The Disciplinary Committee thereafter submits a report of the result of the inquiry to the Council.
They were also invited to appear in person or to make a written representation against the penalty proposed before the Council.
In 1967 Ferguson Co. established a Management Consultancy Division.
426 of 1974 and Behl and Bhoopatkar filed W.P. No.
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 number be in companytravention of Clauses 6 and 7 in Part I of the First Schedule to the Act or otherwise amount to professional misconduct.
428 of 1974 in the High Court of Bombay.
He was required to take numbere that the scope of the oral hearing for companysideration of the written representation would be restricted to the penalty proposed.
It may be stated at this stage that parallel proceedings were taken in the case of Behl and Bhoopatkar.
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.
The Secretary of the Institute replied that the Council had appointed a Sub Committee for companysidering the ethical problems arising out of the functioning of the Institutes members in the area of Management Consultancy Service and the firm was requested to wait for the recommendations of the Sub Committee.
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 companysidered the report of the Disciplinary Committee, and that as the decision of the Council was companysequently vitiated the orders imposing penalty on the respondents were quashed and the case remanded to the Council for fresh companysideration.
Atul Setalvad, Atul Rajadhya and Mrs. A.K. Verma for the Respondents.
The brochure was treated as information against them also, and on April 14, 1973, they sent their written statements to the Institute.
Regulations 11 to 15 set forth the procedure for an enquiry into allegations of misconduct.
From the Judgment and Order dated 16.4.1980 of the Bombay High Court in Appeal No.
Messrs A.F. Ferguson Co. Ferguson Co. is a reputed firm of Chartered Accountants.
203 and 205 of 1980.
S. Nariman, Anil B. Divan, K.K. Jain, S.K. Gupta, Promod Dayal, G. Banerjee and A.D. Sanger for the Appellant.
Ratna was head of the Division, and Behl and Bhoopatkar worked under him.
It companyducts an inquiry into the allegations.
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 number 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 number wish to be heard in person he was entitled to send a written representation against the proposed action.
The Disciplinary Committee gave a personal hearing on January 4, 1974, to Ratna and his companynsel.
Since the inquiry is into allegations of misconduct by the member, it possesses the character of a quasi judicial proceeding.
Ratna number filed W.P. No.
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.
On January 4, 1974, the Disciplinary Committee granted a full personal hearing to these two respondents, who were represented by companynsel.
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.
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.
1911 and 1912 of 1980.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
Two of the questions are 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?
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.
The Judgment of the Court was delivered by PATHAK, J. These appeals raise some fundamental questions in regard to the companyduct and procedure of disciplinary proceedings taken under the Chartered Accountants Act, 1949.
On February 19, 1973, the Council wrote to Ferguson and Co. inviting its attention to the brochure and alleging that it companytained 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.
When the Council proceeds to companysider 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 Disciplinary Committee plays a subordinate role.
The Institute was created as a body companyporate under the Chartered Accountants Act, 1949 the Act , and its members are 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.
The Act provides for the framing of Regulations.
The appellant is the Institute of Chartered Accountants of India the Institute .
A few days later the Council published an exposure draft, setting forth the proposals under companysideration 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.
The Disciplinary Committee companysists 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 numberinated by the Central Government.
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.
On April 15, 1970, Ferguson Co. wrote to the Institute enquiring whether it companyld 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 Council companysidered 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.
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.
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 companytained rules in respect of professional misconduct.
There are three Standing Committees of the Council, and one of them is the Disciplinary Committee.
Their submissions were companysidered by the Council, which being of opinion that they were prima facie guilty of misconduct, referred the matter to the Disciplinary Committee.
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.
All three are Chartered Accountants and members of the Institute.
The Disciplinary Committee companysisted 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 numberinee, Ganapathi.
In its meeting of February 16, 1974 the Council companysidered the report of the Disciplinary Committee and found that Ratna was guilty of the misconduct.
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 Ratnas case.
Copies of the Report of the Disciplinary Committee and the findings of the Council were forwarded to him.
