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The Institute of Chartered Accountants of India Vs. V.P. Agrawal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtDelhi High Court
Decided On
Case NumberChartered Accountant Appeal No. 3 of 1979
Judge
Reported inILR1979Delhi681
ActsChartered Accountants Act, 1949 - Sections 5
AppellantThe Institute of Chartered Accountants of India
RespondentV.P. Agrawal
Advocates: K.K. Jain,; S.K. Gupta and T.L. Garg, Advs
Excerpt:
.....of the institute of chartered accountants of india referred the complaint for enquiry to its disciplinary committee. the committee met on november 4, 1977 and concluded the enquiry on that very day.; on november 7, 1977, respondent's counsel wrote to the disciplinary committee to rehear the matter but it was turned down on november 27, 1977. on november 14, 1977 respondents' counsel had submitted writen arguments, but the disciplinary committee declined to consider it. on december 21, 1977, the committee recorded its findings and submitted its report of the disciplinary committee and decided to recommend to the high court, under sub-section 5 of section 21 of the chartered accountants act, 1949 as amended, for a reprimand to be administered to the respondent. it was evident that..........respondent has committed professional misconduct and so, referred the complaint for enquiry to its disciplinary committee. this committee met on november 4, 1977. the proceedings before the committee concluded on that very day. 'on november 7, 1977 the respondent's counsel wrote to the disciplinary committee to re-hear the matter. this request was turned down by the disciplinary committee by its communication dated november 21, 1977, addressed to respondent's counsel. in the meanwhile on november 14, 1977 the respondent's counsel had submitted written arguments, describing the same to be the interim written arguments, praying that the same may be considered. referring to its reply to the respondent's letter of november 7, 1977 the disciplinary committee declined to consider the written.....
Judgment:

Prakash Narain, J.

(1) The Council of the Institute of Chartered Accountants of India having agreed with the findings of its Disciplinary Committee with regard to alleged professional misconduct committed by the respondent has referred the matter to this court under sub-secion (5) of Section 21 of the Chartered Accountants Act, 1949, as amended by the Chartered Accountants (Amendment) Act. 1959, hereinafter referred to as the Act, with the recommendation that a reprimand be administered to the respondent.

(2) Shri V. K. Jain, proprietor of M, Vee Kay &Co.;, hereinafter referred to as the Complainant filed a complaint against the respondent on October 27, 1976. The complaint, as filed, is Exhibit I on the record. A copy of the complaint was sent to the respondent who refuted the charges. The matter came up before the Council which took the prima facie view that the respondent has committed professional misconduct and so, referred the complaint for enquiry to its Disciplinary Committee. This Committee met on November 4, 1977. The proceedings before the Committee concluded on that very day. 'On November 7, 1977 the respondent's counsel wrote to the Disciplinary Committee to re-hear the matter. This request was turned down by the Disciplinary Committee by its communication dated November 21, 1977, addressed to respondent's counsel. In the meanwhile on November 14, 1977 the respondent's counsel had submitted written arguments, describing the same to be the interim written arguments, praying that the same may be considered. Referring to its reply to the respondent's letter of November 7, 1977 the Disciplinary Committee declined to consider the written arguments submitted by the respondent's counsel. It then proceeded to record its findings which it did on December 21, 1977 and submitted the report to the Council. As noticed earlier, the Council at its 81st meeting held on December 22, 23 and 24, 1977 at New Delhi considered the report of the Disciplinary Committee and decided to recommend to the High Court that the respondent be reprimanded.

(3) Although the learned counsel appearing for the Institute and the respondent advanced lengthy arguments on various facets of the case yet, in our opinion, it is not necessary to refer to all those. We are of the view that this enquiry was conducted by the Disciplinary Committee not only in violation of the rules and regulations but also in violation of the principles of natural justice. Indeed, it may not be incorrect to say that the members of the Disciplinary Committee seem to be unaware of how to hold quasi-judicial proceedings. We are thus of the view that the decision of the Disciplinary Committee, as adopted by the Council, cannot be upheld. We take this view because we find that in this case the provisions of law and the principles of natural justice have been completely disregarded.

(4) The complaint made by M/s Vee Kay & Co. is a document which does not fulfill the requirements of Regulation 11(3). This complaint, inter alia, reads as under :

'3.That the audit of the year 1975-76 was also taken up and while the audit was in final stage Messrs Aggarwal Bansal and Associates, New Delhi communicated with the petitioner of their appointment as auditors of these Institutions and accepted the position inspire of the knowledge of our appointment for the said year and also that the audit had almost completed.

4.That the respondent namely Messrs Aggarwal Bansal & Associates have issued audit reports in Form 10-B of the Income-tax Rules 1962 for the year 1972-73, 1973-74 and 1974-75. The said audit reports have been issued, without mentioning any reference to the audit conducted by us and ignoring all the comments made by us in our audit reports.

(5) That the respondent :

(A) failed to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary to make the financial statement not misleading.

(B) failed to report a material mis-statement known to appear in a financial statement with which he is concerned in a professional capacity.

(C) was grossly negligent in the conduct of his professional duties.

(D) failed to obtain sufficient information to warrant the expression of an opinion or his exceptions are sufficiently (sic) material to negate the expression of an opinion ;

(E) failed to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances.'

WEneed not dilate upon the contents of paragraph 3 read above as the charges contained in this paragraph were not pressed by the Complainant. The charges contained in paragraph 4 were not proved. As far as paragraph 5 is concerned, a very reading of that would show it is verbatim copy of the provisions of the Act and is completely lacking in particulars. The record shows that these particulars were filed for the first time before the Disciplinary Committee by the Counsel for the Complainant on November 4, 1977. The record is not very clear as to whether a copy of the particulars was supplied to the respondent. In any case, it is clear from a reading of the proceedings of November 4, 1977 that the respondent was given no opportunity to either file his written statement or to produce evidence with regard to the particulars supplied for the first time by the Complainant on November 4, 1977. Regulation Ii has, thereforee, been observed only in breach. This would be sufficient to vitiate the proceedings of the Disciplinary Committee.

There is, however, in our opinion, one other basic fact which has to be brought out vis-a-vis the approach and the proceedings of the Disciplinary Committee. The members of the Disciplinary Committee were conscious of the fact that paragraph 5 of the Complaint was lacking in particulars. They were also conscious of the fact that particulars were being supplied for the first time on November 4, 1977; yet without giving any opportunity to refute these particulars to the respondent they proceeded to deal with the particulars or charges in the particulars one by one. Such an approach borders on being inquisitorial.

(6) The respondent asked for an adjournment of the hearing fixed for November 4, 1977 well in advance and, in our opinion, on cogent grounds. The adjournment was refused. The respondent nevertheless attended the hearing on November 4, 1977 though greatly handicapped. In disciplinary proceedings, particularly in professional enquiries, one would expect the peers of the profession to adopt an attitude which will be in consonance with the principles of natural justice. Here we find the Disciplinary Committee from the very beginning has taken an attitude which is a negation of the principles of natural justice. The respondent was in a serious predicament and to refuse an adjournment in these circumstances cannot be called a reasonable or rational approach.

(7) There is another aspect on which we may comment. After examination of the Complainant and the respondent on November 4, 1977 no opportunity appears to have been given to the respondent to address arguments, much less produce documents. In this view of the matter arguments submitted on November 14, 1977 well before the date on which the Disciplinary Committee wrote its report in December, 1977 should at least have been considered. We are of the view that in this case the respondent has not been given reasonable opportunity either to adduce evidence, oral and documentary, or even to address arguments. The proceedings thus stand completely vitiated.

(8) The Council adopted the report of the Disciplinary Committee in December, 1977. The reference has been made to this court two years later. All this while the respondent a professional man, has had the sword of damocles hanging on his head. Such delay is unjustified.

(9) The result is that in the circumstances of the case we take the view that the complaint being vexatious should have been dismissed. It is ordered accordingly.


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