TMI Blog1986 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... endered by the Council. The Council must, therefore, state the reasons for its finding. The appeals fail and are dismissed. - C.A. 1911 OF 1980 - - - Dated:- 21-10-1986 - Judge(s) : R. S. PATHAK., SABYASACHI MUKHARJI JUDGMENT The judgment of the court was delivered by R. S. PATHAK J.--These appeals raise some fundamental questions in regard to the conduct and procedure of disciplinary proceedings taken under the Chartered Accountants Act, 1949 Two of the questions are : " 1. Whether a member of the Institute of Chartered Accountants of India is entitled to a hearing by the Council of the Institute after the Disciplinary Committee has submitted its report to the Council of its enquiry into allegations of misconduct against the member ? 2. When the Council proceeds to consider the Report of the Disciplinary Committee, is the proceeding vitiated by the presence of the members of the Disciplinary Committee who include the President and the vice-president of the Council and three other members of it ? " The appellant is the Institute of Chartered Accountants of India ( "the Institute "). The Institute was created as a body corporate under the Chartered Accountants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thinks fit: Provided that where it appears to the Council that the case is one in which the name of the member ought to be removed from the Register for a period exceeding five years or permanently, it shall not make any order referred to in clause (a) or clause (b), but shall forward the case to the High Court with its recommendations thereon. (5) Where the misconduct in respect of which the Council has found any member of the Institute guilty is misconduct other than any such misconduct as is referred to in subsection (4), it shall forward the case to the High Court with its recommendations thereon. (6) On receipt of any case under sub-section (4) or sub-section (5), the High Court shall fix a date for the hearing of the case and shall cause notice of the date so fixed to be given to the member of the Institute concerned, the Council and to the Central Government, and shall afford such member, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders, namely :-- (a) direct that the proceedings be filed, or dismiss the complaint, as the case may be; (b) reprimand the member; (c) remove him from memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute. In 1967, A. F. Ferguson Co. established a Management Consultancy Division. Ratna was the head of the Division and Behl and Bhoopatkar worked under him. On April 15, 1973, Ferguson Co. wrote to the Institute enquiring whether it could send out letters to auditor-firms apprising them of the existence of their management consultancy service and whether it was forbidden from doing so by any rules of the Institute. The Secretary of the Institute replied that the Council bad appointed a sub-committee for considering the ethical problems arising out of the functioning of the Institute's members in the area of management consultancy service and the firm was requested to wait for the recommendations of the sub-committee. On December 8, 1971, Ratna issued a circular to the partners and principals of the firm setting forth guidelines on bringing the management consultancy service brochures to the attention, of their respective clients. Meanwhile, Ferguson Co. also referred the matter to their solicitors, and the solicitors advised that making available of printed informative material in the form of a brochure would not be in contravention of clauses 6 and 7 in Part I of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional misconduct under clauses 6 and 7 of Part I of the First Schedule to the Act in so far as he solicited clients directly or indirectly and also advertised professional attainments of his services. In its meeting of February 16, 1974, the Council considered the report of the Disciplinary Committee and found that Ratna was guilty of misconduct. On February 25, 1974, the Institute wrote to Ratna that the Council had found him guilty of professional misconduct, as charged, and that it was proposed to remove his name from the Register of Members for a period not exceeding five years in accordance with the procedure laid down in section 21(4) of the Act. He was informed that he would be called upon to appear before the Council at its next meeting but in case he did not wish to be heard in person, he was entitled to send a written representation against the proposed action. He was required to take note that the scope of the oral hearing for consideration of the written representation would be restricted to the penalty proposed. Copies of the report of the Disciplinary Committee and the findings of the Council were forwarded to him. On March 5, 1974, Ratna applied for extension of time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute. When the Council receives information or a complaint alleging that a member of the Institute is guilty of misconduct, and it is prima facie of opinion that there is substance in the allegations, it refers the case to the Disciplinary Committee. The Disciplinary Committee plays a subordinate role. It conducts an inquiry into the allegations. Since the inquiry is into allegations of misconduct by the member, it possesses the character of a quasi-judicial proceeding. The Disciplinary Committee thereafter submits a report of the result of the inquiry to the Council. The Disciplinary Committee is merely a Committee of the Institute, with a function specifically limited by the provisions of the Act. As a subordinate body, it reports to the Council, the governing body. The report will contain a statement of the allegations, the defence entered by the member, a record of the evidence and the conclusions upon that material. The conclusions are the conclusions of the Committee. They are tentative only. They cannot be regarded as " findings ". The Disciplinary Committee is not vested by the Act with power to render any findings. It is the Council which is empowered to find whether a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he has not been heard. He is clearly entitled to an opportunity of hearing before the Council finds him guilty of misconduct. At this point, it is necessary to advert to the fundamental character of the power conferred on the Council. The Council is empowered to find a member guilty of misconduct. The penalty which may follow is so harsh that it may result in his removal from the Register of Members for a substantial number of years. The removal of his name from the Register of Members deprives him of the right to a certificate of practice. As is clear from section 6(1) of the Act, he cannot practise without such certificate. In the circumstances, there is every reason to presume in favour of an opportunity to the member of being heard by the Council before it proceeds to pronounce upon his guilt. As we have seen, the finding by the Council operates with finality in the proceeding, and it constitutes the foundation for the penalty imposed by the Council on him. We consider it significant that the power to find and record whether member is guilty of misconduct has been specifically entrusted by the Act to the entire Council itself and not to a few of its members who constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable opportunity had been given to all the concerned parties to represent their cases before the Government made the impugned order. In the latter, the court held that no real prejudice had been suffered by the complainant in the circumstances of the case. It is next pointed out on behalf of the appellant that while regulation 15 requires the Council, when it proceeds to act under section 21(4), to furnish to the member a copy of the report of the Disciplinary Committee, no such requirement is incorporated in regulation 14 which prescribes what the Council will do when it receives the report of the Disciplinary Committee. That, it is said, envisages that the member has no right to make a representation before the Council against the report of the Disciplinary Committee. The contention can be disposed of shortly. There is nothing in regulation 14 which excludes the operation of the principle of natural justice entitling the member to be heard by the Council when it proceeds to render its finding. The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary. It is then urged by learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid decision to expel him is subsequently made. Such a deprivation would be a powerful result to be achieved by what in law is a more nullity ; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body." The view taken by Megarry J. was followed by the Ontario High Court in Canada in In re Cardinal and Board of Commissioners of Police of City of Cornwall [1974] 42 DLR (3d) 323. The Supreme Court of New Zealand was similarly inclined in Wislang v. Medical Practitioners Disciplinary Committee [1974] 1 NZLR 29 and so was the Court of Appeal of New Zealand in Reid v. Rowley [1977] 2 NZLR 472. But perhaps another way of looking at the matter lies in examining the consequences of the initial order as soon as it is passed. There are cases where an order may cause serious injury LS soon as it is made, an injury not capable of being entirely erased when the error is corrected on subsequent appeal. For instance, as in the present case, where a member of a highly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt allowed the writ petitions, and as we have already heard full arguments on it, we proceed now to consider the point. The question is whether the respective findings of the Council holding the three members guilty of misconduct can be said to be vitiated by bias because the members of the Disciplinary Committee participated in those proceedings. As has been pointed out, section 17 of the Act provides for a Disciplinary Committee, consisting of the President and the Vice-President ex-officio of the Council, who will be the Chairman and Vice-Chairman respectively of the Disciplinary Committee, and three other members of the Council, two of them being elected by the Council to the Committee, and the third being nominated by the Central Government from amongst the persons nominated to the Council by the Central Government. Therefore, all the live members of the Disciplinary Committee are drawn from the Council. Now, the Council is vested with power under section 21 to find whether the member is guilty of misconduct. There is nothing in section 21 of the Act, however, to indicate whether the members of the Disciplinary Committee should be excluded when the Council enters upon i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other members of the Disciplinary Committee would maintain the opinion expressed by them in their report and would press for the acceptance of the report by the Council. To the member whose conduct has been investigated by the Committee, the possibility of the Council disagreeing with the report in the presence of the President and the Vice-President and the other members of the Committee would seem rather remote. His fears would be aggravated by the circumstance that the President would preside over the meeting of the Council and would thus be in a position to control and possibly dominate the proceedings during the meeting. We do not doubt that the President and Vice-President, and also the three other members of the Disciplinary Committee, should find it possible to act objectively during the decision-making process of the Council. But to the member accused of misconduct, the danger of partisan consideration being accorded to the report would seem very real indeed. The objection on the ground of bias would have been excluded if the statute had expressed itself to the contrary. But nowhere do we find in the Act any evidence to establish such exclusion. It is true that by vir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts proceeded in upholding the validity of the meeting of the parent body, despite the participation therein of the members of the Disciplinary Committee, lay in this that the entire proceeding, that is to say, the enquiry by the Committee and the subsequent consideration of its report by the parent body, constituted a single proceeding, and had to be distinguished from case where the decision by a subordinate body was assailed in appeal before a superior authority. This distinction, it seems to us, can be of little assistance if full play is given to the maxim that no man shall be judge in his own cause. We are impressed by the soundness of the minority opinion pronounced by that learned and distinguished judge, Laskin C.J.C. in Law Society of Upper Canada v. French (49 DLR (3d) 1) decided by the Supreme Court of Canada. He observed : " I do not think that the issue herein falls to be decided according to whether the proceedings in Convocation are or amount to an appeal or are or amount to a review under a two-stage scheme of inquiry into allegations of professional misconduct. No doubt, characterization of the proceedings as an appeal may lend weight to the contention of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
