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Judgment
The writ petitioner, a Chartered Accountant, is aggrieved by order of the disciplinary authority, punishing authority and the appellate authority in proceedings under the provisions of the Chartered Accountants Act, 1949. The sum and substance of the charge against the petitioner is that accounts of one SPS Steels Rolling Mills Limited were initially audited and signed by the petitioner, in April, 2012 based on documents provided by the auditee. The said balance sheet showed that the company was very profitable. The auditee later on provided further documents to the petitioner to indicate that the company's claims as raised in some debit notes were refused by its suppliers. As a consequence whereof, the profit margin of the company came down substantially. The accounts were re-audited by the petitioner in September, 2012. The petitioner however did not notify to the entities that the audited balance sheet of 2012 stood modified.
In the meantime, certain financial institutions, placing reliance on the earlier audit report dated 13th April, 2012 had altered position. The said financial institutions, however, even thereafter, reorganised and restructured credit facilities to the auditee.
Disciplinary proceedings were initiated after a prima facie finding against the petitioner of misconduct. The petitioner was primarily charged with violation and/or non-compliance of SA- 560, which is a part of a code of conduct and/or procedure to be adopted by Chartered Accountants in course of audit/reaudit. The disciplinary authority found the petitioner guilty of the charge. The disciplinary authority communicated its findings to a punishing authority, which was comprised of completely different persons.
The punishing authority imposed a punishment of two years debarment and a fine of ₹50,000/-.
The order of the punishing authority was carried to the statutory appellate authority, which modified the punishment from two years of debarment to one year. The fine however, was increased from ₹50,000/- to Rs.1 Lac.
Mr. Jishnu Saha, learned Senior Advocate appearing for the writ petitioner, has painstakingly taken this court through the entire proceedings, particularly the preliminary report, the proceedings before the disciplinary authority, the final pronouncement by the disciplinary authority and the order of the punishing authority. The order of the appellate authority was also placed in detail before this Court. The propriety of the entire proceedings are challenged and quashing thereof is sought.
Interim order of stay of punishment is prayed for, in aid of the main prayers for quashing of the proceedings. It is submitted that the preliminary report was the basis on which the disciplinary authority proceeded. The disciplinary authority did not find that the petitioner was guilty of any deliberate or wilful negligence. It is also argued that there was no mens rea or mental element or any motive for the acts complained of against the writ petitioner.
Even the punishing authority and the appellate authority did not find any such motive. It is, therefore, argued that the petitioner could not behold guilty. Alternatively it is submitted that punishment is rather excessive and disproportionate to the charges against the petitioner.
It is now well settled that in a case of violation of rules particularly relating finances, banking and audit, the proof or finding of motive is not necessary. Strict rules of evidence are not applied to quasi judicial proceedings. The quantum of punishment and the proportionality thereof with the charges proved are normally left to the particular authority under which a member or an employee or person is functioning. It is the authority who is best placed to decide upon the misconduct/misdemeanour of its member/employee. A writ court normally does not interfere with the same unless the same is shockingly disproportionate. No such finding can be given at this stage.
It is next argued by Mr. Saha that there is clear infirmity in that the disciplinary authority, the punishing authority and the appellate authority have all travelled outside the scope of the main charge against the petitioner. It is argued that all the three authorities have gone on to give findings that are outside the scope of the actual charge. So much so that the order of punishment and appellate authority's order are based on completely different issues than those originally charged.
It is established principle of administrative law that when a charged member, employee or person is able to defend the proceedings after having clearly understood the same and does not raise such a question at any stage in the proceedings, there is a presumption that the disciplinary authority as well as the person concerned were fully aware of the scope and nature of the charge. The third argument advanced by Mr. Saha is that the disciplinary proceedings were heard by one set of persons. The punishment was decided by a completely different set of persons. Even the members of the appellate authority changed from time to time.
It is common knowledge that in public employment, employees are transferable. Composition of professional bodies and their governing councils and authorities periodically change with elections. To expect long drawn proceedings to be heard by same set of persons who had heard the matter at the initial stage is extremely difficult, if not impossible to expect. The records and findings are taken down in writing and sufficiently available to all parties and to all successive members who constitute the same authority and hence no grievance as such can be raised on this score.
There are other arguments raised by Mr. Saha that cannot be addressed at this stage. The entire decision making process that has been laboriously placed by Mr. Saha to suggest impropriety, has been considered by this Court and no impropriety is found for calling for any interference at an ad-interim stage. Let affidavit-in-opposition be filed within a period of four weeks from date; reply, if any, within a week thereafter. Liberty to mention for hearing after completion of pleadings.