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H.A.K. Rao Vs. Council of the Institute of Chartered Accountants of India - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKarnataka High Court
Decided On
Case NumberWrit Petn. No. 473 of 1964
Judge
Reported inAIR1965Kant112; AIR1965Mys112; (1964)1MysLJ386
ActsChartered Accountants Act, 1949 - Sections 22; Chartered Accountants Regulation - Regulations 4(B), 54A, 54A(2) and 54A(4B); Constitution of India - Articles 19(1) and 245(1)
AppellantH.A.K. Rao
RespondentCouncil of the Institute of Chartered Accountants of India
Excerpt:
.....4 (b), 54a, 54a (2) and 54a (4b) of chartered accountants regulation - writ petition challenging council's notification on grounds that it was issued without authority of law - effect of impugned notification is that activities covered by items 1 and 2 become misconduct - manifestos or circulars in connection with election were specified as misconduct under item 1 - impugned notification is wide enough to make issuing of any manifestos or circulars in connection with election a misconduct so that disciplinary action is attracted - it is clearly opposed to proviso to regulation 54a (2) because intendment of proviso that declaration of policy or promise of particular action should not be deemed to be undue influence is encroached upon by this notification - validity of item i in..........we are concerned only with the validity of items 1 and 2 in the notification.(2) the effect of the council's notification is that the activities covered by items 1 and 2 therein become misconduct. the relevant part of section 22 of the act which defines professional misconduct is as follows:--'22. professional misconduct defined:-- for the purposes of this act, the expression 'professional misconduct' shall be deemed to include any act or omission specified in any of the schedules,...............' further, part ii of the second schedule contains the following :--'part ii professional misconduct in relation to members of the institute generally requiring action by a high court.a member of the institute, whether in practice or not, shall be deemed to be guilty of professional misconduct,.....
Judgment:

Sadasivayya, J.

(1) The Petitioner is a Chartered Accountant by Profession and is a fellow member of the Institute of Chartered Accountants of India (hereinafter referred to as the Institute). The respondent is the Council of the said Institute. The respondent is the Council of the said Institute. The Institute is a creature of The Chartered Accountants Act,1949 (hereinafter referred to as the Act). From what has been stated in the affidavit of the petitioner, it would appear that the election to the Central Council and the Regular Councils is due to take place in the month of August 1964 and that the Petitioner is a prospective candidate for the Central Council. Exhibit 1 is an announcement dated 22nd February 1964, issued by the President of the Institute. It pertains to the forthcoming elections to the Central and Regional Councils. The relevant portion of that announcement is as follows:

'IMPORTANT ANNOUNCEMENT

* * * * * *

Members' attention is invited to Regulation 54 A of the Chartered Accountants Regulations (Copy enclosed), which provides for disciplinary action against members under certain circumstances in connection with the conduct of elections.

The Council feels that, in addition to the requirements under this Regulation, the candidates should refrain from all such practices as undermine the honour and dignity of the profession. The Council, therefore, solicits the support of members to help in conducting the elections in a spirit of dignity and decorum.

It is felt that the candidates could best bring to the attention of the voters their qualification by taking active interest in professional activities like contributions through the Journal of the Institute, participation in seminars, meetings and discussions and through assistance in other activities of the Institute like promotion of research, rather than through direct or indirect canvassing.

It has, therefore, been decided that any attempt at canvassing through issue of manifestoes circulars, etc., should be considered as 'misconduct' under the Chartered Accountants Act, rendering the members concerned liable for disciplinary action. The Council had issued a notification to that effect being Notification No. 1-CA(34)/64 dated 22nd February 1964 (Copy enclosed)

The Council reiterates its earnest appeal to every member of the Institute to co-operate in implementing this decision of the Council and to ensure that the forthcoming and future elections to the Central and Regional Councils are conducted in a manner worthy of a learned profession, with all decisions and highest ethical standards.

Yours Sincerely,

R.C. COOPER;

President.'

The notification dated 22-2-1964 referred to in the above announcement and which the Council has issued is as follows :

'NOTIFICATION

(Chartered Accountants)

No. 1-CA (34)/64. In exercise of the powers conferred by clause (ii) of part II of the Second Schedule to the Chartered Accountants Act, 1949, the Council of the Institute of Chartered Accountants of India specifies that a member of the Institute shall be deemed to be guilty of misconduct, if, in connection with election to the Central and/or Regional Councils of the Institute, he is found to have taken part, directly or indirectly, either himself or through any other person, in any of the following activities:--

1. Issuing manifestoes or circulars;

2. Canvassing votes by visiting places of business or residence of voters or in any other manner; and

3. Organising parties to entertain voters.

C. BALAKRISHNAN

Secretary'

The Petitioner has, on various grounds, contended that the said notification is without the authority of law and has sought for a writ of certiorari quashing the notification. In the counter affidavit filed on behalf of the respondent, the Council has taken the stand that it was within its competence to issue this notification and that the same is valid in law.

Although the whole of the notification, above referred to, has been attacked in the petitioner's affidavit as being illegal, Mr. Srinivasan, the learned Advocate for the petitioner, made it clear in the course of his arguments that he was not interested in attacking the validity of item 3, namely the prohibition against organising parties to entertain voters. Therefore, we are concerned only with the validity of items 1 and 2 in the notification.

(2) The effect of the Council's notification is that the activities covered by items 1 and 2 therein become misconduct. The relevant part of Section 22 of the Act which defines professional misconduct is as follows:--

'22. Professional misconduct defined:-- For the purposes of this Act, the expression 'Professional Misconduct' shall be deemed to include any act or omission specified in any of the Schedules,...............'

Further, Part II of the Second Schedule contains the following :--

'PART II

Professional misconduct in relation to members of the Institute generally requiring action by a High Court.

A member of the Institute, whether in practice or not, shall be deemed to be guilty of professional misconduct, if he--

(i) Contravenes any of the provisions of this Act or the regulations made thereunder;

(ii) is guilty of such other act or omission as may be specified by the Council in this behalf, by notification in the Gazette of India.'

It is the exercise of the power vested in the Council under Clause (ii) of part II, that the present notification has been issued by the Council specifying the activities covered by the issued in that notification as misconduct.

(3) We will now take the first item in the notification, namely the manifestoes or circulars in connection with the election, which has been specified in the notification as misconduct. The power of the Council to specify an acts or omission under Clause (ii) of part II of the second Schedule, is not disputed by the learned Advocate for the petitioner. But his argument is that the effect of the words 'Such other' in the said clause (ii) is that the act or omission which may be specified under that clause, must be other than any contravention of the provisions of the Act or the regulations--such contravention being covered by clause (i). It is further argued by him that the specification under Clause (ii) of any act or omission, must be done so as not to offend any of the provisions of the Act or the regulations. These arguments must have been advanced with a view to lead to his contentions that the specifying of the issuing of manifestoes or circulars as a misconduct, comes into conflict with the proviso to Clause (ii) of Regulation 54 A. The relevant part of Regulation 54A is as follows:

'54A. Disciplinary action against member in connection with conduct of election.

A member of the Institute shall be liable to disciplinary action by the council if he adopts one or more of the following practices with regards to the election to the Council, namely :

(1) * * * * * * * * (2) Undue influence, that is to say, any of direct or indirect interference or attempt to interfere on the part of a candidate or of any other person with the connivance of the candidate, with the free existence of any electoral right :

Provided that--

declaration of policy or a promise of a particular action, or the mere exercise of a legal right without the intent to interfere with an electoral right, shall not be deemed to be interference within the meaning of this Clause.'

Section 30(1) of the Act provides that the Council may, by notification in this Gazette of India, make regulations for the purposes of carrying out the subjects of the Act. But, sub-section (3) of section 30 requires that all regulations made by the Council, 'shall be subject to the condition of previous publication and to the approval of the Central Government.' This means that the regulations made by the council, under Section 30 of the Act will have been previously published and that they also have the approval of such a high authority as the Central Government. But, the specifying of any act or omission by notification in the Gazette of India, by the Council acting under part II of the Second Schedule, is not subject to any such limitation; that is, no previous publication or approval of the Central Government is necessary. The Council can make any act or omission a misconduct by mere notification in the Gazette of India and it can also at any time similarly modify or withdraw such a notification.

Therefore, the power that is exercised by the Council under part II of the Second Schedule, in notifying any act or omission as a misconduct, cannot stand on the same footing as the power vested in it for making regulations; by reason of the fact that some degree of control is vested in the Central Government, (because it has to accord its approval), the regulations necessarily stand on a higher footing than the mere power to notify under Part II of the Second Schedule. For this reason, it seems to be clear that the power exercised under the said part II ought not to offend any of the provisions of the regulations; further, the words 'Such other' in (ii) of part II make it clear that the act or omission to be notified must be other than any contraventions of the provisions of the Act or regulations--which are covered by (i) of part II. If this be the true position, as we understand it to be, the specifying of the act of issuing manifestoes or circulars by a member of the Institute in connection with the election, as a misconduct, ought not to come into conflict with any of the provisions of the regulations.

Regulations 54A(2) provides for disciplinary action against a member if in connection with the conduct of election, he uses undue influence. But, the proviso (quoted above) to Clause (2) of Regulation 54A specifically states that a declaration of policy or a promise of a particular action, shall not be deemed to be interference within the meaning of the said Clause (2) (which pertains to undue influence). The effect of this proviso is that a declaration of policy or a promise of a particular action by a candidate or by a member, shall not be deemed to be under influence. Therefore, if a member, in connection with election to the Council, (Central or Regional), issues a manifesto or circular containing merely a declaration of policy or a promise of a particular action, then, the same shall not be deemed to be undue influence; such is the effect of that proviso. But, the impugned notification made by the respondent council, is wide enough to make the issuing of any manifestoes or circulars in connection with election, a misconduct, so that disciplinary action is attracted.

It seems to us that this is clearly opposed to the proviso to Regulation 54A(2); because, the intendment of the proviso that the declaration of a policy or a promise of a particular action should not be deemed to be undue influence, is encroached upon by this notification. The validity of item I in the notification cannot be sustained, to the extent to which it encroaches upon the intendment of the provision to Clause (2) of Regulation 54A. A direction will issue to the respondent Council requiring it to modify item 1 of the notification so as to limit the misconduct to the issuing of manifestoes or circulars other than those which contain a mere declaration of policy or a promise of a particular action. A further order will issue to the respondent Council that until such modification is made, no action on the ground of misconduct shall be taken in any case in which the manifesto or circular contains nothing more than a mere declaration of policy or a promise of a particular action.

(4) The second item in the notification makes it a misconduct to canvass votes by visiting places of business or residence of the voters or in any other manner. The argument advanced on behalf of the petitioner in regard to this item is that it comes into conflict with Regulation 54A(4B). That provision is as follows :

'54A. Disciplinary action against member in connection with conduct of election.

A member of the Institute shall be liable for disciplinary action by the Council if he adopts one or more of the following practices with regard to the election to the Council, namely :

* * * * * * * * * * * * (4B) The canvassing for votes, or soliciting the votes of any elector, or persuading any elector not to vote for any particular candidate, or persuading any elector not to vote at the election, or exhibiting any notice or sign board (other than an official notice) relating to the election, by a candidate or by any other person with the connivance of a candidate within a distance of 200 metres from a polling booth.'

The argument advanced in two fold: Firstly, it is stated that by implication the provisions of (4B) permit canvassing for votes beyond the distance of 200 metres from a polling booth; secondly, that it would not be competent for the Council to make any provision for the prohibition of canvassing within a distance of 200 metres from any polling booth, since that is already covered by Regulation 54A(4B). After hearing the arguments of both the sides on this point, we are satisfied that there is no substance in either of these contentions. As has been pointed out by Sri. Ethirajulu Naidu the learned Advocate for the respondent, the provisions of (4B) do not say anything about what may or may not be done at any place beyond the distance of 200 metres from any polling booth; What (4B) provides for is that there will be liability for disciplinary action if a candidate or any other person with connivance of the candidate does certain acts within a distance of 200 metres from a polling booth; those acts are, the canvassing for votes; or soliciting the vote of any elector, or persuading any elector not to vote (whether at the election or for any particular candidate), or exhibiting any notice or sign board (other than an official notice) relating to the election.

All this has been done in order to ensure that in the area within a distance of 200 metres from the polling booth, the atmosphere necessary for free voting shall prevail. It is clear that (4B) is not in any way concerned with what is either done or not done beyond the distance of 200 metres from a polling booth. If the Council considers it necessary or desirable to regulate such activities even in any area beyond the distance of 200 metres from the polling booth, there in no good reason as to why it should not make appropriate provision therefor, by a notification in the Gazette of India. By regulating the activities in connection with the election, in any area or places beyond the distance of 200 metres, the Council will not be doing anything contrary to what is contained in (4B). It has also been urged on behalf of the petitioner that the total prohibition in item 2 of the notification of canvassing for votes in any manner is wide enough to include even the area within the distance of 200 metres from a polling booth and that, therefore, it interferes with the provision made in regulation 54A(4B).

It may be, that the prohibition in the second item of the notification extends also to the area of 200 metres dealt with by Regulation (54A)(B). But we do not find any conflict between the two. The prohibition in item 2 against canvassing for votes, may overlap the provisions of Regulation 54A(4B), in the area within a distance of 200 metres from a polling booth. But, this prohibition does not come into conflict with anything provided under the said regulation 54A(4B). When there is nothing in item 2 of the notification which offends any of the provisions of the said Regulation (4B), there will be no jurisdiction for striking down the said item merely because it may happen to overlap, to some extent, the provisions of Regulation (4B). In this view of the matter, we must reject the contention that item 2 of the notification is in any way contrary to the provisions of Regulation 54A(4B).

(5) A somewhat faint attempt was made by the learned Advocate for the petitioner to contend that the prohibition in item 2 may operate as unreasonable restriction on the fundamental right of the freedom of speech and expression guaranteed under Article 19(1)(a) and on the fundamental right of the petitioner to carry on his profession as guaranteed under Article 19(1)(g) of the Constitution of India. We are not satisfied that there is any strength in such a contention. The right to be a member of the Institute as well as the right to stand for election to the Council, are all statutory rights which can only be exercised on the conditions laid down in the provisions of law, regulations and notifications pertaining thereto. In this connection reference may be made to the observations made in : [1955]1SCR608 , Jamuna Prasad Mukhariya v. Lachhi Ram, (at page 688) relating to the right of a candidate standing for election under the Representation of the People Act. Those observations which apply to this case also, are as follows :

'It was contended that Article 245(1) prohibits the making of laws which violate the Constitution and that the impugned sections interfere with a citizen's fundamental right to freedom of speech. There is nothing in this contention. These laws do not stop a man from speaking. They merely prescribe conditions which must be observed if he wants to enter parliament.

The right to stand as candidate and contest an election is not a common law right. It is a special right created by the statute and can only be exercised on the conditions laid down by the statute. The Fundamental Rights Chapter has no bearing on a right like this created by statute. The appellants have no fundamental right to be elected members of parliament. If they want that they must observe the rules. If they prefer to exercise their right of free speech outside these rules, the impugned sections do not stop them.'

Any right to canvass for votes in connection with election to the Council, could only be incidental to the said statutory rights; therefore, such incidentals rights also can be regulated by the Provisions of the Act. Failure to conform to the statutory requirements may lead to disciplinary action being taken against the concerned member and that may result in interference with his right to carry on as a Chartered Accountant; but, this result is merely incidental to his being a member of the Institute. If a member does not wish to conform to the requirements of the Institute, it would be open to him to relinquish his membership of the Institute. In this connection, it would be useful to refer to what the Supreme Court has stated in the case of Sakhawant Ali v. State of Orissa, (S) : [1955]1SCR1004 . In that case, one of the questions for decision was as to whether Section 16(1)(ix) of the Orissa Municipal Act, 1950, violated Article 19(1)(g) of the Constitution. The said Section 16(1)(ix) was as follows:

'16. (1) No person shall be qualified for election to a sear in a municipality, if such person......

(ix) is employed as a paid legal practitioner on behalf of the municipality or as legal practitioner against he municipality......'

It was contended that this provision operated as an unreasonable restriction on the freedom to practise the profession of law and thus it violated Article 19(1)(g) of the Constitution. In repelling that contention, the Supreme Court stated as follows at page 170:--

'The right of the Appellant to practise the profession of law guaranteed by Article 19(1)(g) cannot be said to have been violated, because in laying down the disqualification in S. 16(1)(ix) of the Act the Legislature does not prevent him from practising his profession of law but it only lays down that if he wants to stand as a candidate for election he shall not either be employed as a paid legal practitioner on behalf of the Municipality or act as a legal Practitioner against the Municipality. There is no fundamental right in any person to stand as a candidate for election to the municipality. The only fundamental right which is guaranteed is that of practising any profession or carrying on any occupation, trade or business. There is no violation of the latter right in prescribing the disqualification of the type enacted in S. 16(1)(ix) of the Act.

If he wants to stand as a candidate for election it is but proper that he should divest himself of his paid brief on behalf of the municipality or the brief against the municipality in which event there will be certainly no bar to his candidature. Even if it be taken as a restriction on his right to practise his profession of law, such restriction would be a reasonable one and well within the ambit of Article 19 Clause 5. Such restriction would be a reasonable one to impose in the interests of the general public for the preservation of purity in public life.

The Profession of Chartered Accountants is a responsible one. The Legislature wanted to provide a self-contained code of conduct in respect of Chartered Accountants; see the observations of the Supreme Court towards the end of para 3 at page 76 of : [1958]1SCR371 , Council of the Institute of Chartered Accountants v. B. Mukherjea. For that purpose, the Council which is the statutory body recognised under the Act, has been vested with a disciplinary jurisdiction. As it is very well fitted to know what act or conduct (in addition to those set out in the Regulation) would be unbecoming of a member of the Institute, provision is made under part II of the Second Schedule of the Act for the Institute specifying by notification in the Gazette of India any act or omission as a professional misconduct. Having regard to the purpose which the Act is intended to serve and the disciplinary jurisdiction which is necessary for the Council to exercise, it cannot be said that such a power in the Council is in any way arbitrary or unreasonable.

If the Council considers that the canvassing of votes by any member, in connection with the election, is unbecoming of the status and the position of a member of the Institute, it would certainly be competent for the Council to specify, by notification in the Gazette of India, such an act as a professional misconduct. The exercise of such a power by the Council would in no way be unreasonable and will be within the ambit of its competence under the Act. Unless the exercise of the power by the Council is manifestly unreasonable or arbitrary, the Court will not intervene. After all, the Council which is expected to know about such matters, has taken the view that it would be undesirable for the members of the Institute to engage in the activity of canvassing, in connection with the election to the Council; it is perfectly possible view to take, having regard to the special position the members of he Institute have. In these circumstance, we have no hesitation in rejecting the contention of the learned Advocate for the petitioner that item 2 may operate as an unreasonable restriction on any fundamental right of the petitioner.

(6) In the result, a direction and an order will issue to the respondent Council, in respect of item I, as already stated above; subject to this, the writ petition fails and is dismissed. Parties shall bear their own costs.

(7) Petition partly dismissed.


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