CA Misconduct – Order quashed as judgment not passed by same members who heard arguments.

CA Misconduct – Appellate order quashed as final judgment was not passed by same members who heard arguments.

In a recent judgment, Hon’ble High Court quashed the decision of ICAI Appellate Authority as the final judgment was not passed by the same members who heard the arguments.

ABCAUS Case Law Citation:
5167 (2026) (06) abacus.in HC

In the instant case, the Petitioners Chartered Accountants had challenged the common order of the ICAI Appellate Authority rejecting their appeals against the ICAI Board of Discipline (BoD).

The impugned action had been taken pursuant to a sting operation conducted by a third-party news agency, alleging that the petitioners had represented that they would legitimize ‘black money’ in return for a commission. The said sting operation was treated to be information under Rule 7 of the Chartered Accountants (Procedure of Investigation of Professional Misconduct and other Misconduct and Conduct of the Cases) Rules and the charge against the petitioners was that they had brought grave disrepute to the chartered accountant fraternity.

The petitioners were, prima facie, found to be guilty in the preliminary inquiry conducted by the concerned authority. Thereafter, the BoD, vide two separate orders held the petitioners guilty. Further, towards punishment removal of the name of the CAs names from the Register of Members of the ICAI for a period of three months and imposition of fines of Rs. 1,00,000/-.

Aggrieved by the said orders, the petitioner CAs preferred appeals before the Appellate Authority, which directed to the BoD to readjudicate the matter after affording a fresh opportunity of hearing. The BoD, subsequently, passed orders again finding the petitioners guilty of misconduct and imposing the same punishment. The petitioners’ appeals against were dismissed by the Appellate Authority vide the impugned order.

Before the Hon’ble High Court, it was submitted that in view of the principles of natural justice, the judgment ought to have been delivered by the very members who heard final arguments and reserved the matter. The opportunity of personal hearing which was granted to the petitioners, otherwise, would be meaningless. Placing reliance on the judgment of the Co-ordinate Bench it was submitted that the impugned order deserved to be set aside on this ground.

It was further submitted that as per Rule 13 of the ‘Procedure to be followed for appeals by the Appellate Authority, 2013’, the quorum of the Appellate Authority for hearing appeals is a minimum of three members including the Chairman. According to him, since the third member who had signed the judgment had not heard final arguments of the parties, the judgment ought to be deemed to have been passed by only two members. Therefore, the impugned judgment was coram non-judice. 

From the interlocutory orders passed by the Appellate Authority, the Hon’ble High Court observed that it indicated that when the parties concluded their final arguments before four members of the Appellate Authority and the judgment was reserved.

The Hon’ble High Court noted that the impugned judgment passed by the appellate authority indicated that it was signed by a total of three members. Two of them, had heard the final arguments and had reserved the judgment. However, the third member, was not a part of the earlier Bench. Therefore, the impugned order was vitiated on account of this discrepancy alone.

The Hon’ble High Court noted that the Hon’ble Supreme Court had held that  if one person hears and another decides, then personal hearing becomes an empty formality. Further, the Co-ordinate Bench of the High Court following thedecision of the Hon’ble Supreme Court had held that where final findings in the form of an order were recorded by the successor Designated Authority, who had no occasion to hear the appellants herein, the final order passed by the new DA offends the basic principle of natural justice.

The Hon’ble High Court held that the final judgment in the petitioners’ appeals ought to have been passed by the same members who heard the arguments. Therefore, the impugned order could not be sustained and was accordingly set aside on this ground. The Appellate Authority was given liberty to re-hear the petitioners and to pass a fresh order in accordance with law.

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