TMI Blog1957 (9) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India. He, however, made no report about the progress of liquidation of the said three companies. Repeated requests made to him by the Assistant Controller of Insurance found no response. As Liquidator the respondent gave a cheque to Shri S. K. Mandal, Solicitor to the Central Government at Calcutta, towards payment of the taxed costs in the winding- up proceedings of one of the companies. The said cheque was, however, returned dishonoured on the ground that the payment had not been arranged for. When the Assistant Controller of Insurance found that the conduct of the respondent as Liquidator was wholly unsatisfactory and that he would not even show the ordinary courtesy of replying to the letters addressed to him, he proceeded to cancel the appointment of the respondent as Liquidator by his letter dated October 29, 1952. The respondent was then called upon to hand over all books of account, records, documents, etc., to Shri N. N. Das, who was appointed a Liquidator in his place. Shri Das as well as the Assistant Controller of Insurance then made repeated demands on the respondent to deliver to Shri Das the assets and records of the three companies. It is common ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was then forwarded to the High Court of Judicature at Calcutta as required by section 21 (1) of the Act and the matter was heard by the learned Chief Justice and Mr. Justice Lahiri. By their judgment delivered on January 12, 1955, the reference was rejected on the ground that no action could be taken against the respondent under the Act though the facts proved against the respondent showed that he had been guilty of grossly improper conduct if not dishonesty . On these facts the main point which arises for our decision is what is the nature, scope and extent of the disciplinary jurisdiction which can be exercised under the provisions of this Act against the respondent. It would now be necessary to examine the scheme of the material provisions of the Act. This Act came into force in 1949 and it was passed, because the Legislature thought it expedient to make provision for the regulation of professional accountants and for that purpose it has provided for the establishment of the Institute of Chartered Accountants. Section 2, sub-s. (1) (b) defines a Chartered Accountant as meaning a person who is a member of the Institute and who is in practice . Section 2, sub-s. (2) provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any member who has been found by the High Court to have been guilty of conduct which renders him unfit to be a member of the Institute. Chapter V deals with the question of misconduct. It consists of ss. 21 and 22. Chapter VI deals with the constitution and functions of the Regional Councils; chapter VII deals with penalties and chapter VIII deals with miscellaneous matters. Section 21 deals with the procedure of enquiries relating to misconduct of members of the Institute. It reads thus: S. 21. (1)-Where on receipt of information or on receipt of a complaint made to it, the Council is of opinion that any member of the Institute has been guilty of conduct which, if proved, will render him unfit to be a member of the Institute, or where a complaint against a member of the Institute has been made by or on behalf of the Central Government, the Council shall cause an inquiry to be held in such manner as may be prescribe and the finding of the Council shall be forwarded to the High Court. (2) .................... (3) .................... (4) .................... Sub-sections (2), (3) and (4) of s. 21 deal with the powers of the High Court in dealing with the reference ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces as in the opinion of the Council are or may be rendered by a chartered accountant. In other words, just as a member of the Institute Who engages himself in the practice of accountancy is by such conduct deemed to be in practice as a chartered accountant, so is he deemed to be in practice as a chartered accountant when he renders other services mentioned in s. 2, sub-s.(2) (iv). What other services attract the provisions of this sub-section has to be determined in the light of the regulations framed under provisions of this Act. Section 30 of the Act confers power on the Council to make regulations by notification in the Gazette of India for the purpose of carrying out the object of the Act and it provides that a copy of such regulation should be sent to each member of the Institute. Section 30, sub-s. 2 sets out the several topics in respect of which regulations can be framed though, as usual, it provides that the enumeration of the different topics is without prejudice to the generality of the powers conferred by s. 30, sub-s.(1). Sub-s. (4) lays down that, notwithstanding anything contained in sub-ss. (1) and (2), the Central Government may frame the first regulations for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as liquidator must be characterised as his professional acts and omissions. Practice according to Webster's New International Dictionary means Cc exercise of any profession or occupation and if the performance of the duties as liquidator attracts the provisions of s. 2, sub-s. (2), whatever the chartered accountant does as a liquidator must be held to be conduct attributable to him in the course of his practice. The object with which cl. (iv) in sub-s. (2) of s. 2 has been deliberately introduced by the Legislature' in our opinion, appears to be to bring within the disciplinary Jurisdiction of the statutory bodies recognized under the Act, conduct of chartered accountants even while they are rendering services otherwise than as chartered accountants properly so-called. It is because the Legislature wanted to provide for a self-contained code of conduct in respect of chartered accountants that the denotation of the expression to be in practice has been in a sense deliberately and artificially extended by virtue of s. 2, sub-s. (2), el. (iv). We must, therefore, hold that, on the facts proved, the respondent is clearly guilty of professional misconduct. This would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred on the Council under sub-s. (1) of s. 21. The position thus appears to be that though the definition of the Material expression used in s. 21, sub-s. (1), refers to the acts and omissions specified in the schedule, the list of the said acts and omissions is not exhaustive;and, in any event, the said list does not purport to limit the powers of the Council under s. 21, sub-s. (1), which may otherwise flow from the words used in the said sub-s. itself. The schedule to which s. 22 refers has enumerated in cls. (a) to (v) several acts and omissions and it provides that, if any of these acts or omissions is proved against a chartered accountant, he shall be deemed to be guilty of professional misconduct which renders him unfit to be member of the Institute. Clause (v) is rather general in terms since it provides for cases where the accountant is guilty of such other act or omission in his professional capacity as may be specified by the Council in this behalf by notification in the Gazette of India. It must be conceded that the conduct of the respondent in the present case cannot attract any of the provisions in the schedule and may not therefore be regarded as falling within the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings because the finding which had been referred to the High Court was only one and that was that the respondent was guilty of professional misconduct in the narrow sense of the term. In other words, the High Court thought that in accepting, and acting or the larger construction of the material words the High Court would be making out a new case on the reference and the High Court would not be justified in adopting such a course. In our opinion, this view is not well-founded. Section 2 1, sub-s. (2), lays down the procedure to be followed by the High Court when a finding made by the Council is referred to it under s. 21, sub-s. (1). Notice of the day fixed for the hearing of the reference has to be given to the parties specified in s. 21, subs. (1) and an opportunity of being heard has to be given to them. Section 21, sub-s. (3), then lays down that the High Court may either pass such final orders on the case as it thinks fit or refer it back for further inquiry by the Council and, upon receipt of the finding after such inquiry, deal with the case in the manner provided in sub-s. (2) and pass final orders thereon. It is clear that, in hearing references made under s. 21, sub-s. (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and in that sense the conclusion of the Bombay High Court that the conviction itself may be the basis of disciplinary action is, with respect, wholly correct; but the other observations on which reliance is placed by the respondent before us are obiter and it also appears from the judgment that the attention of the learned Judges was not drawn to the provision of s. 2 (2) (iv) and other relevant considerations do not appear to have been urged before them in that case. As the judgment itself points out, apart from the technical points which were urged before the court on behalf of the chartered accountant, there was a large volume of other evidence produced against him which conclusively proved that he was guilty of misconduct. Mr. Ashwini Kumar Ghosh, for the respondent, has also sought to rely on Haseldine v. Hosken (1). In this case the solicitor had taken out an indemnity policy which insured him against loss arising by reason of any neglect, omission or error while acting in his. professional capacity. During the subsistence of this policy, the solicitor sustained loss through having, without realizing the fact, entered into a champertous agreement. When the solicitor made a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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