In a latest judgment, Delhi High Court has set aside the report dated 10-02-2012 of the Disciplinary Committee of ICAI holding the petitioner as guilty of professional misconduct. The petition sought the quashing of the report of the Disciplinary Committee on the ground that a fair opportunity for being heard has been denied to the petitioner as required under Chartered Accountants (Procedure of Investigations of Professional and other Misconduct and Conduct of Cases) Rules, 2007

Case Details:
W.P.(C) 4284/2012 & CM No. 8890/2012, CM No. 12079/2012
Naresh Tharad (Petitioner) versus The Institute of Chartered Accountants of India (ICAI) (Respondents)
Date of Judgment: 20-01-2015
Coram: Vibhu Bakhru, J

Facts of the Case:
In the instant case the petitioner chartered accountant was alleged of misconduct by a complaint dated 03-03-2009 and after the petitioner filed his written statement (WS), Director (Discipline), ICAI formed  prima facie opinion dated 04.05.2010 wherein the petitioner was held to be prima facie guilty of professional misconduct under clauses (7), (8), and (9) of Part I of second schedule to the Chartered Accountants Act, 1949. Later Disciplinary Committee (DC) ICAI called the petitioner to submit his written statement within 21 days which was extended two times (up to 15-10-2010) but no WS was filed by the petitioner.

Petitioner was called upon for personal hearing before the Disciplinary Committee on, 26.12.2010, at ICAI, Kolkata. The petitioner requested for an adjournment which was declined. However Although the hearing stood adjourned due to absence of the complainant itself. Again, hearing of DC was fixed on 25-11-2011 but the petitioner again requested for adjournment on medical ground. However, on 25.11.2011, the hearing was concluded in the absence of the petitioner holding the petitioner guilty of professional misconduct.

Relevant Cases quoted by the Court:
Institute of Chartered Accountants of India v. L.K. Ratna & Ors. AIR 1987 SC 71
Capt. M. Paul Anthony v. Bharat Gold Mines Ltd. (1999) 3 SCC 679
State Bank of India v. Chandra Govindji (2000) 8 SCC 532

The important excerpts of the judgment are as under:
It is apparent from the above that the Disciplinary Committee did not entertain the petitioner’s request for an adjournment on either of the two occasions.

Director (Discipline) had stated before the Disciplinary Committee that “Earlier the case was fixed on December 2010 and it was adjourned at his request…”. Apparently, the said statement was made to persuade the Disciplinary Committee to reject the petitioner’s request for adjourning the hearing.

In the circumstances, one can safely deduce that the Disciplinary Committee proceeded on the erroneous assumption that the petitioner had been previously granted an adjournment

A plain reading of Rule 18(1) of the Rules indicates that the Disciplinary Committee is to be guided by the principles of natural justice. Rule 18(7) of the Rules indicates that at the first hearing, the Disciplinary Committee is to read out the charge or charges to the respondent alongwith a summary of the prima facie opinion arrived at by the Director and ask the concerned member whether he/she pleads guilty of the charges. The proviso to Rule 18(7) of the Rules indicates that if the concerned member does not appear “even after one adjournment, the reading out of charge or charges along with the summary of prima facie opinion shall be made in his absence”. This, clearly, indicates that it would be necessary for the Disciplinary Committee to at least grant one adjournment on account of

non appearance of the concerned member....... Admittedly, in the present case the charges alongwith summary of prima facie opinion were not read as required............ perusal of the notes of the hearing held on 25.11.2011 indicate that the entire procedure was compressed in a single hearing as the petitioner was absent on that date.

..... observations made by the Supreme Court clearly establish that the nature of disciplinary proceedings make it imperative that sufficient opportunity be provided to the concerned member

before pronouncing him guilty of misconduct. A bare perusal of Rule 18 of the Rules also indicates that the framers of the rules were conscious of the implications of the disciplinary proceedings and have thus specified detailed procedure to ensure that disciplinary proceedings are fair and transparent. Needless to state, it is essential for the Disciplinary Committee to follow the Rules not only in letter but also in spirit.

.... It is quite possible that the intention of the petitioner may have been to delay the proceedings. However, as the disciplinary proceedings may have a serious adverse consequence on the concerned member, it would be appropriate to err on the side of granting an opportunity to the concerned member rather than to deprive him of a fair hearing. In this case, the procedure before the Disciplinary Committee was also truncated to conclude in a single day and the concerned member had no opportunity to present any arguments to persuade the Disciplinary Committee to reject any of the evidence presented by the Director (Discipline).

The petitioner had submitted a medical certificate and in the event the Disciplinary Committee found the same suspect, it was open for the Disciplinary Committee to call for further information. It cannot be disputed that refusing an adjournment and proceeding ex parte where the concerned member is not in a position to attend on medical grounds would amount to denying an opportunity of a hearing.

Undoubtedly, the petitioner would have an equally efficacious remedy by way of appeal under Section 22G of the Act and in normal circumstances Courts would be reluctant to interfere in proceedings under Article 226 of the Constitution of India where an equally efficacious remedy is available to the petitioner. However, it is well established that existence of an alternate remedy would not bar the jurisdiction of this Court under Article 226 of the Constitution of India. Having been persuaded to accept the view that a fair hearing ought to have been granted to the petitioner, I am unable to accept the contention that the petitioner be relegated to file an appeal under Section 22G of the Act.

During the course of the arguments, the learned counsel for the petitioner had conceded that the petitioner had not filed the written statement and would not be seeking any opportunity to file the same. The learned counsel for the petitioner had limited his request to be granted a hearing before the Disciplinary Committee. He had specifically submitted that the petitioner would not be seeking recall of any witness for the purpose of cross examination or an opportunity to file a written statement.

Accordingly, the impugned report is set aside and the matter is remanded to the Disciplinary Committee to afford the petitioner an opportunity to be heard. The Disciplinary Committee would schedule a hearing to afford the petitioner an opportunity to be heard on the evidence and material already produced by the Director (Discipline). The petitioner would also be granted an opportunity to present documents, if so required, before the Disciplinary Committee.

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