Naresh Chandra Agarawal v. The Institute of Chartered Accountants of India and Ors

SANJIV KHANNA, J.

SEPTEMBER 05, 2011 VKR

*IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 6488/2011 Date of order: 5th September, 2011 NARESH CHANDRA AGARAWAL ..... Petitioner Through Mr. Anurag Kumar Agarwal, Advocate. Versus THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND ORS. ..... Respondents Through Mr. Rakesh Agarwal, Advocate for respondent No. 1. Mr. Sachin Datta, CGSC and Mr. Abhimanyu Kumar, Advocate for respondent No. 2. CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA 1. Whether Reporters of local papers may be allowed to see the judgment? Yes. 2. To be referred to the Reporter or not ? Yes. 3. Whether the judgment should be reported in the Digest ? Yes. DIPAK MISRA, CJ.: Invoking the jurisdiction of this Court under Article 226 of the Constitution of India, the petitioner, a Chartered Accountant, has prayed for declaring Rule 9(3)(b) of Chartered Accountants (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 (hereinafter referred to as the "2007 Rules") as ultra vires as the said Rule transgresses and supplants Section 21-A(4) of the Chartered Accountants Act, 1949 (for brevity, "the 1949 Act"). 2. We have heard Mr. Anurag Kumar Agarwal, learned counsel for the petitioner, Mr. Sachin Datta, learned Standing Counsel for Union of India and Mr. Rakesh Agarwal, learned counsel for the respondent-institute. 3. On a perusal of the pleadings that have been asseverated in the writ petition, we find the challenge pertains to the alleged transgression by the rule making authority of the statutory provision. Section 21 deals with 1949 Act, which occurs in Chapter-V, which deals with misconduct. It deals with Disciplinary Directorate. The said provision reads as follows: "21. Disciplinary Directorate. (1) The Council shall, by notification, establish a Disciplinary Directorate headed by an officer of the Institute designated as Director (Discipline) and such other employees for making investigations in respect of any information or complaint received by it. (2) On receipt of any information or complaint along with the prescribed fee, The Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct. (3) Where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the First Schedule, he shall place the matter before the Board of Discipline and where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules, he shall place the matter before the Disciplinary Committee. (4) In order to make investigations under the provisions of this Act, the Disciplinary Directorate shall follow such procedure as may be specified. (5) Where a complainant withdraws the complaint, the Director (Discipline) shall place such withdrawal before the Board of Discipline or, as the case may be, the Disciplinary Committee, and the said Board or Committee may, if it is of the view that the circumstances so warrant, permit the withdrawal at any stage." 4. Section 21A provides for Board of Discipline. Section 21A(c) stipulates that the Director (Discipline) shall function as the Secretary of the Board. Sub-section 4 of Section 21A reads as follows: "21A.(4) The Director (Discipline) shall submit before the Board of Discipline all information and complaints where he is of the opinion that there is no prima facie case; and the Board of Discipline may, if it agrees with the opinion of the Director (Discipline), close the matter or in case of disagreement, may advise the Director (Discipline) to further investigate the matter." 5. On a studied scrutiny of the aforesaid statutory provisions, it is clear that the Director (Discipline), who is the Secretary of the Board of Discipline, has been conferred the power to submit reports before the Board of Discipline with all the information on the complaints for the purpose of