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2021 (10) TMI 526 - SC - Indian LawsProfessional and/or other misconduct - removal of the name of the appellant from the membership of the respondentInstitute for a period of five years - wrong deposit of amount in local treasury unit of Income tax Department at Agra - further, allegation is that the appellant had interpolated assessees’ copies of challans to show higher figures and claimed the higher amount - HELD THAT:- The Institute of Chartered Accountants of India is a statutory body created by an Act of Parliament that is the Chartered Accountants Act, 1949. In accordance with Section 9 of the Act, the management of the affairs of the Institute are vested in the Central Council. The Council performs its function through three different standing committees constituted under Section 17 of the Act and various other committees. One of the standing committees of the Institute is the Disciplinary Committee. Section 21 of the Act prescribes the procedure to be followed with regard to an inquiry relating to the misconduct of the members of the Institute. Section 22A provides for filing of an appeal by a member against imposition of penalty. The Act was amended on 08.08.2006 by Act 9 of 2006. The findings by the Council constitute the determinative decision as to the guilt of the member and because it is determinative in character, the Act requires it to be recorded. Thus, the Council has to determine that a member is guilty of misconduct and the task of recording of the findings has been specifically assigned to the Council. Subsection (4) of Section 21 mandates that where a member of the Institute has been guilty of professional misconduct specified in the First Schedule of the Act, the Council shall afford to such member an opportunity of being heard before any orders are passed against him. After recording a finding that a member is guilty of misconduct, the Act moves forward to the final stage of penalisation. In INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VERSUS PRICE WATERHOUSE AND ANR. [1997 (7) TMI 649 - SUPREME COURT] it was held by this Court that the Disciplinary Committee is a factfinding body which is subordinate to the Council as a factfinding Authority. After analysing Section 21 and Regulation 15, this Court held that the Council is required to independently consider the explanation submitted by the member and the evidence adduced in the inquiry before the Disciplinary Committee and the report of the Committee. Recording of reasons is a principle of natural justice and every judicial/quasijudicial order must be supported by reasons to be recorded in writing. It ensures transparency and fairness in the decisionmaking process. The person who is adversely affected wants to know as to why his submissions have not been accepted. Giving of reasons ensures that a hearing is not rendered as a meaningless charade - It is a wellknown principle that justice should not only be done but should also be seen to be done. An unreasoned decision may be just, but it may not appear to be so to the person affected. A reasoned decision, on the other hand, will have the appearance of fairness and justice. Where the Council has found any member of the Institute to be guilty of misconduct, it is required under the Act to forward the matter to the High Court with its recommendations and the High Court has to pass final order either dismissing the complaint or penalizing the member of the Institute. The order of the Council, imposing penalty upon the member, is also appealable by the members aggrieved before the High Court. In the circumstances, it is all the more necessary that the recommendation/order of the Council should contain reasons for the conclusion - the High Court has equally erred in accepting the recommendations of the Council without applying its own logic to this aspect of the matter. The recommendations/order(s) passed by the Council of the Institute of Chartered Accountants of India are set aside - matters are remitted back to the Council for fresh consideration and disposal in accordance with law - Appeal allowed.
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