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TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 518
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....2014. In the written submissions, it is mentioned that after filing of the present Writ Petition, the said complaint is being adjudicated before the Disciplinary Committee under the Chartered Accountants Act, 1949 (hereinafter referred to as the 'Act'). Therefore, prayer 'a' of the petition is disposed of as not pressed. 3. As far as the prayer 'b' is concerned, the arguments have been confined only to the limited issue as to whether, while closing the complaint against the member, the Board of Discipline appointed under the Act has to communicate the reasons for the same to the complainant. 4. It is the case of the petitioner that the petitioner had invested in the shares of a company called 'First Leasing Company of India Limited'. The Reserve Bank of India (RBI), vide its letter dated 04.09.2013, called upon the Company to recast the Balance Sheet and the Profit and Loss Account for the period ending 31.03.2013 and 30.06.2013, as it was found that the same had overstated assets as well as earnings of the company. 5. The petition further alleges that by a letter dated 04.09.2013, the RBI also observed that an inspection of the Company had revealed that the company had be....
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....reliance on the judgment dated 01.08.2019 passed by this Court in WP(C) 8071/2019, titled Wholesale Trading Services Pvt. Ltd. v. The Institute of Chartered Accountants of India & Ors; and the judgement dated 24.07.2019 passed in WP(C) 9317/2014, titled Rajiv Bhatnagar v. The Disciplinary Directorate of the Institute of Chartered Accountants of India (ICAI) & Ors., submits that the proceedings before the Disciplinary Committee and the Board of Discipline under the Act are principally between the Institute and its Members; the same cannot be viewed as a private dispute between the complainant and the Chartered Accountant and therefore, reasons for closing the complaint need not be conveyed to the complainant. 12. The learned counsel for the respondent, relying upon the judgments of this Court in Dinesh Gupta v. Vishal Chandra Gupta & Anr., 2012 SCC OnLine Del 6333 and N.C. Bansal v. Board of Discipline of ICAI and Ors., MANU/DE/0887/2014, further submits that this Court has held that in proceedings before the Director (Discipline)/Board of Discipline/ Disciplinary Committee, the complainant does not have a right to be personally heard before a decision is taken on the compla....
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....r the provisions of this Act, the Disciplinary Directorate shall follow such procedure as may be specified. (5) Where a complainant withdraws the complaint, the Director (Discipline) shall place such withdrawal before the Board of Discipline or, as the case may be, the Disciplinary Committee, and the said Board or Committee may, if it is of the view that the circumstances so warrant, permit the withdrawal at any stage." 16. A reading of the above provision would show that where the Director (Discipline) forms a prima facie opinion that a member is guilty of any professional or other misconduct mentioned in the First Schedule, he shall place the matter before the Board of Discipline, constituted under Section 21A of the Act and where the Director (Discipline) is of the prima facie opinion that the member is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules to the Act, he shall place the matter before the Disciplinary Committee constituted under Section 21B of the Act. 17. Section 21A (4) of the Act provides that where the Director (Discipline) is of the prima facie opinion that no case of any professional or other....
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....tion to inform the sender the Information of the progress made in respect of the information received under sub-rule (1) including the final orders: Provided that where the sender of the information is the Central Government, any State Government or any statutory authority, a copy of final order shall be sent to such sender. (3) An anonymous information received by the Directorate will not be entertained by the Directorate." 20. A reading of the above would show that the Complainant has been granted a wider right as compared to a mere Informant. An Informant has no right to be represented during the investigation or hearing of the case and the Institute is under no obligation to inform the Informant of the progress made in respect of the information received, including the final order. This is also evident from Rule 11 of the Rules, which provides that only certain provisions relating to complaint would be applicable in relation to the information so received. 21. Rule 8 of the Rules prescribes the procedure to be followed by the Director (Discipline) on receipt of a complaint. The same is reproduced hereinbelow: "8. Procedure to be followed by Dire....
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.... respondent shall, within 21 days of the service of a copy of the complaint, or within such additional time, not exceeding thirty days, as may be allowed by the Director, forward to the Director, a written statement in his defence. (4) On receipt of the written statement, if any, the Director may send a copy thereof to the complainant and the complainant shall, within 21 days of the service of a copy of the written statement, or within such additional time, not exceeding thirty days, as may be allowed by the Director, forward to the Director, his rejoinder on the written statement. (5) On perusal of the complaint, the respondent's written statement, if any, and rejoinder of the complainant, if any, the Director may call for such additional particulars or documents connected therewith either from the complainant or the respondent or any third party or parties, as he may consider appropriate: Provided that if no reply is sent by the respondent within the time allowed under sub-rule (3) or by the complainant within the time allowed under sub-rule (4), the Director shall presume that the respondent or the complainant, as the case may be, have nothing furt....
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....vised by the Board of Discipline under sub-rule (2) or (3) of this rule or by the Committee under sub-rule (2), shall further proceed under this rule." 23. A reading of the Rule 9(3) would show where the Director (Discipline) is of the prima facie opinion that the member or the firm is not guilty of any misconduct, he shall place the matter before the Board of Discipline and the Board of Discipline, if it agrees with such opinion of the Director (Discipline), shall pass the "order" for closure. 24. Rule 14 (1) of the Rules prescribes that the Board of Discipline shall follow the summary disposal procedure for dealing with all cases before it. 25. As noted hereinabove, the issue before this Court is as to whether the respondent is required to communicate reasons for closing the inquiry against its member that has been initiated on a Complaint filed visa-a-vis on an Information received. 26. Rules 7(2)(c) of the Rules provides that where the inquiry is initiated only on an Information, the Institute will be under no obligation to inform the sender of the progress made in respect of the Information received, including the final orders. 27. In terms of Rule 5(7)(a), the ....
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.... facie opinion to the Complainant in the first instance itself, while communicating the order of closure of the complaint bears no logic. It merely results in adding further litigation and/or compliance with the procedural formalities without serving any benefit and therefore, cannot be accepted. 31. In Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota vs. Shukla and Brothers, (2010) 4 SCC 785, the Supreme Court held as under:- "..... The doctrine of audi alteram partem has three basis essentials. Firstly, a person against whom an order is required to be passed or whose rights are likely to be affected adversely must be granted an opportunity of being heard. Secondly, the authority concerned should provide a fair and transparent procedure and lastly, the authority concerned must apply its mind and dispose of the matter by a reasoned or speaking order. This has been uniformly applied by courts in India and abroad." 32. In S.N. Mukherjee vs. Union of India, (1990) 4 SCC 594, the Supreme Court explained the benefit of recording the reasons as under:- "35. The decisions of this Court referred to above indicate that with regard t....
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....n or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. xxx 39. The object underlying the rules of natural justice "is to prevent miscarriage of justice" and secure "fair play in action". As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasi-judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision-making. Keeping in view the expanding horizon of the principles of natural ju....
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.... duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of an order and exercise of judicial power by a judicial forum is to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration justice - delivery system, to make known that there had been proper and due application of mind to the issue before the Court and also as an essential requisite of principles of natural justice. "The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before Courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the Court concerned had really applied its mind." 35. The Supreme Court in Pankaj Garg vs. Meenu Garg and Ors., (2013) 3 SCC 246 reiterated the settled position of law that an order which does not contain any reason is no order in the eyes of law. 36. In Kranti Associates Pvt. Ltd. and Anr. vs. Sh. Masood Ahmed Khan and Ors., (2010) 9 SCC 496, the Supreme Court formulated certain principles with respect to the structure of an order thereby enun....
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.... (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor [(1987) 100 Harvard Law Review 731-37] .) (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain [(1994) 19 EHRR 553] EHRR, at 562 para 29 and Anya v. University of Oxford [2001 EWCA Civ 405 (CA)] , wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process" 37. In T.O.Aleyas (Supra), the Kerala High Court has he....