Institute of Chartered Accountants Vs.
L.K. Ratna & Ors [1986] INSC 215 (21 October 1986)
PATHAK, R.S. PATHAK, R.S.
MUKHARJI, SABYASACHI (J)
CITATION: 1987 AIR 71 1986 SCR (3)1048 1986
SCC (4) 538 JT 1986 671 1986 SCALE (2)614
CITATOR INFO: RF 1992 SC 248 (537)
ACT:
Chartered Accountants Act, 1949, ss. 17(3),
21(3), 21(4), 22A and First Schedule Part I clauses 6 & 7 Regulations
11-15-Member of Institute of Chartered Accountants-Charged with
Misconduct-Disciplinary Committee- Jurisdiction of-Scope of inquiry-Member,
Whether entitled to hearing by Council of Institute after Disciplinary
Committee submits report.
Sec. 21-Nature of Proceedings before the
Disciplinary Committee & Council of the Institute-What are-The conclusion
of Disciplinary Committee does not enjoy the status of a 'finding'-Conclusion
of Council is the first determinative finding-Council-Whether obliged to give
reasons for its finding.
Administrative Law-Professional Body-Charge
of misconduct-Disciplinary Committee conducting inquiry & submitting report
to Council for final decision- Participation of members of Disciplinary Committee
in Council deliberations-Principles of Natural Justice-Whether violated.
HEADNOTE:
The appellant-the Institute of Chartered
Accountants of India was created as a body corporate under the Chartered Accountants
Act 1949. 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-s. (1) of s. 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-s. 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-s. 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 Part
I 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 s. 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] S. 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 considered 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 v. Dr. Prem
Chand, [1957] SCR 575, referred to.
4. There is no doubt that there is difference
between the provisions of s. 21(3) and 21(4), in that while in s.
21(4) Parliament has indicated that an
opportunity of being heard should be accorded to the member, nowhere in s.
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 s. 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 s. 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 s. 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, 17 D.L.R. (3d)
206, Re Prescott, 19 D.L.R. (3d) 446, Re Merchant and Benchers of the Law
Society, 32 D.L.R. (3d) 178 and Law Socieety of Upper Ganada v. French, 49
D.L.R. (3d) 1, distinguished.
8. 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 s. 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 s. 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 v. New Zealand Dairy Production and Marketing
Board and others, [1967] 1 AC 551, Chandra Bhavan Boarding and Lodging
Bangalore v. The State of Mysore and Anr.[1970] 2 SCR 600 and K.L. Tripathi v. State
Bank of India and Others, [1984] 2 SCC 43, inapplicable.
Leary v. National Union of Vehicle Builders,
[1971] 1 Ch. 34, Re Cardinal and Board of Commissioners of Police of City of
Cornwall, [1974] 42 D.L.R. (3d) 323, Wisland v. Medical Practioners
Disciplinary Committee, [1974] 1 N.Z.L.R. 29 and Reid v. Rowley, [1977] 2
N.Z.L.R. 472, referred to.
CIVIL APPELLATE JURISDICTION: 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 Chartered Accountants
Act, 1949. 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 Chartered Accountants
Act, 1949 (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 Chartered Accountants Act
read with clauses 6 and 7 of Part I 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 S. 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 s. 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 s. 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 s. 21(2) and s. 21(3) are
clear as to that. If on receipt of the report the Council finds that the member
is not guilty of misconduct, s. 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, s. 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. S. 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 s. 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 v. 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 s. 21(3) and s. 21(4) have been enacted
and, it is pointed out, that while in s. 21(4) Parliament has indicated that an
opportunity of being heard should be accorded to the member, nowhere in s.
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 v. The State of Mysore and Anr.,
[1970] 2 SCR 600, where this Court found that the procedure adopted by the
Government in fixing a minimum wage under s. 5(1) of the Minimum Wages Act,
1948 was not vitiated merely on the ground that the Government had failed to
constitute a committee under s. 5(1) (a) of that Act. Reference was also made
to K.L. Tripathi v. 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 s. 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 s. 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 s. 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 v. National Union of
Vehicle Builders, [1971] 1 Ch. 34. 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, [1974] 42 D.L.R. (3d)
323. The Supreme Court of New Zealand was similarly inclined in Wislang v.
Medical Practioners Disciplinary Committee, [1974] 1 N.Z.L.R. 29 and so was the
Court of Appeal of New Zealand in Reid v. Rowley, [1977] 2 N.Z.L.R. 472.
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, s. 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 s.
21 to find whether the member is guilty of misconduct. There is nothing in s.
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 s. 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 s. 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 v. Dr. Prem Chand, [1957]
SCR 575.
"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 s.
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 s. 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, 17 D.L.R. (3d) 206;
Re Prescott, 19 D.L.R. (3d) 446; Re Merchant
and Benchers of the Law Society. 32 D.L.R. (3d) 178 and the majority opinion in
Law Society of Upper Canada v. French, 49 D.L.R. (3d) 1 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 v. 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)
8. Co. Rep. 113b, 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 s. 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.
Back