Madhya Pradesh High Court
Bhagwat Prasad Sharma vs Council Of The Institute Of Chartered ... on 8 May, 1991
Equivalent citations: AIR1991MP378, 1992(0)MPLJ614, AIR 1991 MADHYA PRADESH 378, (1992) 3 COMLJ 149, (1992) MPLJ 614, (1993) 78 COMCAS 417
JUDGMENT S.K. Dubey, J.
1. The petitioner has preferred this revision under Section 22A(2) of the Chartered Accountants Act, 1949 (Act XXXVIII of 1949), (for short, the 'Act') against an order dated 29-2-1988, passed by the Council of the Institute of Chartered Accountants of India (for short, the 'Council') in case No. 25-CA(44)/82, exonerating respondent No. 2, a Chartered Accountant and a Member of the Institute of Chartered Accountants of India (for short, 'respondent No. 2') of the charges levelled against him by the petitioner in his complaint dated 29-6-1982.
2. The material facts leading to this revision are that the petitioner, who was an Articled Clerk working with respondent No. 2, made a complaint in Form 9 accompanied by an affidavit, levelling the following charges of misconduct against respondent No. 2:--
(a) The respondent had charged a sum of Rs. 6000/- from the complainant as a premium at the time of entering into service as an Articled clerk with him.
(b) He had never paid the stipend as applicable from time to time.
(c) The conveyance was never paid to the complainant and he had to spend a lot of money in day-to-day job assigned by the respondent."
(d) The complainant was discharged on 5-6-1982 by force."
The respondent No. 2 denied all the imputation on affidavit and submitted certain documents with his reply dated 20-9-1982. The Council in its meeting held from 14-9-1983 considered the complaint of the petitioner and the reply of the respondent No. 2 and formed a prima facie opinion that respondent No. 2 was guilty of professional and/or other misconduct and, therefore, referred the case to the Disciplinary Committee for inquiry under Section 21(1) of the Act. Before the Disciplinary Committee the petitioner as well as respondent No. 2 adduced oral and voluminous documentary evidence. After concluding the inquiry the Disciplinary Committee gave a report to the Council which runs in 30 pages, finding the respondent No. 2 guilty of professional misconduct within the meaning of Section 21 read with Section 22 and Clause (i) of Part II of the Second Schedule to the Act in as much as (i) there was evidence to show that he charged a premium of Rs. 6,000/-from Shri B. P. Sharma, Articled Clerk, in contravention of Regulation 31 of the Chartered Accountants Regulations, 1964 (for short, the 'Regulations') and (ii) he had not paid stipend to the said Articled clerk as required under Regulation 32B(1) of the Regulations. The findings in respect of other two charges (c) and (d) were against the petitioner.
3. The respondent No. 2 against the report the Disciplinary Committee made a long and detailed representation dated 20-7-1987, running in about 100 pages. The petitioner aggrieved of the report of the Disciplinary Committee holding that charges (c) and (d) were not found proved, also preferred a representation dated 20-7-1987. The Council after hearing the petitioner/complainant and respondent No. 2, recorded a finding in favour of respondent No. 2, and held that the imputation of charging premium is not proved as there was no evidence before the Disciplinary Committee. As regards nonpayment of stipend the Council recorded a finding that the complainant gave receipts for the receipt of stipend payment, and the complainant could not prove that he gave blank signatures on plain sheets which were alleged to have been converted into receipts. As regards charges (c) and (d) the Council concurred with the Disciplinary Committee and, thus, held respondent No, 2 as not guilty of any of the charges mentioned in the complaint. It is against this finding of the Council, the petitioner has preferred this revision.
4. Shri K. N. Gupta, learned counsel for the petitioner; Shri N. P. Mittal, learned counsel for respondent No. 1/Council, and Shri J. P. Gupta and Shri R. K. Shinde, learned counsel for respondent No. 2, were heard at length.
5. Shri K. N. Gupta, at the outset, attacked the order passed by the Council, being a non-speaking and laconic order. In my opinion, the contention has got a force. A look to the order shows that the Council recorded its finding in the last paragraph only in four lines, stating that the Council was not in agreement with the conclusions of the Disciplinary Committee in respect of charges Nos. 1 and 2, that the respondent was guilty of professional misconduct within the meaning of Section 21 read with Section 22 of the Chartered Accountants Act, 1949, and Clause (i) of Part 11 of the Second Schedule to the said Act because of the reason that there was no evidence before the Committee to prove the charge of premium having been received by the respondent. As regards non-payment of stipend by the respondent to the petitioner, the Council found that the complainant gave the receipts for the receipt of stipend payment and he could not prove that he gave blank signatures on the plain sheets which were alleged to have been converted into receipts. This is all the finding arrived at by the Council without appreciating the complaint, the reply, oral and documentary evidence adduced and the the report of the Disciplinary Committee.
6. If a member of the Institute is found guilty he suffers penal and civil consequences. It is, therefore, necessary that when the Council records findings it should support its findings with reasons. The Council being a statutory body exercising quasi judicial functions, must record its reasons in support of the order it makes, which is a basic rule of natural justice. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice, which must inform every quasi judicial process, which must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law.
7. True, the report of the Disciplinary Committee is not a finding, and the Council cither can concur with it or may record its own finding, independent of the report of the Disciplinary Committee. The necessity to give reasons for recording a finding that Member of the Institute is guilty of misconduct was considered by the apex Court in L.K. Ratna, AIR 1987 SC 71, wherein after considering the provisions of Sections 21 and 22 of the Act, while dealing with the point whether the Council is obliged to give reasons for its finding that the member is guilty of misconduct, it observed in para 30 :
"In fairness and justice, the member is entitled to know why he has been found guilty. The case can be so serious that it can attract the harsh penalties provided by the Act. Moreover, the member has been given a right of appeal to the High Court under Section 22A of the Act. To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty. We have already pointed out that a finding by the Council is the first determinative finding on the guilt of the member. It is a finding by a Tribunal of first instance. The conclusion of the Disciplinary Committee does not enjoy the status of a "finding". Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council, The Council must, therefore, state the reasons for its finding."
8. The principle of recording of reasons for arriving at a finding of guilt shall also equally apply to a case where a member is not found to be guilty, because the High Court while exercising revisional jurisdiction has power under Section 22A(2) of the Act to;
(a) confirm, modify or set aside the order;
(b) impose any penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order; (c) remit the case to the Council for such further inquiry as the High Court considers proper in the circumstances of the case, or (d) pass such other order as the High Court thinks fit. Of course, before passing an order falling in any of the Clauses (a) to (d) of Section 22A(2), the Council and the person concerned have to be afforded an opportunity of hearing. Therefore, when (he order of the Council can be reversed or modified, or any other order can be passed by the High Court, as it deemed fit in the circumstances of the case, the basic principle of recording finding supported by reasons must be observed to appreciate the finding recorded by the Council. As alluded, the finding recorded by the Council is slip-shod without giving any reasons and, hence, is liable to be set aside and is hereby set aside.
9. Now, the question remains whether in exercising the revisional jurisdiction, this Court should itself appreciate the evidence and material on record and pass an order in the given facts of the case, or the case should be remitted to the Council for recording a reasoned finding afresh after hearing the, parties.
10. Shri J. P. Gupta, learned counsel for the member, submitted that the sword is hanging on the member/respondent No. 2 since last about 9 years, who has suffered a great deal of mental stress and agony. Therefore, this Court may itself appreciate the evidence and pass any order, as may be found proper in the facts and circumstances of the case, instead of remitting the case to the Council for rendering its fresh decision. To this submission, Shri K. N. Gupta, learned counsel for the petitioner, has no objection.
11. Learned counsel took this Court through the evidence and made their respective submissions. On going through the record and appreciating the arguments, I find myself inagreeable to the contention advanced by the petitioner, that the respondent No. 2 charged a premium of Rs. 6000/- on 13th July, 1980 while admitting the petitioner as an Articled Clerk under him. The charge being of serious nature and having serious penal consequences, the petitioner ought to have not only pleaded in his complaint giving the facts constituting the charge but should also have proved by cogent and legal evidence. The complaint simply averred that an amount of Rs. 6000/- was paid as premium but the story of demand, striking down the bargain and, then, of payment of money, constituting the charge were not averred in the complaint. Besides, the story as put up in evidence creates a doubt whether, actually, any demand was made or the premium was paid after bargain.
12. The petitioner examined himself, besides examining Section S. Sinha, V. K. Agrawal, L. K. Ojha and M. V. Sharma (the father of the petitioner) to prove the charge. V. K. Agrawal and Section Section Sinha are the two former Articled Clerks of the respondent No. 2, before whom premium was not paid, but stated that after negotiations the respondent No. 2 agreed to reduce the amount from Rs. 8000/-to Rs. 6000/-. L. K. Ojha is a witness who introduced the petitioner's father to respondent No. 2, by accompanying him to the respondent No. 2's office for making the payment of premium. Admittedly, the petitioner approached respondent No. 2 for keeping him as an Articled Clerk in June, 1980. On 28-7-1980 the petitioner executed the agreement of articleship and from 12th August, 1980 the petitioner was registered as an Articled Clerk. The petitioner came with the story that on 13th July the premium was paid, but to great surprise neither the petitioner nor his father objected to it nor made any complaint or protest till the termination of the petitioner as an Articled Clerk on 5-6-1982. Besides, there was exchange of a number of letters making allegations and counter-allegations between petitioner and respondent No. 2, but the petitioner in none of the letters made any grievance about payment of premium. The petitioner's father M. V. Sharma stated that he withdrew Rs. 3000/.- from Punjab National Bank and collected Rupees 3000/ - from his own source and went with the money to the respondent No. 2 on 7-7-1980, but the respondent No. 2 did not take the amount on that date and asked him to come on next Sunday, i.e., 13-7-1980, on which date the amount was accepted. It does not appeal to reason that when the bargain was struck down in June, 1980 why would respondent No. 2 refuse to accept the money at the earliest opportunity before registering the petitioner as an Articled Clerk and would rather ask for to come on the next Sunday. Had this been the situation, then why could not the petitioner or his father lodge any complaint either to Police or to the Council. Thus, the over-all picture of the case, the evidence adduced and the conduct of the petitioner creates a suspicion, benefit of which must go to the respondent No. 2, as the charge has not been proved to the hilt by clear and cogent evidence.
13. Coming to the gravamen of the charge of non-payment of stipend to the petitioner by respondent No, 2 as required under Regulation 32B(1) of the Regulations framed under Section 30 of the Act, it is convenient to quote sub-regulation (1) of Regulation 32B for appreciation of the submissions made by the counsel:--
"32B. Stipend to Articled Clerks.
(1) Every member engaging an articled clerk on or after 1st July, 1973 shall pay to such clerk a minimum monthly stipend at the rates specified in sub-regulation (2) or in sub-regulation (3) thereof, as the case may be."
Sub-regulation (2) and sub-regulation (3) are not in dispute and, hence, are not extracted.
14. Shri J. P. Gupta strenuously contended and made his assiduous effort to convince this Court that the petitioner came with a case in his complaint that no stipend was paid at all while the respondent No. 2 proved the payment of stipend; therefore, this charge also fails and no grievance can be made that the stipend was not paid monthly. The report of the Disciplinary Committee was to the effect that stipend was not paid month-wise, which is not binding. The finding to the charge rests on evidence and is a question of fact, for that respondent No. 2 did not get any opportunity to explain why the payment of stipend was delayed and could not be made monthly in some months. The petitioner cannot take advantage of his own inaction in not pleading the necessary facts which necessarily deprives the respondent No. 2 of an effective opportunity of hearing. It was also submitted that Regulation 32B nowhere provides that the monthly stipend should be paid month to month; it only lays down that an Articled Clerk shall be paid minimum monthly stipend at a rate specified in sub-regulation (2) or sub-regulation (3), as the case may be, which was paid. In any case, there was no mens rea; the proceedings are quasi criminal in nature and, as Regulation 32B(1) is not happily worded which is open to two interpretations, the benefit must go to respondent No. 2. Alternatively, a prayer was made, relying on B. B. Rohatgi's case of Delhi High Court (C.A. Vol. XXIV July-June, 1980-81 p. 51) that as the proceedings are pending since last about 9 years, the same be filed, as the respondent No. 2 has already suffered a lot of mental stress and agony.
15, The contention of Shri J. P. Gupta that Regulations 32B(1) is not happily worded and is capable of two interpretations, in my opinion, cannot be accepted. A reading of this provision clearly shows that the requirement of payment of stipend monthly has to be followed. If such a construction of the provision that the stipend is not to be paid monthly and if accumulated payment of stipend is made, it would be sufficient compliance, is accepted, it would mean that the stipend can be paid on a quarterly basis, half yearly basis or annually or at the time of termination of articleship or at any time. Such an uncertainty is not contemplated in Regulation 32B(1). The question came up for consideration before various High Courts. A Division Bench of Orissa High Court in B. Mohanty, AIR 1985 Orissa 46, has observed :
"The contention that Regn. 32B (1) provides for accrual of liability for payment of stipend on the basis of monthly calculation but it does not require payment of stipend every month cannot be accepted. If such a construction of the provision is accepted, it would mean that the stipend could be paid on a quarterly basis, half yearly basis or annual basis or at any time when the principal chooses to make the payment, may be even after the completion of the articleship. Regn. 32B(1) does not contemplate such uncertainties as regards the due date of payment. The only reasonable and proper construction of the provision is that the monthly stipend must be paid every month."
The view of Delhi, Allahabad, Rajasthan and Andhra Pradesh High Courts is also in the same line. (See B. B. Rohatgi, C.A. Vol. XXIX July-June 1980-81 p. 51; Section C. Bhatia, C.A; Vol. XXXII July-June 1982-83 p. 233; M. L. Surana, C.A. Vol. XXXIV 1986, p. 678, and M. Narasaiah, C.A. Vol. XXXIV July-June 1984-85 p. 912).
16. Besides, after all, what is the purpose of payment of stipend to an Articled Clerk, which is clear; he must get monthly some amount specified, which now-a-days is very paltry to meet his bare minimum expense, and if this is paid quarterly, half yearly or annually, or at the time of termination of articleship, the purpose will not be achieved, rather it will be frustrated. It is settled that while interpreting a relevant provision of a statute the purposeful construction should be adopted and not that which frustrates the purpose.
17. On facts, it is evident from the receipts of payment produced by respondent No. 2, the stipend, though paid, was not paid month to month as is evident from 6 receipts. Hence, this Court is of the opinion that respondent No. 2 contravened Regulation 32B(1), may be because of the circumstances created by the petitioner himself or for some other reason which is not on record. The attention of the Council was also not focussed of non-payment of monthly stipend, clearly, because there was no complaint or charge of that sort; It is settled that the inquiry in a serious case of professional misconduct should proceed on formulated charges not only in fairness to the person charged with professional misconduct but in order that the evidence may relevantly bear on the particular issue and the evidence should be carefully taken and judged according to the ordinary standard of proof to bring home the charge. Therefore, the contention of Shri J. P. Gupta that the petitioner could riot place material and relevant evidence and circumstances to show why in few months the payment of stipend was delayed certainly needs consideration.
18. It is true that the Council has got power to add a charge which is not made in the complaint, if a charge is made out on facts. But, the Council has also not framed the charge of contravention of Regulation 32B(1) of not making monthly payments of stipend nor recorded any finding on it.
19. In view of the above situation, this Court would have sent the matter back to the Council for giving an opportunity to the respondent No. 2, which he could not get, to explain and to meet the charge of nonpayment of monthly stipend as required under Regulation 32B(1), but, in the facts and circumstances of the case, that would not be a proper course, as respondent No. 2 has already suffered mental stress, strain and agony for the last about 9 years, which, in the opinion of this Court, is sufficient to meet the ends of justice. Considering the over-all picture, the proper course would now be to file the proceedings, which are ordered to be filed.
20. In the result, the revision is disposed of in the manner aforesaid. The record of the Council be returned to Shri N. P. Mittal, Advocate, for the Council/respondent No. 1.
21. No costs.