No.2, Shri Amal Ganguli, partner of the first respondent filed his written statement. On consideration thereof, by proceedings dated 5-6th August, 1991, the Council prima facie opined that the second respondent and referred the case to the Disciplinary Committe....
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....iscipline among the members of the Institute which is deleterious to maintain discipline among its members. Shri P.P. Rao, learned senior counsel appearing for the respondents, on the other hand, contends that the provisions, being penal in nature, require to be construed strictly. The Disciplinary Committee is a high-power committee constituted under the Act. If the Disciplinary Committee finds that the guilt of misconduct has not been proved, the Council is left with no option but to accept the finding of no-guilt and record the same under sub-section (2) of Section 21. In case the finding of the Disciplinary Committee that the member is guilty is not acceptable to the Council, only then, the Council has power to remit to the Disciplinary Committee for further enquiry and the operation of Regulation 16(4) would come into play. In that perspective, on a harmonious interpretation of all the provisions, the finding of the high power committee, namely, the Disciplinary Committee, should always be given primacy and serious consideration by the Council before accepting or calling for further report. From this perspective, the view of the High Court is correct in law. He also contends t....
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....mmittee being that the respondent was not guilty of any professional misconduct within the meaning of clauses (6) and (7) of Part I of the First Schedule of the Act, the Council had no power to direct Disciplinary Committee to hold further enquiry. With a view to appreciate the correctness of the above view, it is necessary to look into the relevant provisions of the Act and the Regulations made thereunder. Section 2(b) defines 'Chartered Accountant' to mean a person who is a member of the Institute. Section 2(c) defines 'Council' to mean the Council of the Institute. Under Section 2(e) 'Institute' means the Institute of Chartered Accountants of India constituted under the Act. 'Registered Accountant' is define under Section 2(h) to mean any person who has been enrolled on the register of Accountants maintained by the Central Government under the Auditor's Certificates Rules, 1932. A member of the Institute shall be deemed "to be in practice", when individually or in partnership with Chartered Accountants in practice, he, in consideration of remuneration received or to be received, as postulated by sub-section (2) thereof, engages himself in the practice of accountancy or offers t....
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....onduct, 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 of 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 recommendations 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 sub-section (4), it shall forward the case to the High Court with its recommendations thereon. (6) On re....
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....oduction of any document; and (c) receiving evidence on affidavit. "Professional misconduct" is defined in Section 22, which reads as under ; "22. Professional misconduct defined For the purposes of this Act, the expression "professional misconduct" shall be deemed to include any act or omission specified in any of eh Schedules, but nothing in this section shall be construed to limit or abridge in any way the power conferred or duty cast on the Council under subsection (1) of Section 21 to inquire into the conduct of any member of the Institute under any other circumstances." The procedure to enquire into the misconduct on the part of the members of the Institute is dealt with in Section 21. Sub-sections (1), (2), (3), (4) and (5) are relevant for the purpose of this case. By exercise of the power under Section 30, the Council is empowered to make Regulations to carry out the object of the Act. Sub-section (2) postulates that in particular and without prejudice to the generality of the foregoing power, "such regulations may provide for all or any of the following matters". Section 30(2) (s) speaks of "the exercise of disciplinary powers conferred by the Act" and Section 30(2)....
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.... case, the finding of guilt of a member of professional misconduct/other misconduct is reported by the Disciplinary Committee, a copy thereof shall be furnished to the delinquent member and he shall be given an opportunity to make representation in writing to the Council. This would be done under sub-regulation (2) of Regulation 16. Thereon, by operation of sub-regulation (3), the Council shall consider the report of the Disciplinary Committee along with the representation in writing of the delinquent member, if any. If on consideration thereof, the Council is of the opinion that the further enquiry is necessary, it shall direct such further enquiry to be made, whereupon a further report shall be submitted by the Disciplinary Committee. Sub-regulation (4) of Regulation 16 envisages that the Council shall, on the consideration of the report and the further report, if any, and the representation in writing of the respondent record its findings. Under the proviso thereto, if the report of the Disciplinary Committee is that the respondent is not guilty of any professional or other misconduct, the Council shall not record its findings contrary to the report of the Disciplinary Committee....
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.... or associate members is salutary and paramount to maintain public confidence in the members of the Institute and to inculcate sense of discipline and excellence in the performance of the functions as member of the Institute or associate member of the Institute, as the case may be. The contrary view would easily defeat the purpose of the Act and the object behind the regulatory measures envisaged in Section 21 of the Act. Regulation 16 is only an enabling provision to conduct by the Disciplinary Committee which is a fact-finding subordinate delegated body whose finding is not conclusive on the non-guilt of the professional or other misconduct of the member of the Institute. A combined reading of relevant provisions in Section 21 and Regulation 16 does indicate that the recording of a finding of guilt or non-guilt by the Council is mandatory to take further action or to dismiss the complaint or for further process. The Council is required to consider independently the explanation submitted by the member and the evidence adduced in the enquiry before the Disciplinary Committee and the report of the Disciplinary Committee. It provides an inbuilt mechanism under which the Council itsel....
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....ings. It is the Council which is empowered to find whether the member is guilty of misconduct. Both Section 21(2) and Section 21(3) are clear as to that. If on receipt of the report the Council finds that the member is not guilty of misconduct, Section 21(3) requites it to record a finding accordingly, and thereafter to proceed in the manner laid down in the succeeding sub-sections. So, the finding by the Council is the determinative decision as to the guilt of the member, and because it is determinative the Act requires it to be recorded. A responsibility so grave as the determination that a member is guilty of misconduct, and the recording of that finding, has been specifically assigned by the Act to the governing body, the Council. It is also apparent that it is only upon a finding being recorded by the Council that the Act moves forward to the final stage of penalisation. The recording of the finding by the Council is the jurisdictional springboard for the penalty proceeding which follows." And in paragraph 13, it was held that "at this point, it is necessary to advert to the fundamental character of the power conferred on the Council. The Council is empowered to find a member....
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....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. The contention of Shri Rao that the Council had not applied its mind to the facts of this case is not correct. In fact, the proceedings dated December 21, 1993, viz., "on consideration of the....