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High Court Of Delhi
PRICE WATERHOUSE - Appellant
Versus
INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA - Respondent
Decided On : 09/12/1996
CHARTERED ACCOUNTANTS - DISCIPLINARY PROCEEDINGS - FURTHER ENQUIRY - POWER OF COUNCIL - REGULATION 16 OF THE CHARTERED ACCOUNTANTS REGULATIONS, 1988 - INTERPRETATION - COUNCIL HAS NO POWER TO DIRECT FURTHER ENQUIRY WHERE DISCIPLINARY COMMITTEE HAS CONCLUDED THAT THE MEMBER IS NOT GUILTY OF ANY PROFESSIONAL OR OTHER MISCONDUCT.
Fact of the Case:
The Institute of Chartered Accountants of India (ICAI) initiated disciplinary action against Price Waterhouse, a firm of Chartered Accountants, for alleged professional misconduct. The Disciplinary Committee of ICAI, after examining the matter, concluded that the firm was not guilty of any professional misconduct. However, the Council of ICAI, instead of accepting the report, directed the Disciplinary Committee to conduct a further enquiry.
Finding of the Court:
The Court held that the Council had no power to direct further enquiry where the Disciplinary Committee had concluded that the member was not guilty of any professional or other misconduct. The Court interpreted Regulation 16 of the Chartered Accountants Regulations, 1988, which deals with the report of the Disciplinary Committee, and held that the proviso to Regulation 16(4) puts an embargo on the power of the Council to record a finding contrary to the report of the Disciplinary Committee where the report of the Disciplinary Committee is that the member is not guilty of any such misconduct.
Issues: Whether the Council has the power to direct further enquiry where the Disciplinary Committee has concluded that the member is not guilty of any professional or other misconduct.
Ratio Decidendi: The Court interpreted Regulation 16 of the Chartered Accountants Regulations, 1988, and held that the proviso to Regulation 16(4) puts an embargo on the power of the Council to record a finding contrary to the report of the Disciplinary Committee where the report of the Disciplinary Committee is that the member is not guilty of any such misconduct. The Court held that the scheme of Regulation 16 is clear and unambiguous that in case of Disciplinary Committee concluding that a member is not guilty, it is the end of the matter and the disciplinary proceedings have to be dropped by the Council.
Final Decision: The Court quashed the impugned communication dated 21st December 1993, by which the Council had directed further enquiry, and directed that the matter shall be disposed of on the basis of the report dated 16th January 1993 in terms of Regulation 16(4).
( 1 ) M/s. Price Waterhouse--Petitioner No. I is a firm of Chartered Accountants. Petitioner No. 2 is one of the partners of the said firm. The respondent-The Institute of Chartered Accountants of India (for short the Institute ) has been established under the Chartered Accountants Act, 1949 (hereinafter referred to as the Act ). The council" constituted under Chapter III of the Act initiated disciplinary action for professional misconduct against the petitioner firm and on receipt of the renort from the disciplinary committee that the member is not guity of any professional misconduct, the Council instead of accepting the report has directed the discipimary committee to conduct a turner enquiry, which action is under challenge in this petition. Briefly the facts which lie in a narrow compass are :--
( 2 ) THE Export-Import Bank (for shirt exim BANK ) commissioned the services of petitioner firm to assist the bank in the preparation of a booklet entitled "india-Your Software Opportunity". The need for such a booklet has been explained by EXIM Bank in the inside cover of the booklet, which reads as under :-
"as part of the overall strategy to put India on the world map as a major developer and exporter of software, the Government announced, in December 1986, the Policy on Computer Software. This policy simplifies the procedures for undertaking software development export activity, offers a number of incentives, and provides for the building up of a comprehensive and modern infrastructure. The software policy, for the first time, designates a financial institution, Exim Bank. as an agency for facilitating Government clearances and providing the finance required by software exporters. Government clearances and finance are thus covered by Exim Bank under a single umbrella. Proposals from software exporters handled by Exim Bank are simultaneously appraised for extending the necessary finance, with the result that the exporters can get both clearances and financial support within a maximum of 90 days. The Exim Bank offers an integrated financing package to software exporters. It covers Foreign Currency Term Loans (FCTL), Deferred Payment Guarantees (DPG) and Rupee Term Loans. As part of his package, Exim Bank also arranges Working Capital Finance through commercial banks. Software exporters will also benefit through Exim Bank s overseas offices and its advisory services. In addition, software exporters will benefit through Exim Bank s financing programme for overseas marketing, and other programmes for export financing. "
( 3 ) AT the end of the Contents page, the booklet states as under:-
"the information set out in this publication, meant for general guidance, has been compiled by Price Waterhouse (India) at the instance of the Export-Import Bank of India (EXIM BANK ). While the booklet is not intended to be an exhaustive treatment of the subject, the information contained is based on sources and interpretations of applicable legal provisions believed to be reliable for which, howerver, both Exim Bank and Price Waterhouse (India) are unable to assume any liability. For further information, clarifications and assistance, interested parties may communicate with Price Waterhouse offices located at: 1102/1107 Raheja Chambers, Narimnan Point, Bombay-400021. Telephones: 232816/235138/235190. Telex: (O1l) 5791. B-102, himalaya House, 23, Kasturba Gandhi Marg, New Delhi-1 10001. Telephones: 3314591/3312856. Telex: (031.) 63070. "
( 4 ) THE charge against the petitioner firm is that the aforesaid information amounts to solicitation of professional work and advertisement of professional attainments which are in violation of clauses 6 and 7 of Part I of the First Schedule to the Act. The Council at its meeting on 5th/6th August 1991 being prima facis of the opinion that the petitioner firm was guilty of professional and other misconduct decided to cause an enquiry to be made in the matter by its Disciplinary Committee. Th
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