Subramani Gopalkrishnan v. The Institute of Chartered Accountants of India

JUDGMENT

22.11.2010 ^ogre1of39 Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. .1. Althoughthe facts in these two writ petitions are sHghtly different,th questions involved are more or less similar. Both Petitioners,being the members of the Institute of Chartered Accountants of India (ICAF), i.e. the RespondentNo. 1 in both the petitions seek to challenge a prima facie opinion dated 17^'' September 2009 arrived at by the ICAI and the disciplinaryproceedings thathave commenced consequentthereto. Both Petitioners seek a direction to the ICAI to keep the respective disciplinary proceedingsagainst them in abeyance till the conclusionof the criminal cases against each of them. Factual Background

¶2The Petitioner in Writ Petition (C) 2505 of 2010, Mr. Talluri Srinivas ('Srinivas') is a CharteredAccountantby professionand a member of the ICAI since 1990. Srinivaswas a partnerwith M/s PriceWaterhouse(TW); a firm of Chartered Accountants registered with the ICAI. In the year 2000, PW were appointedas the statutoryauditorsof Satyam ComputerServices Limited ('SCSL'). While the statutoryaudits of SCSL for the years 200l. to March 2007 were conducted and the reports were signed by Mr. Subramani Gopalkrishnan('Gopalkrishnan')(thePetitionerinWritPetition(C) 5352 qf 2010),the statutoryauditfor the quartersendingon 30^*^ June 2007 and 30'" September2008 wereconductedandsignedby Srinivas.

¶3On 7^^ January2009, Mr. B. RamalingaRaju, the then Chairmanof SCSL wrote a letter to his Board of Directors in which inter alia he disclosed that the balancesheetof SCSL as on 30"^ September2008 carriedinflated(non existent)cash and bank balancesofRs. 5,040/-crores (as againstRs. 5361 W.P.{C)Nos. 2505&5352of2010 Poge2of39 crore reflected in the books) and accrued non-existent interest of Rs. 376 crores, an understated liability of Rs. 1,230 crores on account of funds: arranged by him and an overstateddebtors position of Rs. 490 crores (as againstRs. 2651 croresreflectedinthe books).He also disclosedthat for the Septemberquarter,thecompanyhad reporteda revenueofRs. 2,10(il-crores and an operatingmarginof Rs. 649 crores (24% of revenues)as againstthe, actual revenue of Rs. 2,112 crores and an actual operating margin of Rs. 61 crores (3% revenues).This had resultedin artificialcash and banlcbalances' going up by Rs. 588 croresin the SecondQuarteralone. Mr. Raju tendered his resignationas the Chairmanof SCSL and statedthat he was preparedtq subjecthimselfto thelaw ofthe landand face the consequencesthereof..

¶4On lO^'' January2009, the ICAI wrote a letter to M/s Price Waterhouse: Bangalore (PW, Bangalore)referringto the letter dated 7"" January 2009 addressedby Mr. Raju to the Board of Directorsof SCSL. It was statedby the ICAI that from the perusal of the said letter of Mr. Raju and. the newspaperreports,it emergedthatthe auditfiguresfor the years2004-05till the quarter ending on 30'*" September 2008 had been certified by PW, Bangaloreas reflectingthe true and fair pictureof the accounts,which was now admitted even by the Chairman of SCSL to be incorrect. This meant that the PW, Bangalore"had failedto carry out necessarycheckswhich are required while undertaking the audit of the financial statements-and certifyingthe quarterlyresultsof the company."ICAI allegedthat the-PW, Bangalorehad violatedthe accountingprincipleswhile auditing/certifying the accounts/quarterly results of SCSL for the aforementioned years/Quarters;that in spiteofthe aforestatedirregularities/manipulationsin W.p.(C) Nos. 2505&5352of2010 Poge3of39 0< the financial statements, PW, Bangalore had stated that financial statements together with the notes thereon gave a true and fair view; that PW, Bangalorehad failed to disclosematerialfacts which were not disclosedin financial statements of SCSL; that it had failed to report material mis-statementknown to it as statutoryauditors, which appeared in the financial statements of SCSL. It was thus alleged that PW, Bangalore did not exercise due diligenceand was grossly negligentin the conductof its professional duties as statutory auditors of SCSL for all these years.

¶5In the said letterdated lO"" January2009 addressedto PW, Bangalorethe ICAI stated that the letter dated January 2009 of Mr. Raju and the newspaperreportshad been treatedas "information"withinthe meaning.;©f Section21(2) of the CharteredAccountantsAct, 1949 [as amended by the Chartered Accountants (Amendment) Act, 2006 with effect from 17-'' November2006] (hereinafter'CA Act'). PW, Bangalorewas calledupon."to disclose the name or names of the member or members who is/are answerableto the allegation/sand send a copy of the aforesaidinformatlQii letteralong with its enclosuresto the said member/membersand he/theybe requestedto send his/theirWrittenStatement,if any, in triplicate,within21 days of the receiptof this letter." It was ftirtherstatedthat the memberor members answerable, should also send a declaration duly signed in the enclosed format and iri the event that the name/s of member/s answerable was not disclosed "then all the members who were partners or employeesof the firm on the date of occurrence of the alleged misconduct, shall ^be responsible for answering the allegation or allegations contained in the information."On 14^*" January 2009, similar notices were sent to Price W.P.{C)Nos. 2505&5352of2010 Page4of39 Waterhouse, Kolkata (TW, Kolkata') and Price Waterhouse, New Delhi (TW, New Delhi'). . .

¶6On30^^ January2009,PW repliedtotheICAI stating,interalia:- "As regards the furnishing of the names of member/s that are answerable to the allegations, key members are as under: ^

¶1Mr. S. Gopalkrishnan,Partner (MembershipNo. F - 18863),^ for the period April 1, 2000 to March 31, 2007.

¶2Mr. S. Talluri, Partner (Membership No. F - 20864) for the period April 1, 2007 to September 30, 2008.

¶3Mr. P. Shiva Prasad (Membership No. 204076) for the period. 5• April 1, 2001 and March 31, 2005.

¶4Mr. C.H. Ravindranath (Membership No. 204494) for the period April 1, 2005 and September 30, 2008."

¶7PW also informed that Gopalkrishnan and Srinivas had been arrested by the localpoliceandwere,therefore,out of reach.TheICAI was requestedto grant all the members, whose names were disclosed, some more time to respondto the noticedated lO'^ January2009. PW also gave its responseto the queriesraised.As mentionedhereinbefore,on 23^''January2009 Srinivas was arrested.Gopalkrishnanwas arrestedon 24^^^ January2009.

¶8On 20'^ February 2009, the criminalinvestigationwas transferredto the Central Bureau of Investigation ('CBI') and RC No. 4(S)/2009 was registeredagainstGopalkrishnan,Srinivasand seven other accusedpersons under Sections 409, 420, 468, 471, 477-A, 201, 120-B IPC.

¶9At the instance of the CBI, a Multi Disciplinary Investigation Team ('MDIT')was constitutedand a reportwas preparedby the ICAI Group-oii Poge5of39 April 2009. In para 1.2 of the said reportit has been mentionedthat Mr; Uttam Prakash Agarwal, President of the ICAI and Mr. Amarjit Chopra, VicePresidentoftheICAI,representedtheICAI in the MDIT. In Para 1.3; it is statedthat Mr. Agarwalconstituteda group of local CharteredAccountant professionalsfrom Hyderabadunder the convenorshipof Mr. Shanti Lai Daga, a member of the Central Council of ICAI, based in Hyderabadto providerequisitesupportandtohelpthe CBI inits investigationofthe sc^rn, It is stated that Mr. Daga then led the group and interactedwith Mr. V.Y;. Laxmi Narayana,the DIG who was headingthe probe, and Mr. J.L. Negi, the Coordinator of the CBI investigationteam. Para 1.4 of the report of the ICAI Group states that the Group has been entrusted with the "task of verificationof compliancesor otherwiseby Price Waterhouse,the auditors of the company, with various auditing and assurances standards and guidancenotesissuedby ICAI, in respectof cash and bank balances,sales, receivables,interest accrued and tax deducted at source relating to fixed deposits and its impacton financialreportingand auditor'sreportthereohl Therefore,the verificationby the Group is limited to the above heads of account of the financial statements." The report further stated that the IQAI Group had "restrictedits enquiry to the aforesaidheads of accounts and relatedmattersfor the years ending 31^' March 2005, 31^*^ March 2006, 3.1 •• March2007, 31'^March2008 and for the quartersended 30"" June 2008 and 30^*^ September2008."

¶10The ICAI Group in para 19.1 of its report arrived at the following conclusions: "19.1 The statutory auditors have failed to exercise reasonable Page6of39 care and compliance with various auditing and assurance standards issued by the Institute of Chartered Accountants of India as a generally accepted auditing practice while reporting on the financial statements and the materiality of the misstatements are so huge that it has rendered the financial statements for all these years as untrue and unfair. However, the executive, management and staff have drawn substantial amounts as , remunerations, commission, incentives, bonuses, ESOPs. The management has also declared the dividends to its shareholders under the Companies Act, 1956. However, all these overstatements and misstatements have reported the EPS at a higherlevelin the financialreportingannuallyas well as quarterly which has directly impacted the movement of the share prices in. the stock exchanges market in India and abroad."

¶11On 7^*" April 2009, the CBI filed its first chargesheetin the Courtof the AdditionalChiefMetropolitanMagistrate('ACMM') namingthe Petitioners Gopalkrishnanand Srinivasand sevenothersas accusedpersons.Amongthe documentsreliedupon by the CBI was the reportof the ICAI Group,which was a part of the MDIT.

¶12Under Section 21(2) of the CA Act, on receipt of any information-©r complaintby the ICAI, the Director (Discipline)should arrive at a prima facie opinion on the occurrenceof the allegedmisconduct.Under Sectiori 21(3),it is statedthatwherethe Director(Discipline)is ofthe opinionthat a memberis guiltyof any professionalor other misconductmentionedin, the First Schedule to the CA Act, then the matter will be placed before ,the Board of Disciplineand where the Director(Discipline)is of the opinion that a memberis guilty of any professionalor other misconductmentioned Poffe7of39 in the Second Schedule or in both the Schedules, then the matter will he placed before the Disciphnary Committee.

¶13The Director (Discipline)placed the primafacie opinion dated l?'*" September2009 before the DisciplinaryCommittee. The view expressed therein was that Gopalkrishnanand Srinivas were prima facie guilty,of professionalmisconductwithinthe meaningofClauses(5), (6), (7), (8) and

(9) ofPart I ofthe Second Scheduleto the CA Act. Aprimafacie opinion was also formed that the two Petitioners were guilty of other misconduct withinthe meaningof Section22 read with Section21 of the CA Act. .

¶14On the basis of the aboveprimafacie opinionwhichwas consideredby the DisciplinaryCommittee,a separatenotice dated 8^^ October2009 was. sent by the ICAI to each of the Petitionersenclosingthe copy of the prima facie opinionand asking each ofthem to send theirwrittenstatementalong with supportingdocumentsand a list of witnesseswithin 21 days. At th^t pointoftime,boththe Petitionerswere injudicialcustody. .~

¶15On 22"'' November2009, a supplementarycharge sheetwas filed by the CBI. Asecondsupplementarychargesheetwas filedon 7* January2010.

¶16On 4"" February2010, Srinivaswas grantedbail by the SupremeCourtin Crl. AppealNo. 257 of2010.Therelevantportionofthe orderread as under:.: "We do not expressany opiniononthe meritsof this case regarding. the nature of offenceor gravitythereof allegedlycommittedby the accused-appellant. PoQe8of39 Havingregardto the fact that the appellanthad been in custodyfor more than one year, we are of the view that he be released on bail subject to certain conditions

¶1The appellant is permanentresident of Hyderabad. He will reportto the investigatingofficer-S.P. (C.B.I.)once in two months in the first week.

¶2The appellantshall appearin Court as and when the case is posted for hearing.

¶3The appellant shall be available for further interrogation/investigationas and when required on the written requisition by the investigating agency.

¶4The appellant shall not tamper with any evidence and shall not influence the prosecution witnesses.

¶5The appellant shall execute bail bonds of Rs.20 lacs (Rupees twenty lacs only) with two solvent sureties of the like amount to the satisfaction of the Trial Court.

¶6On executing the bail bonds he be released on bail pending trial."

¶17On26'''February2010,noticeswere issuedby the ICAIto Srinivaswith respectto the disciplinaryproceedingspendingagainsthim as well as Mr. Ch. Ravindranath.On 26^^ March 2010, Srinivasrepliedto the ICAI stating, that Mr. Ravindranath had been cited as a witness in the criminal case pendingbeforethe SpecialCourt,CBI againstSrinivas.The proceedingsfor which the ICAI had summoned Srinivas as a witness in the disciplinary ' proceedingsagainst Mr. Ravindranatharose from the very same acts of allegedomissionor commissionwhich formedthe basis for variouscha;rges alleged against Srinivasin the pending criminalcase. Accordingly,it was submittedby Srinivasthat his appearanceas a witness in the disciplinar}' Page9of39 proceedingsagainstMr. Ravindranathwould severelyprejudicehis position in the criminal cases pendingtrial. As regards the disciplinaryproceedings against himself, Srinivas pointed out that he would be dealing with it separately.By a separateletterdated 26'^ March 2010, Srinivasstatedthat-the disciphnaryproceedingsagainsthim shouldbe deferredsincethe alleged acts of omission or commission on the basis of which disciplinary, proceedings had commenced formed not only the basis of prima facie opinion but also formed the basis for various charges against him in the criminal cases. Srinivas expressedhis apprehensionthat "any disclosure ©f my explanationsor defenses until the final conclusion of my aforesaid, pending criminal trial before the Special Court at Hyderabad, would seriouslyimpactmy defencein the abovecriminaltrial."

¶18On 6"" April 2010, the ICAI wrote to Srinivasaskinghim to attendas:a witness in the disciplinaryproceedingsagainst Mr. Ravindranathfailing which he would be subject to the consequence of non-attendance as,laid down in Rule 12 of Order XVI of the Code of Civil Procedure, 1908 read with Section 21-C of the CA Act. By a separate communication received by Srinivason 9^^ April 2010,the ICAI informedhim that althoughthe hearing on 30'" March 2010 had been adjourned by the Disciplinary Committeej-the scope of inquiry by the DisciplinaryCommittee and that of the criminal court were on a separatefooting and, therefore,at the next date of hearing, i.e. 18^'' April 2010, he should remain present and further that ,ho adjournmentwouldbe grantedunder any circumstances.

¶19W.P. (C) 2505 of2010 was filedby Srinivasin this Courton 15^^ ApriJ Page10of39 2010. On 16'^ April 2010, while directingnoticeto issue in thepetition,this Court directed that the hearing fixed before the Disciplinary Committee of the ICAI on 18* April 2010 would be postponed by ten days. In the meanwhile, the Petitioner was to prepare and file a chart to show the exact allegationsin the charge-sheetofthe CBI and thosein the showcausenotice issued by the ICAI in the disciplinary proceedings.

¶20On 25* June 2010 Gopalkrishnanwas grantedbail by the High Courtof Andhra Pradesh subject to the following conditions:- - .v;; "1. The petitioner-A.4shall execute bail bond of Rs.20,00,000/- (Rupeestwentylacs only) with two solventsuretiesof the amount to the satisfaction of the Additional Chief Metropolitan Magistrate, Nampally,Hyderabad,whereas petitioner-A.10 shall executebail bond of Rs.20,00,000/- (Rupees twenty lacs only) with two solvent sureties of the like amount to the satisfaction of the XIV Additional, Chief MetropolitanMagistrate,Hyderabad.

¶2In view of the fact that the Investigation is still in progress in connection with diversion of funds, the petitioners are directed to reportbeforethe investigatingagency,daily at 10 a.m until further orders.

¶3The petitionersshall appearinthe Courtas and whenthe case is posted for hearing.

¶4The petitionersshallbe availablefor furtherinterrogationas and when required, on the written requisition by the investigating agency.

¶5Thepetitionersshallnottamperwithany evidenceand shallnot influence the prosecution witnesses.

¶6On executingthe bail bonds they be releasedon bail pending trial. However,theprosecutionis at libertyto file cancellationof bail, if it is broughttothenoticeoftheprosecutingagencythatthe present Page11 of39 () petitionersviolatethe conditionsimposedby this Court." r

¶21On 6"" July 2010, two separate letters were sent by the ICAI to Gopalkrishnan.One requiredhim to appearas awitnesson 23'^ July 2010 at 2 pm in the disciplinaryproceedingsagainstMr. Ch. Ravindranathand Mr. P. Shiva Prasad who had both managed audits with the PW, Bangalore. In the other letter, Gopalkrishnanwas asked to appear on 23"^ July 2010 at 3 pm in the disciplinaryproceedingsagainsthim. By separatelettersdated 19.^'' July 2010, Gopalkrishnanexplainedwhy he could not appear either as a witness in the disciplinaryproceedingsagainst Mr. Ravindranathand Mr. Shiva Prasad and also in the disciplinary proceedings against himself. This was more or less on the same lines as the stand of Srinivas.

¶22Thereafteron 26^^ July 2010, by separate letters, the ICAI required Gopalkrishnanto again appear before the DisciplinaryCommitteeon 12"^ August 2010 with reference to both the enquiries initiated against Mr. Ravindranath and Mr. P. Siva Prasad as well as the one pending against him. In the circumstances,Gopalkrishnanfiled W.P.(C) 5352 of 2010 in this Courton 6'^ August2010.

¶23As regards the plea of Gopalkrishnanthat he should not be asked to appear in the disciplinaryproceedingsagainst Mr. Ravindranathand Mr. Shiva Prasad, after hearing the submissions of counsel for both, the Petitioneras well as the ICAI,this Courton 9"" August2010 whiledisposing of the CM No. 10545 of 2010 passed the following order: "1. Notice. Mr. Tiku and Mr. Ravinder Agarwal, CGSC accept.. Page12of39 noticeon behalfofRespondentNos.1and 2. ^

¶2There are two inquiriesfor whichtwo separatenoticesdated26*'' July 2010 have been issued to the Petitionerby the Institute of Chartered Accountants of India ('ICAF). The first show cause notice (at page 222 of the paper book) is regardingthe inquiry' againstthe Petitionerhimselfin whichhe has been askedto appear beforethe DisciplinaryCommitteeon 12"^August2010. ;'

¶3In regard to the above inquiry, it is not in dispute that the Petitioner was head of the audit team of Price Waterhouse, the firm who were the statutory auditors for Satyam Computers Services Ltd for the years 2000 to 2007. He is facing criminal proceedings and a chargesheetin this regard has been filed againsthim by the Central Bureau of Investigation ('CBF). He was granted bail by the High Court of Andhra Pradesh. This case is pending in the court of concerned Additional Chief Metropolitan Magistrate at Hyderabad.

¶4Mr. Talluri Srinivas, the Petitioner in Writ Petition (Civil) No. 2505 of 2010 was the head of the audit team of Price Waterhouse for the subsequentyears 2007 to 2009. He too is facing criminal trial,pursuantto the chargesheetfiled by the CBI in his case. This Court had passed an interim order on 16^*^ April 2010 in W.P.(C)No.2505 of 2010 postponingthe date ofthe disciplinao^ proceedings against Mr. Srinivas before the Disciplinar5'^ Committee of the ICAI. The said interim order has continued. The saidwritpetitionis listedin this Courtnexton 20'^ October2010.

¶5Mr. Kaul, learned Senior counsel appearing for the Petitionef submits that as far as the enquiry against the Petitioner is concerned,the questionof lawraisedin the presentwritpetitionis identical to the question of law raised by Talluri Srinivas and, therefore, a similar interim relief should be granted to the Petitioner. Page13of39

¶6Mr. Kaul points out that, as done in the case of Mr. Srinivas, the Petitioner too has produced a chart to show that there is an overlapof the disciplinaryand criminalproceedings.He statesthat the Petitioner's case is covered by para 22 (ii) of the judgment of the Supreme Court in M Paul Anthony v. Bharat Gold Mines Ltd. (1999) 3 see 679.

¶7Havingconsideredthe abovesubmissions,this Courtdirectsthat the disciplinary proceedings against the Petitioner shall remain stayed till the next date of hearing.

¶8The secondnoticedated 26"" July 2010 requiresthePetitionerto remain present as a witness in the disciplinary proceedings initiated against Mr. P. Siva Prasad and Mr. Ravindranath which has also been fixed for 12^*^ August2010. Both Mr. P. SivaPrasad and Mr. Ravindranath have been cited as prosecution witnesses by the CBI in the chargesheet filed against the Petitioner. It is submitted that the Petitioner may not be compelled to make any statement before the Disciplinary Committee that may prejudice his defence in the criminal trial.

¶9Mr. Tiku, on the other hand, submits that the Petitioner has been cited .as a witness by the above two persons and the Respondent ICAI is under an obligation under the statute to summon him. He, nevertheless, states that the Petitioner will be under no compulsion to make any statement before the Disciplinary Committee which he might think will prejudice his defence in the criminal trial. Mr. Tiku added that if the Petitioner appearsbefore the DisciplinaryCommitteeand statesthat he does not wish to make any statement in view of the pending criminal trial, the DisciplinaryCommitteewill not insist on his making a statement.

¶10In view of the above statement of Mr. Tiku, there is no need for this Court to directthe postponementof the proceedings against W.P.iC)Nos. 2505&5352of2010 Page14of39 ^ • Mr. P. Siva Prasad and Mr. Ravindranath scheduled for 12"' August 2010. The Petitioner is under no compulsionto make any statement which might prejudice his defence in the criminal proceedings. No adverse inference will be drawn by the Disciphnary Committee if the Petitioner declines to make a, statement.

¶11Mr. Kaul states that in view of the fact that the Petitioner is - , requiredto appearbeforethe CBI on 12'^August2010 at 10 am, he may be permitted to appear before the DisciplinaryCommittee after 1 pm. Mr. Tiku statesthat there will be no difficultyin this regard.

¶12The application stands disposed of" Submissions of Counsel

¶24Mr. S. Ganesh, learned Senior counsel appearing for the Petitioner Srinivas,refers to the specificparagraphsof the CBI's charge sheet and the parasoftheprimafacie opinionformedby the Director(Discipline),ICAIto show that the subject-matterof both the disciplinaryproceedingsas well as the criminalcase in the SpecialCourt, CBI against Srinivasare more or less identical. Referring to the list of witnesses cited by the CBI, he points out thatthe Superintendentof Police(SP), CBI as well as the GeneralManager, SEBI whose statements were relied upon in the disciplinary proceedings, are also the witnesses in the criminal trial. If Srinivas were to cross-examine .the SP, CBI in the disciplinaryproceedingsthen he will be requiredto disclose his entire defence and the cross-examination in.the criminal case will be an emptyformality.He pointedout that Mr. UttamPrakashAgarwal,President of the ICAI was also cited as a witness in the criminal trial, and he is also a witnessin the disciplinaryproceedings.A referenceis also made to a news W.p.(C) Nos. 2505&5352of2010 Page15of33 item where the ICAI was reported to have requested the CBI and the SEBI to share the evidence gatheredboth against Srinivas and Gopallorishnananid they had also requested the CBI and the SEBI to be their witnesses. A referencewas made to the report dated 5^^ April 2009 of the ICAI Group, whichformeda partoftheMDIT,the conclusionsofwhichformedthe basis for the prima facie opinion dated l?^'^ September 2009 of the Director (Discipline).The saidreportofthe ICAI Group also formedthe basis ofthe charge sheet. Relying on the judgmentsof the Supreme Court in M. Paul Anthony v. Bharat GoldMinesLtd. (1999)3 SCC 679 andIndian Overseas Bank V. P. Ganesan (2008) 1 SCC 650, it is submitted that since ..the criminal case against Srinivas is on identical facts as in the disciplinary proceedingsinitiatedby the ICAI and the chargesin the criminalcase wer§ of a grave nature, the disciplinaryproceedingsshould be.stayed till the conclusion of the criminal case. He submitted that since the Special Court, CBI is proceedingwiththe case whichis at the stage of framingof charges., and there is no other case before that court, the criminal trial is not expected to take any further time. It may be mentionedhere that after the hearjjrig. concluded,counselfor the Petitionersplaced beforethis Court a copy of an order dated 26'^ October2010 passedby the SupremeCourt in Crl.A. Nos, 2068-72 of 2010 cancelling the bail granted to Mr. Raju and four other accusedpersonsand directingconclusionofthe trialbythe SpecialCourtby 31^'July 2011. .• >-

¶25Mr. Ganesh further submitted that it was not open to Srinivas to exercisq any rightofsilencebeforethe DisciplinaryCommitteeofthe ICAI and ifhe does so, an adverse inference could be drawn against him by-the Page16of39 DisciplinaryCommitteein regard to the very same charges which formed the subjectmatterofthe criminalcase.He would,therefore,be compelledto disclose his defence and this would be violative of his fundamental right againstself-incriminationunderArticle20(3).

¶26Appearingfor Gopalkrishnan,Mr. N.K. Kaul, learned Senior counsel pointed out that soon after the statement made by Mr. Raju, both Gopall<xishnanand Srinivashad been suspendedfrom PW. Gopallcrishnan, had since retired from PW. Mr. Kaul doubted the objectivity of the . proceedingsbeforethe DisciplinaryCommitteesincethe reportof the ICAI Group headed by its President and consisting of its Vice-President.had alreadyformedan opinionin theirreportdated5* April2009,whichformed the basis of the prima facie opinion of the Director (Discipline). The disciplinaryproceedingsconductedby the ICAI after such pre-judgmentof the conduct of the Petitioners was unlikely to be fair or objective. He alsc) referred to a statement made in the counter affidavit at para A of.the PreliminaryObjectionsthat "the discretionaryjurisdictionof this Hon'ble Court may thereforenot to be permittedto be used by the unscrupulous CharteredAccountantsas they are a part of the conspiracyinvolvinga fraud" of Rs. 7000 crores." Mr. Kaul submitted that statements like these betrayed the biased attitude of the ICAI, even before the disciplinary proceedings against Gopalkrishnan commenced.

¶27Mr. Kaul points out that Gopalkrishnanhas not been dischargingany ftinction as a Chartered Accountant ever since he was suspended from PW and he does not intend to do so till the conclusion of the criminal trial. K is Page17of39 submitted that the constitutional right against self-incrimination cannot,be violated on account of the insistence by the ICAI to proceed with its disciplinaryproceedings.He points out that Ms. Vandana D. Nagpal, the Director(Discipline),ICAI has been cited as a witness at SerialNo. 37 of the List of Witnessesformingpart of the charge-sheetfiled by the CBI. The Secretaryof the ICAI,Mr. T. Kartikeyanhas also beencitedas a witness. ,

¶28Appearing for the ICAI, Mr. Ramji Srinivasan, learned Senior counsel first submitted that the entire basis of alleging that the subject-matter of both, the proceedingsbeforethe DisciplinaryCommitteeand the Special Court, CBI is the same, is misconceived.Accordingto him, the disciplinary proceedingscannotpossiblyenquireinto the chargesof criminalconspiracy, fraud, cheating and cannot possibly award any punishment for those offences,whichonly a criminalcourtcan. He also submitsthatthe standard of proof adopted by the disciplinaryproceedingswould be based on "the preponderanceof probabilities",which was differentfrom the standardof "proof beyond all reasonable doubf to be adopted in the criminal proceedings. Thirdly, it is submitted that the focus of the disciplinary proceedings initiated by the ICAI was very different from that of the criminal trial. One of the charges to be examined by the criminal court w.as that both Srinivas and Gopalkrishnan held themselves out to be the partners of PW, whereas in fact they were partners only of PW, Bangalore. The questionof cheatingof SCSL was not part ofthe disciplinaryproceedingsat all. Referringto the chargeby the CBI that Srinivaswas actingin eollusit»h with Mr. Raju, it is submittedthatthis againcouldnot be the subjectniatter of the disciplinaryproceedings. The disciplinaryproceedingswould be \N.P.[C)Nos. 2505&5352of2010 Page18of39 concerned only with the discrepancyin the accounts and, therefore, its scope of enquirywill be muchnarrowerthanwhatwill be examinedbythe Special Court, CBI. ~

¶29Mr. Srinivasan then contended that although the criminal case has been assignedto a fast-trackcourt, the fact that there are 433 witnessesand the', case is still at the stage of framing of charges, the trial is unlikely to concludespeedily.He further submittedthat one of the grounds on which bail was sought and is grantedwas that the. criminaltrial is going to be a long drawn one. Having made that submissionbefore the Supreme Court and obtained bail, it did not lie in the mouth of the Petitioners to now urge that the disciplinaryproceedingscan be stayed in view of the expeditious disposal of the criminal trial. He submitted that on the other hand; the decisions in State of Rajasthan v. B.K. Meena (1996) 6 SCC 417-, Depot Manager APSRTC v. Mohd YousufMiya (1997) 2 SCC 699\ Kendriya Vidyalaya v. T. Srinivas (2004) 7 SCC 442 and Hindustan Petroleum CorporationLtd. v. SarveshBerry (2005) 10SCC471 emphasizedthat the disciplinary proceedings cannot be postponed indefinitelyto await,the conclusion of a criminal trial. •' •

¶30It is submitted that there is no provision in the CA Act for suspending the two Petitionersfrom practice as CharteredAccountants.It would cause severeprejudiceto publicinterestif, despitefacing seriouscriminalcharges as well as chargesof professionalmisconduct,the Petitionersare permitted to have the disciplinary proceedings against them under the CA-Aet postponedindefinitely. Reliance is also placed on the judgmentsof this W.P.{C)Nos. 2505&5352of2010 Poge19of39 Court in Brahma Prakash Kalra v. NTPC 96 (2002) DLT 369, CT. Krishan Kumar v. Union of India [judgmentdated 31^' May 2007 in Writ Petition

(C) 2384 of 2007] and of the Bombay High Court in AnupamaNalk v. Standard Chartered Bank 2007 BCR (4) 549. Mr. Srinivasan submitted that by appearing before the disciplinary proceedings and offering their explanations for misconduct, no prejudice could be caused to either Petitioner. If they are exoneratedon a lesser standard of proof, they would not be prejudicedin the criminaltrial at all. Mr. Srinivasansubmittedon instructions that in the disciplinary proceedings, the examination of SP

(CBI) as a witness is only for the purposesof markingthe documents,i.e.. the CBI's charge sheet. Likewise,the other witnessesfrom the CBI will;be examined only for the purposes of marking the relevant records. He submitted that Mr. Uttam Prakash Agarwal is not proposed to be examined as a witness in the disciplinaryproceedings,and would not participatein the disciplinaryproceedings.It is submittedthat merelylabelingthe chargesin a criminal case as 'grave' will not suffice and the burden will be on;the Petitioners to show that these are, in fact, grave criminal charges. It"is submittedthat the disciplinaryproceedingsoughtto be allowedto proceedin accordance with law, ; -r Factors influencing stay ofdisciplinaryproceedings pending criminal trial

¶31Before proceeding to discuss the contentions of the counsel for the parties,it is necessaryto recapitulatethe currentlegalpositionas regardsthe continuationof disciplinaryproceedingswhen a criminaltrial on the same charges is pending. •: Page20of39

¶32The question whether the disciplinaryproceedingscan be allowed to proceedwhen a criminaltrial is pendingon the same chargeshas invariably arisen in the domain of service law. The cases discussed hereinafter will show that the context invariablyhas been of an employee facing disciplinary^ proceedingsover a set ofcharges,which are eithersimilaroridenticaltothe charges forming the subject matter of a criminal trial in which siach. employee is the accused. - ^.

¶33In Delhi Cloth & General Mills Ltd. v. Kushal Bhan AIR 1960 SC 806, it was acknowledgedthat it was not a principle of natural justice "that an employermustwait for the decisionat leastofthe criminaltrialcourtbefore taking action against an employee." However, it was observed by -the SupremeCourtthat "if the case is of a grave nature or involvesquestions of fact or law, which are not simple, it would be advisable for the employerto await the decisionof the trial court, so that the defenceof th§ employeeinthe criminalcase may notbeprejudiced."(emphasissupplied):

¶34In Tata Oil Mills Co. Ltd. v. Workmen AIR 1965 SC 155, it was held to be "desirable" to stay the domestic enquiry pending final disposal of the criminal case. In Jang Bahadur Singh v. Baij Nath Tiwari AIR 1969 SC 30, it was held that "the initiation and continuation of disciplinary proceedingsin good faith is not calculatedto obstructor interferewith the course of justice in the pendingcourt proceeding.The employeeis free to move the court for an order restraining the continuance of the disciplinary proceedings."InKusheshwarDubeyv. BharatCokingCoalLtd. AIR1988 SC 2118, the SupremeCourt after analyzingthe case law found that "it is Page21 of33 v:n neitherpossiblenor advisableto evolvea hard and fast strait-jacketforrhulg valid for all cases and of general application without regard to. the particularitiesof the individualsituation."In the facts of that case, it was found that since the "criminal action and the disciplinary proceedings are..' groundedupon the same set of facts", the disciplinaryproceedingsshould have been stayed.

¶35In Nelson Motis v. Union ofIndia AIR 1992 SC1981, it was held that the disciplinaryproceedingscouldbe continuedeven afterthe employeehad been acquitted by the criminal court since the standard of proof .was different. Moreover, the Court found that the subject matter of the disciplinaryproceedingsin that case was not exactly the same as in -the criminal case.

¶36In State of Rajasthan v. B.K. Meena (1996) 6 SCC 417, the Sta:te Government issued a memo of charges in regard to the allegation that tlie Respondenthad misappropriatedpublic fiinds while workingas Additional Collector-cum-ProjectDirector, District Rural DevelopmentAgency,Jaipur in the year 1989. An FIR had been registeredin relationthereto on 12^' March 1990. The Respondenthad been arrestedon 26^^ March 1990. After respondingto the articles of charges in the disciplinaryproceedings,the Respondent filed a petition before the Central AdministrativeTribunal^ Jaipur challenging the disciplinary proceedings. The CAT stayed the disciplinaryproceedings.Thereafterthe StateofRajasthanrevokedthe order of suspensionand reinstatedhim. The Respondentthus amendedhis petition before the CAT and asked for the stay of the disciplinary enquiry. The CAT Page22of39 stayed the discipHnaryproceedingspending the conclusionof the criminal trial. The Supreme Court reversed the CAT's-order. After analyzing the relevant case law, it observed as under (SCC @ p.422-423): "14. It would be evident from the above decision that each of therri , starts with the indisputablepropositionthat there is no legal bar for both proceedingsto go on simultaneouslyand then say that in: certain situations, it iriay not be 'desirable', 'advisable or • ^ 'appropriate' to proceed with the disciplinary enquiry when a v. criminal case is pending on identical charges. The staying of disciplinary proceedings, it is emphasised, is a matter to be determined having regard to the facts and circumstancesof a given case and that no hard and fast Rules can be enunciated in that behalf. The only ground suggested in the above decisions ai constitutinga validgroundfor stayingthe disciplinaryproceedings is "that the defence of the employee in the criminal case may not •, be prejudiced." This ground has, however, been hedged in by providing further that this may be done in cases of grave nature involving questions of fact and law. In our respectful opinion, it means that not only the charges must be grave but that the case must involve complicated questions of law and fact. Moreover, 'advisability', 'desirability' or 'propriety', as the case may be, has to be determined in each case taking into consideration all the facts and circumstances of the case. Tlie ground indicated in D.C.M. and Tata Oil Mills is not also an., invariable rule. It is only a factor which will go into the scales while judging the advisability or desirability of staying the disciplinaryproceedings.One of the contendingconsiderationis i. that the disciplinary enquiry cannot be - and should not be - delayedunduly. So far as criminalcases are concerned,it is well- * known that they drag on endlesslywhere high officialsor persons holdinghighpublicofficesare involved.They getboggeddown oh one or the other ground. They hardly ever reach a prompt conclusion. That is the reality in spite of repeated advice and W.P.(C)Nos.2505&5352of2010 Page23 of39 admonitions from this Court and the High Courts. If a criminal case is undulydelayedthat may itself be a good groundfor going ahead with the disciplinaryenquiry even where the disciplinary ' proceedings are held over at an earlier stage. The interests of administration and good government demand that these proceedingsare concludedexpeditiously.It must be remembered that interests of administration demand that undesirable elements are thrown out and any charge of misdemeanour is enquired into promptly. The disciplinaryproceedings are meant not really to punish the guilty but to keep the administrative machinery unsullied by getting rid of bad elements. The interest of the delinquent officer also lies in a prompt conclusion of the disciplinaryproceedings.If he is not guilty of the charges, his honour should be vindicated at the earliest possible moment and if he is guilty,he shouldbe dealtwith promptlyaccordingto law. It is not also in the interest of administration that persons accused of serious misdemeanour should be continued in office indefinitely, i.e., for long periodsawaitingthe result of criminalproceedings.It is not in the interest of administration. It only serves the interest of the guilty and dishonest. While it is not possible to enumerate the various factors, for and against the stay of disciplinary proceedings, we found it necessary to emphasise some of the important considerations in view of the fact that very often the disciplinary proceedings are being stayed for long periods pending criminal proceedings.Stay of disciplinary proceedings cannot be, and should not be, a matter of course. All the relevant factors, for and against, should be weighed and a decision taken keeping in view the various principles laid down in the decisions referred to above." (emphasis supplied)

¶37The other factor on facts which weighed with the Supreme Court in B.K, Meena was that (SCC @ p. 423): "The irregularitiesalleged againstthe respondentare of the year W.P.(C)Nos.2505&5352of2010 Page24of39 1989. The conclusionof the criminal proceedings is nowhere in/ sight. (Each party blames the other for the said delay and we cannot pronounce upon it in the absence of proper material before us.) More than six years have passedby. The chargeswere served upon the respondent about 4 years back. The respondent has already disclosed his defence in his elaborate and detailed statement filed on 9.2.93. There is no question of his being compelledto disclosehis defence in the disciplinaryproceedings - which would prejudicehim in a criminalcase. The chargesagainst the respondentare very serious. They pertain to misappropriation• of public funds to the tune of more than Rupees one crore. The observation of the Tribunal that in the course of examination of evidence, new material may emerge against the respondent and he may be compelledto disclosehis defence is, at best, a surmise-a - speculator reason. We cannot accept it as valid." The further factor that weighed with the Supreme Court was that the standardof proofin the disciplinaryproceedingsandthat in the criminaltrial would be different. It must be mentioned here that the observations in para 14 in B.K. Meena were heavily relied upon by Mr. Srinivasan, learned Senior counsel for the Respondent No. 1 ICAI to urge that the disciplinary proceedingsmay be stayed only where there are criminal cases involving questionsof grave nature of both fact and law. He urged that in the present case there were no grave questions of law, which have been shown by.the Petitioners to be involved in the criminal proceedings that warranted stay of disciplinary proceedings.

¶38In Depot Manager APSRTC v. Mohd YousufMiya, the APSRTC initiated disciplinary proceedings against the Respondent driver on the groundthat he had caused an accidentin which a cyclistdied. Prosecution W.p.(C) Nos. 2505&5352of2010 Page25of39 n was also launchedagainstthe driverunder Section304, Part II of the IPG.in the criminal court. The High Court stayed the departmental enquiry pending criminal trial. This ruling of the High Court was reversed by the Supreme Court.Afterdiscussingthe earlierdecisions,it was observedin that case that the chargein the disciplinaryproceedingswas aboutthe failureto anticipate' the accidentand preventionthereof.It was concludedthat "it has nothing,to do withthe culpabilityof the offenceunderSection304-Aand338 IPC." It was reiterated that (SCC @ p. 704): "It would, therefore, be expedient that the disciplinary proceedings are conducted and completed as expeditiously as possible. It is not, therefore, desirable to lay down any guidelines as inflexible rules in which the departmentalproceedingsmay or may not be stayed pendingtrial in criminalcase againstthe delinquentofficer.Each case requiresto be consideredin the backdropof its own facts and circumstances. There would be no bar to proceed simultaneously with departmental enquiry and trial of a criminal case unless the ' charge in the criminal trial is of grave nature involving .. complicated questions of fact and law."

¶39In M Paul Anthony v. Bharat Gold Mines Ltd., the appellant was a Security Officer in Bharat Gold Mines, a government undertaking. In a police raid, a mining spongegold ball weighing4.5 grams and 1276 grams of gold-bearing sand were recovered from the appellant's house. He was placed under suspension and disciplinaryproceedings were commenced. Criminal proceedings were also initiated. On the conclusion of }the disciplinary proceedings, the appellant was dismissed from service. Thereafter he was acquitted by the criminal court with the categorical findingthat the prosecutionhad failedto establishits case. On the basisof Page26of39 his acquittal, he requested for reinstatementwhich was turned down. Arter unsuccessfully challenging it before the High Court, the appellant approached the Supreme Court. It was held that the criminal case and departmentalproceedingswere based on identical set of facts and in.the circumstances,"it would be unjust, unfair and rather oppressiveto allow the findings recorded at the ex parte departmentalproceedingsto stand." The witnesses who were examined by the enquiry officer in the departmental proceedingswere the same witnesseswho were examinedin the criminal case. Since there was no iota of difference in the facts and evidence in the-departmental and criminal proceedings, it was concluded that "tlie distinction, which is usually drawn as between the departmentalproceedings and the criminal case on the basis of approach and burden of proof, would not be applicableto theinstantcase."In arrivingattheabove conclusion,,the SupremeCourthad an occasionto reviewthe entirecase law up tothatpqirit in time and summarized the position as under (SCC @ p. 691): "22. The conclusions which are deducible from various decisions of this Court referred to above are:

(i) Departmentalproceedingsand proceedingsin a criminalcase can proceed simultaneouslyas there is no bar in their being: conducted simultaneously, though separately.

(ii) If the departmentalproceedingsandthe criminalcase arebased / on identical and similar set of facts and the charge in the criminal case againstthe delinquentemployeeis of a grave nature which involves complicated questions of law and fact, it would be desirableto stay the departmentalproceedingstill the conclusion of the criminal case. Page27of39 o

(iii) Whetherthe natureofa chargeina criminalcase is grave and whethercompHcatedquestionsof fact and law are involvedin that case, will dependuponthe natureof offence,the natureofthe case launched against the employee on the basis of evidence and materialcollectedagainsthim during investigationor as reflected in the charge sheet.

(iv) The factors mentioned at (ii) and (iii) above cannot be considered in isolation to stay the Departmental proceedings but due regard has to be given to the fact that the departmental • proceedingscannotbe undulydelayed.

(v) If the criminalcase does not proceedor its disposal is being unduly delayed, the departmentalproceedings,even if they were stayed on account of the pendency of the criminal case, can be resumed and proceededwith so as to conclude them at an early date, so that if the employeeis found not guilty his honour may be vindicated and in case he is found guilty, administration may get rid of him at the earliest."

¶40On account of the above decision in M.Paul Anthony, much of the argumentin the presentpetitionscenteredon whetherthe Petitionerswere facing charges in the criminalcases which were identicalto that forming subjectmatterof the disciplinaryproceedingsbeforethe ICAI; whetherthe charges in the criminal court were of a grave nature, and whether they involved "complicated questions of law and fact."

¶41To continue the discussion of the decisions on the point, the question again arose in Kendriya Vidyalaya v. T. Srinivas.There the Respondent, while workingwiththe appellantKendriyaVidyalayaSangathan('KVS') as an Upper Division Clerk, was arrestedwith the CBI and charged for the W.P.{C)Nos. 2505&5352of2010 Page28of39 offence under Section 7 read with Section 13(l)(d) of the Prevention of CorruptionAct, 1988 (TCA'). During the pendency of the criminal trial, departmental proceedings were initiated. The Tribunal stayed the disciplinaryproceedingstill the disposal of the trial. The KVS challenged the decision in the High Court stating that they should be permitted to proceedin thedepartmentalenquiryat leastinregardto Charge3 whichwas independentof Charges 1 and 2. This was rejected by the High Court, holdingthat Charge 3 was interconnectedwith the other two charges. The Supreme Court, while allowing the appeal of the KVS, found that the.. Tribunal and the High Court proceeded on an erroneous principle as if the stay of the disciplinaryproceedings"is a must in everycase wherethereis:a criminaltrial on the very same charges."The Court followedthe decisionin State ofRajasthan v. B.K.Meena, andreversedtheHighCourt'sjudgment.-

¶42In State Bank ofIndia v. R.B. Sharma (2004) 7SCC 27, the High Comt order staying the departmentalproceedingswas reversed by the Supreme Court only on the ground that the High Court had come to an abrupt conclusionthat the employeehad been able to showthat the entirematterin the departmentalproceedingsand the criminalcourtwas the same. Since.no detailshad beengiventojustifythisconclusion,it was directedthattheHigh Court should rehear the matter.

¶43In HPCL v. Sarvesh Berry, the CBI raidedthe house of the Respondent in 1998 and charged him with having been in possession of assets disproportionateto his known sources of income. After obtainingsarictioh for prosecution,the CBI filed a charge sheet. The criminaltrial did not W.P.{C)Nos. 2505&5352of2010 Page29of39 progressfor at least four years. In the disciplinaryproceedingsinitiated:-by the employer, therewere three charges. The first related to possessionof assets disproportionateto the known sources of income and the other two related to misconduct relating to non-disclosure or non-submission of propertyreturns as requiredby the conductrules. A DivisionBench of the High Court held that the second and third charges were relatedto the first charge and it would not be safe to permit the employerto continue the departmentalproceedingstill the completionof the criminalcase. Allowing the appeal of the employer,the Supreme Court held as under (SCC @ p. 475): ; "8. The purposes of departmentalenquiry and of prosecution are :;. two different and distinct aspects. Criminal prosecution is launched . for an offence for violation of a duty the offender owes to the society, or for breach of which law has provided that the offender ' shall make satisfaction to the public. So, crime is an act of commission in violation of law or of omission of public duty. The departmentalenquiry is to maintaindisciplinein the service and efficiency of pubhc service. It would, therefore, be expedient that the disciplinary proceedings are conducted and completed as expeditiouslyas possible.It is not, therefore, desirableto lay down any guidelines as inflexible rules in which the departmental proceedings may or may not be stayed pending trial in criminal case against the delinquent officer. Each case requires to be-considered in the backdrop of its own facts and circumstances. There would be no bar to proceed simultaneously with departmentalenquiryand trial of a criminalcase unlessthe charge ^ in the criminal trial is of a grave nature involving complicated questionsof fact and law. Offencegenerallyimpliesinfiringemerit of public duty, as distinguished from mere private rights punishableunder criminallaw. When trial for criminaloffence is conducted it^ should be in accordance with proof of the offence as W.P.(C)Nos.2505&53p2of2010 Page30of39 per the evidence defined under the provisions of the Indian Evidence Act 1872 (in short the "Evidence Act"). Converse is the case of departmental enquiry. The enquiry in departmental proceedingsrelatesto conductor breachof duty of the delinquent officerto punish him for his misconductdefinedunderthe relevant statutory rules or law. That the strict standard of proof or applicabilityof the EvidenceAct standsexcludedis a settledlegal position.Underthese circumstances,what is requiredto be seen is whether the departmental enquiry would seriously prejudice the delinquentin his defenceat the trial in a criminalcase. It is always a question of fact to be consideredin each case dependingon its , own facts and circumstances." Thereafterin para 13 it was observedas under(SCC @ p. 477): "13. It is to be noted that in cases involving Section 13(1) (e) of the P.C. Act, the onus is on the accused to prove that the assets found were not disproportionateto the known sources of income. The expression 'known sources of income' is related to the sources known to the authorities and not the accused. The Explanation to Section 13(1) of the P.C. Act provides that for the purposes of the Section, "known sources of income" means income derived froiri any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant. How the assets were acquired and from what source of income is within the special loiowledge of the accused. Therefore, there is no question of any disclosure of defence in the departmental proceedings. In the criminal case, the accused has to prove the source of acquisition. He has to satisfactorily account for the same. Additionally, issues covered by charges 2 and 3 cannot be the subject matter of adjudication in the criminal case." Consequentlythe employer was permitted to continue the departmental proceedings. Page31 of39

¶44In NOIDA Entrepreneurs Association v. NOIDA (2007) 10 SCC 375, it was again held that there was a subtle differencebetween a departmental enquiryand the criminalproceedings,the standardsof proofin which were different. The order of the State Government not to continue the departmentalenquirywas held unsustainableand the departmentalenquir}'^ was directed to continue. In Indian Overseas Bank v. P. Ganesan, the Supreme Court again answered in the negative the question whether the. pendencyof a criminalcase byitselfwouldbe a sufficientgroundfor stay of the departmentalproceedings.Additionallyin that case, it was noticedthat the departmentalproceedingsagainstthe employeesin questionhad made considerableprogress and a large number of witnesses had already been examined. Applicability ofthe M Paul Anthony test to thepresent cases

¶45The judgments of the Supreme Court discussed hereinbeforeby and largepermittedthe continuationof disciplinaryproceedingsnotwithstanding the pendencyof a criminalcase on the same charges. In applyingthe law explainedinthe abovecasesto thepresentpetitions,the Courtis calledupon to examine: (a) are the charges on which the disciplinary proceedings are proposedto be held identicalor nearlysimilarto the chargeson whichthey are facing criminal proceedings? (b) Are the criminal charges of a gravp nature?(c) Do the chargesinvolvecomplicatedquestionsof lawand fact? :

¶46It may at the outset be noticed that in the criminal case, argumentson chargewhich were in progresswhen these petitionswere arguedhave been Page32of39 framedby the SpecialJudge on 25'*' October2010. The offencesmentioned in the charge sheets do allege that the Petitioners have committed offences which could be characterized as being of a 'grave' nature. These include the offences under Sections 409, 420, 468, 471, 477-A, 201 r/w Section 120-B;. IPG. Secondly, a comparison of the charges in the disciplinary proceedings with those in the criminal trial indicates that while the charges in the fonnei" will all be examined in the latter as well, the converse is not true. There would be additional matters that are likely to be examined in the criminal trial. This brings up the third limb, i.e. whether the charges involve complicated questions of law and fact? It may be recalled that m BiK, Meena the Supreme Court has reiterated that criminal case should be of a - grave nature "involving complicatedquestions of fact and law." In other words, it is not sufficient for a Petitioner resisting departmental proceedings to show that the criminal case is based on an identical set of facts but that it involves complicated questions of both fact and law. V; •

¶47The learned senior counsel for the ICAI was right in the submission that apart from merely statingthatthe chargesinvolvecomplicatedquestionsof law and fact there has been nothing actually shown by the Petitioners ,-tp:. demonstrate this. Whether in fact the charges that are stated to have been framed on 25^^ October 2010 by the Special Judge involve complicated questionsof law and fact cannot be determinedunless they are studiedin some detail and further after the trial progresses. Also, the mere fact that the number of witnesses is large or that the alleged fraud is of a large sum need not by itself mean that the questions of fact and law are complicated: Thirdly,even if in criminalcases, the facts may be invariablycomplicated, Page33of39 the questionoflaw neednot be. Understandablytherefore,the learnedsenior counsel for the Petitioners did not address the Court on this particular aspect exceptto repeatthe requirementofM Paul Anthonythat the criminalcase involved complicated questions of law and fact. This however is not sufficient if the court has to be persuaded to stay the disciplinary proceedings. ?

¶48The inescapableconclusionis that the third and importantlimb of the test evolved in the decisions discussed hereinbefore and succinctly summarisedm M Paul Anthony has not been shownby the Petitionersto be satisfied in their cases viz., that the criminal cases in which they are arrayed as accused involve complicated questions of law and fact. They have therefore been unable to persuade this Court, on the basis of the la\y explainedabove,to staythe disciplinaryproceedingspendingthe conclusion of the criminal trial. Other factors

¶49One important factor in each of the above decisions that have been discussed is that the issue arose in the context of service law where, the desirabilityof permittingan employeecontinuingto dischargeofficialduties pending disciplinaryproceedingsweighed with the courts. In the present writ petitions,althoughthe Petitionerscannotbe equatedwith government servants,they too have been chargedwith professionalmisconductin-not dischargingtheir duties, as expectedof a professionalcharteredaccountant in terms of the CA Act. A chartered accountant who continues to have, a privilegeofpractisingas suchnotwithstandingthe factthathe may be facing W.P.{C)Nos. 2505&5352of2010 Page34of39 charges of professional misconduct is indeed a matter of concern. It is no less than having a government servant facing disciplinary proceedings on serious charges. What is more significant is that a chartered accountant cannot be suspended from practice and there is nothing to prevent a chartered accountant practising as such till such time the disciplinary^ proceedings come to an end. ^.

¶50Relying on the observations of the Supreme Court in M Paul Anthony see para 22 (v)] to the effect that the disciplinaryproceedingscan he asked to continue if "the criminal case does not proceed or its disposal is beingundulydelayed",it wasurgedthat sincethere is a designatedfasttrack courtthat has been askedto concludethe criminaltrial before31^'July2011, the disciplinaryproceedings,even if stayed on account of the pendency.of the criminal case, could be resumed and proceeded with soon thereafter and would therefore not get indefinitely postponed. This Court is not persuaded to accept this submission. The penultimate paragraph of the Supreme Court's order dated 26"" October 2010 acknowledges that if the trial, is unable to conclude before 31"' July 2011 the accused whose bail have been cancelledcan apply afreshfor bail. In any event, unlessthis Courtis shown that the charges involve complicated questions of law and fact the case for stay of disciplinaryproceedingspendingthe conclusionof the criminaltrial cannot be said to be made out. The right against self-incrimination

¶51One of the pointsurged by learnedSeniorcounselfor the Petitioners-is that duringthe courseof cross-examinationof the witnessesfor the ICAIin Page35of39 the disciplinary proceedings,the Petitioners will be compelledto disclose their defence which might prejudice them in the criminal trial and, therefore, > this would take away one of their valuable rights under Article 20(3) of the Constitution as far as the criminal trial is concerned. Article 20(3) talks of the right against self-incrimination. The scope and ambit of this right has been explained in Romesh Chandra Mehta v. State of West Bengal AIR 1970 SC 940. The context in that case was about facing proceedings under the Sea Customs Act, 1878 while facing criminal trial on the same set. of charges.It was arguedthat by beingcompelledto disclosethe defencein the proceedings under the Sea Customs Act, the Petitioner there would be disclosingthe entire defence in the criminaltrial and, therefore, it wouldhe violative of his constitutional right under Article 20(3). This plea was, however, negatived by the Supreme Court on the following reasoning (AIR @p.945): "11. The remaining contention that a person against whom an enquiry is made by the Customs Officer under the Sea Customs Act is a person accused of an offence and on "that account he cannot be compelled to be made a witness against himself, and . the evidence if any collected by examining him under Section 171-A of the Sea Customs Act is inadmissible has, also no substance. By Article 20(3) of the Constitution a person who is accused of any offence may not be compelled to be a witness against himself The guarantee is, it is true, not restricted to statements made in the witness box. This Court in State of Bombay v. Kathi Kalu Oghad AIR 1961 SC 1808 observed at •p. 1817: "To be a witness' means imparting knowledge in respect of relevant facts by an oral statement or a statement in writing, made or given in Court or W.P.{C)Nos. 2505&5352of2010 Page36of39 otherwise. 'To be a witness' in its ordinary grammatical sense means giving oral testimony in Court. Case law has gone beyond this strict literal interpretation of the expression which may now bear a wider meaning, namely, bearing testimony in Court or out of Court by a person accused of an offence, orally or in writing." But in order that the guarantee against testimonial compulsion incorporatedin Article 20(3) may be claimed by a person it has to be established that when he made the statement sought to be tendered in evidence against him, he was a person accused of an offence. Under Section 171-A of the Sea Customs Act, a Customs Officer has power in an enquiry in connection with the smuggling of goods to summon any person whose attendance he considers necessary, to give evidence or to produce a document or any other thing, and by Clause (3) the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documentsand other things as may be required. The expression "any person" includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicionthat he is concerned in smuggling is not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspectedof infringingthe provisionsof the Sea CustomsAct Page37of39 with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of customs when collecting evidence in respect of smuggling against a person suspectedof infringingthe provisionsof the Sea CustomsAct, he is not accusingthe person of any offence punishable at a trial before a Magistrate. In Maqbool Hussain v. The State of Bombay, 1953 SCR 730, the Court held that a person against whom an order for confiscation of goods had been made in proceedingstaken by Customs Officers under Section 167 of the Sea Customs Act and was subsequently prosecuted before a Magistrate for offencesunder the ForeignExchangeRegulation Act, 1947, could not plead the protection of Article 20(2), since he was not "prosecuted"beforethe Customsauthorities,and the order for confiscation was not a "punishment" inflicted by a Court or judicial tribunalwithinthe meaning of Article20(2) of the Constitution and the prosecution was not barred."

¶52The position in law would be no different as regards the Petitioners havingto deposebeforethe disciplinarycommitteein proceedingsunderthe CA Act. Consequently,this Courtis unableto acceptthe plea that by being asked to appear in the disciplinaryproceedings under the CA Act, the fundamental right of the Petitioners under Article 20(3) vis-a-vis the criminal trial would be violated. The contention that the Petitioners have no right of silence in the disciplinary proceedings and, therefore, their statementsin thoseproceedingswill amountto disclosureof their defencein the criminal trial is without merit in view of the fact that the very nature of thetwoproceedingsis differentas explainedin the abovedecisions. Conclusion

¶53For all of the aforementioned reasons, this Court finds no ground having W.P.(C)Nos.2505&5352of2010 Page38of39 f ) been made out by the Petitioners for the grant of the rehefs as prayed for. The writ petitions are dismissedwith costs of Rs. 10,000/-each which will be paid by the each of the Petitioners to the Respondent No. 1 ICAI within a period of four weeks. The interim orders stand vacated.

S. MURALIDHAR, J. NOVEMBER 22, 2010 akg W.P.(C)Nos.2505&5352of2010 Page39of39 h $ •k IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) No. 2505 of 2010 TALLURISRINIVAS .....Petitioner Through: Mr. R. Sudhinder with Mr. Vibhu Bakm, Mr. Rahul Ravindran and Ms. Prerana Amitabh, Advocates. versus THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA THROUGH:ITS SECRETARY&ANR. Respondents Through:Mr. Rakesh Agarwal with Mr. Pulkit Agarwal, Advocate for R-mCAI. Mr. Jatan Singh, CGSC forR-2/UOI. And W.P.(C) No. 5352 of 2010 v^-SUBRAMANIGOPALKRISHNAN Petitioner Through: Mr. R. Sudhinder, Mr. Amit Sibal and Mr. Rahul Ravindran, Advocates. versus THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA THROUGH:ITS SECRETARY&ANR. Respondents Through:Mr. J. J. Bakshi,Mr. Zeyaul Haque and Mr. Amitesh S. Bakshi, Advocates for R-l/ICAI. Mr. Ravinder Agarwal, CGSC for R-2/U0I. •>.- - -t r CORAM: JUSTICE S. MURALIDHAR ORDER %

22.11.2010 Upon being mentionedby the learnedcounselfor the parties copies of the judgmentpassedtodayin W.P. (C) Nos. 2505 of 2010 and 5352 of2010 be givento the counselfor thepartiesunderthesignatureofthe CourtMaster. S.MURALIDHAR, J NOVEMBER 22, 2010 Ak

IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.ra No. 2505 of 2010 Reserved on: September 29, 2010 Decision on; November 22, 2010 TALLURI SRINIVAS Petitioner Through: Mr. S. Ganesh, Senior Advocate with Mr. R. Sudhinder, Mr. Vibhu Bakru, Mr. Rahul Ravindran and Ms. Prerana Amitabh, Advocates. versus THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA TFIROUGH: ITS SECRETARY & ANR. ..... Respondents Through: Mr. Rakesh Agarwal with Mr. Pulkit Agarwal, Advocate for R-l/ICAI. Mr. Jatan Singh, CGSC for R-2/UOI. And W^(C) No. 5352 of2010 SUBRAMANI GOPALKRISHNAN Petitioner Through:Mr. N.K. Kaul, Senior Advocatewith Mr. R. Sudhinder, Mr. Amit Sibal and Mr. Rahul Ravindran, Advocates. versus THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA THROUGH: ITS SECRETARY & ANR. Respondents Through:Mr. Ramji Srinivasan, SeniorAdvocate with Mr. J. J. Bakshi, Mr. Zeyaul Haque and Mr. Amitesh S. Bakshi, Advocates for R-l/ICAI. Mr. Ravinder Agarwal, CGSC for R-2/U0I. CORAM: JUSTICE S. MURALIDHAR 1. Whether reporters of the local news papers be allowed to see the judgment? 'f 2. To be referred to the Reporter or not? 3. Whetherthejudgmentshouldbe reportedin the Digest?u—^