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Supreme Court of India
D.K. Agrawal vs Council Of The Institute Of … on 23 September, 2021Author: S. Abdul Nazeer
Bench: S. Abdul Nazeer, Krishna Murari
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6337 OF 2021
(Arising out of S.L.P. (Civil) No.24350 of 2017)
D.K. AGRAWAL …Appellant(s)
Vs.
COUNCIL OF THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF INDIA …Respondent(s)
WITH
CIVIL APPEAL NO. 6340 OF 2021
(Arising out of S.L.P. (Civil) No.8118 of 2018)
CIVIL APPEAL NO. 6339 OF 2021
(Arising out of S.L.P. (Civil) No.5733 of 2018)
CIVIL APPEAL NO. 6338 OF 2021
(Arising out of S.L.P. (Civil) No.5652 of 2018)
ORDER
S. ABDUL NAZEER, J.
1. Leave granted.
Civil Appeal No. 6337 of 2021 (Arising out of SLP (Civil) No.
24350 of 2017, and Civil Appeal No. 6338 of 2021 (Arising out
of SLP (Civil) No.5652 of 2018)
Signature Not Verified
Digitally signed by
2. The appellantD.K. Agrawal is a chartered accountant having
Anita Malhotra
Date: 2021.10.09
13:16:54 IST
Reason:
his Office as M/s, Dinesh K. Agrawal & Co., Chartered
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Accountants, 46A, Madhav Kunj, Pratap Nagar, Agra. Information
was received by the Institute of Chartered Accountants of India (for
short, “the Institute”) from the Office of the Inspecting Assistant
Commissioner of the Income Tax alleging that the appellant had
deposited in local treasury unit of Incometax Department at Agra a
total sum of Rs.2514/ being the last digit of amount, outstanding
against the assessees. The Office of the Inspecting Assistant
Commissioner of the Income Tax further alleged that the appellant
had interpolated assessees’ copies of challans to show higher
figures and claimed the higher amount from them. The said
information was conveyed to the appellant vide Institute’s letter
dated 14.02.1980 and he was requested to send his written
statement in response. The appellant submitted his duly verified
written statement dated 18.10.1980. At its 96 th meeting held on
20/21.07.1981, the Council of the Institute (for short, “the
Council”)was of the prima facie opinion that the appellant was
guilty of professional and/or other misconduct and accordingly
referred the case to the Disciplinary Committee constituted under
the Chartered Accountants Act, 1949 (for short, “the Act”).
3. The Disciplinary Committee held various meetings between
05.10.1981 and 21/22.02.1989 for the purpose of enquiry. After
hearing the parties, recording the evidence of the witnesses and on
perusal of the documents which were produced before the
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Disciplinary Committee, the Disciplinary Committee submitted its
report on 12.09.1989 to the Council. The Disciplinary Committee
was of the view that the appellant had involved himself in respect of
two parties, namely, M/s. United Pulverisers and M/s. Bharat Gas
Agencies, for depositing money only to the extent of last digit and
claiming from them full amount as indicated in the information and
that the appellant was guilty of other misconduct under Section 22
read with Section 21 of the Act. A copy of the report of the
Disciplinary Committee was forwarded to the appellant vide
Institute’s letter dated 20.08.1990 and he was requested to send
his written representation, if any, and also if he so desired, to
appear before the Council on 14.09.1990 either in person and/or
through a member of the Institute duly authorized him and to
make his oral submissions. The appellant submitted his
representation dated 05.09.1990. However, at the request of the
appellant, that his counsel has expressed his difficulties to appear
before the Council, the consideration of the report was postponed
by the Council. Thereafter, the appellant was informed vide
Institute’s letter dated 12.11.1990 that the report of the
Disciplinary Committee would be considered by the Council at its
meeting to the held from 6th to 8th December, 1990 and if he so
wished, he might appeal before the Council either in person and/or
through a member of the Institute duly authorized by him on
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07.12.1990. The consideration of the report by the Council was
adjourned at an oral request of the appellant and his authorized
representative made at the time of meeting on the ground of
preoccupation of the appellant’s authorized representative. By his
letter dated 19.01.1991, the appellant requested that the report of
Disciplinary Committee might not be placed before the Council in
March 1991 which was scheduled to be held at Bangalore. His
request was acceded to. The appellant was further informed vide
Institute’s letter dated 8th July, 1993 that the report of the
Disciplinary Committee would be considered by the Council at its
meeting scheduled to the held from 5 th to 7th August, 1993. The
appellant appeared before the Council on 06.08.1993 and made his
oral submissions that his counsel was out of Delhi and in his
absence, it was not possible for him to proceed with the case. He
again requested for postponement of the hearing. This process
went on till the month of September 1994. On 02.09.1994 the
appellant appeared before the Council and made his oral
submissions. The Council passed the following orders:
“On consideration of the report of the Disciplinary
Committee, written representations and the oral
submissions made by the respondentD.K. Agrawal
before the Council on 2nd September, 1994, the Council
accepted the Report of the Disciplinary Committee and
found that the respondent was guilty of “other
misconduct” under Section 22 read with Section 21 of
4
the Chartered Accountants Act, 1949.
The Council also decided to recommend to the High
Court that the name of the respondent be removed from
the Register of Members for a period of two years.”
4. The respondentInstitute, after the lapse of about five years of
the report of the Disciplinary Committee, made a reference bearing
Reference No.1 of 1999 before the High Court of Judicature at
Allahabad for removal of the name of the appellant from the
register of the membership for two years. The High Court, on
consideration of the reference, confirmed the Resolution of the
Council that the appellant was guilty of “other misconduct”
warranting appropriate punishment and, therefore, ordered the
removal of the name of the appellant from the membership of the
respondentInstitute for a period of five years.
5. The appellant filed a review petition before the High Court for
review of the aforesaid order. The said review petition was also
dismissed by the High Court. The appellant has challenged the
aforesaid two orders in these appeals.
Civil Appeal No. 6340 of 2021 (Arising out of SLP (Civil)
No.8118 of 2018) and Civil Appeal No. 6339 of 2021 (Arising
out of SLP (Civil) No.5733 of 2018)
6. These two appeals have also been filed by the aforesaid D.K.
5
Agrawal. In these cases, the respondentInstitute received a
complaint dated 07.02.1986 from Shri A.K. Swahney, the then
Inspecting Assistant Commissioner of Incometax, (Assessment),
Agra, alleging that: (i) the appellant had been found to be indulging
in acts which were unbecoming of a professional holding the
position of Chartered Accountant and was guilty of professional
misconduct; (ii) by his unethical practice, the appellant had duped
the exchequer and deprived it of a large chunk of money by way of
evading taxes; (iii) by his corrupt practices, the appellant had also
lured the personnel of Incometax Department by giving them
illegal gratification.
7. A copy of the complaint was forwarded by the Institute to the
appellant on 30.05.1986 asking him to submit his written
statement by 20.06.1986. In these cases as well, several rounds of
correspondence took place between the respondentInstitute and
the appellant. The matter was referred to the Disciplinary
Committee for the purpose of an inquiry to be held on 07.03.1988.
The appellant submitted several paper books before the
Disciplinary Committee. Again, in these cases as well, the
appellant went on taking time on one pretext or another before the
Disciplinary Committee. The Disciplinary Committee on perusal of
the documents produced before it, upon recording the evidence of
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the witnesses and after hearing the submission made by the
complainant and the appellant, submitted its report to the Council
on 12.09.1989. The Disciplinary Committee was of the opinion
that the appellant was guilty of “other misconduct” under Section
21 read with Section 22 of the Act. A copy of the report of the
Disciplinary Committee was forwarded to the appellant as also to
the complainant vide Institute’s letter dated 08.08.1991 and they
were informed that the report would be considered by the Council
at one of its forthcoming meeting and that they were required to
send their written representations, if any, and also if they so
desired, to appear before the Council either in person and/or
through a member of the Institute duly authorized by them at the
time of the consideration of the report.
8. The report of the Disciplinary Committee was fixed for
consideration by the Council at its meeting scheduled to the held
from 5th to 7th August, 1993. At the request of the appellant, the
matter was adjourned. The appellant went on taking time for
hearing. Finally, on consideration of the report of the Disciplinary
Committee and the written representations of the appellant, the
Council accepted the report of the Disciplinary Committee and
found that the appellant guilty of “other misconduct” under Section
21 read with Section 22 of the Act insofar as the first two charges
were concerned and he was also found guilty of professional
7
misconduct under Clause 10 of Part I of first schedule to the Act in
respect of the third charge. The council decided to recommend to
the High Court that the name of the appellant be removed from the
Register of the Members for a period of five years. Accordingly, in
terms of Section 21(5) of the Act, the disciplinary case was
forwarded to the High Court to pass necessary orders in
accordance with Section 21(6) of the Act.
9. The High Court, by its order dated 28.09.2016 in Reference
No.2 of 1999 accepted the Resolution of the Council and directed
removal of the appellant’s name from the Register of the
Membership permanently.
10. Feeling aggrieved by the aforesaid order of the High Court, the
appellant filed a review application which was dismissed by the
High Court. The appellant has challenged the validity and
correctness of the aforesaid Judgments and orders of the High
Court in these appeals.
11. The learned counsel appearing for the appellant has mainly
contended that the conclusion reached by the Council was on the
basis of conjectures and surmises. In fact, the appellant has filed
his written submissions objecting to the report of the Disciplinary
Committee. The appellant has presented his case before the
Council. However, without independently considering any of the
materials placed before it, including the written and the oral
8
submissions made by the appellant, the Council unilaterally
accepted the report of the Disciplinary Committee and found that
that appellant was guilty of “other misconduct”. The Council had
failed to appreciate the materials produced by the appellant, the
appellant’s written submissions and his oral submissions made
before it. In this connection, he has drawn our attention to the
report of the Council and also Section 21 of the Act.
12 Apart from the above, it was also argued that the opinion
formed by the Council was not guided by the doctrine of benefit of
doubt. The Council was under an obligation to record a finding
that the guilt of the appellant was beyond reasonable doubt which,
it was argued, is not so in the instant case. It was further argued
that the High Court ought to have accepted the submissions of the
appellant and set aside the recommendations, considering the fact
that the recommendation of the Council was violative of the
principles of natural justice. He has also attacked the report of the
Disciplinary Committee which, according to him, was made with a
predetermined mind and that it is perverse and contrary to the
materials placed on record.
13. On the other hand, learned counsel appearing for the
respondentInstitute has submitted that taking into consideration
the materials on record and also the written statements and
submissions of the appellant, the Council had come to the
9
conclusion that the appellant was guilty of misconduct. The High
Court has very rightly confirmed the recommendations of the
Council and has allowed the references accordingly. There is no
error in the report of the Disciplinary Committee or in the order of
the Council. Therefore, the appellant cannot find fault with the
judgment of the High Court. He prays for dismissal of the appeals.
14. We have carefully considered the submission of the learned
counsel for the parties and also perused the materials placed on
record.
15. The Institute of Chartered Accountants of India is a statutory
body created by an Act of Parliament that is the Chartered
Accountants Act, 1949. In accordance with Section 9 of the Act,
the management of the affairs of the Institute are vested in the
Central Council. The Council performs its function through three
different standing committees constituted under Section 17 of the
Act and various other committees. One of the standing committees
of the Institute is the Disciplinary Committee. The function of the
Institute is to regulate the provisions of the Act and it is also
empowered to take action against its members for any misconduct
as contemplated in the Act and relevant regulations framed
thereunder. Section 21 of the Act prescribes the procedure to be
followed with regard to an inquiry relating to the misconduct of the
members of the Institute. Section 22A provides for filing of an
10
appeal by a member against imposition of penalty. The Act was
amended on 08.08.2006 by Act 9 of 2006. However, since the
alleged misconduct relates to the year 1978, we are concerned with
the unamended Sections 21 and 22A which are as under:
“21. Procedure in inquiries relating to misconduct
of members of Institute:
“(1) Where on receipt of information by, or of a complaint
made to it, the Council if prima facie of opinion that an
member of the Institute has been guilty of any
professional or other misconduct, the Council shall refer
the case to the Disciplinary Committee, and the
Disciplinary Committee shall thereupon hold such inquiry
and in such manner as may be prescribed, and shall
report the result of its inquiry to the Council.
(2) If on receipt of such report the Council finds that the
member of the Institute is not guilty of any professional
or other misconduct, it shall record its finding accordingly
and direct that the proceedings shall be filed or the
complaint shall be dismissed, as the case may be.
(3) If on receipt of such report the Council finds that the
member of the Institute is guilty of any professional or
other misconduct, it shall record a finding accordingly
and shall proceed in the manner laid down in the
succeeding subsections.
(4) Where the finding is that a member of the Institute
has been guilty of a professional misconduct specified in
the First Schedule, the Council shall afford to the member
an opportunity of being heard before orders are passed
against him on the case, and may thereafter make any of
the following orders, namely :
(a) reprimand the member;
(b) remove the name of the member from the Register for
such period, not exceeding five years, as the Council
thinks fit:
Provided that where it appears to the Council that
the case is one in which the name of the member ought to
be removed from the Register for a period exceeding five
years or permanently, it shall not make any order
referred to in Clause (a) or Clause (b), but shall forward
11
the case to the High Court with its recommendations
thereon.
(5) Where the misconduct in respect of which the Council
has found any member of the Institute guilty is
misconduct other than any such misconduct as is
referred to in Subsection (4), it shall forward the case to
the High Court with its recommendations thereon
(6) On receipt of any case under subsection (4) or sub
section (5), the High Court shall fix a date for the hearing
of the case and shall cause notice of the date so fixed to
be given to the member of the Institute concerned, the
Council and to the Central Government, and shall afford
such member, the Council and the Central Government
an opportunity of being heard, and may thereafter make
any of the following orders, namely:
(a) direct that the proceedings be filed, or dismiss the
complaint, as the case may be;
(b) reprimand the member;
(c) remove him from membership of the Institute either
permanently or for such period as the High Court thinks
fit; (d) refer the case to the Council for further inquiry and
report.
(7) xxx xxx xxx
(8) For the purposes of any inquiry under this section, the
Council and the Disciplinary Committee shall have the
same powers as are vested in a civil Court under the
Code of Civil Procedure, 1908, in respect of the following
matters, namely:
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) the discovery and production of any document; and
(c) receiving evidence on affidavit.”
“22A . Appeals : (1) Any member of the Institute
aggrieved by any order of the Council imposing on him
any of the penalties referred to in subsection (4) of
section 21, may, within thirty days of the date on which
the order is communicated to him, prefer an appeal to
the High Court:
PROVIDED that the High Court may entertain any
such appeal after the expiry of the said period of thirty
12
days, if it is satisfied that the member was prevented by
sufficient cause from filing the appeal in time.
(2) The High Court may, on its own motion or oth
erwise, after calling for the records of any case, revise
any order made by the Council under subsection (2) or
subsection (4) of section 21 and may
(a) confirm, modify or set aside the order;
(b) impose any penalty or set aside, reduce, con
firm, 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:
PROVIDED that no order of the Council shall be
modified or set aside unless the Council has been given
an opportunity of being heard and no order imposing or
enhancing a penalty shall be passed unless the person
concerned has also been given an opportunity of being
heard.”
16. Regulation 13 of the Chartered Accountants Regulations,
1964 (for short “Regulation”) provides for the procedure of an
inquiry before the Disciplinary Committee. Regulations 14 and 15
which are relevant for the purpose of this case are as under:
“14. Report of the Disciplinary Committee
(1) The Disciplinary committee shall submit its report
to the Council.
(2) The Council shall consider the report of the
Disciplinary Committee and if, in its opinion, a further
enquiry is necessary, shall cause such further enquiry
to be made whereupon a further report shall be
submitted by the Disciplinary Committee.
(3) The Council shall, on the consideration of the
report and the further report, if any, record its findings.
(4) If the finding is that there is no case for passing
13
one of the orders specified in clauses (a) or (b) of sub
section (4) of section, the complainant and the
respondent shall be informed accordingly.
15. Procedure in a hearing before the Council.
(1) If the Council, in view of its findings, is of opinion
that there is a case for passing one of the orders
specified in clauses (a) or (b) of subsection (4) of
Section 21, is shall—
(a) furnish to the respondent a copy of the report
of the Disciplinary Committee and a copy of its
findings: and
(b) give him a notice indicating the order proposed
to be passed against him and calling upon him to
appear before it on a specified date or if he does
not wish to be heard in person, to send within a
specified time, such representation in writing as
he may wish to make against the proposed order.
(2) The scope of the hearing or of the representation in
writing, as the case may be, shall be restricted to the
order proposed to be passed.
(3) The Council shall, after hearing the respondent, if he
appears in person, or after considering the
representation, if any, made by him, pass such orders
as it may think fit.
(4) The orders passed by the Council shall be
communicated to the complainant and the respondent.”
17. It is clear from the above provisions that the report of the
Disciplinary Committee will contain a statement of the allegations,
the defence entered by the members, the recorded evidence and the
conclusions expressed by the Disciplinary Committee. The
conclusions of the Disciplinary Committee are tentative and the
same are not recorded as findings. It is only the Council which is
14
empowered to find out whether the member is guilty of misconduct.
If on receipt of the report, the Council finds that the member is not
guilty of misconduct, Section 21(2) requires that it shall record its
finding accordingly and direct that the proceedings shall be filed or
the complaint shall be dismissed. On the other hand, if the
Council finds that the member is guilty of misconduct, Section
21(3) requires it to record a finding accordingly and to proceed in
the manner laid down in the succeeding subsections. The findings
by the Council constitute the determinative decision as to the guilt
of the member and because it is determinative in character, the Act
requires it to be recorded. Thus, the Council has to determine that
a member is guilty of misconduct and the task of recording of the
findings has been specifically assigned to the Council. Subsection
(4) of Section 21 mandates that where a member of the Institute
has been guilty of professional misconduct specified in the First
Schedule of the Act, the Council shall afford to such member an
opportunity of being heard before any orders are passed against
him. After recording a finding that a member is guilty of
misconduct, the Act moves forward to the final stage of
penalisation. The recording of the finding by the Council is the
jurisdictional springboard for the penalty proceedings which follow.
15
18. In Institute of Chartered Accountants of India v. L.K.
Ratna and Ors.1 this Court considered the duties of the
Council as under :
“12. Now when it enters upon the task of finding
whether the member is guilty of misconduct, the
Council considers the report submitted by the
Disciplinary Committee. The report constitutes the
material to be considered by the Council. The Council
will take into regard the allegations against the member,
his case in defence, the recorded evidence and the
conclusions expressed by the Disciplinary Committee.
Although the member has participated in the inquiry,
he has had no opportunity to demonstrate the fallibility
of the conclusions of the Disciplinary Committee. It is
material which falls within the domain of consideration
by the Council. It should also be open to the member,
we think, to point out to the Council any error in the
procedure adopted by the Disciplinary Committee which
could have resulted in vitiating the inquiry. Section
21(8) arms the Council with power to record oral and
documentary evidence, and it is precisely to take
account of that eventuality and to repair the error that
this power seems to have been conferred. It cannot,
therefore, be denied that even though the member has
participated in the inquiry before the Disciplinary
Committee, there is a range of consideration by the
Council on which he has not been heard. He is clearly
entitled to an opportunity of hearing before the Council
finds him guilty of misconduct.
13. At this point it is necessary to advert to the
fundamental character of the power conferred on the
Council. The Council is empowered to find a member
guilty of misconduct. The penalty which follows is so
harsh that it may result in his removal from the
Register of Members for a substantial number of years.
The removal of his name from the Register deprives him
of the right to a certificate of practice. As is clear from
Section 6(1) of the Act, he cannot practice without such
certificate. In the circumstances there is every reason to
1 1986 4 SCC 537
16
presume in favour of an opportunity to the member of
being heard by the Council before it proceeds to
pronounce upon his guilt. As we have seen, the finding
by the Council operates with finality in the proceeding,
and it constitutes the foundation for the penalty
imposed by the Council on him. We consider it
significant that the power to find and record whether a
member is guilty of misconduct has been specifically
entrusted by the Act to the entire Council itself and not
to a few of its members who constitute the Disciplinary
Committee. It is the character and complexion of the
proceeding considered in conjunction with the structure
of power constituted by the Act which leads us to the
conclusion that the member is entitled to a hearing by
the Council before it can find him guilty. Upon the
approach which has found favour with us, we find no
relevance in James Edward Jeffs v. New Zealand Dairy
Production and Marketing Board – (1967) 1 AC 551
cited on behalf of the appellant. The Court made
observations there of a general nature and indicated the
circumstances when evidence could be recorded and
submissions of the parties heard by a person other than
the decisionmaking authority. Those observations can
have no play in a power structure such as the one
before us.”
19. Similarly, in Institute of Chartered Accountants of
India v. Price Waterhouse and Ors.2 it was held by this
Court that the Disciplinary Committee is a factfinding body
which is subordinate to the Council as a factfinding
Authority. After analysing Section 21 and Regulation 15, this
Court held that the Council is required to independently
consider the explanation submitted by the member and the
evidence adduced in the inquiry before the Disciplinary
2 (1997) 6 SCC 312
17
Committee and the report of the Committee. It was held thus:
“14.…A combined reading of relevant provisions in
Section 21 and Regulation 16 does indicate that the
recording of a finding of guilt or nonguilt by the Council
is mandatory to take further action or to dismiss the
complaint or for further process. The Council is required
to consider independently the explanation submitted by
the member and the evidence adduced in the enquiry
before the Disciplinary Committee and the report of the
Disciplinary Committee. It provides an inbuilt
mechanism under which the Council itself is required to
examine the case of professional or other misconduct of a
member of the Institute or associate member, taking the
aid of the report submitted by the Disciplinary
Committee, the evidence adduced before the Committee
and the explanation offered by the delinquent member.
Entire material constitutes the record of the proceeding
before the Council to reach a finding whether or not the
delinquent member committed professional or other
misconduct. Otherwise, the primacy accorded to the
report of the Disciplinary Committee attains finality,
denuding the Council of the power of discipline over the
members of the Institute; that would render deleterious
effect on the maintenance of discipline among the
members or associate members of the Institute.”
20. It is also necessary to notice yet another aspect. As per sub
section (5) of Section 21, where the Council has found any member
of the Institute to be guilty of misconduct other than any such
misconduct as is referred to in subsection (4), it is required to
forward the case to the High Court with its recommendations and,
under subsection (6) of Section 21, the High Court has to pass the
orders in accordance with subsection (6)(a) to (d) of Section 21 of
the Act. Section 22A provides for appeal by a member against
imposition of penalty.
18
21. Needless to say that, the power exercised by the Council
under Section 21 is quasijudicial in nature. Perusal of the
recommendations of the Council shows that it did not discuss the
report of the Disciplinary Committee, the written statement and the
oral submissions of the appellant while coming to the conclusion
that he is guilty of misconduct. However, the concluding portion of
the recommendations of the Council made an incorrect statement
that the Council had considered all the materials on record and the
written and oral submissions of the appellant. The observations of
the Disciplinary Committee cannot by any stretch of imagination be
treated as findings. At best, they may be termed as the material
which falls within the domain of consideration by the Council. The
Council has failed to give its own independent findings. The
recommendations made by the Council are not supported by
independent reasons. The recommendations, in our opinion, have
been made mechanically by the Council.
22. Recording of reasons is a principle of natural justice and
every judicial/quasijudicial order must be supported by reasons to
be recorded in writing. It ensures transparency and fairness in the
decisionmaking process. The person who is adversely affected
wants to know as to why his submissions have not been accepted.
Giving of reasons ensures that a hearing is not rendered as a
meaningless charade. Unless an adjudicatory body is required to
19
give reasons and make findings of fact indicating the evidence upon
which it relied, there is no way of knowing whether the concerned
body genuinely applied itself to and evaluated the arguments and
the evidence advanced at the hearing. Giving reasons is all the
more necessary because it gives satisfaction to the party against
whom a decision is taken. It is a wellknown principle that justice
should not only be done but should also be seen to be done. An
unreasoned decision may be just, but it may not appear to be so to
the person affected. A reasoned decision, on the other hand, will
have the appearance of fairness and justice.
23. In M/s. Woolcombers of India Ltd. v. Woolcombers
Workers Union and Ors.3, while dealing with an award of an
Industrial Tribunal, this Court found that the award stated
only the conclusions and did not providing the supporting
reasons. The matter was remitted back to the Tribunal to
record fresh findings and it was observed that providing
reasons in support of the conclusion is essential. The
reasoning has been enumerated below:
“5. …The giving of reasons in support of their
conclusions by judicial and quasijudicial authorities
when exercising initial jurisdiction is essential for
various reasons. First, it is calculated to prevent
unconscious unfairness or arbitrariness in reaching
the conclusions. The very search for reasons will put
the authority on the alert and minimise the chances
3 (1974) 3 SCC 318
20
of unconscious infiltration of personal bias or
unfairness in the conclusion. The authority will
adduce reasons which will be regarded as fair and
legitimate by a reasonable man and will discard
irrelevant or extraneous considerations. Second, it is
a wellknown principle that justice should not only
be done but should also appear to be done.
Unreasoned conclusions may be just but they may
not appear to be just to those who read them.
Reasons conclusions, on the other hand, will have
also the appearance of justice. Third, it should be
remembered that an appeal generally lies from the
decisions of judicial and quasijudicial authorities to
this Court by special leave granted under Article 136.
A judgment which does not disclose the reasons, will
be of little assistance to the Court. The Court will
have to wade through the entire record and find for
itself whether the decision in appeal is right or
wrong. In many cases this investment of time and
industry will be saved if reasons are given in support
of the conclusions. So it is necessary to emphasise
that judicial and quasijudicial authorities should
always give reasons in support of their conclusions.”
24. Further, this Court in State of West Bengal v. Atul Krishna
Shaw and Anr.4 has held that failure to give reasons does not
instill public confidence in the correctness of the decisions
rendered by the adjudicatory bodies. It was held thus:
“7. ……it is indisputably true that it is a quasijudicial
proceeding. If the appellate authority had appreciated
the evidence on record and recorded the findings of fact,
those findings are binding on this Court or the High
Court. By process of judicial review, we cannot
appreciate the evidence and record our own findings of
fact. If the findings are based on no evidence or based
on conjectures or surmises and no reasonable man
would, on given facts and circumstances, come to the
conclusion reached by the appellate authority on the
basis of the evidence on record, certainly this Court
4 (1991) Supp (1) SCC 414
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would oversee whether the findings recorded by the
appellate authority is based on no evidence or beset
with surmises or conjectures. Giving of reasons is an
essential element of administration of justice. A right to
reason is, therefore, an indispensable part of sound
system of judicial review. Reasoned decision is not only
for the purpose of showing that the citizen is receiving
justice, but also a valid discipline for the Tribunal itself.
Therefore, statement of reasons is one of the essentials
of justice.”
25. As noticed above, where the Council has found any member
of the Institute to be guilty of misconduct, it is required under the
Act to forward the matter to the High Court with its
recommendations and the High Court has to pass final order either
dismissing the complaint or penalizing the member of the Institute.
The order of the Council, imposing penalty upon the member, is
also appealable by the members aggrieved before the High Court.
In the circumstances, it is all the more necessary that the
recommendation/order of the Council should contain reasons for
the conclusion.
26. We are of the view that the High Court has equally erred in
accepting the recommendations of the Council without applying its
own logic to this aspect of the matter. We are also of the view that
the Council has to reconsider the matter afresh after granting the
appellant an opportunity of being heard. Having regard to the
above, we do not propose to consider the other contentions of the
parties.
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27. Resultantly, the recommendations/order(s) passed by the
Council of the Institute of Chartered Accountants of India which
were the subject matter of the aforesaid two reference cases, are set
aside. Consequently, the orders of the High Court impugned herein
are also set aside. The appeals are accordingly allowed. These
matters are remitted back to the Council for fresh consideration
and disposal in accordance with law and in the light of the
observations made above. The Council is directed to consider and
dispose of the matter(s) as expeditiously as possible but not later
than three months from the date of receipt of a copy of this order.
All the contentions of the parties are left open. Having regard to the
facts and circumstances of the cases, both the parties are directed
to bear their respective costs.
28. Pending applications, if any, shall also stand disposed of.
………………………J.
[S. ABDUL NAZEER]
………………………J.
[KRISHNA MURARI]
New Delhi;
September 23, 2021.
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