D.K. AGRAWAL versus COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

Citation: [2021] 7 S.C.R. 1043 · Decided: 23-09-2021 · Supreme Court of India · Bench: S. ABDUL NAZEER · Disposal: Appeal(s) allowed

cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
1043
D.K. AGRAWAL
v.
COUNCIL OF THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA
(Civil Appeal No. 6337 of 2021)
SEPTEMBER 23, 2021
[S. ABDUL NAZEER AND KRISHNA MURARI, JJ.]
Chartered Accountants Act, 1949 – ss.9, 17, 21, 22-A –
Complaints against appellant-Chartered Accountant received by
respondent-Institute – Council of the Institute prima facie opined
that the appellant was guilty of professional and/or other misconduct
– Case referred to Disciplinary Committee – Disciplinary Committee
submitted its report to the Council also opining the appellant to be
guilty of other misconduct – Report accepted by Council –
Recommendations made to High Court for removal of the appellant’s
name from the Register of the Members – Accepted by High Court –
On appeal, held: Observations of the Disciplinary Committee cannot
by any stretch of imagination be treated as findings – It is only the
Council which is empowered to find out whether the member is guilty
of misconduct – Power exercised by the Council u/s.21 is quasi--
judicial in nature – Recording of reasons is a principle of natural
justice and every judicial/quasi--judicial order must be supported
by reasons to be recorded in writing – In the present case,
recommendations of the Council show that it did not discuss the
report of the Disciplinary Committee, written statement and oral
submissions of the appellant while coming to the conclusion that he
is guilty of misconduct – Recommendations were made mechanically
– High Court equally erred in accepting the said recommendations
– Recommendations passed by the Council set aside – Orders of the
High Court also set aside – Matters remitted back to the Council
for fresh consideration – Chartered Accountants Regulations, 1964
– Regulations 13-15 – Principles of Natural Justice.
Principles of Natural Justice – Recording of reasons –
Necessity of – Discussed.
[2021] 7 S.C.R. 1043
1043
A
B
C
D
E
F
G
H
1044
SUPREME COURT REPORTS
[2021] 7 S.C.R.
Allowing the appeals, the Court
HELD:1.1 The Institute of Chartered Accountants of India
is a statutory body created by an Act of Parliament, the Chartered
Accountants Act, 1949. In accordance with Section 9, the
management of the affairs of the Insitute are vested in the Central
Council. The Council performs its functions through three
different standing committees. The function of the Institute is to
regulate the provisions of the Act and it is also empowered to
take action against its members for any misconduct as
contemplated in the Act and relevant regulations framed
thereunder. 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 22-A provides for filing of
an appeal by a member against imposition of penalty. Regulation
13 of the Chartered Accountants Regulations, 1964 provides for
the procedure of an inquiry before the Disciplinary Committee.
The report of the Disciplinary Committee will contain a statement
of the allegations, the defence entered by the members, the
recorded evidence and the conclusions expressed by the
Disciplinary Committee. The conclusions of the Disciplinary
Committee are tentative and the same are not recorded as
findings. It is only the Council which is empowered to find out
whether the member is guilty of misconduct. If on receipt of the
report, the Council finds that the member is not guilty of
misconduct, Section 21(2) requires that it shall record its finding
accordingly and direct that the proceedings shall be filed or the
complaint shall be dismissed. On the other hand, if the Council
finds that the member is guilty of misconduct, Section 21(3)
requires it to record a finding accordingly and to proceed in the
manner laid down in the succeeding sub--sections. 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. Sub--section (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
A
B
C
D
E
F
G
H
1045
any orders are passed against him. After recording a finding that
a member is guilty of miscondu

Excerpt shown. Read the full judgment & AI analysis in Lexace.