judgement:
Appeal No. 170 of 1956.
Appeal by special leave from the judgment and order dated the 12th January, 1955, of the Calcutta High Court in exercise of its Special Jurisdiction under the , in Matter No. 107 of 1954.
M. C. Setalvad, Attorney General for India, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellants.
Aswini Kumar Ghose, T. section Venkataraman and K. R. Chaudhury, for the respondents.
373 1957.
September 10.
The following Judgment of the Court was delivered by GAJENDRAGADKAR J.
The material facts leading to the present appeal are not in dispute and may be conveniently stated at the outset.
On July 17, 1933, the respondent was enrolled as a registered accountant under the Auditors Certificate Rules, 1932.
When the , came into, operation, the respondent 's name was entered as a Member of the Institute of Chartered Accountants of lndia on July 1, 1949.
On September 13, 1950, the respondent was appointed a Liquidator of three companies.
The respondent obtained refund of the sums and securities deposited on behalf of the three companies with the Reserve Bank of India.
He, however, made no report about the progress of liquidation of the said three companies.
Repeated requests made to him by the Assistant Controller of Insurance found no response.
As Liquidator the respondent gave a cheque to Shri section K. Mandal, Solicitor to the Central Government at Calcutta, towards payment of the taxed costs in the winding up proceedings of one of the companies.
The said cheque was, however, returned dishonoured on the ground that the payment had not been arranged for.
When the Assistant Controller of Insurance found that the conduct of the respondent as Liquidator was wholly unsatisfactory and that he would not even show the ordinary courtesy of replying to the letters addressed to him, he proceeded to cancel the appointment of the respondent as Liquidator by his letter dated October 29, 1952.
The respondent was then called upon to hand over all books of account, records, documents, etc., to Shri N. N. Das, who was appointed a Liquidator in his place.
Shri Das as well as the Assistant Controller of Insurance then made repeated demands on the respondent to deliver to Shri Das the assets and records of the three companies.
It is common ground that the respondent had with him securities of the value of Rs. 11,950 and a cash sum of Rs. 642 on account of the United Common 374 Provident Insurance Co. Ltd. He had also with him securities to the value of Rs. 12,100 on account of the Asiatic Provident Co. Ltd., and securities and cash on account of the Citizens of India Provident Insurance Co. Ltd. Out of these amounts the respondent returned only securities of the face value of Rs. 10,000 and Rs. 350 of Asiatic Provident Co. Ltd., and United Common Provident Insurance Co. Ltd., respectively.
He failed to send any further securities or cash held by him on account of the said three companies.
It was at this stage that a complaint was lodged against the respondent with the Council of the Institute of Chartered Accountants of India in Calcutta.
As required by the provisions of the Act, the disciplinary committee of the Council inquired into the matter.
Notice was served on the respondent but he filed no written statements within the time fixed.
On August 1, 1953, a letter was received from the respondent that he was ill and was unable to attend personally.
The respondent had also requested for the adjournment of the case.
Proceedings were accordingly adjourned to August 29, 1953, on which date the respondent was represented by a counsel who filed the respondent 's affidavit stating that he was prepared to hand over the entire cash, books of account, etc., to the newly appointed Liquidator without rendering the necessary accounts.
It appears that Shri Das, the subsequently appointed Liquidator, gave evidence before the disciplinary committee.
Though several opportunities were given to the respondent to appear before the disciplinary committee he failed to appear or to take part in the proceedings.
Ultimately the committee made its report on September 13, 1953, and found that the respondent was guilty of gross negligence in the conduct of his professional duty in not handing over charge of the assets and the books of account of the said companies to the newly appointed Liquidator.
This report was considered by the Council itself as required by the Act.
Tile Council agreed with the finding recorded by the disciplinary committee in substance, but took the view that the 375 acts and omissions of the respondent were more serious than what can be described as gross negligence.
The finding of the Council was then forwarded to the High Court of Judicature at Calcutta as required by section 21 (1) of the Act and the matter was heard by the learned Chief Justice and Mr. Justice Lahiri.
By their judgment delivered on January 12, 1955, the reference was rejected on the ground that no action could be taken against the respondent under the Act though the facts proved against the respondent showed that " he had been guilty of grossly improper conduct if not dishonesty".
On these facts the main point which arises for our decision is what is the nature, scope and extent of the disciplinary jurisdiction which can be exercised under the provisions of this Act against the respondent.
It would now be necessary to examine the scheme of the material provisions of the Act.
This Act came into force in 1949 and it was passed, because the Legislature thought it expedient to make provision for the regulation of professional accountants and for that purpose it has provided for the establishment of the Institute of Chartered Accountants.
Section 2, sub section
(1) (b) defines a Chartered Accountant as meaning "a person who is a member of the Institute and who is in practice".
Section 2, sub section
(2) provides that a member of the Institute shall be deemed to be in practice when, individually or in partnership with chartered accountants, he, in consideration of the remuneration received or to be received, does any of the acts mentioned in the following 4 sub clauses: . .
Sub clause (iv) is relevant for our purpose: " section 2 (2) (iv): " (Where a member) renders such other services as in the opinion of the Council are or may be rendered by a chartered accountant, (he is deemed to be in practice).
" Section 4 provides for the entry of names in the register of chartered accountants.
Section 5 divides the members of the Institute into two classes designated respectively as Associates and Fellows.
Section 6 lays down that no member of the Institute shall be 376 entitled to practise unless he has obtained from the 'Council a certificate of practice.
Under section 7, every member of the Institute in practice shall be designated as a chartered accountant and no person practising the profession of accountancy in India shall use any other designation whether in addition thereto or in substitution therefor.
Section 8 deals with disabilities.
Any person who incurs any one of the disabilities enumerated in sub cls.
(i) to (vi) of section 8 shall not be entitled to have his name entered in or borne on the Register.
Sub clause (v) deals with the disability arising by reason of conviction by a competent court whether within or without India of an offence involving moral turpitude and punishable with transportation or imprisonment or of an offence not of a technical nature committed by him in his professional capacity unless in respect of the offence committed be has either been granted a pardon or, on an application made by him in this behalf, the Central Government has, by an order in writing, removed the disability.
Sub clause (vi) deals with the disability in cases where the chartered accountant is found on an inquiry to be guilty of conduct which renders him unfit to be a member of the Institute.
Chapter III deals with the constitution of the Council, the committees of the Council and the finances of the Council.
Chapter IV deals with the register of members and the removal from the Register of the name of a chartered accountant, as provided by section 20, sub cls.
(a), (b) and (c).
Under section 20, sub section
(2), it is provided that the Council shall remove from the Register the name of any member who has been found by the High Court to have been guilty of conduct which renders him unfit to be a member of the Institute.
Chapter V deals with the question of misconduct.
It consists of sections 21 and 22.
Chapter VI deals with the constitution and functions of the Regional Councils; chapter VII deals with penalties and chapter VIII deals with miscellaneous matters.
Section 21 deals with the procedure of enquiries relating to misconduct of members of the Institute.
It reads thus: 377 " section 21.
(1) Where on receipt of information or on receipt of a complaint made to it, the Council is of opinion that any member of the Institute has been guilty of conduct which, if proved, will render him unfit to be a member of the Institute, or where a complaint against a member of the Institute has been made by or on behalf of the Central Government, the Council shall cause an inquiry to be held in such manner as may be prescribe and the finding of the Council shall be forwarded to the High Court.
(2). . . . (3). . . . (4). . . .
Sub sections (2), (3) and (4) of section 21 deal with the powers of the High Court in dealing with the reference made to it, under section 21, sub section
Section 22 defines misconduct.
It reads thus: " section 22.
For the purposes of this Act, the expression conduct which, if proved, will render a person unfit to be a member of the Institute " shall be deemed to include any act or omission specified in the Schedule, but nothing in this section shall be construed to limit or abridge in any way the power conferred on the Council under sub section
(1) of section 21 to inquire into the conduct of any member of the Institute under any other circumstances." The learned Judges of the Calcutta High Court have held that the conduct of which the respondent is proved to have been guilty cannot be said to be professional misconduct properly so called and cannot, therefore, attract the provisions of sections 21 and 22 of the Act.
"There, thus, seems to be no room for contending"# observes the learned Chief Justice in his judgment, " that misconduct not connected with the exercise of the profession is also within the ambit of the Act, provided it involves moral turpitude or appears to render a person unworthy to remain a member of a responsible profession".
It has also been found by the learned Judges that even if they were to hold that the misconduct proved against the respondent attracted the provisions of sections 21 and 22 of 378 the Act it would not be open to them to take any action against the respondent on that ground because the Institute cannot expect the Court to take action in the present case on the footing that the respondent had been guilty of misconduct otherwise than in his professional capacity since that is not the finding which the Council arrived at and which is reported to the Court.
It is the correctness of these findings that is challenged before us by the learned Attorney General.
lie contends that the learned Judges of the Calcutta High Court have put an unduly restricted and narrow construction on the provisions of section 21 and section 22 in holding that the respondent 's conduct does not amount to professional misconduct; and he has also urged that the technical reason given by the learned Judges in not taking any action against the respondent even if they had accepted the broader interpretation of the two said sections proceeds on a misconception about the nature and extent of the powers of the High Court while hearing references made to it under the provisions of section 21, sub sections
(2), (3) and (4).
In our opinion, the contentions raised by the learned Attorney General are well founded and must be upheld.
Let us first consider whether the conduct of the respondent amounts to professional misconduct or not.
In dealing with this question it is necessary to bear in mind the provisions of section 2, sub section
(2) (iv) of the Act.
A member of the Institute under this provision shall be deemed to be in practice when he renders such other services as in the opinion of the Council are or may be rendered by a chartered accountant.
In other words, just as a member of the Institute Who engages himself in the practice of accountancy is by such conduct deemed to be in practice as a chartered accountant, so is he deemed to be in practice as a chartered accountant when he renders other services mentioned in section 2, sub s.(2) (iv).
What other services attract the provisions of this sub section has to be determined in the light of the regulations framed under provisions of this Act.
Section 30 of the Act confers power on the Council to make regulations by notification 379 in the Gazette of India for the purpose of carrying out the object of the Act and it provides that a copy of such regulation should be sent to each member of the Institute.
Section 30, sub section 2 sets out the several topics in respect of which regulations can be framed though, as usual, it provides that the enumeration of the different topics is without prejudice to the generality of the powers conferred by section 30, sub s.(1).
Sub section
(4) lays down that, notwithstanding anything contained in sub sections
(1) and (2), the Central Government may frame the first regulations for the purposes mentioned in the section and such regulations shall be deemed to have been made by the Council and shall remain in force from the date of coming into force of this Act until they are amended, altered or revoked by the Council.
Regulation 78 is one of the regulations originally framed by the Central Government under section 30, sub section
It reads thus: " Regulation 78.
Without prejudice to the discretion vested in the Council in this behalf, a Chartered Accountant may act as liquidator, trustee, executor, administrator, arbitrator, receiver, adviser, or as representative for costing financial and taxation matter or may take up an appointment that may be made by Central or State Governments and Courts of law or any Legal Authority, or may act as Secretary in his professional capacity not being an employment on a salary cum full time basis.
" The last clause has been added by the Council by a notification dated August 22, 1953.
Now it is clear that when the respondent accepted his appointment as liquidator of the three companies in question he agreed to work as a liquidator in pursuance of an order passed by the High Court of Judicature at Calcutta and there can be no doubt that in working as such liquidator he was rendering services which in the opinion of the Council may be rendered by a chartered accountant.
The provisions of Regulation 78 must inevitably be considered in the light of section 2, sub s.(2), cl.(iv) and the result of considering the two provisions together obviously is that when the respondent was working as a liquidator in pursuance of an order passed by the Calcutta High Court he 49 380 must be deemed to be in practice within the meaning of section 2, sub s.(2).
We feel no difficulty in holding that chartered accountants who render services falling within section 2, sub section
(2), cl.
(iv) are as much entitled to be deemed to be in practice as those whose duties attract the provisions of cls.
(i), (ii) and (iii) of sub section
If that be the true position it is difficult to accept the view that the conduct of the respondent while he discharged his duties as a liquidator is not the professional conduct of a chartered accountant even within the narrow and restricted sense of the term.
If, while acting as liquidator, the respondent must be deemed to be in practice as a chartered accountant, all acts and omissions proved against him in respect of such conduct as liquidator must be characterised as his professional acts and omissions.
"Practice" according to Webster 's New International Dictionary means Cc exercise of any profession or occupation " and if the performance of the duties as liquidator attracts the provisions of section 2, sub section
(2), whatever the chartered accountant does as a liquidator must be held to be conduct attributable to him in the course of his practice.
The object with which cl.
(iv) in sub section
(2) of section 2 has been deliberately introduced by the Legislature ' in our opinion, appears to be to bring within the disciplinary Jurisdiction of the statutory bodies recognized under the Act, conduct of chartered accountants even while they are rendering services otherwise than as chartered accountants properly so called.
It is because the Legislature wanted to provide for a self contained code of conduct in respect of chartered accountants that the denotation of the expression " to be in practice " has been in a sense deliberately and artificially extended by virtue of section 2, sub section
(2), el.
We must, therefore, hold that, on the facts proved, the respondent is clearly guilty of professional misconduct.
This would really dispose of the appeal before us, because once it is held that the respondent is guilty of professional misconduct it would be obviously necessary to deal with him on that basis and make an appropriate order under section 21, sub section
(3) of the Act.
However, 381 since the learned Attorney General has alternatively urged before us that in confining the exercise of disciplinary jurisdiction only to cases of professional misconduct, technically so called, the learned Judges of the Calcutta High Court have misconstrued the relevant provisions of the Act, we propose to deal very briefly with that question also.
Section 21, sub section
(1), deals with two categories of cases in which the alleged misconduct of members of the Institute can be inquired into.
If information is received or complaint is made to the Institute against the conduct of any chartered accountant the Council is not bound to hold an inquiry straightaway.
The Council is required.
to examine the nature of the information or complaint made and decide whether, if the facts alleged against the member are proved, they would render the member unfit to be a member of the Institute.
In other words, in the case of a private complaint made against members, it is only where the Council is satisfied prima.facie that facts alleged against the member, if proved, would justify the exercise of disciplinary jurisdiction against the member that the Council is required to hold an inquiry.
The conduct alleged must be such as, if proved, would render the member unfit to be a member of the Institute.
The other class of cases has reference to.
the complaint received by the Council from the Central Government.
In regard to this class of cases, the Council is not required, and indeed has no jurisdiction to apply the primarily test before holding an inquiry.
The Council is required to cause an inquiry to be held on such complaint straightaway.
In both the cases when the inquiry is concluded, the findings of the Council are to be forwarded to the High Court.
Section 22 purports to define the expression "conduct which, if proved, will render a person unfit to be a member of the Institute".
It is an inclusive definition ; it includes any act or omission specified in the schedule but the latter portion of section 22 clearly lays down that nothing contained in this section shall be construed to limit or abridge in any way the power conferred on the Council under sub section
(1) of section 21.
The position thus 382 appears to be that though the definition of the Material expression used in section 21, sub section
(1), refers to the acts and omissions specified in the schedule, the list of the said acts and omissions is not exhaustive;and, in any event, the said list does not purport to limit the powers of the Council under section 21, sub section
(1), which may otherwise flow from the words used in the said sub section itself.
The schedule to which section 22 refers has enumerated in cls.
(a) to (v) several acts and omissions and it provides that, if any of these acts or omissions is proved against a chartered accountant, he shall be deemed to be guilty of professional misconduct which renders him unfit to be member of the Institute.
Clause (v) is rather general in terms since it provides for cases where the accountant is guilty of such other act or omission in his professional capacity as may be specified by the Council in this behalf by notification in the Gazette of India.
It must be conceded that the conduct of the respondent in the present case cannot attract any of the provisions in the schedule and may not therefore be regarded as falling within the first part of section 22; but if the definition given by section 22 itself purports to be an inclusive definition and if the section itself in its latter portion specifically preserves the larger powers and jurisdiction conferred upon the Council to hold inquiries by section 21, sub section
(1), it would not be right to hold that such disciplinary jurisdiction can be invoked only in respect of conduct falling specifically and expressly within the inclusive definition given by section 22.
In this connection it would be relevant to mention section 8 which deals with disabilities.
Section 8, sub sections
(v) and (vi), support the argument that disciplinary jurisdiction can be exercised against chartered accountants even in respect of conduct which may not fall expressly within the inclusive definition contained in section 22.
We, therefore, take the view that, if a member of the Institute is found, prima facie, guilty of conduct which, in the opinion of the Council, renders him unfit to be a member of the Institute, even though such conduct may not attract any of the provisions of the schedule, it would still be open to the Council to hold an inquiry against the 383 member in respect of such conduct and a finding against him in such an inquiry would justify appropriate action.
being taken by the High Court under section 21, sub section
It is true that the High Court would take action against the offending member only if the High Court accepts the finding made by the Council and not otherwise.
This conclusion is strengthened if we bear in mind the extended meaning of the expression "to be in practice" given in section 2, sub section
(2), which we have already dealt with.
In this view of the matter we must reverse the conclusion of the learned Judges of the Calcutta High Court that the conduct proved against the respondent does not fall within as.
21 and 22 because it is not conduct connected with the exercise of his profession as a chartered accountant in the narrow sense of that term.
The next question to consider is in regard to the extent of the jurisdiction and powers of the High Court when the High Court deals with references under section 21, sub sections
(2), (3) and (4).
The learned Judges of the Calcutta High Court took the view that even if they had agreed to put a wider construction on the material words used in sections 21 and 22, they would not be justified in passing any orders against the respondent in the present proceedings because the finding which had been referred to the High Court was only one and that was that the respondent was guilty of professional misconduct in the narrow sense of the term.
In other words, the High Court thought that in accepting, and acting or the larger construction of the material words the High Court would be making out a new case on the reference and the High Court would not be justified in adopting such a course.
In our opinion, this view is not well founded.
Section 2 1, sub section
(2), lays down the procedure to be followed by the High Court when a finding made by the Council is referred to it under section 21, sub section
Notice of the day fixed for the hearing of the reference has to be given to the parties specified in section 21, subs.
(1) and an opportunity of being heard has to be given to them.
Section 21, sub section
(3), then lays down that the High Court may either pass such final orders on the case as it thinks fit or refer it back for further 384 inquiry by the Council and, upon receipt of the finding after such inquiry, deal with the case in the manner provided in sub section
(2) and pass final orders thereon.
It is clear that, in hearing references made under section 21, sub section
(1), the High Court can examine the correctness of the findings recorded by the statutory bodies in that behalf.
The High Court can even refer the matter back for further inquiry by the Council and call for a fresh finding.
It is not as if the High Court is bound in every case to deal with the merits of the finding as it has been recorded and either to accept or reject the said finding.
If, in a given case, it appears to the High Court that, on facts alleged and proved, an alternative finding may be recorded, the High Court 'can well send the case back to the Council with appropriate directions in that behalf.
The powers of the High Court under section 21, sub section
(8), are undoubtedly wide enough to enable the High Court to adopt any course which in its opinion will,, enable the High Court to do complete justice between the parties.
Besides, in the present case, no such technical considerations can really come into operation because the material facts have not been in dispute between the parties at any stage of the proceedings.
The only point in dispute between the parties has been whether on the facts proved disciplinary jurisdiction can be invoked against the respondent under the provisions of the Act.
We, therefore, take the view that the learned Judges of the High Court were in error in holding that, even if they had accepted the broader interpretation of section 21 and section 22, they could not make an appropriate order in the present case against the respondent having regard to the specific finding recorded by the Council in the inquiry in question.
It would now be necessary to refer to some judicial decisions to which our attention has been invited.
In G. M. Oka, In re (1), it has been held by a Division Bench of the Bombay High Court that, when a chartered accountant gives evidence before a court of law and he is in the witness box not as a chartered (1) [1952] 22 Comp.
385 accountant but as a witness, the falsity of his ,statement does not give rise to any disciplinary proceedings against him as a chartered accountant.
If he gives false evidence he may be guilty of perjury and if he is convicted the conviction itself may call for disciplinary action.
These observations undoubtedly lend support to the view taken by the Calcutta High Court.
It is of course.
true that the conviction of a chartered accountant would attract the provisions of section 8, sub a.
(vi) and in that sense the conclusion of the Bombay High Court that the conviction itself may be the basis of disciplinary action is, with respect, wholly correct; but the other observations on which reliance is placed by the respondent before us are obiter and it also appears from the judgment that the attention of the learned Judges was not drawn to the provision of section 2 (2) (iv) and other relevant considerations do not appear to have been urged before them in that case.
As the judgment itself points out, apart from the technical points which were urged before the court on behalf of the chartered accountant, there was a large volume of other evidence produced against him which conclusively proved that he was guilty of misconduct.
Mr. Ashwini Kumar Ghosh, for the respondent, has also sought to rely on Haseldine vs Hosken (1).
In this case the solicitor had taken out an indemnity policy which insured him against loss arising by reason of any neglect, omission or error while acting in his.
professional capacity.
During the subsistence of this policy, the solicitor sustained loss through having, without realizing the fact, entered into a champertous agreement.
When the solicitor made a claim to be indemnified, it was held that the loss in respect of which indemnity was claimed did not arise by reason of any neglect, omission or error committed by the solicitor in his professional capacity but arose from his entering into a personal speculation.
We do not see how this case can assist the respondent in any way.
In considering the question as to whether the respondent has been guilty of professional misconduct in the present case, we are concerned with (1) 386 the material provisions of the itself.
Observations made by the learned Judges in Haseldine 's case can afford no assistance to us in interpreting the said provisions.
Similarly the decision in Krishnaswamy vs The Council of the Institute of Chartered Accountants (1) where the court was primarily concerned with the question as to whether orders passed under section 21 (2) of the Act are orders passed in civil proceedings or not is wholly inapplicable and gives us no help in deciding the points before us.
The only question which now remains to be considered is the final order to be passed against the respondent.
The conduct of the respondent is, in our opinion, wholl yunworthy of a chartered accountant in practice.
His refusal to give prompt replies to the letters received from the Assistant Controller of Insurance followed by his failure to return the documents and all securities and cash received by him as liquidator leave no room for doubt that he was unable to return the said amount and the said securities and cash and that he was merely employing delaying tactics with the object of postponing the evil day.
It is not conduct which is only technically improper or unworthy; it is conduct which is grossly improper and unworthy and as such it calls for a deterrent order.
The respondent was appointed a liquidator by the Calcutta High Court presumably because he was a chartered accountant in practice.
He thus received the benefit of this appointment as a result of his status as chartered accountant in practice and in acting as a liquidator he has been guilty of conduct which is absolutely unworthy of his status and it renders him unfit to be a member of the Institute.
We, therefore, think that the ends of justice require that the respondent 's name should be removed from the Register for four years.
In regard to costs we direct that the respondent should pay the costs of the appellants in this Court and that the parties should bear their own costs in the court below.
Appeal allowed.
(1) A.I.R. 1953 Madras 79.

summary:
Respondent, a chartered accountant and a member of the Institute of Chartered Accountants, was appointed liquidator of three insurance companies in pursuance of the orders of the High 48 372 Court.
He received records, cash and securities on behalf of these companies.
The Assistant Controller of Insurance found that his conduct as liquidator was wholly unsatisfactory and that he would not even reply to the letters addressed to him.
His appointment was cancelled and another person was appointed.
In spite of repeated demands he failed to return all the records, cash and securities.
A complaint was lodged against him with the Council of the Institute of Chartered Accountants.
After inquiry the respondent was found guilty of misconduct, and the report was forwarded by the Council to the High Court for necessary action under section 21 of the .
The High Court rejected the reference on the ground that the conduct of which the respondent was found guilty could not be said to be professional misconduct and did not attract the provisions of sections 21 and 22 of the Act.
Held, that the respondent, when working as a liquidator, must be deemed to have been in practice as a chartered accountant within the meaning Of section 2(2) of the Act.
The definition of misconduct in section 22 is inclusive and the Council may hold an inquiry and find a member guilty of conduct which, in its opinion, renders him unfit to be a member of the Institute, even though such conduct does not attract any of the provisions of the schedule referred to in section 22.
The conduct of the respondent was grossly improper and unworthy and amounted to professional misconduct within the meaning of the Act.
In a reference under section 21 of the Act the High Court has ample powers to adopt any course which would enable it to do complete justice between the parties.
It can examine the correctness of the findings recorded by the Council or refer the matter back for further inquiry and call for a fresh finding.
The High Court is not bound to deal with the merits of the finding as it has been recorded and either to accept or reject it.


judgement:
Special Leave Petition (Civil) No. 11015 of 1986.
From the Judgment and Order dated 2.5.86 of the High Court of Punjab & Haryana at Chandigarh in Regular Second Appeal No. 1504 of 1977.
R.K. Jain, D.S. Mehra and Ms. Abha Jain for the Petitioners.
Ram and Hari Chand are sons of one Kesaria.
The suit land be longed jointly to Respondents 5 to 7.
They sold it to Re spondents 1 to 4Nathi Mal Kejriwal, Radhey Shayam Kejriwal, Smt.
Daropdi Devi and Nagar Mal Kejriwal, who were strangers to their family for a consideration of Rs.33,000 under a sale deed registered on 25.10.1971.
The petitioners, who claimed themselves to be the sons and nephews of the ven dors, instituted a suit in Civil Suit No. 466 of 1972 on the file of the Sub Judge, 1st Class, Palwal for possession of the suit land on payment of Rs.33,000 claiming that they were entitled to the right of pre emption in respect of the suit land either under clause 'First ' or 'Secondly ' of Section 15(1)(a) of the Punjab Pre emption Act, 1913 (here inafter referred to as 'the Act ') as in force in the State of Haryana or under clause 'First ' or 'Secondly ' of Section 15(1)(b) of the Act.
The learned Sub Judge upheld the plea of the petitioners and decreed the suit for possession of the suit land against Respondents 1 to 4 who had purchased the suit land as well as against Respondents 5 to 7 who had sold it subject to the petitioners paying a sum of Rs.36,642 ' which included the consideration of Rs.33,000 and interest thereon at 8 per cent per annum.
The learned Sub Judge further directed the petitioners to deposit the sum of Rs.36,642 minus the zare punjam amount on or before 3rd May, 1976 and that on their failure to deposit the said amount, he directed that the suit should be deemed to have been 70 dismissed with costs.
Aggrieved by the judgment of the learned SubJudge, Respondents 1 to 4 filed an appeal before the District Judge, Gurgaon in Civil Appeal No. 69 of 1976.
The appeal was dismissed.
Against the judgment of the learned District Judge, Respondents 1 to 4 filed a second appeal before the High Court of Punjab and Haryana in Regu lar Second Appeal No. 1504 of 1977.
That second appeal was taken up for hearing on 2nd May, 1986.
By that time this Court had delivered its judgment in Atam Prakash vs State of Haryana and Others, ; declaring clauses 'First ', 'Secondly ' and 'Thirdly ' of Section 15(1)(a), clauses 'First ', 'Secondly ' and 'Thirdly ' of Section 15(1)(b), clauses 'First, 'Secondly ' and 'Thirdly ' of Sec tion 15(1)(c) and the whole of Section 15(2) of the Act as ultra vires the Constitution.
Following the said decision the High Court allowed the second appeal and dismissed the suit since the provisions under which the petitioners claimed the right of pre emption had been declared void by this Court.
This petition is filed praying for special leave to prefer an appeal against the judgment of the High Court in the second appeal.
At the hearing of this Special Leave Petition the learned counsel for the petitioners contended that even though the petitioners were not able to claim the right of pre emption under clauses 'First ', and 'Secondly ' of Section 15(1)(a) or clauses 'First ' and 'Secondly ' of Section 15(1)(b) by reason of the decision in the Atam Prakash 's case (supra) they were entitled to claim the right of pre emption under clause 'Fourthly ' in Section 15(1)(b) of the Act.
Section 15(1)(b) reads thus: "15.
Persons in whom right of pre emption vests in respect of sales of agricultural land and village immovable property (1)The right of pre emption in respect of agricultural land and village immovable property shah vest ( a ) . . . . . . . . (b) where the sale is of a share out of joint land or property and is not made by all the co sharers jointly First, in the sons or daughters or sons or daughters ' sons of the vendor or vendors; Secondly, in the brothers or brother 's sons of the vendor or vendors; 71 Thirdly, in the father 's brother or father 's brother 's sons of the vendor or vendors; Fourthly, in the other co sharers; Fifthly, in the tenants who hold under tenancy of the vendor or vendors the land or property sold or a part thereof; . . . . . . . . . . " It is argued by the learned counsel for the petitioners that since the suit land belonged to the joint family and it had not been sold by all the co sharers they were entitled to claim the right of pre emption under clause 'Fourthly ' of Section 15(1)(b) of the Act because they happened to be the non alienating co sharers Although there is no specific finding that the property is the joint property in this case, we shall assume for purposes of this judgment that the suit land was joint property.
In order to understand the meaning of the ' words 'other co sharers ' in Section 15(1)(b) we have to read of the Act as it stood before the decision in Atam Prakash 's case (supra).
It is seen that the expres sion 'other co sharers ' in clause 'Fourthly ' of Section 15(1)(b) of the Act refers to only those co sharers who do not fall under clause 'First ' or 'Secondly ' or 'Thirdly ' of Section 15(1)(b) of the Act.
Since the petitioners admitted ly fall either under clause 'First ' or under clause 'Second ly ' of Section 15(1)(b) of the Act they are clearly outside the scope of clause 'Fourthly '.
Therefore, the petitioners cannot claim the right of pre emption under clause 'Fourth ly '.
We do not, therefore, find any substance in this con tention which was urged for the first time before the High Court The suit was, therefore, rightly dismissed by the High Court holding that the petitioners were no longer entitled to any relief under the Act.
This petition, there fore, fails and it is dismissed.
M.L.A. Petition dis missed.

dataset_name: IN-Abs

summary:
Respondent Nos.
5 to 7 were joint owners of the suit land.
They sold it to respondent nos.
1 to 4 on 25.10.71.
The petitioners, sous and nephews of the vendors, instituted a suit before the sub Judge, Palwal for possession of the suit land on payment of the sale consideration on the ground that they were entitled to the right of the pre emption in respect of the suit land either under clause "First", or Secondly, of section I5(1)(a) or under clause 'First ' or 'Second ly ' of section 15(1)(b) of the Punjab Pre emption Act 1913 as in force in the SLate of Haryana.
The Sub Judge decreed the suit for possession.
The appeal of Respondent Nos. 1 to 4 against the aforesaid order having been dismissed by the District Judge, they filed a second appeal before the High Court.
During the pendency of the second appeal, the Supreme Court delivered its judgment in Atam Prakash vs State of Haryana & Ors., ; The High Court allowed the second appeal and dismissed the suit since the provisions under which the petitioners claimed the fight of pre emption had been declared void by the Supreme Court in Atam Pra kash 's case.
Being aggrieved by the judgment of the High Court, the petitioners in the special leave petition contended that since the suit land belonged to the joint family and it had not been sold by all the sharers, they were entitled to claim the right of pre emption under dause 'Fourtidy ' of s.15(1)(b) of the Act because they happened to be the non alienating co sharers.
Dismissing the petition, HELD: The expression 'other co sharers ' in clause 'Fourthly ' of section 15(1)(b) of the Act refers to only those co sharers who do not fall 69 under clause 'First ' or 'Secondly ' or 'Thirdly ' of s.15(1)(b) of the Act.
Since the petitioners admittedly fail either under clause 'First ' or under clause 'Secondly ' of section 15(1)(b) of the Act, they are clearly outside the scope of clause 'Fourthly '.
Therefore, the petitioners cannot claim the right of pre emption under clause 'Fourthly '.
[71D E]


judgement:
Civil Appeals Nos. 1911 and 1912 of 1980.
From the Judgment and Order dated 16.4.1980 of the Bombay High Court in Appeal No. 203 and 205 of 1980.
F.S. Nariman, Anil B. Divan, K.K. Jain, S.K. Gupta, Promod Dayal, G. Banerjee and A.D. Sanger for the Appellant.
Atul Setalvad, Atul Rajadhya and Mrs. A.K. Verma for the Respondents.
The Judgment of the Court was delivered by PATHAK, J.
These appeals raise some fundamental questions in regard to the conduct and procedure of disciplinary proceedings taken under the .
Two of the questions are: 1. "Whether a member of the Institute of Chartered Accountants of India is entitled to a hearing by the Council of the Institute after the Disciplinary Committee has sub 1056 mitted its report to the Council of its enquiry into allegations of misconduct against the member? 2.
When the Council proceeds to consider the Report of the Disciplinary Committee, is the proceeding vitiated by the presence of the members of the Disciplinary Committee who include the President and the Vice President of the Council and three other members of it?" The appellant is the Institute of Chartered Accountants of India (the "Institute").
The Institute was created as a body corporate under the (the "Act"), and its members are Chartered Accountants.
The affairs of the Institute are managed by a body known as the Council of the Institute, which is headed by a President and a Vice President below him.
There are three Standing Committees of the Council, and one of them is the Disciplinary Committee.
The Disciplinary Committee 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.
Chapter V of the Act contains provisions dealing with cases of misconduct of members of the Institute.
Section 21 provides for conducting enquiries relating to such misconduct and the penalties which may be imposed, and section 22A provides for an appeal by a member against the imposition of a penalty.
As the sections are material, they may be set forth: S.21.
Procedure in inquiries relating to misconduct of members of Institute (1) Where on receipt of information by, or of a complaint made to it, the Council is prima facie of opinion that any member of the Institute has been guilty of any professional or other misconduct, the Council shall refer the case to the Disciplinary Committee, and the Disciplinary Committee shall thereupon hold such inquiry and in such manner as may be prescribed, and shall report the result of its inquiry to the Council.
(2) If on receipt of such report the Council finds that the member of the Institute is not guilty of any professional or other misconduct, it shall record its finding accordingly and direct that the proceedings shall be filed or the complaint shall be dismissed, as the case may be.
1057 (3) If on receipt of such report the Council finds that the member of the Institute is guilty of any professional or other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding sub section.
(4) Where the finding is that a member of the Institute has been guilty of a professional misconduct specified in the First Schedule, the Council shall afford to the member an opportunity of being heard before orders are passed against him on the case, and may thereafter make any of the following orders, namely: (a) reprimand the member; (b) remove the name of the member from the Register for such period, not exceeding five years, as the Council thinks fit: Provided that 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, it shall not make any order referred to in clause (a) or clause (b), but shall forward the case to the High Court with its recommendations thereon.
(5) Where the misconduct in respect of which the Council has found any member of the Institute guilty is misconduct other than any such misconduct as is referred to in subsection (4), it shall forward the case to the High Court with its recommendations thereon.
(6) On receipt of any case under sub section (4) or subsection (5), the High Court shall fix a date for the hearing of the case and shall cause notice of the date so fixed to be given to the member of the Institute concerned, the Council and to the Central Government, and shall afford such member, the Council and the Central Government an opportunity of being heard, and may thereafter make any of the following orders namely: (a) direct that the proceedings be filed, or dismiss the complaint, as the case may be; 1058 (b) reprimand the member; (c) remove him from membership of the Institute either permanently or for such period as the High Court thinks fit; (d) refer the case to the Council for further inquiry and report.
(7) . . . . . . . . (8) For the purposes of any inquiry under this section, the Council and the Disciplinary Committee shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, in respect of the following matters, namely: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) the discovery and production of any document; and (c) receiving evidence on affidavit.
22A. Appeals (1) Any member of the Institute aggrieved by any order of the Council imposing on him any of the penalities referred to in sub section (4) of Section 21, may, within thirty days of the date on which the order is communicated to him, prefer an appeal to the High Court: Provided that the High Court may entertain any such appeal after the expiry of the said period of thirty days, if it is satisfied that the member was prevented by sufficient cause from filing the appeal in time.
(2) The High Court may, on its own motion or otherwise, after calling for the records of any case, revise any order made by the Council under sub section (2) or sub section (4) of Section 21 and may 1059 (a) confirm, modify or set aside the order; (b) impose any penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order; (c) remit the case to the Council for such further inquiry as the High Court considers proper in the circumstances of the case; or (d) pass such other order as the High Court thinks fit: Provided that no order of the Council shall be modified or set aside unless the Council has been given an opportunity of being heard and no order imposing or enhancing a penalty shall be passed unless the person concerned has also been given an opportunity of being heard.
" The Act provides for the framing of Regulations.
Regulations 11 to 15 set forth the procedure for an enquiry into allegations of misconduct.
Messrs A.F. Ferguson & Co. ("Ferguson & Co.") is a reputed firm of Chartered Accountants.
The respondent Lalit Kumar Ratna is a partner and the respondents Ashok Kumar Behl and P.R. Bhoopatkar are employees in the firm.
All three are Chartered Accountants and members of the Institute.
In 1967 Ferguson & Co. established a Management Consultancy Division.
Ratna was head of the Division, and Behl and Bhoopatkar worked under him.
On April 15, 1970, Ferguson & Co. wrote to the Institute enquiring whether it could send out letters to Auditor Firms apprising them of the existence of the Management Consultancy Service and whether it was forbidden from doing so by any rules of the Institute.
The Secretary of the Institute replied that the Council had appointed a Sub Committee for considering the ethical problems arising out of the functioning of the Institute 's members in the area of Management Consultancy Service and the firm was requested to wait for the recommendations of the Sub Committee.
On December 8, 1971, Ratna issued a circular to the partners and principals of the firm setting forth guidelines on bringing the Management Consultancy Service brochures to the attention of their 1060 respective clients.
Meanwhile, Ferguson & Co. also referred the matter to their solicitors, and the solicitors advised that making available of printed informative material in the form of a brochure would not be in contravention of Clauses 6 and 7 in Part I of the First Schedule to the Act or otherwise amount to professional misconduct.
A few days later the Council published an "exposure draft", setting forth the proposals under consideration by the Council regarding the regulations and ethical rules in respect of Management Consultancy Services by Chartered Accountants, and invited members to send their suggestions on the proposals.
It was pointed out further that the recommendations to be made by the Council would require appropriate amendments in Part I of the First Schedule to the Act which contained rules in respect of professional misconduct.
Meanwhile, Ratna had prepared a brochure relating to the Management Consultancy Service to be provided by Ferguson & Co. It was stated that the brochure was intended for the use of the clients of the firm who requested information regarding such services and that it was for limited circulation only, the clients themselves being warned of that restriction.
On February 19, 1973, the Council wrote to Ferguson and Co. inviting its attention to the brochure and alleging that it contained information against the firm under Section 21 of the read with clauses 6 and 7 of of the First Schedule to the Act, and in accordance with Regulation 11(5) (b) read with Regulation 12 of the Chartered Accountants Regulations 1964, the firm was required to disclose to the Council the name of the member answerable to the charge of misconduct.
In reply, the firm named Ratna as the member responsible for the brochure.
On April 14, 1973, Ratna submitted a written statement to the Institute denying that he was guilty of professional misconduct and he set forth a detailed statement of the reasons in support of his stand.
The Council considered the matter in its meeting of September 13, 14 and 15, 1973 and being of prima facie opinion that Ratna was guilty of professional misconduct referred the case to the Disciplinary Committee.
The Disciplinary Committee consisted of the President, S.K. Gupta, the Vice President, N.C. Krishnan, two members of the Institute, R.K. Khanna and Bansi section Mehta and the Government nominee, Ganapathi.
The Disciplinary Committee gave a personal hearing on January 4, 1974, to Ratna and his counsel.
On February 14, 1974, the Disciplinary Committee submitted its report to the Council opining 1061 that Ratna was guilty of professional misconduct under clauses 6 and 7 of Part I of the First Schedule to the Act insofar as he solicited clients directly or indirectly and also advertised professional attainments of his services.
In its meeting of February 16, 1974 the Council considered the report of the Disciplinary Committee and found that Ratna was guilty of the misconduct.
In February 25, 1974, the Institute wrote to Ratna that the Council had found him guilty of professional misconduct, as charged, and that it was proposed to remove his name from the Register of Members for a period not exceeding five years in accordance with the procedure laid down in section 21(4) of the Act.
He was informed that he would be called upon to appear before the Council at its next meeting but in case he did not wish to be heard in person he was entitled to send a written representation against the proposed action.
He was required to take note that the scope of the oral hearing for consideration of the written representation would be restricted to the penalty proposed.
Copies of the Report of the Disciplinary Committee and the findings of the Council were forwarded to him.
On March 4, 1974, Ratna applied for extension of time to enable him to make his representation and the Council granted him time up to April 13, 1974, for that purpose.
It may be stated at this stage that parallel proceedings were taken in the case of Behl and Bhoopatkar.
The brochure was treated as information against them also, and on April 14, 1973, they sent their written statements to the Institute.
Their submissions were considered by the Council, which being of opinion that they were prima facie guilty of misconduct, referred the matter to the Disciplinary Committee.
On January 4, 1974, the Disciplinary Committee granted a full personal hearing to these two respondents, who were represented by counsel.
As in the case of Ratna, the Disciplinary Committee made its report to the Council that these two respondents were guilty of professional misconduct under clauses 6 and 7 of Part I of the First Schedule to the Act, and in its meeting on February 16, 1974 the Council held them guilty accordingly and proposed the same penalty as in Ratna 's case.
They were also invited to appear in person or to make a written representation against the penalty proposed before the Council.
Ratna now filed W.P. No. 426 of 1974 and Behl and Bhoopatkar filed W.P. No. 428 of 1974 in the High Court of Bombay.
The Writ Petitions were allowed by Lentin, J by separate orders dated March 3, 1980, on the finding that the Council should have given an opportunity to the members to represent before it against the report of the Disci 1062 plinary Committee and that the President, the Vice President and the two members of the Institute who were members of the Disciplinary Committee were disqualified from participating in the proceedings of the Council when it considered the report of the Disciplinary Committee, and that as the decision of the Council was consequently vitiated the orders imposing penalty on the respondents were quashed and the case remanded to the Council for fresh consideration.
The Institute appealed to a Division Bench of the High Court and the appeals have been summarily rejected by separate orders dated April 16, 1980.
It is apparent that in the scheme incorporated in section 21 of the Act there are separate functionaries, the Disciplinary Committee, the Council and, in certain cases, the High Court.
The controlling authority is the Council, which is only logical for the Council is the governing body of the Institute.
When the Council receives information or a complaint alleging that a member of the Institute is guilty of misconduct, and it is prima facie of opinion that there is substance in the allegations it refers the case to the Disciplinary Committee.
The Disciplinary Committee plays a subordinate role.
It conducts an inquiry into the allegations.
Since the inquiry is into allegations of misconduct by the member, it possesses the character of a quasi judicial proceeding.
The Disciplinary Committee thereafter submits a report of the result of the inquiry to the Council.
The Disciplinary Committee is merely a Committee of the Institute, with a function specifically limited by the provisions of the Act.
As a subordinate body, it reports to the Council, the governing body.
The report will contain a statement of the allegations, the defence entered by the member, a record of the evidence and the conclusions upon that material.
The conclusions are the conclusions of the Committee.
They are tentative only.
They cannot be regarded as 'findings '.
The Disciplinary Committee is not vested by the Act with power to render any findings.
It is the Council which is empowered to find whether the member is guilty of misconduct.
Both section 21(2) and section 21(3) are clear as to that.
If on receipt of the report the Council finds that the member is not guilty of misconduct, section 21(2) requires it to record its finding accordingly, and to direct that the proceedings shall be filed or the complaint shall be dismissed.
If, on the other hand, the Council finds that the member is guilty of misconduct, section 21(3) requires it to record a finding accordingly, and thereafter to proceed in the manner laid down in the succeeding subsections.
So the finding by the Council is the determinative decision as to the guilt of the member, and because it is determinative the Act requires it to be recorded.
A responsibility so grave as the determina 1063 tion that a member is guilty of misconduct, and the recording of that finding, has been specifically assigned by the Act to the governing body, the Council.
It is also apparent that it is only upon a finding being recorded by the Council that the Act moves forward to the final stage of penalisation.
The recording of the finding by the Council is the jurisdictional springboard for the penalty proceeding which follows.
Now when it enters upon the task of finding whether the member is guilty of misconduct, the Council considers the report submitted by the Disciplinary Committee.
The report constitutes the material to be considered by the Council.
The Council will take into regard the allegations against the member, his case in defence, the recorded evidence and the conclusions expressed by the Disciplinary Committee.
Although the member has participated in the inquiry, he has had no opportunity to demonstrate the fallibility of the conclusions of the Disciplinary Committee.
It is material which falls within the domain of consideration by the Council.
It should also be open to the member, we think, to point out to the Council any error in the procedure adopted by the Disciplinary Committee which could have resulted in vitiating the inquiry.
section 21(8) arms the Council with power to record oral and documentary evidence, and it is precisely to take account of that eventuality and to repair the error that this power seems to have been conferred.
It cannot, therefore, be denied that even though the member has participated in the inquiry before the Disciplinary Committee, there is a range of consideration by the Council on which he has not been heard.
He is clearly entitled to an opportunity of hearing before the Council finds him guilty of misconduct.
At this point it is necessary to advert to the fundamental character of the power conferred on the Council.
The Council is empowered to find a members guilty of misconduct.
The penalty which follows is so harsh that it may result in his removal from the Register of Members for a substantial number of years.
The removal of his name from the Register deprives him of the right to a certificate of practice.
As is clear from section 6(1) of the Act, he cannot practice without such certificate.
In the circumstances there is every reason to presume in favour of an opportunity to the member of being heard by the Council before it proceeds to pronounce upon his guilt.
As we have seen, the finding by the Council operates with finality in the proceeding, and it constitutes the foundation for the penalty imposed by the Council on him.
We consider it significant that the power to find and record whether a member is guilty of misconduct has been specifically entrusted by the 1064 Act to the entire Council itself and not to a few of its members who constitute the Disciplinary Committee.
It is the character and complexion of the proceeding considered in conjunction with the structure of power constituted by the Act which leads us to the conclusion that the member is entitled to a hearing by the Council before it can find him guilty.
Upon the approach which has found favour with us, we find no relevance in James Edward Jeffs and others vs New Zealand Dairy Production and Marketing Board and others, [1967] 1 AC 551 cited on behalf of the appellant.
The Court made observations there of a general nature and indicated the circumstances when evidence could be recorded and submissions of the parties heard by a person other than the decision making authority.
Those observations can have no play in a power structure such as the one before us.
Our attention has been invited to the difference between the terms in which section 21(3) and section 21(4) have been enacted and, it is pointed out, that while in section 21(4) Parliament has indicated that an opportunity of being heard should be accorded to the member, nowhere in section 21(3) do we find such requirement.
There is no doubt that there is that difference between the two provisions.
But, to our mind, that does not affect the question.
The textual difference is not decisive.
It is the substance of the matter, the character of the allegations, the far reaching consequences of a finding against the member, the vesting of responsibility in the governing body itself, all these and kindred considerations enter into the decision of the question whether the law implies a hearing to the member at that stage.
Learned counsel for the appellant relies on Chandra Bhavan Boarding and Lodging, Bangalore vs The State of Mysore and Anr., ; , where this Court found that the procedure adopted by the Government in fixing a minimum wage under section 5(1) of the was not vitiated merely on the ground that the Government had failed to constitute a committee under section 5(1) (a) of that Act.
Reference was also made to K.L. Tripathi vs State Bank of India and Others, [1984] 1 SCC 43 where the petitioner complained of a breach of the principles of natural justice on the ground that he was not given an opportunity to rebut the material gathered in his absence.
Neither case is of assistance to the appellant.
In the former, the Court found that reasonable opportunity had been given to all the concerned parties to represent their case before the Government made the impugned order.
In the latter, the Court held that no real prejudice had been suffered by the complainant in the circumstances of the case.
1065 It is next pointed out on behalf of the appellant that while Regulation 15 requires the Council, when it proceeds to act under section 21(4), to furnish to the member a copy of the report of the Disciplinary Committee, no such requirement is incorporated in Regulation 14 which prescribes what the Council will do when it receives the report of the Disciplinary Committee.
That, it is said, envisages that the member has no right to make a representation before the Council against the report of the Disciplinary Committee.
The contention can be disposed of shortly.
There is nothing in Regulation 14 which excludes the operation of the principle of natural justice entitling the member to be heard by the Council when it proceeds to render its finding.
The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary.
It is then urged by learned counsel for the appellant that the provision of an appeal under section 22 A of the Act is a complete safeguard against any insufficiency in the original proceeding before the Council, and it is not mandatory that the member should be heard by the Council before it proceeds to record its finding.
Section 22 A of the Act entitles a member to prefer an appeal to the High Court against an order of the Council imposing a penalty under section 21(4) of the Act.
It is pointed out that no limitation has been imposed on the scope of the appeal, and that an appellant is entitled to urge before the High Court every ground which was available to him before the Council.
Any insufficiency, it is said, can be cured by resort to such appeal.
Learned counsel apparently has in mind the view taken in some cases that an appeal provides an adequate remedy for a defect in procedure during the original proceeding.
Some of those cases are mentioned in Sir William Wades erudite and classic work on "Administrative Law" But as that learned author observes, "in principle there ought to be an observance of natural justice equally at both stages", and "if natural justice is violated at the first stage, the right of appeal is not so much a true right of appeal as a corrected initial hearing: instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial.
" And he makes reference to the observations of Megarry J. in Leary vs National Union of Vehicle Builders, [1971] 1 Ch.
Treating with another aspect of the point, that learned Judge said: "If one accepts the contention that a defect of natural justice 1066 in the trial body can be cured by the presence of natural justice in the appellate body, this has the result of depriving the member of his right of appeal from the expelling body.
If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him.
I cannot think that natural justice is satisfied by a process whereby an unfair trial, though not resulting in a valid expulsion, will nevertheless have the effect of depriving the member of his right of appeal when a valid decision to expel him is subsequently made.
Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice.
As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body.
" The view taken by Megarry, J. was followed by the Ontario High Court in Canada in Re Cardinal and Board of Commissioners of Police of City of Cornwall, The Supreme Court of New Zealand was similarly inclined in Wislang vs Medical Practioners Disciplinary Committee, and so was the Court of Appeal of New Zealand in Reid vs Rowley, But perhaps another way of looking at the matter lies in examining the consequences of the initial order as soon as it is passed.
There are cases where an order may cause serious injury as soon as it is made, an injury not capable of being entirely erased when the error is corrected on subsequent appeal.
For instance, as in the present case, where a member of a highly respected and publicly trusted profession is found guilty of misconduct and suffers penalty, the damage to his professional reputation can be immediate and far reaching.
"Not all the King 's horses and all the King 's men" can ever salvage the situation completely, notwithstanding the widest scope provided to an appeal.
To many a man, his professional reputation is his most valuable possession.
It affects his standing and dignity among his fellow members in the profession, and guarantees the esteem of his clientele.
It is often the carefully garnered fruit of a long period of scrupulous, 1067 conscientious and diligent industry.
It is the portrait of his professional honour.
In a world said to be notorious for its blase attitude towards the noble values of an earlier generation, a man 's professional reputation is still his most sensitive pride.
In such a case, after the blow suffered by the initial decision, it is difficult to contemplate complete restitution through an appellate decision.
Such a case is unlike an action for money or recovery of property, where the execution of the trial decree may be stayed pending appeal, or a successful appeal may result in refund of the money or restitution of the property, with appropriate compensation by way of interest or mesne profits for the period of deprivation.
And, therefore, it seems to us, there is manifest need to ensure that there is no breach of fundamental procedure in the original proceeding, and to avoid treating an appeal as an overall substitute for the original proceeding.
Upon the aforesaid considerations, we are of definite opinion that a member accused of misconduct is entitled to a hearing by the Council when, on receipt of the report of the Disciplinary Committee, it proceeds to find whether he is or is not guilty.
The High Court is, therefore, right in the view on this point.
Accordingly, the respective findings of the Council that Ratna, Behl and Bhoopatkar are guilty of misconduct are vitiated and must be quashed.
Consequently, the penalty imposed on each of them is also liable to be quashed.
Our decision on the first question is sufficient to dispose of these appeals.
But the appellant is anxious to obtain our opinion on the second question also as, it is said, the question is bound to arise in future in cases of disciplinary proceedings.
As it was one of the points on which the High Court allowed the writ petitions, and as we have already heard full agrument on it, we proceed now to consider the point.
The question is whether the respective findings of the Council holding the three members guilty of misconduct can be said to be vitiated by bias because the members of the Disciplinary Committee participated in those proceedings.
As has been pointed out, section 17 of the Act provides for a Disciplinary Committee, consisting of the President and the Vice President ex officio of the Council, who will be the Chairman and Vice Chairman respectively of the Disciplinary Committee, and three other members of the Council, two of them 1068 being elected by the Council to the Committee, and the third being nominated by the Central Government from amongst the persons nominated to the Council by the Central Government.
Therefore, all the five members of the Disciplinary Committee are drawn from the Council.
Now the Council is vested with power under section 21 to find whether the member is guilty of misconduct.
There is nothing in section 21 of the Act, however, to indicate whether the members of the Disciplinary Committee should be excluded when the Council enters upon its task.
The answer must be found from the general scheme of the Act and the fundamental principles of law.
There can be no dispute that the function of the Disciplinary Committee of holding an enquiry under section 21(1) of the Act into the conduct of the member calls for a recording of evidence by the Committee.
Its duty does not end there.
It must consider the evidence and come to its conclusions.
As section 21(2) of the Act plainly says, it must report "the result of its enquiry" to the Council.
In the absence of express or implied statutory intendment to the contrary, it appears to us that the members of such a Committee would be disqualified from participating in the deliberations of the Council when it proceeds to consider the report in order to find whether the member is guilty of misconduct.
For that alone would be consistent with the fundamental principle that justice must not only be done but must also appear to be done.
The nature of the function discharged by the Council in rendering its finding is quasi judicial, and we are reminded of the observations of this Court as far back as Manek Lal vs Dr. Prem Chand, ; "It is well settled that every member of a tribunal that is called upon to try issues in judicial or quasi judicial proceedings must be able to act judicially; and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially, objectively and without any bias.
In such cases the test is not whether in fact a bias has affected the judgment; the test always is and must be whether a litigant could reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision of the tribunal.
It is in this sense that it is often said that justice must not only be done but must also appear to be done." 1069 We must remember that the President and the Vice President of the Council and 3 members of the Council compose the Disciplinary Committee.
The President and the Vice President do certainly hold significant status in the meetings of the Council.
A member whose conduct has been the subject of enquiry by the Disciplinary Committee ending in conclusions adverse to him can legitimately entertain an apprehension that the President and the Vice President of the Council and the other members of the Disciplinary Committee would maintain the opinion expressed by them in their report and would press for the acceptance of the report by the Council.
To the member whose conduct has been investigated by the Committee, the possibility of the Council disagreeing with the report in the presence of the President and the Vice President and the other members of the Committee would so rather remote.
His fears would be aggravated by the circumstance that the President would preside over the meeting of the Council, and would thus be in a position to control and possibly dominate the proceedings during the meeting.
We do not doubt that the President and the Vice President, and also the three other members of the Disciplinary Committee, should find it possible to act objectively during the decision making process of the Council.
But to the member accused of misconduct, the danger of partisan consideration being accorded to the report would seem very real indeed.
The objection on the ground of bias would have been excluded if the statute had expressed itself to the contrary.
But nowhere do we find in the Act any evidence to establish such exclusion.
It is true that by virtue of section 17(3) it is obligatory that the Disciplinary Committee should be composed of the President and the Vice President of the Council and three other members of the Council.
While that is so, there is nothing in the Act to suggest that the meetings of the council must always be presided over by the President or the Vice President, and that no meeting can be held in their absence.
We find that Regulation 140 framed under the Act contemplates that the Council may meet in the absence of the President and the Vice President, and provides that in their absence a member elected from among the members who are present should preside.
There is an element of flexibility which makes it possible for the Council to consider the report of the Disciplinary Committee without the participation of the members of the Committee.
Because of the 'flexibility ' potential in the scheme, the doctrine of necessity, to which reference has been made on behalf of the Institute, cannot come into play.
We must admit that it does appear anomalous that the President and the Vice President of the Council should be disabled from participating in a meeting of the 1070 Council because they are bound by statute to function as the Chairman and the Vice Chairman of the Disciplinary Committee, and were it not for the factor of flexibility which we see in the scheme, we would have been compelled to the conclusion that the Act implies an exclusion of the doctrine of bias.
But as we have observed, no such exclusion is implied by the scheme of the Act or its policy.
We suggest the removal of the anomaly by suitable legislative amendment of section 17(3) of the Act so that the constitution of the Disciplinary Committee should not necessarily include the President and the Vice President of the Council.
It is only appropriate that due recognition should be given to the fundamental principles and accepted axioms of law.
Learned counsel for the Institute relies on Re Dancyger and Alberta Pharmaceutical Association, ; Re Prescott, ; Re Merchant and Benchers of the Law Society.
and the majority opinion in Law Society of Upper Canada vs French, in support of the contention that participation by the members of the Disciplinary Committee does not vitiate the proceedings of the Council.
The principal basis on which the Canadian courts proceeded in upholding the validity of the meeting of the parent body, despite the participation therein of the members of the Disciplinary Committee, lay in this that the entire proceeding, that is to say the enquiry by the Committee and the subsequent consideration of its report by the parent body, constituted a single proceeding, and had to be distinguished from a case where the decision by a subordinate body was assailed in appeal before a superior authority.
This distinction, it seems to us, can be of little assistance if full play is given to the maxim that no man shall be a Judge in his own cause.
We are impressed by the soundness of the minority opinion pronounced by that learned and distinguished Judge, Laskin, C.J.C. in Law Society of Upper Canada vs French (supra) decided by the Supreme Court of Canada.
He observed: "I do not think that the issue herein falls to be decided according to whether the proceedings in Convocation are or amount to an appeal or are or amount to a review under a two stage scheme of inquiry into allegations of professional misconduct.
No doubt, characterization of the proceedings as an appeal may lend weight to the contention of the appellant solicitor, but the principle underlying his position rises above any such formalistic approach.
The principle is immanent in the ancient maxim nemo judex in causa sua, expressed by Coke in Dr. Benham 's case (1610) ; , 77E.R. 646.
" 1071 The conclusion reached by us has not been an easy one.
The authorities on the subject have oscillated from one extreme to the other, and an analysis of the cases points at times to some rather slender element in the mosaic of facts which has influenced the outcome.
There is good reason ultimately for adopting a liberal view, for as has been observed by the late Professor S.A. De Smith in his 'Judicial Review of Administrative Action ' Fourth Edition p. 261: ". . a report will normally include a statement of findings and recommendations, which may be controverted before the parent body; and in such a case the participation of members of the sub committee in the final decision may be of dubious validity.
The problem is not merely one of strict law; it is also one of public policy." Accordingly, we concur with the High Court that the finding of the Council holding the respondents Ratna, Behl and Bhoopatkar guilty of misconduct is vitiated by the participation of the members of the Disciplinary Committee.
Before we conclude, we may refer to a third point raised before us, the point being whether the Council is obliged to give reasons for its finding that a member is guilty of misconduct.
It seems to us that it is bound to do so.
In fairness and justice, the member is entitled to know why he has been found guilty.
The case can be so serious that it can attract the harsh penalties provided by the Act.
Moreover, the member has been given a right of appeal to the High Court under section 22 A of the Act.
To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty.
We have already pointed out that a finding by the Council is the first determinative finding on the guilt of the member.
It is a finding by a Tribunal of first instance.
The conclusion of the Disciplinary Committee does not enjoy the status of a "finding".
Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council.
The Council must, therefore, state the reasons for its finding.
The appeals fail and are dismissed, but in the circumstances of the case we make no order as to costs.
M.L.A. Appeals dismissed.

summary:
The appellant the Institute of Chartered Accountants of India was created as a body corporate under the .
Its members are Chartered Accountants.
The affairs of the Institute 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 section
(1) of section 21 provides that where 1050 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 Disciplinary Committee which is to hold an inquiry and report the result to the Council.
Sub section
4 lays down that where the finding of the Disciplinary Committee is that a member has been guilty of professional misconduct it shall afford an opportunity of being heard and may thereafter make an order either to: (a) reprimand the member; or (b) remove the name of the member from the Register for such period not exceeding 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 section
4, it shall forward the case to the High Court with its recommendations 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 misconduct under clauses 6 & 7 of of the First Schedule to the Act, in that they had prepared and brought out a brochure relating to Management 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 professional 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 accordance 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 representation 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 respondents and remanded the cases to the Council for fresh consideration on the finding: (i) that the Council should have given an opportunity to the respondents to represent before it against the report of the Disciplinary Committee; and (ii) that the decision of the Council was 1051 vitiated inasmuch as the President, the Vice President and the two members of the Institute, who were also members of the Disciplinary Committee, were disqualified from participating in the proceedings of the Council when it considered the report of the Disciplinary Committee.
The appeals filed by the appellant having been summarily rejected by the Division Bench, the Institute appealed to this Court.
Dismissing the appeals of the appellant, this Court, ^ HELD: 1.1 A member accused of misconduct is entitled to a hearing by the Council when, on receipt of the report of the Disciplinary Committee, it proceeds to find whether he is or is not guilty.
[1067D] 1.2 The Council is empowered to find a member guilty of misconduct.
The penalty which follows is so harsh that it may result in his removal from the register of Members for a substantial number of years.
The removal of his name from the register deprives him of the right to a certificate of practice.
In these circumstances there is every reason to presume in favour of an opportunity to the member of being heard by the Council before it proceeds to pronounce him guilty of misconduct.
[1063F G] 2.1 In the scheme incorporated in section 21 of the Act there are separate functionaries, the Disciplinary Committee, the Council and in certain cases, the High Court.
The controlling authority is the Council.
The Disciplinary Committee plays a subordinate role.
It conducts an inquiry into the allegations.
Since the inquiry is into allegations of misconduct by the member, it possesses the character of a quasi judicial proceedings.
The Disciplinary Committee thereafter submits a report of the result of the inquiry to the Council.
The Disciplinary Committee is merely a Committee of the Institute, with a function specifically limited by the provisions of the Act.
Its conclusions are tentative only.
They cannot be regarded as 'findings '.
The Disciplinary Committee is not vested by the Act with power to render any findings.
It is the Council which is empowered to find whether the member is guilty of misconduct.
The finding by the Council is the determinative decision as to the guilt of the member, and because it is determinative, the Act requires it to be recorded.
[1062C H] A responsibility so grave as the determination that a member is guilty of misconduct, and the recording of that finding, has been specifically assigned by the Act to the governing body, the Council.
It is also 1052 only upon a finding being recorded by the Council that the Act moves forward to the final stage of penalisation.
The recording of the finding by the Council is the jurisdictional spring board for the penalty proceeding which follows.
[1062H; 1063A B] 2.2 The report constitutes the material to be considered by the Council.
The Council will take into regard the allegations against the member, his case in defence, the recorded evidence, and the conclusions expressed by the Disciplinary Committee.
The nature of the function discharged by the Council in rendering its finding is quasi judicial.
A member whose conduct has been the subject of inquiry by the Disciplinary Committee ending in conclusions adverse to him can legiti mately entertain an apprehension that the President and the Vice President of the Council and the other members of the Disciplinary Committee would maintain the opinion expressed by them in their report and would press the acceptance of the report by the Council.
Although the member has participated in the inquiry, he has had no opportunity to demonstrate the fallibility of the conclusions of the Disciplinary Committee.
It is the material which falls within the domain of consideration by the Council.
It should also be open to the member, to point out to the Council any error in the procedure adopted by the Disciplinary Committee which could have resulted in vitiating the inquiry.
[1063B D] section 21(8) arms the Council with power to record oral and documentary evidence, and it is precisely to take account of that eventuality and to repair the error that this power has been conferred.
It cannot, therefore, be denied that even though the member has participated in the inquiry before the Disciplinary Committee, there is a range of consideration by the Council on which he has not been heard.
He is clearly entitled to an opportunity of hearing before the Council finds him guilty of misconduct.
[1063D E] 3.1 The finding by the Council operates with finality in the proceedings, and it constitutes the foundation for the penalty by the Council on him.
[1063G H] The power to find and record whether a member is guilty of misconduct has been specifically entrusted by the Act to the entire Council itself and not to a few of its members who constitute the Disciplinary Committee.
[1063H; 1064A] 3.2 It is the character and complexion of the proceeding consi 1053 dered in conjunction with the structure of power constituted by the Act which leads to the conclusion that the member is entitled to a hearing by the Council before it can find him guilty.
[1064A B] Manek Lal vs Dr. Prem Chand, ; , referred to.
There is no doubt that there is difference between the provisions of section 21(3) and 21(4), in that while in section 21(4) Parliament has indicated that an opportunity of being heard should be accorded to the member, nowhere in section 21(3) there is such requirement.
But, that does not affect the question.
The textual different is not decisive.
It is the substance of the matter, the character of the allegations, the far reaching consequences of a finding against the member, the vesting of responsibility in the governing body itself, all these and kindred considerations enter into the decision of the question whether the law implies a hearing to the member at that stage.
[1064D E] 5.
There is nothing in Regulation 14 which excludes the operation of the principle of natural justice entitling the member to be heard by the Council when it proceeds to render its finding.
[1065B C] The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary.
[1065C] 6.
There are cases where an order may cause serious injury as soon as it is made, an injury not capable of being entirely erased when the error is corrected on subsequent appeal.
Where a member of a highly respected and publicly trusted profession is found guilty of misconduct and suffers penalty, the damage to his professional reputation can be immediate and far reaching.
To many a man, his professional reputation is his most valuable possession.
It is often the carefully garnered fruit of a long period of scrupulous, conscientious and diligent industry.
It is the portrait of his professional honour.
In such a case, after the blow suffered by the initial decision, it is difficult to contemplate complete restitution through an appellate decision.
Therefore, there is manifest need to ensure that there is no breach of fundamental procedure in the original proceeding, and to avoid treating an appeal as an overall substitution for the original proceeding.
[1066F H; 1067A C] 7.1 By virtue of section 17(3) it is obligatory that the Disciplinary Committee should be composed of the President and the Vice President of the Council and three other members of the Council.
While that is so, 1054 there is nothing in the Act to suggest that the meetings of the Council must always be presided over by the President or the Vice President and that no meeting can be held in their absence.
There is an element of flexibility which makes it possible for the Council to consider the report of the Disciplinary Committee without the participation of the members of the Committee.
Because of the 'flexibility ' potential in the scheme, the doctrine of necessity, cannot come into play.
[1069E H] 7.2.
There is nothing in section 21 of the Act to indicate whether the members of the Disciplinary Committee should be excluded when the Council enters upon its task.
The function of the Disciplinary Committee of holding an inquiry under section 21(1) of the Act into the conduct of the member calls for a recording of evidence by the Committee.
Its duty does not end there.
It must consider the evidence and come to its conclusions.
Section 21(2) of the Act plainly says, it must report "the result of its enquiry" to the Council.
In the absence of express or implied statutory intendment to the contrary, the members of such a committee would be disqualified from participating in the deliberations of the Council when it proceeds to consider the report in order to find whether the member is guilty of misconduct.
For that alone would be consistent with the fundamental principle that justice must not only be done but must also appear to be done.
[1068B F] Re Daneyger and Alberta Pharmaceutical Association, , Re Prescott, , Re Merchant and Benchers of the Law Society, and Law Socieety of Upper Ganada vs French, , distinguished.
The Council is obliged to give reasons for its finding that a member is guilty of misconduct.
In fairness and justice, the member is entitled to know why he has been found guilty.
[107 1E G] The member has been given a right of appeal to the High Court under section 22 A of the Act.
To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty.
Further, a finding by the Council is the first determinative finding on the guilt of the member.
It is a finding by a Tribunal of first instance.
The conclusion of the Disciplinary Committee does not enjoy the status of a "finding".
Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council.
The Council must, therefore, state the reasons for the finding.
[1071F G] 1055 9.
Due recognition should be given to the fundamental principles and accepted axioms of law.
[1070B C] [Removal of the anomaly by suitable legislative amendment of section 17(3) of the Act so that the constitution of the Disciplinary Committee should not necessarily include the President and the Vice President of the Council was suggested by the Court.] [1070B C] James Edward Jeffs and Others vs New Zealand Dairy Production and Marketing Board and others, [1967] 1 AC 551, Chandra Bhavan Boarding and Lodging Bangalore vs The State of Mysore and Anr.[1970] 2 SCR 600 and K.L. Tripathi vs State Bank of India and Others, , inapplicable.
Leary vs National Union of Vehicle Builders, , Re Cardinal and Board of Commissioners of Police of City of Cornwall, , Wisland vs Medical Practioners Disciplinary Committee, and Reid vs Rowley, , referred to.