INSTITUTE OF CHARTERED ACCOUNTANTS versus L.K. RATNA & OTHERS

Citation: [1986] 3 S.C.R. 1049 · Decided: 21-10-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed
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Judgment (excerpt)

< 
INSTITUTE OF CHARTERED ACCOUNTANTS 
v . 
L.K. RATNA & OTHERS 
OCTOBER 21, 1986 
[R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.] 
Chartered Accountants Act, 1949, ss. 17(3), 21(3), 21(4), 22A 
a;,d First Schedule Part I clauses 6 & 7 Regulations 11-15-Member of 
Institute of Chartered Accountants-Charged with Misconduct-Disci-
plinary Committee-Jurisdiction of-Scope of inquiry-Member, 
Whether entitled to hearing by Council of Institute after Disciplinary 
Committee submits report. 
Sec. 21-Nature of Proceedings before the Disciplinary Commit-
tee & Council of the Institute-What·are-The conclusion of Disci-
plinary Committee does not enjoy the status of a 'finding'-Conclusion 
of Council is the first determinative finding-Council~Whether obliged 
to give reasons for its finding. 
Administrative Law-Professional Body-Charge of miscon-
duct-Disciplinary Committee conducting inquiry & submitting report 
to Council for final decision-Participation of members of Disciplinary 
Committee in Council deliberations-Principles of Natural Justice-
Whether violated. 
The appellant-the Institute of Chartered Accountants of India 
was created as a body corporate under the Chartered Accountants Act 
1949. Its members are Chartered Accountants. The affairs of the Insti-
tute are managed by a body known as the Council of the Institute which 
is headed by the President. Below him is the Vice-President. One of the 
Standing Committees of the Council is the Disciplinary Committee. It 
consists of the President and the Vice-President ex-officio of the 
-. 
Council, two members elected by the Committee from its members, and 
a third member nominated by the Central Government. 
Section 21 of the Act lays down the procedure for conducting 
inquiries relating to cases of misconduct by the members and the 
penalty which may be imposed. Sub-s. (I) of s. 21 provides that wh~re 
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1050 
SUPREME COURT REPORTS 
[1986] 3 S.C.R. 
the Council is prima facie of opinion that any member has been guilty of 
any professional or other misconduct it shall refer the case to the Dis'ci-
plinary Committee which is to hold an inquiry and report the result to 
the Council. Suh-s. 4 lays down that where the finding of the Disci-
plinary Committee is that a member has been guilty of professional mis-
conduct it shall afford an opportunity of being heard and may there-
.after make an order either to: (a) reprimand the member; or (b) remove 
the name of the member from the Register for such period not exceed-
ing five years, or (c) 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 or if the member is 
guilty of misconduct other than any such misconduct as is referred to in 
sub-s. 4, it shall forward the case to the High Court with its recommen- · 
dations thereon. Section 22A of the Act entitles a member to prefer an 
appeal to the High Court against an order of the Council. 
The respondents-Chartered Accountants and members of the 
Institute, were charged for committing the offences of professional mis-
conduct under clauses 6 & 7 of Part I of the First Schedule to the Act, in 
that they had prepared and brought out a brochure relating to Manage-
ment Consultancy Services, and had sent out letters to Auditor Firms 
appraising them of its existence. The Council considered their replies 
and being of the prima facie opinion that they were guilty of profes-
sional misconduct referred the cases 'to the Disciplinary Committee 
which,. after affording a personal hearing to the respondents, submitted 
its report to the Council opining that they were guilty of professional 
misconduct. The Council considered the aforesaid report, and, after 
having found the respondents guilty of the misconduct, proposed to 
remove their names from the register of members for a period not 
exceeding five years in accord311ce with the procedure laid down in 
section 21(4). The respondents were informed that they would be called 
upon to appear before the Council to make a representation against the 
proposed action and that the scope of the oral hearing or written rep-
resentation would be restricted to the penalty proposed. 
Aggrieved by the order of the appellant, the respondents filed 
Writ Petitions in the High Court. A Single Judge of the High Court 
allowed the petitions, quashed the orders imposing penalty on the
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