Institute of Chartered Accountants of India vs Sanjeav Shukla

R.R.K. Trivedi, J.—The Institute of Chartered Accountants of India has preferred this appeal from the judgment and order, dated 2221995, passed by learned Single Judge, in writ petition No. 31113 of 1993, filed by petitionerrespondent Sanjeev Shukla, by which the writ petition has been allowed and the appellants have been directed to declare the result of Final Examination of May, 1993 of petitioner applying provisions of Regulation 38 (2) of the Chartered Accountants (Amended) Regulations, 1992. The result already declared, of the Final Examination of the Chartered Accountants held in May, 1993, on 1371993 has been quashed.

The facts, in brief, giving rise to this appeal are that Council of the Institute of Chartered Accountants of India (hereinafter referred to as the Institute) amended the Chartered Accountants Regulations, 1988 (hereinafter referred to as the Regulations) by Chartered Accountants (Amendment) Regulations, 1992, published a Notification in Part III Section 4 of the Gazette of India, dated 731992. According to the aforesaid Notification, the amended Regulations came into force on the date of their publication in the official Gazette, i.e. 731992. By this amendment, Regulations have been amended extensively and a foundation course has been introduced prescribing Syllabus and Fee etc. for this course. Simultaneously the Council also changed the syllabus for the Intermediate and Final Examinations. Passing requirements have been prescribed for the foundation examination. Regulation 38 which contained passing requirements to Final Examination was also amended. So far as the dispute which is subjectmatter of this appeal is concerned it is with regard to Final Examination and we are concerned with Regulations 31 and 38 which prescribed syllabus and passing requirements for the Final Examination. For better appreciation Regulations 31 and 38, as they existed before amendment and after amendment, are being reproduced below :

Before amendment After amendment

31.A candidate for the final 31 (1) A candidate for the final examination

examination shall be examined shall be examined in the groups and

in the groups and subjects prescribed in para 3 of Schedule B.

proscribed in para 3 of Schedule B.

(2) Notwithstanding anything contained in these Regulations, the Council may at any time Rafter introduction of the foundation course, discontinue holding the final examination as per the syllabus given in para 3 of Schedule B and require the candidates to pass the final examination as per syllabus given in para 3A of Schedule B.

Requirements of passing 38. Requirements for passing

the Final Examination. the Final Examination.

(1) A candidate for the Final (1) A candidate shall ordinarily be declared

Examination shall ordinarily to have passed the Final Examination

be declared to have passed the if he passes in both the groups.

examination if He may appear in both the groups

simultaneously or in one group in one examination and in the remaining group at any subsequent examination.

(a) he is declared to have (2) A candidate shall be declared to

passed in both the groups have passed in both the groups

taken simultaneously, securing simultaneously if he secures at one

at one sitting a minimum of sitting a minimum of 40 per cant

40 per cent marks in each paper marks in each paper of both the

of the group and a minimum groups and a minimum of 50 per

of 50 per cent of the total marks cent in the aggregate of all the papers

of all the papers of each group, or of both the groups taken together.

(b) he is declared to have (3) A candidate shall be declared to

passed in one group at one have passed in a group if he

examination and in the secures at one sitting a minimum of

remaining group at any 40 per cent marks in each paper of

subsequent examination, the group and a minimum of 50

securing at one sitting, a per cent marks in the aggregate

minimum of 40 per cent marks of all the papers of that group.

in each paper of the group and

minimum of 50 per cent of (5) A candidate who has passed in any

the total marks of all the papers one but not in both the groups of

of that group. the Final Examination held under the

Chartered Accountants Regulations, 1988,

(5) Notwithstanding anything shall continue to be governed by the

contained in subregulation provisions of those Regulations till

(1) above, a candidate who fails the commencement of Final

in one paper comprised in a Examination to be held under

group but secures a minimum paragraph 3A of Schedule ''B''

of 60 per cent of the total marks, to these Regulations.

of the remaining papers of the

group, shall be declared to

have passed in that group if

he appears at any one or

more of the immediately next

three following examinations

in the paper which he had

failed and secures a minimum

of 40 per cent marks in that

paper.

(5) Notwithstanding anything

contained in subregulation (1)

above, a candidate not covered

by sub '' regulation (4) who fails

in one or more papers comprised

in a group but secures a minimum

of 60 per coot marks in any

paper or papers of that group

and a minimum of 30 per cent

marks in each of the remaining

papers of that group that be

eligible to appear at any one or

more of the immediately next

three following examinations in

the paper or papers in which he

had seemed less than 60 per

cent marks and shall be declared

to have passed in that group if he

secures at one attempt a minimum

of 40 per cent marks in each of

such papers and a minimum

of 50 per cent of the total marks

of all the papers of that group

including the paper or papers

in which he secured a minimum

of 60 per Cent marks in the

earlier examination referred to above.

Under the amended provisions of Regulation 31, the Council published in May, 1992, implementation schedule in its journal |known as ''Chartered Accountants'' with the following dates :

Date of implementation of new scheme

and registration for foundation course 2441992

First foundation examination June, 1993

Last Intermediate examination under

the existing syllabus May, 1994

First Intermediate examination under

the new syllabus November, 1994

Last final examination under the

existing syllabus November, 1995

First Final examination under the

new syllabus May, 1996

Last Entrance examination under

the existing scheme November, 1992

From a perusal of the aforesaid implementation schedule, it is clear that the foundation course was implemented with effect from 2441992 and the first final examination under the new syllabus was to commence from May, 1996. As the final examination under the new syllabus was postponed upto May, 1996, the Council passed a resolution dated 1871992 suspending the operation of the passing requirements as provided under the amended Regulation 38. This resolution had been passed under the exercise of the powers provided under Regulation 205 of the Regulations, which reads as under :

Examination:

"It has been further resolved by the Council that the students appearing in the Intermediate and Final examination under the existing syllabus specified in paragraphs 2 aid 3 of Schedule ''B'' to the Chartered Accountants Regulations, 1988 shall continue to be governed by the provisions of the Chartered Accountants Regulations, 1988 as in force on 6th March, 1992 till the commencement of the Intermediate or Final examination, as the case may be, to be held under the new syllabus."

The petitionerrespondent appeared in Final examination held in May, 1993 under the existing syllabus. He appeared in both the groups simultaneously. There is no dispute that petitioner obtained 40% marks in each paper of both the groups. However, the total marks secured were 181 and 269 in first and second groups (out of 400 each) respectively. Under the existing Regulation 38(1)(a), the petitioner was required to secure 40% marks in each paper of the group and a minimum of 50% of the total marks of all the papers of each group. The result of the petitioner was published in July, 1993 and the petitioner was declared failed in first group as he could not secure 50% of the total marks in that group. The markssheet dated 1371993 was provided to the petitioner.

Aggrieved by the aforesaid, the petitioner filed writ petition No. 31113 of 1993 challenging the action of the appellants in declaring him fail in the First group applying unamended Regulation 38. The contention of the petitioner was that as the amended Regulation 38 came into force on 731992, he was entitled to be declared passed in both the groups applying Regulation 38(2) under which a minimum of 50% marks in aggregate of all the papers of both the groups were required to be secured for being declared passed and as total marks secured in both the groups exceeded 50% he has been wrongly declared failed.

After hearing the learned counsel for the parties, learned Single Judge accepted the contention of the petitionerrespondent and allowed the writ petition on 2221995 and directed the appellants to declare the result of petitionerrespondent applying the amended Regulation 38(2), aggrieved by which the present appeal has been filed.

Learned counsel for the appellants has submitted that as the implementation of the new syllabus prescribed for the Final examination has been postponed upto May, 1966, the passing requirements were also required to be suspended. The passing requirements under the amended provisions of Regulation 38 could not be applied in respect of the examination held under the old syllabus. In order to avoid this difficulty and various anomalies which could have arisen the council exercising the powers provided under Regulation 205, passed the resolution dated 1871992 and suspended the operation of the amended Regulation 38 till the commencement of the Final examination under the new syllabus. Learned counsel has submitted that fact as to whether there was a difficulty in implementing the amended Regulation 38 providing passing requirement to the final examination held under the old syllabus could only be felt or determined by the Council and the learned single Judge fell in serious error in taking the view that there was no difficulty in implementing the amended Regulation 38. Learned counsel for the appellant has placed before us the provisions of the existing Regulation 38 and amended Regulation 38 and has also explained the change in the syllabus and has submitted that the passing requirement provided under the amended Regulations could not be applied to the final examination held under the old syllabus. Various paragraphs of the counter affidavit filed in reply to the writ petition have been placed before us in support of this contention. Learned counsel for the appellant has submitted that Regulation 205 is worded in widest terms and the council could legally suspend the implementation of the passing requirement under the amended Regulation till the final examination was held under the new syllabus. The decision taken was just and proper and in the interest of the large number of candidates appearing for such examinations from all over the country. It has also been submitted that petitioner respondent was well aware of this legal position that for passing final examination held in May, 1993, the passing requirements will be as provided under the old Regulation 38(1)(a) of the Regulations. There was no doubt in this regard and it is not now open to him to contend that the Amended Regulations, providing for the passing requirements, should be applied to him.

Learned counsel for the appellants has placed reliance in an unreported judgment deted 3081994 delivered by the High Court of Karnataka in writ petitions No. 43175 and 43176 of 1993 between Subhash Chandra Rai v. The Institute of Chartered Accountants of India. The learned counsel has also placed reliance in case of the Commissioner of Income Tax Hyderabad v. Diwan Bahadur Ram Gopal Mills Ltd., reported in AIR 1961 SC 338 ; D. S. Greawal v. State of Punjab, reported in AIR 1959 SG 512 and the Goodland Plantation (P.) Ltd. v. State Bank of Travancort reported in AIR 1965 Ker 297.

Learned counsel for the respondent, on the other hand, has submitted that the power of removing difficulties will depend on the word used in the provision conferring such power. Regulation 205 of the Regulations is not as wide as Article 392 of the Constitution of India and the cases relied on by the learned counsel for the appellant are not applicable to the facts of the present case. It has been further submitted that the power under Regulation 205 is circumscribed by limitations that there should be a difficulty and for removing that difficulty nothing inconsistent with the provisions of the Act may be done. It is submitted that in the present case resolution, postponing the operation of the amended Regulation 38(2) is clearly inconsistent with the provisions of the Act as Regulation 38(2) as amended should be deemed to be a part of the Act for all purposes. The contention is that the resolution dated 1871992 is beyond the powers of the Council under Regulation 205 and should not be taken into account. The learned counsel has placed reliance in case of State of Tamilnadu v. M/s Hind Stones etc. reported in AIR 1981 SC 711. Learned counsel has further submitted that amended Regulation 38 did not contain any provision under which its implementation could be postponed though the amended Regulations admittedly came into force on 731992. Drawing support from Regulation 31(2) of the amended Regulation, it has been submitted that had the framers of the Regulations intended to postpone the implementation of Regulation 38(2), there was no difficulty in providing identical provision for Regulation 38 also. It has been further contended that the passing requirements have no connection with the syllabus as they may be changed or modified at any time. It is incorrect to say that there was any difficulty in implementing the amended Regulation 38 to the Final examination held under the existing syllabus. The learned counsel has submitted that the resolution of the Council clearly amounts to amendment of Regulation 38 which is not provided under Regulation 205 of the Regulations. Learned counsel has further submitted that the power to remove difficulty has bees conferred by Regulations and not by the Act. It is also submitted that Regulation 205(2) applied only to the provisions which existed at the time of the introduction of Regulations of 1988 and it cannot be stretched to include the power to continue the unamended regulations and to postpone the implementation of the future Regulations or amended Regulations. The learned counsel has further submitted that amended Regulation 38(5) takes into account the alleged difficulty and has provided that a candidate who has passed in any one but not in both, the groups or final examination held under the Chartered Accountants Regulations, 1988, shall continue to be governed by the provisions of those Regulations till the commencement of the final examination to be held under the new syllabus, and this is the clear indication that amended Regulation 38 became applicable to the final examination held under the old syllabus and the view taken by the learned single Judge is perfectly justified in the facts and circumstances of the case. At the end, the learned counsel for the respondent has submitted that in the present case, learned single Judge pronounced the operative portion of the judgment on 29104993 and delivered the reasons therefore on 2221995 and this fact was mainly instrumental for petitioner respondent for not appearing in the final examinations held in November, 1993, May, 1994, February, 1995, May, 1995 and now the petitioner respondent will not even b8 entitled to appear in the examination to be held in the month of November, 1995. The petitioner has been thus left in a situation of being deprived of all the benefits of his performance shown in the examination held in May, 1993 In which he has been declared passed in one group. The learned counsel for the petitionerrespondent has submitted that in these facts and circumstances, whatever may be the view about the merits, this Court may refuse to Interfere with the decision of the learned single Judge so far as this case is concerned.

We have considered the rival contentions advanced by the learned counsel for the parties. The controversy in the present tease centres round the question as to what is the extent of authority of the Council to remove difficulty in exercise of the powers conferred on it under Regulation 205, under which it passed resolution dated 1871992 and declared that the provisions of the Regulations of 1988 as in force on 631992, shall continue to govern the final examination under the existing syllabus, till the commencement of such examination to be held under the new syllabus. It would be appropriate at this stage for better appreciation of the controversy to reproduce Regulation 205 hereunder:

"205. Power to remove difficulties.(1) If any difficulty arises in giving effect to the provisions of these Regulations, the Council may, by general or special order, do anything not inconsistent with provisions of the Act which appears to it to be necessary or expedient for the purpose of removing the difficulty.

(2) In particular and without prejudice to the generality of the foregoing power, any such order may provide for continuing in force such provisions of the Chartered Accountants Regulations, 1964, as were applicable to persons governed by the Auditor''s Certificate Rules, 1932 of the Chartered Accountants Regulations 1949, or such other provisions as conferred any right or privilege or as imposed any obligation or liability."

It cannot be denied that the existence of the difficulty is a jurisdictional fact for exercising the power under the provision which provides for removal of such difficulty. However, the question for determination is as to who will be the best suited authority to decide the existence of such difficulty. In our opinion, it is the Council which only could decide, whether there was any difficulty in implementing the amended provisions which required to be removed under Regulation 205 and exercise of this power is not open to challenge except on the ground of mala fides. For this view, we find support from the observations made by Hon''ble Supreme Court in case In re: Commissioner of Income Tax Hyderabad (supra) wherein it has been said that the "true scope and effect of Section 12 seems to be that it is for the Central Government to determine if any difficulty of the nature indicated in the section has arisen and then to make such order or give such direction as appears to it to be necessary to remove the difficulty." If the aforesaid principle is applied to Regulation 205, the Council is the only authority who could say that the difficulty existed which required removal. There was no allegation against the appellants that the power has been exercised with any mala fide object. Therefore, ''in out opinion, the learned single Judge was not justified in saying that there was no difficulty which required removal by exercising power conferred under Regulation 205.

The second limb of the aforesaid consideration is the contention advanced by the learned counsel for the respondent that the Regulations of 1988 as in force on 631992 could not be continued in exercise of the powers under Regulation 205(2). From a perusal of the language used in Regulation 205(2) it is clear that the Council may pass any such order and may provide for continuing in forcesuch other provisions as conferred any right or privilege or as imposed any obligation or liability. In our opinion, the language used is not confined to the Regulations and Rules mentioned in clause 205(2) which existed at the time regulations were passed but it applies to any such provision which was in existence at the time of exercising the power under Regulation 205. The contention of the learned counsel for the respondent cannot be accepted in view of the clear legislative intention expressed in the provision under consideration.

Learned counsel for the respondent has strongly contended that passing requirements have no nexus with, the syllabus and the provisions prescribing new syllabus and the providing new passing requirements could be enforced separately without any difficulty. The submission of the learned counsel is that the passing requirements may be changed at any time. We have considered this submission of the learned counsel. However, in our opinion, the submission cannot be accepted. It is true that the passing requirements may be altered at any time but it is equally true with regard to the syllabus which can be changed at any time with the same passing requirements, hence the fact that passing requirements may be changed at any time cannot be made basis for the challenge that there could be no difficulty. In fact, it has to be decided in the facts of a given case. In the present case the Council prescribed a new syllabus for final examination. Under the old syllabus there were 8 papers for both the groups and out of these 8 papers, 5 were compulsory papers and 3 were optional, A candidate could chose a set of three papers out of three sets of papers (each set containing three papers). Under the new syllabus all the 8 papers are compulsory and no optional paper is available. Under the new syllabus some old papers have been deleted and new papers have been added. It was in view of the aforesaid change in the syllabus that the Council thought it proper to change the passing requirements also which in essence amounts to relaxation that a candidate may pass in both the groups by securing 50% of the total marks in aggregate of both the groups, while under the unattended Regulations, he was required to secure 50% marks separately in each group. From the change introduced in the syllabus the necessary nexus with the passing requirement can be understood and in our opinion the Council was justified in not applying the new passing requirements to the examination held under the old syllabus. It cannot be denied that syllabus to any examination and the passing requirements are part of the same process. That is altogether different matter that on gaining experience after some time passing requirements or syllabus may be changed. However, it is for the consideration of the authority which conducts the examination and to take decision on these matters. In our opinion, there was nothing bad or illegal on the part of the appellants not to apply the new passing requirements to the final examination held under the old syllabus. The contention has no force.

The submission of the learned counsel for the respondents with regard to the fact that Regulations should be treated as part of the Act, even if accepted for the sake of argument, does not bring any change to the aforesaid conclusions. Under this analogy Regulation 205 has also to be treated as part of the Act like other Regulations, in fact the legal position in this regard is that the statutory rules made pursuant to the power delegated by any legislature are the law made by that particular legislature and hence they are to be treated as part of the statute unless otherwise provided. It cannot be ignored that nowadays the plenary legislating body for want of time and in view of the present day complex demands generally discharges legislative functions by laying down broad guidelines and standards and leave it to the subordinate legislating body to fill up the details by making necessary rules. In our opinion, Regulations 31, 38 and 205 if taken to be part of the Act, then also the resolution dated 1874992 in any way, cannot be said to be inconsistent with any provision of the Act. The contention thus has no substance.

Learned counsel for the respondents has also submitted that amended Regulation 38(5) provides necessary safeguard to the candidate appealing in the final examination to be held under the old syllabus and there was no question of any difficulty. We have seriously considered the submission as it was on the basis of this provision that the learned single Judge accepted the case of the respondent. However, in our opinion, on the basis of the amended Regulation 38(5), it cannot be said that it covered all the circumstances and difficulties which have been sought to be removed by the resolution dated 1871992. Regulation 38(5) contemplates about a candidate whose result has been declared applying passing requirements as provided under Regulation 38 (1)(a) of the Regulations. A perusal of Regulation 38(4) and (5) of unamended Regulations shall show that the candidates appearing final examination under the old syllabus could be given benefits contemplated under the aforesaid Regulations. In case the amended Regulations are applied there is no provision dealing with the candidate:) who normally could get benefit under Regulation 38(4) and (5) of unamended Regulations. In these facts and circumstances, in our opinion, the Council rightly came to the rescue of such candidates and passed the resolution dated 1871992 and removed the difficulty. In similar facts, learned single Judge of Karnataka High Court observed as under:

"If the amended provisions are given effect to, many exemptions given to the candidates who wrote the examination under the existing syllabus will be effected, which is not the intention of the amended regulations, it is of no use stating that the Council would have no difficulty in applying the new rule to the case of the petitioners, for, that would not work out the scheme of the amended provisions which is intended only to apply the amended rules to the examinations held under the new syllabus provided for under paragraph 3 A of Schedule ''B''. Such examination will commence only from May, 1966. A reading of the amended provisions would clearly indicate that, that was the intention of the amended Regulations and secondly, the resolution by the Council is well within their power under Regulation 205."

We are in respectful agreement with the view expressed by the learned single Judge.

Learned counsel for the respondents lastly submitted that petitioner could not appear in the final examination due to the delay caused by this Court in giving reasons for the judgment pronounced on 9101993. It has been submitted by the learned counsel that whatever may be the view on the merits taken in this appeal this Court may refuse to interfere with the decision of the learned single Judge so far as this case is concerned. Learned counsel for the respondents also submitted that the petitioner will not be able to appear in the last final examination to be held under the existing syllabus in the month of November, 1995. In connection with the aforesaid submission we put a question to the learned counsel for the appellant as to what can be done by the Council to help the petitionerrespondent in the peculiar facts and circumstances of the present case. Learned counsel for the appellant then placed before us letter dated 691995 of the Secretary of the Institute of Chartered Accountants of India addressed to the learned counsel which reads as under :

"I wish to inform you that the Institute shall honour the desire of the Hon''ble Court in the above matter. The student may be advised to collect the Examination Form, from New Delhi Office/Kanpur and submit the same as early as possible with all relevant documents."

In view of the aforesaid letter, now it is open to the petitioner to apply for appearing in the Final examination scheduled to be held in the month of November, 1995 and we direct that the Form if submitted by the petitionerrespondent, shall be accepted and he will be allowed to appear in the Examination. However, the suggestion of the learned counsel for the respondent that this Court should not interfere with the judgment of the learned single Judge cannot be accepted as the amended Regulation 38(2) could not be applicable to him.

For the reasons stated above, this appeal is allowed. The order ot the learned single Judge dated 2221995 in writ petition No. 31113 of 1993 is set aside. Subject to the direction given above, the writ petition filed by the petitionerrespondent is dismissed. However, there will be no order as to costs.