C.A. A. Siddharth vs Institute of Chartered Accountants of India

Rule. Hearing expedited. Heard Mr. Seervai, learned senior counsel appearing for the Petitioner on the question of grant of interim relief and Mr. Moye, learned counsel for Respondent No. 1.

Mr. Seervai, learned senior counsel submits that the order impugned herein which provides for reconsideration suffers from vires of procedural irregularities inasmuch as the same is not permissible under Regulation 16 of the Chartered Accountants Regulations, 1988. He further submits that no reasons are given as to why Respondent No. 1 finds reconsideration necessary. He further submits that copies of written submissions of Respondent No. 2 were not supplied to the Petitioner and as such, the same has caused great prejudice to the Petitioner. He further submitted that permitting Respondent No. 2 to file the submissions before Respondent No. 1 was itself not permissible in law.

At this stage, we must point out that Mr. Moye has fairly stated that Respondent No. 1 is willing to conduct the further enquiry and also supply written submissions made by Respondent No. 2 to the Petitioner so that the Petitioner has opportunity to meet the contentions raised in that submission. However, the said officer is not acceptable to the Petitioner.

For appreciating rival contentions it will be necessary to refer to of Regulation 16 which reads thus:

"16. Report of the Disciplinary Committee.-

[Applicable to a complaint or information pending before the Council or any inquiry initiated by the Disciplinary Committee or any reference or appeal made to a High Court prior to 17-11-2006]

(1) The Disciplinary Committee shall submit its report to the Council.

(2) Where the e-finding of the Disciplinary Committee is that the Respondent is guilty of professional and or other misconduct, a copy of the report of the Disciplinary Committee shall be furnished to the Respondent and he shall be given the opportunity of making a representation in writing to the Council.

(3) The Council shall consider the report of the Disciplinary Committee along with the representation in writing of the Respondent, if any, and if, in its opinion, a further enquiry is necessary, shall cause such further enquiry to be made whereupon a further report shall be submitted by the Disciplinary Committee.

(4) The Council shall, on the consideration of the report and the further report, if any, and the representation in writing of the Respondent, if any, record its findings:

PROVIDED that 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.

(5) The finding of the Council shall be communicated to the Complainant and the Respondent."

At the outset we may observe that non-supply of the written submissions by Respondent No. 2 to the Petitioner would have vitiated the proceedings on the ground of non-observance of principles of natural justice. Non-supply of the written submissions by Respondent No. 2 to the Petitioner would result in using the material, of which the Petitioner had no opportunity to meet. The same would not be permissible as per the principles of natural justice. However, in order to meet the principles of natural justice, learned counsel for Respondent No. 1 fairly conceded that the said error would be rectified and the Petitioner will be given copies of the said statement so that he can meet the contentions raised therein.

The main thrust appears to be permitting Respondent No. 2 to file submissions in the proceedings under Regulation 16 of the Chartered Accountants Regulations, 1988.

As per Regulation 16 the disciplinary committee is required to submit its report to the council. As per clause (2) of the Regulation where a finding of the disciplinary committee is against a person against whom the enquiry is conducted, a copy of the report of the disciplinary committee is required to be furnished to such a candidate and he is entitled to be given an opportunity of making a representation in writing to the council. Clause (3) provides that the disciplinary committee shall consider the report along with the representation of the Respondent and if in its opinion further enquiry is necessary, shall cause further enquiry to be made whereupon a further report shall be submitted by the disciplinary committee. Clause (4) submits that on consideration of the representation of the Respondent, the council may record its finding.

No doubt that clause (2) of Regulation 16 only refers to the Respondent that is the person against whom an enquiry is being conducted for giving a copy of the report of the disciplinary committee so that he has an opportunity of making a representation. However, by now it is settled principle of law that every order which has an adverse effect has to be preceded by principles of natural justice, when the provision expressly or by necessary implication excludes the applicability of the same.

Undisputedly, the proceedings are initiated against the Petitioner at the instance of Respondent No. 2. If Respondent No. 1, in compliance of the principles of natural justice finds it appropriate to take view of Respondent No. 2 who is the complainant and on whose complaint the disciplinary proceedings are set in motion, we do not find that it can be said to be contrary to the principles of natural justice. On the contrary, prima facie it would be in consonance with the principles of natural justice. In any case, by adopting such a procedure, no prejudice would be caused to the delinquent against whom enquiry is pending. We are prima facie of the view that Regulation 16 does not prohibit the procedure as adopted by Respondent No. 1.

In ordinary course we would have very well disposed of the Petition by accepting a fair and reasonable proposal as given by Respondent No. 1. However, as Mr. Seervai has insisted upon interpretation of Regulation 16, we have admitted the matter. If the interim relief as sought is granted, it would be forestalling the enquiry proceedings against the Petitioner. In that view of the matter, we are not inclined to grant interim relief as prayed for. However, we make it clear that the further enquiry shall be subject to the result of the Petition.