THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA versus MIS PRICE WATERHOUSE AND ANR.

Citation: [1997] SUPP. 2 S.C.R. 267 · Decided: 11-07-1997 · Supreme Court of India · Bench: K. RAMASWAMY · Disposal: Appeal(s) allowed

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Judgment (excerpt)

THE INSTITUTE OF CHARTERED ACCOUNTANTS 
A 
OF INDIA 
v. 
MIS PRICE WATERHOUSE AND ANR. 
JULY 11, 1997 
[K. RAMASWAMY, S. SAGHIR AHMAD 
AND G.B. PATTANAIK, JJ.] 
Cha1tered Accountants Act, 1949-S-21(2) read with Regulation 16 (3) 
B 
& ( 4),-771e Council being empowered by Parliament and also by vi1tue of C 
being the ultimate body colltrolling the conduct of its members can refer a 
matter to the Disiplina1y Committee for fwther enquily even when an enquiry 
has already been conducted and rep01t submitted-If on fwther enqui1y, the 
report does not suppo1t action, then the Council has to give a verdict of not 
guilty since it does not have any power to direct fwther enquiry-Cowicil to D 
consider the explanation of the member, the evidence led and the report of 
the Disciplinary Committee each independently, before coming to a con-
clusion. 
Chartered Accountants Act 1949-Pmt I, First Schedule Clause (6) & 
(7)-Solicitation of professional attainments. 
E 
I11tepretatio11 of Statute~~A/l provisions aie to be read hannoniously 
so as not to render any provision suplus-Unlike inte1preti11g the Constitution 
where the Cowt has wider powers, if the language of a Statute is unambiguous 
and clear, the Cowt cannot innovate or alter the statut01y provisions. 
F 
The appellant Council, on learning that the respondent had profes-
sionally helped the Exim Bank prepare a book, issued notice to them for 
violating the provisions of Part I of the First Schedule to the Chartered 
Accountants Act, 1949. After receipt of the written statement from the 
respondent, the Council referred the matter to the Disciplinary Commit- G 
tee. On the Committee submitting a report, the Council asked the Com· 
mittee to conduct a further enquiry. The Respondent challenged this action 
of the Council before the High Court. The High Court upheld the conten· 
tion of the respondent. 
In appeal to this Court, it was submitted on behalf of the appellant H 
267 
268 
SUPREME COURT REPORTS [1997] SUPP. 2 S.C.R. 
A that the High Court erred in as much as the provisions of the Act read 
with the Regulation gave power to the Council to refer the matter for 
further enquiry. On the other hand the respondent argued inter alia, that 
the High Court was right since the Council can refer the matter to the 
Committee for further enquiry only on a finding by the Committee that the 
B 
c 
member is not guilty and this finding is not acceptable to it; that the 
Council did not apply its mind, and that the consequences are penal in 
nature. 
Allowing the appeal this Court, per majority (K. Ramaswamy J, for 
himself and G.B. Pattanaik J) 
HELD : 1. The Council has the power to call for further report from 
the Disciplinary Committee on the non-guilt of the professional or other 
misconduct of the respondent. In this backdrop, the proviso to sub-regula-
tion (4) of Regulation 16 becomes relevant. In case on the second occasion, 
D the report of the Disciplinary Committee still holds the delinquent member 
not guilty, there is no option left to the Council except, by operation of 
proviso to sub-regulation (4) of Regulation 16 read with Section 21 (2), as 
the Council is enjoined to record finding of no guilt since the power of 
calling for further report would stand exhausted. Any other view, in the 
E 
Courts considered opinion, would defeat the object of the Act. A combined 
reading of the above statutory provisions would indicate that in case the 
Council finds that the report of the Disciplinary Committee recording "no 
guilt" is not correct or relevant material was not consid"ered by the 
Disciplinary Committee, the Council has power to ca:ll further report from 
the Disciplinary Committee. It is ditlicult to give acceptance to the conten-
F 
tion that the report of "no guilt" by the Disciplinary Committee should be " 
given primacy as it would deplete lhe content of the power to maintain 
discipline among the members of the Institute. The ultimate control over 
conduct of members is by the Council. The Disciplinary Committee is a 
fact finding body which is a body subordinate to the Council as a fact 
finding authority. If its finding of guilt or non-guilt receives finality, it 
G denudes the Council of the power to direct further appropriate enquiry 
into the professional or other misconduct not adequately dealt with by the 
Disciplinary Committee. Similarly, the Council would be disabled to exer-
cise effective vigil and supervision over the professional or othe

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