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2022 (12) TMI 821
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....he question revolves around the meaning to be ascribed to the word "information" as occurring in Section 21 of the Chartered Accountants Act, 1949 (Act). 2. The writ petitions themselves emanate from disciplinary proceedings initiated by the Institute against the petitioners who are its members and were employed with firms which were appointed as Joint Statutory Auditors of the Punjab National Bank (PNB). The writ petitioners assail the validity of the show cause notices which were issued as well as the Prima Facie Opinion which has been drawn by the Disciplinary Directorate and forwarded for the consideration of the Disciplinary Committee. The writ petitions also seek quashing of the disciplinary proceedings itself as initiated against the individual petitioners. A. ESSENTIAL FACTS 3. All the writ petitioners are stated to be members/partners of different chartered accountancy firms which had collectively been engaged by the PNB for conducting a limited review of its financial statements. The challenge essentially arises from the suo moto initiation of proceedings by the Institute with it being principally contended that neither the Act nor the Chartered Accountants (Proc....
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....sentatives of the Joint Statutory Auditors to discuss the suspected fraud which had occurred. In the course of this discussion, the Joint Statutory Auditors are stated to have been apprised of PNB having provided requisite information to the concerned regulators as well as the Central Bureau of Investigation (CBI). 8. The minutes of the discussion also records that the liability which would arise would have to be decided based on further examination of the legality and genuineness of the various transactions which constituted the fraud. These minutes further record that since the fraud was detected in the current quarter of March 2018 and the financial statements which formed subject matter of the limited review related to December 2017, no provision was required to be made. In view of the aforesaid, PNB as well as the other members are stated to have opined that no provision was required to be made in the limited review results. These minutes further record that the amount of Rs.280.70 crores was not material as per the policy of the bank. On the conclusion of this discussion, the Joint Statutory Auditors are stated to have submitted their Limited Review Report (LRR) on 06 Febr....
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....ies Act, 2013 requires an auditor to immediately report to the Central Government on fraud if in the course of performance of his duties as an auditor, the auditor has reason to believe that an offence involving fraud is being or has been committed against the company by its officers or employees. The provision of aforesaid section is re-produced herewith: 143(12) Notwithstanding anything contained in this section if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that on offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed. (b) SA 240- THE AUDITOR'S RESPONSIBILITIES RELATING TO FRAUD IN AN AUDIT OF FINANCIAL STATEMENTS casts a responsibility on an auditor that while conducting an audit in accordance with SAs he is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. SA 240 inter alia states as under: t....
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....irregularity was already detected and reported by the bank to the investigating agency. Thus there appears to be a serious professional lapse on your part while undertaking above review done for the relevant period. In this regard, a show cause notice dated 21 February, 2018 was issued to you giving an opportunity to clarify your position in the matter. You vide your letters dated 27thFebruary, 2018 and 1st March, 2018 has submitted your response, but the same is found unsatisfactory. In view of the above, the matter has been treated as 'Information' within the meaning of Rule 7 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007. A copy of the aforesaid Rules is also enclosed herewith for your ready reference. The aforesaid allegations, if proved, would fall within the purview of professional misconduct falling within the meaning of Clauses (5), (6), (7) and (8) of Part I of Second Schedule to the Chartered Accountants Act, 1949. Further, in accordance with the provisions of clause (a) of sub-rule (1) of Rule 8 read with Rule 11 of the aforesaid Rules, we are re....
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....dance with the applicable financial reporting framework. 8.4.1 Further it prescribes the reviewer to make inquiries, analytical and other review procedures to enable him to conclude whether there is anything that causes him to believe that the interim financial information is not prepared, in all material respects, in accordance with the applicable financial reporting framework. The matters for such inquiry has been laid out in Paragraph 21 of SRE 2410 which also include - Significant changes in contingent liabilities including litigation or claims and Knowledge of any fraud or suspected fraud affecting the entity involving employees. Paragraph 26 and 29 defines obligation of the reviewer/ auditor to determine if any event requires adjustment or disclosure in the interim financial information when it states as follows: "26. The auditor should inquire whether management has identified all events up to the date of the review report that may require adjustment to or disclosure in the interim financial information. It is not necessary for the auditor to perform other procedures to identify events occurring after the date of the review report." "29. When a mat....
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....had been detected by the management, but the same was under investigation by the Bank and CBI. The Management has also confirmed the detailed discussions held between management and the auditors (including the Respondent) on 5th February 2018 before the submission of the Limited Review Report in which the Bank has confirmed as under (B30-830B)-. a That the quantum of fraud as per information available with the management on that date was Rs 280.70 crores and a further detailed investigation was in progress by the bank and CBI officials simultaneously. b. That as per Bank's Management, as on that date documentary evidence was not available to prove that these import transactions were bonafide trade transactions. c. That the liability arising out of these LOU'S on PNB would be decided based on the legality and genuineness of underlying transactions. d. That the fraud was detected during the current quarter i.e. March 2018 whereas financial statements under limited review relates to December 2017 and as per extant RBI guidelines provision would be required to be made in the quarter ending March 2018. As such, no provision was required to be ....
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....t the fraudulent transactions involved not to have taken place during December quarter. 8.4.8 It is noted that SRE 2410 lays down following principles for evaluation of misstatement and materiality: "30. The auditor should evaluate, individually and in the aggregate, whether uncorrected misstatements that have come to the auditor's attention are material to the interim financial information." "31. misstatements which come to the auditor's attention, including inadequate disclosures, are evaluated individually and in the aggregate to determine whether a material adjustment is required to be made to the interim financial information for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework (emphasis supplied)." "33. The auditor may designate an amount below which misstatements need not be aggregated, because the auditor expects that the aggregation of such amounts clearly would not have a material effect on the interim financial information. In so doing, the auditor considers the fact that the determination of materiality involves quantitative as well as qualitative considerations, and ....
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.... Section 133 of the Companies Act. 2013 read with relevant rules framed thereunder or as specified by the Institute of Chartered Accountants of India, whichever is applicable." 8.4.12 It is also noted that format of condensed financial statement has been prescribed by SEBI but explanatory notes are to be disclosed as required in paragraph 16 of AS 25, even in the case of banks (Refer Illustrative Format of Condensed Financial Statements for a bank given in AS 25) which states as under: "16. An enterprise should include the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report; (h) material events subsequent to the end of the interim period that have not been reflected in the financial statements for the interim period; ....." As regards materiality, it is noted that Paragraph 21 of AS 25 also define 'materiality' when it states as follows: "In deciding how to recognise, measure, classify, or disclose an item for interim financial reporting purposes, materiality should be assessed in relation to the interim period financial....
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....arry individual responsibilities and none of them are bound by the views of the majority joint auditors. They are always free to report their disagreement, if any. In the absence of disclosure of the matter either in explanatory notes or limited review report, it is viewed that the Respondent is prima facie guilty with respect to this allegation falling within the meaning of Clauses (5), (6) & (7) of Part 1 of Second Schedule to the Chartered Accountants Act. 1949. 8.6 It is also noted that the Respondent in his Written Statement (B21- B22) has submitted that the interim financial information was prepared by the management in accordance with the applicable financial reporting framework in keeping with the principles of materiality and that the report does not confirm the applicability of the various standards. It is further submitted that the said report was issued only to the Board of Directors of PNB and that too after the said Board had approved the interim financial statements in respect of which the report was issued. In this regard, it is observed that para 4 of the Limited Review Report (A3) for the said quarter states that "nothing has come to our attention that ca....
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....or the purposes of initiation of disciplinary proceedings against a firm or a member thereof. The learned Judge in Manubhai observed as follows: - "25. It is relevant to note that prima facie opinion is silent with regard to applicability of Rule 7 of the Rules-2007 which provides that the information has to be in form of any written information containing allegation or allegations against the member or a firm, received in person or by post or courier. However, the report of operation of MNAF in India and the judgment referred to in Paragraph No. 3 of the prima facie opinion, there is no reference to petitioner and therefore, question arises whether it would constitute the "Information" as per Rule 7 of the Rules-2007 or not. However, it appears from the material on the record that what is to be treated as "Information" within the meaning of Rule 7 of the Rules-2007 is missing because from the contents of the Paragraph No. 3 of the prima facie opinion, which is extracted herein above, it does not reveal any written allegation or allegations against the petitioner so as to treat the same as "Information" within the meaning of Rule 7 of the Rules-2007. The report of operatio....
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....ur firm, if proved, would fall within the purview of professional misconduct falling within the meaning of Item (2), (5) of Part I of First Schedule and Item (1) of Part-II of Second Schedule to the Chartered Accountants Act-1949. Accordingly, in accordance with the provisions of clause (b) of sub-rule (1) of Rule 8 read with Rule 11 of the aforesaid Rules, you are requested to disclose the name or names of the member or members who is/are answerable to the allegation/s and send a copy of the aforesaid Information letter along with its enclosures to the said member/members. Thereafter, the member/members answerable is/are required to forward his/her written statement, if any, in triplicate, within 21 days of the receipt of this letter." 27. On perusal of the above contents of the letter dated 05.04.2018, it emerges that the very basis to treat the material available on record and observations of the Supreme Court as the "Information" within the meaning of Rule 7 of the Rules-2007 for alleged violation of Section 25 and Section 29 of the Act-1949 cannot be considered as "Information" in absence of any written information containing allegation or allegations against....
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....sis of other related firm (Ref : DD/46/INF/18) having tie up with the same entity HLBI, membership fees was payable based upon the revenue of the CA Firm. Since the respondent firm was also member of the same group (HLBI) and the amount of membership varies each year, it can be inferred that the membership fees was perhaps being determined on the revenue of the respondent-firm. It is, therefore, incomprehensible that if the payment made was for membership only then how this can be payable based upon the revenue of the respondent-firm. The respondent-firm has thus failed to bring in any corroborative evidences which may prove/substantiate that the firm has paid the amount on account of membership fee only and in no way this was a fee/profit sharing of professional fee based on referrals with HLB international. Thus, at this stage, the respondent-firm is prima facie guilty of professional misconduct falling within the meaning of item (2) of Part I of First Schedule to the Chartered Accountants Act-1949." 30. With regard to violation of item (2) of Part I of the First Schedule, following prima-facie opinion is arrived at:- "12.1 Thus, it has been observed that the fi....
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....ding paragraphs read with judgment of Hon'ble Supreme Court, therefore, seems to have facilitated HLBI overcome the barriers imposed through it, is prima facie guilty for professional misconduct falling within the meaning of Item (2) of Part I of First Schedule and Item (1) of Part-II of Second Schedule to the Chartered Accountants Act, 1949." 32. Thus, it appears from the above prima facie opinion that in absence of any "Information", as contemplated under Rule 7 of the Rules-2007, the respondent no. 2 has formed prima facie opinion only to do fishing inquiry and investigation. The intention of prima facie opinion is not for initiating disciplinary inquiry for the purpose of investigating further to establish whether the petitioner-firm in collaboration with the international entity, HLBI was involved in encouraging surrogate practice in India as highlighted in the judgment of the Supreme Court or not. For such purpose, the petitioner-Firm which is in existence for more than 70 years cannot be put to rigors of disciplinary proceedings in absence of any specific allegation and in absence of any written information containing allegation as per Rule 7 of the Rule-2007." ....
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....titute purporting to act in exercise of suo moto powers. Drawing the attention of the Court to Section 21 of the Act, Mr. Nandrajog firstly submitted that on an ex facie reading of the said provision, it would be evident that no power to initiate disciplinary proceeding suo moto stands specifically conferred upon the Institute. Learned Senior Counsel submitted that Section 21 confers a power on the Institute to try and investigate a matter on receipt of any information or complaint. According to learned Senior Counsel, the meaning to be ascribed to the word "information" would have to necessarily be gathered from the manner in which it has been treated and explained under the Rules since the Act fails to independently define the said expression. 20. Taking the Court through the provisions pertaining to the registration of a complaint and the treatment of information contained in Chapter II of the Rules, it was submitted that Rules 3 and 7 contemplate and envisage information being provided or a complaint being submitted in writing. The submission essentially was that since both a complaint under Rule 3 and information under Rule 7 is envisaged to be material that may be submitte....
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.... In view of the aforesaid, it was his submission that news reports and any other material that may appear on different media platforms cannot possibly be equated with information. In any case, and it was so contended by Mr. Nandrajog, disciplinary proceedings against a member or a firm would essentially be dependent upon whether a complaint or information in writing has been received by the Institute against a particular member. According to Mr. Nandrajog, a conjoint reading of Section 21 and Rule 7 would lead one to the irresistible conclusion that the Institute cannot arrogate to itself a power to initiate proceedings on its own motion since both a complaint as well as information is understood under the statute to be written material that may be received against a member laying specific allegations with respect to an act of professional misconduct. 23. Mr. Nandrajog laid stress on the fact that in order to commence an inquiry with respect to the alleged misconduct of a member or a firm, the complaint or the information must necessarily be specific and disclose an identified act of misconduct that may be leveled against a member or a firm. Learned Senior Counsel submitted that....
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.... (4) Upon receipt of the written statement under sub-section (3), if any, the Director (Discipline) shall send a copy thereof to the complainant or the informant, as the case may be, and the complainant or the informant shall, within twenty-one days of the receipt of such written statement, submit his rejoinder. (5) Upon receipt of written statement under sub-section (3) and rejoinder under sub-section (4), the Director (Discipline) shall submit a preliminary examination report within thirty days, if a prima facie case is made out against a member or a firm, as the case may be. (6) In case a prima facie case is made out for any professional or other misconduct mentioned in the First Schedule, the Director (Discipline) shall submit the preliminary examination report to the Board of Discipline and where prima facie case is made out for any professional or other misconduct mentioned in the Second Schedule or in both the First Schedule and the Second Schedule, he shall submit a preliminary examination report to the Disciplinary Committee: Provided that a complaint or information filed by any authorised officer of the Central Government or a State Gov....
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....s are based on the recommendations of a High Level Committee constituted by the Ministry of Corporate Affairs, inter alia, to examine the existing provisions in the Acts and the rules and regulations made thereunder, for dealing with the cases of misconduct in the three Professional Institutes, namely, the Institute of Chartered Accountants of India, the Institute of Cost Accountants of India and the Institute of Company Secretaries of India and with a view to strengthening the existing mechanism and ensure speedy disposal of the disciplinary cases. 3. The Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Bill, 2021 proposes to further amend The Chartered Accountants Act, 1949, the Cost and Works Accountants Act, 1959 and the Company Secretaries Act, 1980, inter alia, to- (i) strengthen the disciplinary mechanism by augmenting the capacity of the Disciplinary Directorate to deal with the complaints and information and providing time bound disposal of the cases by specifying the time limits for speedy disposal of the cases against members of the Institutes; (ii) address conflict of interest between the administra....
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....us adherence to the 2007 Rules, is the sine qua non for a valid enquiry, thereunder. This is apparent from the use of the word "shall" in Section 21 (4), as well as Section 21-B(2), of the CA Act. 33. Section 21(1) requires the ICAI to, by Notification, establish a Disciplinary Directorate, headed by the Director, for making investigations in respect of any information or complaint received by the Directorate. On receipt of any information or complaint, accompanied by the prescribed fee, sub-section (2) mandates that the Director shall arrive at a prima facie opinion on the occurrence of the alleged misconduct. Proceedings can, therefore, clearly be initiated consequent to receipt either of "information" or a "complaint". However, significantly, the CA Act does not condescend to define either of the said expressions, namely "information" or "complaint". This is a clear lacuna, which the legislature would do well to plug. 36. "Complaints", under Section 21 of the Act, have, as per Rule 3(1) of the 2007 Rules, necessarily to be filed in Form I annexed to the 2007 Rules, in triplicate, before the Director, in person or by post or by courier, and are required to be ac....
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....r Counsel appearing for the petitioners are correct in their submission that the consequence of having to suffer the ignominy of enquiry, under the provisions of the CA Act and the 2007 Rules, are by itself deleterious, irrespective of the outcome, and that the result, were the final decision, of the Disciplinary Committee, to be adverse to the members of the firm being enquired into, could be disastrous. This is also apparent from the fact that a very detailed and exhaustive procedure has been prescribed, in the 2007 Rules, to be followed before such a decision is arrived at. In case, as the petitioners contend, the proceedings before the Committee are actually bad for want of jurisdiction, or have been commenced in a manner foreign to the scheme contained in the 2007 Rules, it would be a travesty of justice to require them to suffer the said proceedings." 29. Upon recordal of the aforesaid prima facie conclusions, the learned Judge framed the following operative directions: - "44. As has already been noted herein above, the petitioners had taken a preliminary objection, before the Disciplinary Committee, to the effect that the entire proceedings are vitiated ab initio....
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....w as set forth in SRE-2410 and which are extracted hereinbelow: - "Objective of an Engagement to Review Interim Financial Information 7. The objective of an engagement to review interim financial information is to enable the auditor to express a conclusion whether, on the basis of the review, anything has come to the auditor's attention that causes the auditor to believe that the interim financial information is not prepared, in all material respects, in accordance with an applicable financial reporting framework. The auditor makes inquiries, and performs analytical and other review procedures in order to reduce to a moderate level the risk of expressing an inappropriate conclusion when the interim financial information is materially misstated. 8. The objective of a review of interim financial information differs significantly from that of an audit conducted in accordance with International Standards on Auditing (ISAs). A review of interim financial information does not provide a basis for expressing an opinion whether the financial information gives a true and fair view, or is presented fairly, in all material respects, in accordance with an applicable financi....
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....improve the case against the petitioners periodically and being totally unsure of whether they could have been charged of professional misconduct. 36. The petitioners also seek to draw sustenance from the discussion notes which were drawn by PNB and which had clearly recorded that the disclosure with respect to the fraudulent transactions was not required to be made in the limited review and also because as per the guidelines of the PNB, the same would not be "material" for the purposes of disclosure. 37. Insofar as the issue of a suo moto power vesting in the Institute is concerned, the written submissions tendered on behalf of the petitioners also alludes to the Position Paper on Regulation of Accountancy Profession and Oversight Mechanismin India (Position Paper) published by the Institute in 2018 and which had made the following suggestions for the consideration of the Union Government:- "An appropriate amendment to be made in Section 21 of the Chartered Accountants Act, to enable the Institute to initiate either suo motu or on a reference made to it by the Central Government or by any other Government agency in any matter of professional or other misconduct comm....
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.... was further pointed out that the Act itself makes adequate provisions for any aggrieved person preferring an appeal against any final adverse order that may come to be made. Mr. Srinivasan contended that the sole ground which appears to have prompted the petitioners to approach this Court was the decision of the Gujarat High Court in Manubhai since prior thereto they were admittedly participating and cooperating in the disciplinary proceedings which were ongoing. Mr. Srinivasan submits that challenges by way of a writ petition at the stage of a show cause notice or the formation of a preliminary view must necessarily be based on an assumption of jurisdiction by an authority which is either ex facie illegal or where proceedings are initiated by an authority which patently lacks jurisdiction or the power to initiate action. According to Mr. Srinivasan, the lack of jurisdiction which would justify a challenge being entertained under Article 226 of the Constitution must necessarily be patent, stark and self-evident. According to learned Senior Counsel, the instant challenge clearly fails to meet the aforesaid parameters viewed in light of the information on the basis of which the Inst....
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....h are expected of members and firms and since their actions impact the decision that are made by a wide variety of people who may come to place reliance and trust on reports and returns that are prepared by them. In view of the above, it was his submission that the Institute is obliged to play a proactive role in ensuring that the ethics and values of the profession are upheld. Mr. Srinivasan would contend that bearing in mind the aforesaid objectives underlying the regulatory power which stands conferred on the Institute, it would be wholly incorrect to restrict its oversight functions only to cases where a third party were to make a complaint or submit information. 45. According to learned Senior Counsel the word "information" in light of the above is liable to be viewed as being unmistakably distinguishable from the word "complaint". It was submitted that while a complaint may relate to a particular grievance which an individual may have against a member or a firm, information on the other hand would include any material or fact that may be placed for the consideration of the Institute or may otherwise come to its knowledge. Mr. Srinivasan submitted that an informant may not ....
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....l apply, but in an information case which is still pending before the Council, the new procedure and the new (even harsher/stringent) punishments and the amended Schedules 1 and 2 will apply. It is difficult to fathom any reason and ground why any such distinction should be made or this is the legislative intention, as the word "complaint" is mentioned in Section 21D of the CA Act, 1949. The word "complaint" as used in Section 21D would include all pending matters including information cases on which the Council has applied its mind after they have been brought to the notice of the Council. The word "complaint" as used in Section 21D does not refer to the complaints made by third parties but also information whether made available by a third person or comes to the knowledge and has been considered by the Institute/Council. The word "complaint" in Section 21D has to be given a broader and a wider meaning to give full effect to the legislative intent behind Section 21D. In common parlance also the word "complaint" means and refers to a pending matter before the prescribed authority authorized to make enquiry into the allegations. The source of information may not be relevant....
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....-Lokayukta to hold inquiry by utilizing the services of any person/agency suo motu into an allegation made against a public functionary. 43. In view of the above, the newspaper report cannot be construed as a complaint for the purposes of conducting the inquiry under Section 8(1)(d) of the CVC Act, for two reasons: first of all, it is not a complaint but an information; and second, it also does not allege that any employee as specified under Section 8(2) of the CVC Act has committed an offence under the Prevention of Corruption Act, 1988." 48. Mr. Srinivasan in light of the aforesaid observations submitted that the Act as well as the Rules when holistically read would clearly belie the submissions addressed in this regard on behalf of the petitioners. It was further contended that if the provisions of the Act and the Rules were to be interpreted in the manner suggested by the petitioner and be restricted to the Disciplinary Directorate being empowered to act only upon the receipt of a written complaint or information, it would not only denude it of the regulatory and supervisory role which are assigned to it, but also whittle down the powers that otherwise stands vested....
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....t and not being constricted by form. It was submitted that Rule 7 simply makes provisions for a situation where even though a complaint may be received in writing, if it be non-compliant with Form-I and the provisions of Rule 3, it would still enable the Institute to treat it as information under Section 21 of the Act. In any case, according to learned Senior Counsel, the expression "information" as occurring in Section 21 cannot be read as confined to information cases that may be conferred recognition or validity by virtue of Rule 7 alone. 51. Turning then to the facts of the case itself Mr. Srinivasan submitted that the assertion of the petitioners that the Institute proceeded against them solely on the basis of some news reports is factually incorrect. Taking the Court through the show cause notice as well as the information on the basis of which the proceedings against the petitioner were formally initiated, it was submitted that the news reports only acted as a trigger for the Directorate to examine the allegations relating to the scam and to evaluate the role discharged by the auditors of PNB. It was pointed out that the letter of 13 March 2018 would clearly establish tha....
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....andard on Review Engagement (SRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to making inquiries of the Bank personnel and applying analytical and other review procedures to financial data and thus provides less assurance than an audit. A review is substantially less in scope than an audit conducted in accordance with the Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. We have not performed an audit and accordingly, we do not express an audit opinion. 4. Based on our review as aforesaid, subject to limitation in scope as mentioned in Para3 above, nothing has come to our attention that causes us to believe that the accompanying statement of unaudited interim financial results together with the notes thereon, prepared in accordance with applicable accou....
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....ples of a Review of Interim Financial Information 4. The auditor should comply with the ethical requirements relevant to the audit of the annual financial statements of the entity. These ethical requirements govern the auditor's professional responsibilities in the following areas: independence, integrity, objectivity, professional competence and due care, confidentiality, professional behavior, and technical standards. 6. The auditor should plan and perform the review with an attitude of professional skepticism, recognizing that circumstances may exist that cause the interim financial information to require a material adjustment for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework. An attitude of professional skepticism means that the auditor makes a critical assessment, with a questioning mind, of the validity of evidence obtained and is alert to evidence that contradicts or brings into question the reliability of documents or representations by management of the entity. Objective of an Engagement to Review Interim Financial Information 7. The objective of an engagement to review inter....
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....uld inquire whether management has identified all events up to the date of the review report that may require adjustment to or disclosure in the interim financial information. It is not necessary for the auditor to perform other procedures to identify events occurring after the date of the review report. 29. When a matter comes to the auditor's attention that leads the auditor to question whether a material adjustment should be made for the interim financial information to be prepared, in all material respects, in accordance with the applicable financial reporting framework, the auditor should make additional inquiries or perform other procedures to enable the auditor to express a conclusion in the review report. For example, if the auditor's review procedures lead the auditor to question whether a significant sales transaction is recorded in accordance with the applicable financial reporting framework, the auditor performs additional procedures sufficient to resolve the auditor's questions, such as discussing the terms of the transaction with senior marketing and accounting personnel, or reading the sales contract." 58. The Policy framed by PNB in respect of Materialit....
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....ave the authority to initiate disciplinary proceedings suo moto. In order to frame an answer to the aforesaid question which stands posited, it would be apposite to briefly notice the position of the Institute under the statutory regimen and the various obligations and duties which stand placed upon it. The origins of the Institute have been elaborately chronicled in the Position Paper. In the Second Council Meeting of the Institute held on 11 August 1951, Sh. C.D. Deshmukh the then Hon'ble Finance Minister in the Union Government in his speech described the essence of the profession of Chartered Accountants as follows:- "The practice of accountancy is in the nature of a public service. Apart from the statutory responsibilities to report on the accounts to the shareholders, it is the duty of every member of the Institute to ensure that he fulfils the high ideals set before him amidst all the pressures and temptations of the day. I am glad to know from your address that you are fully alive to your responsibilities. It is only the watchful eyes of the members of your profession which can make any measures that Government may take to curb malpractices in trade and business, r....
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....n, licensing, continued professional education, peer review, financial report review amongst others. The Institute carries out its functions through various Standing and Non-Standing Committees, all of whom are obliged to ensure that members and firms are held good to the exacting professional standards which stand formulated as also to preserve and protect the interest of all members of the Institute. 63. The Executive Summary of the Position Paper, in the considered opinion of the Court, rightly observes that the Chartered Accountancy profession has a wider and vital role in the process of nation building itself. This aspect assumes significance in the backdrop of every developed economy, businesses and enterprises as well as other stake holders having the right of access to a mature and reliable financial reporting system. The executive summary takes due notice of the accountancy function subserving larger public interests, of promoting an investment climate of trust as also being the source of reliable information and data which may be accessed by all stakeholders. It also takes note of the extended role which accountants today may be called upon to discharge in the sense of....
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....dit and Governance" setup under the Chairmanship of Shri Naresh Chandra which inter alia, examined the Auditor-Company relationship and the Disciplinary mechanism for the auditors. 4. A Bill namely, The Chartered Accountants (Amendment) Bill, 2003 was introduced in the Rajya Sabha on 23.12.2003. The Bill was thereafter referred to the Parliamentary Standing Committee on Finance whose report was presented to Parliament in February, 2005. Taking into account the recommendations of the Committee, proposal in the Bill were revised and the bill was introduced as a fresh bill." 65. It was on the basis of the recommendations made by the Naresh Chandra Committee that appropriate provisions were thereafter introduced in the Act including the adoption of provisions for an institutionalised disciplinary mechanism, the creation of the office of Disciplinary Directorate, the establishment of the Disciplinary Directorate and the constitution of a Board of Discipline. The aforesaid amendments also led to the establishment of Quality Review Boards and saw the expansion of Chapter 5 in the Act which deals with the subject of misconduct. F. "INFORMATION" & "COMPLAINT" - SEMANTIC CONNO....
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....by the Directorate and which is not in Form-I as prescribed by Rule 3(1) is statutorily ordained to be treated as information received under Section 21 of the Act and thus liable to be dealt with accordingly. Rule 7(2) then provides that on receipt of the aforesaid information, the sender thereof is to be called upon in the first instance to indicate whether it would like to file a complaint in accordance with Form-I. The aforesaid process appears to be guided by the fact that the Institute perhaps accords priority to complaint cases along with the informant being deprived of the right to be represented during the investigation or hearing of that category of cases. This clearly flows from Clauses (a), (b) and (c) of Rules 7(2). 69. In fact unlike a complaint case and as is manifest from a reading of Rule 7(2)(c), the Institute is also not obliged to apprise the sender of the progress that may have been made with respect to the information tendered. Rules 7(3) in unambiguous terms provides that anonymous information shall not be entertained by the Directorate. Rule 7 deals with a situation where the sender of the information is either an individual, the Union Government, State Go....
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.... that the information which has been received in the shape of written content is not in Form-I. Rule 7(2) further obliges the Directorate to apprise the sender whether it would like to file a complaint in Form-I. This procedure, as was noted hereinabove, is placed in sub-rule (2) of Rule 7 so as to place the sender of the information on notice that information cases take much longer than a complaint coupled with the fact that the sender would have neither the right to be represented during investigation nor would he be entitled to be provided any information with respect to the progress made with respect to information received under Rule 7(1). The only category of "information" which in terms of the Rules need not be taken cognisance of is that which may be received by the Institute anonymously. 74. The trial of the complaint is, thereafter, governed by Rule 8. The parity which stands accorded to complaints and information is only with respect to the contents of Rule 3(6), sub-rules 1, 2 and 3 of Rule 5 and sub-rules 1, 2, 3 and 5 of Rule 8 coupled with Rules 9 and 10. Insofar as Rules 3 and 5 are concerned, they are merely procedural and relate to the acknowledgment and regist....
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....information' means something that the mind has acquired. If actual knowledge was absent, it is immaterial how that actual knowledge was absent. When the actual knowledge comes, it would amount to information for the purposes of Section 34 of the Act [Rajputana Textiles (Agencies) Pvt. Ltd. v. Das Gupta, ITO/EPT, (1964) 52 ITR 1 (Bom)] [Indian Income-tax Act (11 of 1922), S. 34] The term 'information' means the act or process of informing, communication, or reception, of knowledge. It may be knowledge acquired directly as by observation or study, or derived inferentially, or from communication from others. Commissioner of Income Tax v. Shree Jagan Nath Maheswary, AIR 1957 Punj 226, 229. [Income-tax Act (11 of 1922), S. 34] The expression 'information' mean instruction or knowledged derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. Commissioner of Income tax v. A. Raman and Co., AIR 1968 SC 49,51. The term 'information' means instruction or knowledge concerning facts or particulars, derived from an external source relating to a matter bearing on the assessmen....
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....ct (27 of 1957). S. 17(1)(b)] The power of State Government can be exercised under S. 57 when it receives "information" of the various defaults mentioned in the above clauses. The word "information" indicates that the State Government can act on any information received by it. [Board of Trustees v. State of Uttar Pradesh, MLJ: YD (1983), p. 198: 1982 All LJ 698]. [Uttar Pradesh State Universities Act (X of 1973). S. 57(i) and (iv)]". 77. As would be evident from the above, the expression "information" has been defined and understood to mean any instruction or knowledge derived from an external source concerning facts or particulars. It has been further explained to include knowledge acquired from investigation, study or instruction. The word "inform" has been understood to mean to impart knowledge, knowledge concerning a matter and the power of an authority to act on any information that may be received. The word "information" as used in Section 17(1)(d) of the Wealth Tax Act, 1957 was interpreted to be of the widest amplitude and to include knowledge of any fact that may be derived from either an external source or from material already on record. 78. The Oxford Eng....
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....th reference to criminal Courts to describe the mode in which proceedings are to be instituted. The complaint need not be either in writing or on oath, unless required to be so by the particular enactment upon which it is framed. It is form of legal process which consists of a formal allegation or charge against a party, made or presented to the appropriate Court or officer, as for a wrong done or a crime committed; in the latter case generally under oath. A "complaint" is an allegation that some person has committed an offence and "an offence" is an act or omission made punishable by any law for the time being in force. An application under S. 107, Cr.PC., 1973 (2 of 1974), is not a complaint where there is merely an allegation that a breach of the peace is likely. AIR 1925 Oudh 138. The action of complaining; an utterance of grievance [Ss. 95 and 499, ill. to 8th excep, I.P.C. (45 of 1860)]; a formal accusation in a Court of law [S. 2(6), Cr.P.C., 1973 (2 of 1974)]; an ailment or disease of the body. COMPLAINT : ACCUSATION. Both these terms are employed in regard to the conduct of others, but a complaint is mostly made in matters that personall....
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....d in respect of a fact or occurrence from an external source. 82. Even under the scheme of the Act and the Rules with which we are concerned, the word complaint clearly appears to have been used in the sense of a written request for redressal of grievances which is submitted by a person specific and seeks the redressal of grievances that may have been personally suffered. This would also be evident from a perusal of the nature of disclosures which are to be made in terms of Form-I. Information, on other hand, is in terms of the Rules presumed to be material that may be received by the Institute in writing although not in accordance with the format prescribed in terms of Rule 3. However, the aforesaid is confined to what is prescribed by Rule 7 and which salvages written complaints which may not conform to the norms of Rule 3. 83. However, if the word "information" be correctly understood, and appreciated and as the dictionaries have defined it to be, as the mere communication of knowledge or news of some factual occurrence, it would clearly stand on a pedestal distinct and different from a complaint. Information need not necessarily be or relate to the grievance or injury suf....
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....ued as suggested by the petitioners, it would clearly undermine the duty and obligation of the Institute to examine cases of professional misconduct and restrict it to being able to initiate action against a member dependent upon whether it had received written information or complaints. It would clearly result in seriously handicapping the Institute in the discharge of its disciplinary functions. If Section 21 were to be interpreted in the manner as advocated by the petitioners, it would constrict the Institute to being entitled to examine instances of professional misconduct only if it had received a complaint or information in written form. This would clearly hamper and impede the regulatory function that it is obliged to perform under the Act. 87. The Court thus comes to the firm conclusion that the words "information" and "complaint" appear to have been consciously used and placed in Section 21 in order to enable the Institute to proceed against a particular member unfettered by the absence a written complaint being provided to the Institute. If Section 21 were to be interpreted as conferring jurisdiction on the Institute to proceed against a member only upon receipt of a w....
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....precedent for the invocation of Section 28A, it could not be understood to encompass or incorporate a power to proceed suo moto. The decision in Indira Gandhi arose out of the provisions of the Commissions of Inquiry Act, 1952. The ultimate conclusion of the Commission having no authority to proceed suo moto turned on the provisions made in that Act. 91. In Mohinder Singh, the Jammu and Kashmir High Court was essentially called upon to interpret the provisions of the Jammu and Kashmir Accountability Commission Act, 2002. The High Court noted that the Commission itself had been constituted to conduct investigation and enquiries in respect of complaints. Construing the phrase "grievances and allegations" as appearing in the Preamble of the said Act, the High Court held that the language of the statute clearly implied or presupposed that there would be a person aggrieved or a person levelling an allegation. It was in that backdrop that it came to hold that the commission could not initiate a suo moto enquiry. 92. The issue of a suo moto power being exercised by statutory authorities also fell for consideration before this Court in Praveen Chhabra vs. Real Estate Appellate Tribun....
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....r, allottee or real estate agent injuncting it from carrying on any act which is complained of or noticed until the conclusion of the enquiry initiated under Section 35. This very provision also empowers the Authority to issue interim orders ex-parte. The Authority in terms of Section 37 is invested with the power to issue directions from time to time to any promoter, allottee or real estate agent and prescribes that all such directions would be binding on parties concerned. Rule 22 enumerates the additional powers which may be exercised by the Authority and is referrable to the provisions contained in Section 35 (2)(iv). Similarly, Rule 29 spells out the additional powers which may be exercised by the Appellate Tribunal and thus amplifies and provides content to the mandate of Section 53(4)(g). 19. On a consideration of the aforesaid provisions as made and incorporated in the Act, it is manifest that the Appellate Authority cannot possibly be recognized as conferred with the power to initiate proceedings suo moto or on its own motion. This is evident from a reading of the provisions engrafted in the statute and which enumerate and circumscribe the jurisdiction of the Appe....
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....ich governed the exercise of jurisdiction and the fact that those bodies could have initiated proceedings only upon the filing of an application or complaint relating to grievances and allegations. 94. In contrast to the above, Section 21 of the Act empowers the Institute to proceed either on the basis of a complaint or on information that may be received. The Court has on due consideration of the relevant provisions, the scheme of the Act and the nature of the duty cast upon the Institute, found that it could also proceed on the basis of cogent information that may be either gathered or may come to light from an external source. The usage of the word information in Section 21 thus clearly places the extent of the power vested on the Institute on a clearly distinct pedestal. It appears to be guided by the intent of the Legislature to enable and empower the Institute to proceed on any material or fact that may either come to its attention or be brought to its notice. Section 21 thus clearly appears to be distinguishable from the various statutory provisions and the scheme of the respective statutes which formed the basis for the various decisions rendered on the subject and which....
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....dment is indicative of the Legislature seeking to supply an obvious omission and to allay all doubts. 97. Mr. Datt, learned counsel for the petitioner had, in this context, also placed reliance on the following passages as appearing in the decision of the Supreme Court in Ghanashyam Mishra & Sons (P) Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657 "86. In Zile Singh v. State of Haryana [Zile Singh v. State of Haryana, (2004) 8 SCC 1], this Court had an occasion to consider the provisions of Section 13-A of the Haryana Municipal Act, 1973 which, prior to amendment, read thus: "13-A. Disqualification for membership.-(1) A person shall be disqualified for being chosen as and for being a member of a municipality- *** (c) if he has more than two living children: Provided that a person having more than two children on or after the expiry of one year of the commencement of this Act, shall not be deemed to be disqualified." (emphasis supplied) 88. This Court while observing, that the amendment was clarificatory in nature, held thus: (Zile Singh case [Zile Singh v. State of Haryana, (2004) 8 SCC 1], SCC pp. 9-12, ....
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....v. Pougett, (1816) 2 Price 381 : 146 ER 130] (Price at p. 392). By a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s 4d per cwt., but Thomson, C.B., in giving judgment for the Attorney General, said: (ER p. 134) 'The duty in this instance was, in fact, imposed by the first Act; but the gross mistake of the omission of the weight, for which the sum expressed was to have been payable, occasioned the amendment made by the subsequent Act: but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act;' (Price at p. 392) 17. Maxwell states in his work on Interpretation of Statutes (12th Edn.) that the rule against retrospective operation is a presumption only, and as such it 'may be overcome, not only by express words in the Act but also by circumstances sufficiently strong....
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....ment was passed. The legislative power to enact law includes the power to declare what was the previous law and when such a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word "declaration" in an Act explaining what was the law before may not appear to be a declaratory Act but if the court finds an Act as declaratory or explanatory, it has to be construed as retrospective.' (p. 2487). 20. In Bengal Immunity Co. Ltd. v. State of Bihar [Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 2 SCR 603 : AIR 1955 SC 661] , Heydon case [Heydon case, (1584) 3 Co Rep 7a : 76 ER 637] was cited with approval. Their Lordships have said : (Bengal Immunity case [Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 2 SCR 603 : AIR 1955 SC 661] , AIR p. 674, para 22) '22. It is a sound rule of construction of a statute firmly established in England as far back as 1584 when Heydon case [Heydon case, (1584) 3 Co Rep 7a : 76 ER 637] was decided that- "... for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned ....
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....ving a retrospective operation to the legislation is not determinative of its prospectivity or retrospectivity. Intrinsic evidence may be available to show that the amendment was necessarily intended to have retrospective effect and if the Court can unhesitatingly conclude in favour of retrospectivity, the Court would not hesitate in giving the Act that operation unless prevented from doing so by any mandate contained in law or an established principle of interpretation of statutes." (emphasis supplied) 89. It could thus be seen that what is material is to ascertain the legislative intent. If legislature by an amendment supplies an obvious omission in a former statute or explains a former statute, the subsequent statute has a relation back to the time when the prior Act was passed." 98. Learned counsel had also sought to draw sustenance for the aforesaid submission from the following principles as were laid down by the Supreme Court in CIT vs. Podar Cement (P) Ltd. (1997) 5 SCC 482:- "53. A Constitution Bench of this Court in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas [(1968) 3 SCR 623 : AIR 1968 SC 1336], while considering the nature of amendment to Sec....
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....t an amending statute could be curative or even purely declaratory, intended to clear the meaning of a provision of the principal act and expound on something which is already explicit. In the facts of that case, the Supreme Court came to the conclusion that the amendments had been introduced to cure a particular mischief and was clearly declaratory and clarificatory in nature. This is evident from the ultimate conclusion which stood recorded in paragraph 94 of the Report and reads thus: "94. We have no hesitation to say that the words "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature noticing that on account of obvious omission certain tax authorities were not abiding by the mandate of the I&B Code and continuing with the proceedings, has brought out the 2019 Amendment so as to cure the said mischief. We therefore hold that the 2019 Amendment is declaratory and clarificatory in nature and therefore retrospective in operation." 100. Similarly, in Podar Cement, the Supreme Court ultimately found that the amendments were clarificatory in nature. This is clearly evident from what stands recorded....
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....ls had laid immense stress on the fact that Section 21 while empowering the Directorate to make investigation in respect of any information or complaint was obliged to follow such procedure as may be specified. The argument was that the procedure stands duly specified and stipulated under the rules which stood framed. 103. According to the petitioners, Rule 7 specifically deals with written information that may be received in respect of allegations against a member or a firm. In view of the aforesaid, it was contended that the word "information" as occurring in Section 21 cannot possibly be interpreted to include any external source or for that matter a news report which may come to the attention of the Institute. The submission in essence was that every information must be a written complaint that may be received by the Institute albeit non-compliant with Form-I as prescribed in Rule 3. 104. The Court finds itself unable to sustain the aforesaid submission for the following reasons. Firstly, and on a fundamental plane, it will be wholly incorrect to either interpret or construe a provision placed in the principal enactment on the basis of what may be contained in a subordina....
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....ion" as contemplated under the Act. Mr. Nandrajog had contended that as would be evident from the show cause notice which came to be issued on 21 February 2018, the Directorate rested its opinion to commence disciplinary proceedings solely on various news reports which had come to be published in connection with the financial scam which had occurred in PNB. 107. According to learned Senior Counsel a news report is neither evidence nor can it possibly constitute material on the basis of which action could have been initiated against the petitioners. Mr. Nandrajog highlighted the fact that the news reports themselves neither mentioned the petitioners nor did they carry any allegations against the Joint Statutory Auditors or the LRR which was undertaken by them. Mr. Nandrajog submitted that, under the scheme of the Act, information must necessarily constitute material which prima facie establishes an act of professional or other misconduct committed by a member. According to learned Senior Counsel, a news report which may have referred to financial irregularities which had taken place in the PNB cannot possibly meet the aforesaid requirement. 108. Appearing for the Institute, Mr....
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....further detail with appropriate information being gathered from PNB and the LRR also being carefully examined. It also becomes pertinent to note the fact that the huge financial fraud had been duly taken cognisance of and details thereof also provided to SEBI prior to the submission of the LRR, was an admitted position insofar as the petitioners are concerned. This would be evident from their reply to the initial show cause notice itself. 112. The petitioners, along with the material which has been filed in these proceedings, have also placed the minutes of the discussion which appears to have taken place in the presence of officials of PNB and the representatives of the Joint Statutory Auditors. This would appear to indicate that, at the time when the aforesaid discussion took place, the financial fraud had already been unearthed and complaints made to the investigating agencies and information also provided to other statutory regulators. It is in the aforesaid context that the respondents have referred to the various provisions made in SRE 2410 and which according to them place an obligation and a liability upon the Joint Statutory Auditors to make appropriate notes in the rev....
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.... based merely on news reports. The record in fact and to the contrary would appear to indicate that the news reports only triggered a deeper examination by the Institute with respect to the role that had been discharged by the Joint Statutory Auditors and evaluating whether the standards of performance and enquiry as embodied in the various SAs' had been complied with. 116. While closing the discussion insofar as this issue is concerned, the Court deems it apposite to observe that the petitioners do appear to be correct that a mere news report cannot constitute material which may justify the initiation of an enquiry. A newspaper report, as is well settled, cannot and does not constitute evidence per se. A report that may appear in the print media or on a visual news platform, can at best be understood as being an external source from which the Institute may gather or derive knowledge of a particular fact or incident. However, since the initiation of disciplinary action clearly has serious repercussions, the decision to initiate disciplinary action would necessarily have to rest on more cogent and dependable material, data and facts. The initiation of an enquiry would necessarily....
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....es which the Institute is ordained to discharge. For all the aforesaid reasons, the Court finds itself unable to adopt the line of reasoning which weighed with the learned Judge in Manubhai. 119. Insofar as the order passed by a learned Judge of our Court in N. Sampath Ganesh is concerned all that needs to be said is that the learned Judge in the aforesaid order had only recorded certain prima facie conclusions. The issue of whether newspaper reports would constitute information was left open for the Committee to examine as a preliminary objection. The order in N. Sampath Ganesh cannot, therefore, be read as either conclusively determining the issue which arises or constituting a binding precedent. 120. The Court also finds itself unable to sustain the submission of the petitioners that the aforesaid order would have persuasive value. While interim orders passed by a coordinate Bench of the Court in pending proceedings may have a bearing or relevance on interim directions that may be warranted or be framed in identical situations, they cannot possibly have any bearing on a final decision which the Court is called upon to render upon due contest. K. CONCLUSIONS 121. In v....
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....inant. "Information is commonly understood and defined to mean the deriving of knowledge of a particular fact or event. It includes any knowledge or information that may be derived in respect of a fact or occurrence from an external source. E. Even under the scheme of the Act and the Rules with which we are concerned, the word complaint clearly appears to have been used in the sense of a written request for redressal of grievances which is submitted by a person specific and seeks the redressal of grievances that may have been personally suffered. This would also be evident from a perusal of the nature of disclosures which are to be made in terms of Form-I. F. Distinguished from the above, information, is in terms of the Rules presumed to be material that may be received by the Institute in writing although not in accordance with the format prescribed in terms of Rule 3. The aforesaid is confined to what is prescribed by Rule 7 and which salvages written complaints which may not conform to the norms of Rule 3. G. However, if the word "information" be correctly understood, and appreciated [and as the dictionaries have defined it to be], as the mere communic....
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....laint, it would clearly fetter and impede the larger public function that it is obliged to perform and the statutory duties that stand placed upon it. M. The Court further takes into consideration the significance of the prefix "any" to the word information as occurring in Section 21 of the 1949 Act. The use of the word "any" before information in Section 21 clearly appears to be a conscious attempt by the authors of the statute to confer an expansive meaning upon the word and not confine or whittle it down to the rigours and formality that may be attached to a written complaint that may be received by the Institute. N. The expression "any information" as used in Section 21 thus appears to have been consciously employed so as to enable the Institute to make an investigation with respect to professional conduct of its members untrammelled by rigours of form. O. On an overall consideration of the aforesaid, this Court is of the considered view that the word "information" as appearing in Section 21 cannot be narrowly construed to mean only those facts which may be specifically provided to the Institute. The Act and the Rules have consciously attempted to tre....
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...., it is evident that the ultimate conclusion of the respective entities not being empowered to exercise powers suo moto ultimately rested on the language of the statutory provisions which governed the exercise of jurisdiction and the fact that those bodies could have initiated proceedings only upon the filing of an application or complaint relating to grievances and allegations. T. Viewed in the aforesaid backdrop, this Court is of the considered opinion that Section 21 does empower the Institute to proceed suo moto and unhindered by the absence of a written complaint or allegation that may be submitted. A written complaint or allegation in writing cannot, in any manner, be understood to be a pre-requisite or a sine qua non for the initiation of action under Section 21. This since the authority conferred on the Institute relates to both a complaint as well as information. Information, as has been found by this Court, would extend to any material or fact that may come to the notice of the Institute and from which it may derive knowledge. That material need not necessarily be in the written form or be interpreted as being confined to something which an individual may choose ....
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....te that ordinarily the Institute may receive information in the shape of a written complaint against a member or a firm. That written complaint would have to necessarily be compliant with the requirements of Rule 3 and thus the in the format prescribed by Form-I. However, Rule 7 takes care of contingencies where even though information may be received by the Institute in writing, it may not be in accord with Form-I as prescribed. It is only to take care of such an eventuality that Rule 7 prescribes that even such written information shall be treated as such and fall within the ambit of Section 21. Y. The usage of the phrase "shall be treated" is clear evidence of the introduction of a statutory fiction. However, that cannot possibly be understood as denuding the Institute of the authority to commence an investigation on the basis of information that may be derived from an external source or be restricted only to information that may be submitted before it in writing. Z. In the facts of the present case, the Court comes to conclude that the impugned action was not based on mere newspaper reports. In fact, those reports could not have possibly and on their own const....