Order passed by four member Appellate Authority against CA was valid-High Court

Order passed by four member Appellate Authority against CA was valid. Under doctrine of necessity recusal of one member not affect hearing and decision-High Court

ABCAUS Case Law Citation:
ABCAUS 2246 (2018) (03) HC

The Petitioner chartered accountant (CA) challenged before the Hon’ble High Court the order passed by the Appellate Authority, on the ground of lack of quorum as his appeal was heard by four members on recusal of one of the appointed members.

The CA submitted that the Appellate Authority constituted under Section 22A of the Chartered Accountants Act, 1949 (CA Act) must consist of five members. The CA sought directions for constitution of the Appellate Authority of five members and a restraint order against the four member Appellate Authority from proceeding till reconstitution. CA also challenged validity of Rules 13 and 16 of the ‘Procedure to be Followed for Appeals by the Appellate Authority, 2013’ being repugnant to the provisions of the CA Act.

Order passed by four member Appellate Authority against CA valid

The Appellate Authority while passing the order held that absence or recusal of one or more members for justifiable reasons does not create any temporary or permanent vacancy and four members of the Appellate Forum could hear and decide the appeal. Thus the petitioner’s plea of non-quorum was rejected.

The Hon’ble High Court noted that Section 22A of the CA Act constitutes the Appellate Authority as a five-member body empowered to hear appeals under Section 22G filed by any member of the Institute aggrieved by any order of the Board of Discipline or the Disciplinary Committee imposing penalties. Proviso to sub-section (1) to Section 22F of the CA Act states that the Chairperson or members, unless permitted by the Central Government to relinquish their office earlier, would continue to hold office until expiry of three months from the date of receipt of resignation letter or till a new successor is appointed at his place or till expiry of the term of office, whichever is earlier. Thus, the member despite recusal continued and remain a member of the Appellate Authority in spite of his recusal in the present case. His term has not come to an end. He had not been removed by recourse to procedure under Section 22F(2) of the CA Act. A Chairperson or a member, as per sub-section (2), cannot be removed except by the Central Government on the ground of proved misbehavior or incapacity after an inquiry made by such person as the Central Government may appoint for this purpose. For removal, the Chairperson or the member has to be informed of the charges and he has to be given a reasonable opportunity of being heard. The said position did not arise in the present case.

The Hon’ble High Court opined that in view of the statutory provisions, it would be contrary to the CA Act, if the Central Government appoints another person as a member of the Appellate Authority on recusal of one of the member of the Appellate Authority. There was no vacant post either on resignation or removal that can be filled up by appointment notification by the Central Government. This is impermissible and would be contrary to the CA Act.

Referring to the doctrine of necessity, the Hon’ble High Court opined that the rationale behind the Rule is that the litigation cannot be a non sequitur. In other words, there cannot be a litigation system in which it is impossible to litigate a given case.  

On the same principle,  the Court examined the statutory provisions of the CA Act and the effect of recusal of one member of the five-members of the Appellate Authority and held that recusal will not stall hearing and decision of the appeal. Therefore, contention of lack of quorum on account of recusal of one member of the five member Appellate Authority was rejected.

Order passed by four member Appellate Authority against CA valid

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