Full Judgment Text
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PETITIONER:
H. A. K. RAO, CHARTERED ACCOUNTANT
Vs.
RESPONDENT:
COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW
DATE OF JUDGMENT:
13/12/1966
BENCH:
RAO, K. SUBBA (CJ)
BENCH:
RAO, K. SUBBA (CJ)
SHAH, J.C.
SIKRI, S.M.
RAMASWAMI, V.
VAIDYIALINGAM, C.A.
CITATION:
1967 AIR 1257 1967 SCR (2) 256
ACT:
Chartered Accountants Act 1949--Clause (ii), Part II,
Second Schedule--Council’s power to specify any act or
omission other than those covered by Act or Regulations as
’professional misconduct’--scope of.
HEADNOTE:
The Council of the Institute of Chartered Accountants,
by a notification issued on February 22, 1964, in exercise
of powers conferred by cl. (ii) of Part 11 of the Second
Schedule to the Chartered Accountants Act, 1949, notified,
inter alia, that a member of the Institute shall be deemed
to be guilty of misconduct if, in connection with elections
to the Councils of the lnstitute., he took part directly or
indirectly in (1) issuing manifestoes or circulars; (2)
canvassing votes by visiting places of business or residence
of the voters or in any other manner.
The appellant, who was a prospective candidate for election
to the Central Council of the Institute, filed a writ
petition to quash the notification. It was contended on his
behalf that the power of the Council to issue a notification
is limited by the express provisions of cl. (ii) of Part II
of the Second Schedule to the Act. Under cl. (i) any
contravention of the provisions of the Act or of the
Regulations made thereunder was professional misconduct;
therefore the expression "other act or omission" in cl. (ii)
must be an act or omission other than those covered by the
Act or the Regulations. Under cl. (2) of Regulation 54-A,
undue influence by interfering with the free exercise of any
electoral rights was misconduct, but the proviso to cl. (2)
which permitted a declaration of policy or a promise of a
particular action saved the issuing of manifestoes and
circulars from the operation of the substantive part of the
clause. The appellant therefore claimed that he had a legal
right to issue circulars or manifestoes within the meaning
of the proviso and that the impugned notification being in
derogation of the Regulation, was illegal.
It was further contended that the notification was
inconsistent with cl. (4B) of Regulation 54A, because that
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clause only prohibited canvassing for votes within a
distance of 200 meters from the polling booths, thereby
impiedly permitting canvassing beyond that distance; cf.
(4B) detracted only to a limited extent from the legal right
to canvass and the impugned notification containing a
prohibition against general canvassing beyond these limits
contravened both cl. (2) and cl. (4B) of Regulation 54-A and
was therefore bad.
The High Court held that the impugned notification in so far
as it directed that the issuing of manifestoes or circulars
was misconduct, was illegal; but that the rest of it was
valid. On appeal to this Court by the appellant and upon a
cross-appeal by the respondent.
HELD: The entire notification was valid.
Although the act of issuing a manifesto or a circular would
not amount to undue influence by virtue of the proviso to
Regulation 54-A(2) such
257
act was constituted by the notification a different head of
professional misconduct which the Council was authorised to
do under cl. (ii) of Part II of the Second Schedule to the
Act. [263 H]
The Council had the power to issue the notification
prohibiting canvassing of votes and the notification was not
inconsistent with either the provisions of the Act or the
Regulations. [263 F]
While the Regulations provide for disciplinary action for
undue influence and for canvassing for votes within a
distance of 200 meters from a polling booth, the
notification placed other acts and omissions under different
heads of misconduct. There is no inherent conflict between
undue influence, canvassing of votes by visiting the places
of business or the residence of the voters, and canvassing
within a distance of 200 metres from a polling booth. All
the three can stand together. [262 H]
The appellant did not have any unlimited right to canvass
for vote either statutory or otherwise. His rights were
defined by the statute and it could not be said that such an
unlimited right to canvass is implicit in the right to stand
for election. [263 B]
The electorate was an enlightened body and the elections
were to a council designed to maintain high standards of the
profession. Canvassing may be necessary for explaining to
an illiterate voter the qualifications of a candidate and
the principles for which he stands or in the case of a vast
electorate with which the candidate may not be familiar, but
no such necessity exists in the case of enlightened voters
of a compact electorate The impugned notification was not
therefore unreasonable in the sense that expression is
understood in law. [263 C]
[The question whether the notification was violative of
Article 19 of the Constitution and whether that Article
could be invoked notwithstanding the fact that a state of
emergency was in force, was left open.] [259 A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 447 and
501 of 1965.
Appeals by special leave from the judgment and order dated
July 2, 1964 of the Mysore High Court in Writ Petition No.
473 of 1964.
K. Srinivasan and R. Gopalakrishnan, for the appellant (in
C A. No. 447 of 1965) and the respondent (in C. A. No. 501
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of 1965).
M. C. Setalvad, K. K. Jain and H. K. Puri, for the
respondent (in C. A. No. 447 of 1965) and the appellant (in
C. A. No. 501 of 1965).
The Judgment of the Court was delivered by
Subba Rao, C. J. These are cross-appeals-the appeal has been
filed by H. A. K. Rao, a Chartered Accountant, and the
cross-appeal has been filed by the respondent therein-
against the judgment and order of the Mysore High Court
passed in Writ Petition No. 473 of 1964 filed by the former
challenging the validity of the notification issued by the
latter regulating the conduct of elections to the Central
Council and the Regional Councils of the Institute of
Chartered Accountants of India.
M1Sup.CI/67-3
258
The facts are not in dispute and, they may be briefly
stated, H. A., K. Rao, the appellant in Civil Appeal No. 447
of 1965, is a chartered accountant by profession and is a
fellow member of the Institute of Chartered Accountants of
India, hereinafter referred to as the "Institute". The
election to the Central Council and the Regional Councils of
the Institute was to take place in the month of August,
1964. On February 22, 1964, the President of the Institute
issued a notification in exercise of the powers conferred by
cl. (ii) of Part 11 of the Second Schedule to The Chartered
Accountants Act, 1949 (38 of 1949), hereinafter called the
Act, notifying that a member of the Institute shall be
deemed to be guilty of misconduct, if, in connection with
election to the Councils of the Institute, he was found to
have taken part, directly or indirectly, either himself or
through any other person, in any of the following
activities:-(I) issuing manifestoes or circulars; (2)
canvassing votes by visiting places of business or residence
of the voters or in any other manner; and (3) organising
parties to entertain voters. The appellant in Civil Appeal
No. 447 of 1965 was a prospective candidate for the Central
Council of the Institute. He filed the aforesaid writ
petition to quash the said notification on various grounds,
which we will consider in the course of the judgment. The
High Court held that the impugned notification, in so far as
it directed that issuing of manifestoes or circulars was
misconduct was illegal and that that part of the
notification in so far as it directed canvassing of votes
was misconduct was valid. Both the parties are challenging
the said order in so far as it is against each of them.
Mr. K. Srinivasan, learned counsel for the appellant in
Civil Appeal No. 447 of 1965, attacked the validity of. the
notification on three grounds, namely, (1) it was beyond the
competence of the Central Council, (2) it purported to amend
the Regulations, (3) it was in conflict with the
Regulations, and (4) it was in violation of cls. (1)(a) and
(1)(g) of Art. 19 of the Constitution.
,Mr. M. C. Setalvad, appearing for the Institute, canvassed
the correctness of the order of the High Court in so far as
it held that the issuing of manifestoes and circulars was
illegal. He contended that the impugned notification was
well within the competence of the Institute and was not in
conflict with any of the Regulations, but it was really an
additional head of disqualification introduced by the
Institute in the interests of maintaining high standards in
the profession.
At the outset it may be mentioned that the appellant in
Civil Appeal No. 447 of 1965 did not seek to sustain his
claim on the basis of his fundamental right presumably in
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view of the fact that its operation was and is suspended
under Art. 358 of the Constitution during the emergency,
though he sought to draw an anology on the provisions of
Art. 19 and the decisions thereon in support
259
of his contentions. We do not propose to express any
opinion either on the question whether Art. 19 of the
Constitution can be invoked in the instant case
notwithstanding the fact that the state of emergency is in
force or on the question whether the Institute is a State
within the meaning of Art. 12 of the Constitution. We put
aside Art. 19 altogether, as the appellant did not rely upon
it and proceed to consider his other arguments..
Before we consider the relevant provisions of the Act it is
necessary to notice at the outset the nature and the objects
of the Institute. The Institute is a statutory body having
perpetual successION and a common seal. It is governed by
the Act and the Chartered Accountants Regulations, 1949,
hereinafter called the Regulations. The Central Council of
the Institute shall be composed of not more than 24 members
elected by the members of the Institute from among the
fellows thereof and 6 persons nominated by the Central
Government. There are Regional Councils which function in
their respective regions subject to the control, supervision
and direction of the Central Council or any of its
committees. Elections to the Councils are held once in
three years. Therefore, the Act, through its provisions,
regulates the profession of chartered accountants. It
establishes an Institute of Chartered Accountants and
provides for the constitution of a Council for carrying out
the objects of the Act. The Central Council,inter alia, has
the power to admit members to the Institute, to take
disciplinary action, and to regulate and maintain the status
and standard of the professional qualifications of the
members of the Institute. It is needless to say that the
profession of chartered accountant is a respectable one and
the duties of chartered accountants are onerous and
responsible. They are all educated and qualified men and on
their efficiency and integrity depends the stability of many
of the institutions in the country. It cannot, therefore,
be gainsaid that the candidates seeking to become members of
the said Council which regulates the conduct of chartered
accountants shall necessarily be persons of high integrity
and above criticism.
With this background we shall now proceed to consider the
arguments raised in the appeals.
To appreciate the contentions of the parties it will be con-
venient to collect at one place the relevant provisions of
the Act and the Regulations.
The Act
.Section 22. For the purpose of this Act,
the expression professional misconduct" shall
be deemed to include any ,act or omission
specified in any of the Schedules, but nothing
in this section shall be construed to limit
or .abridge in any way the power conferred or
duty cast on
260
the Council under sub-section (1) of section
21 to inquire into the conduct of any member
of the Institute under any other
circumstances.
Section 30 (1). The Council may, by
notification in the Gazette of India, make
regulations for the purpose of carrying out
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the objects of this Act, and a copy of such
regulations shall be sent to each member of
the Institute.
(2) In particular, and without prejudice to
the generality of the foregoing power, such
regulations may provide for all or any of the
following matters
(b) the manner in which elections to the
Council and the Regional Councils may be held.
THE SECOND SCHEDULE
Part I
A chartered accountant in practice shall be
deemed to be guilty of professional
misconduct, if he-
Clauses (1) to (10)
Part II
A member of the Institute, whether in
practice or not, shall be deemed to be guilty
of professional misconduct, if he-
(i) contravenes any of the provisions of
this Act or the regulations made thereunder.
(ii) is guilty of such other act or omission
as may be specified by the Council in this
behalf, by notification in the Gazette of
India.
Regulation 54-A. Disciplinary action against
member in connection with conduct of election
:
A member of the Institute shall be liable for
disciplinary action by the Council if he
adopts one or more of the following practices
with regard to the election to the Council,
namely
(1)
(2) Undue influence, that is to say, any
direct or indirect interference or attempt to
interfere on the
261
part of a candidate or of any other person
with the connivance of the candidate, with the
free exercise of any electoral right ;
Provided that-
A declaration of policy or a promise of a
particular action, or the mere exercise of a
legal right without intent to interfere with
an electoral right, shall not be deemed to be
interference within the meaning of this
clause.
(4B). The canvassing for votes, or
soliciting the vote of any elector, or
persuading any elector not to vote, for any
particular candidate, or persuading any
elector not to vote at the election, or
exhibiting any notice or sign board (other
than an official notice) relating to the
election, by a candidate or by any other
person with the connivance of a candidate
within a distance of 200 meters from a polling
booth.
In exercise of the power conferred under cl. (ii) of Part 11
of the Second Schedule to the Act, on February 22, 1964, the
Council issued the following notification :
...... a member of the Institute shall be
deemed to be guilty of professional
misconduct, if in connection with election to
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the Central Council and/or Regional Councils
of the Institute, he is found to have taken
part, directly or indirectly, either himself
or through any other person, in any of the
following activities :-
(i) issuing manifestoes or circulars.
(ii) canvassing votes by visiting places of
business or residence of voters in any other
manner; and
(iii) organising parties to entertain voters.
The gist of the said provisions may be stated thus : For the
purpose of the Act the expression "professional misconduct"
includes the act or omission specified in the Schedule to
the Act. The Council also may by notification make
regulations in connection with the conduct of elections.
Under Regulation 54-A(2) and (4B) a member of the Institute
shall be liable to disciplinary action by the Council if he
was guilty of the practice, among others, of undue influence
and canvassing as defined therein. On February 22, 1964.
the Council issued a notification specifying that a member
of the Institute shall be deemed to be guilty of misconduct,
if, in connection with the election to the Councils of the
Institute, he is found to have taken part, directly or
indirectly, either himself or
262
through any. other person, or to have issued manifestoes or
circulars or to have canvassed votes by visiting places of
business. or residence, of voters or in any other manner.
Part I of the Second Schedule to the Act describes the acts
of professional misconduct in relation to chartered
accountants in practice requiring action by the High Court
and Part II thereof states, generally that a member of the
Institute.’ whether in practice or not, shall be deemed to
be guilty of professional misconduct, if’ he contravenes any
of the provisions of the Act or the Regulations or is guilty
of such other act or omission as may be specified by the
Council in this behalf, by notification in the Gazette of
India.
Now the question is whether the said notification
is invalid for any of the reasons mentioned above. It is
said that the power of the Council to issue a notification
is limited by the express provisions of cl. (ii) of Part 11
of the Second Schedule to the Act. As under cl. (i) of Part
11 of the. Second Schedule to the Act, the contravention of
the provisions of the Act or of the Regulations made
thereunder was professional misconduct, the argument
proceeded, the expression "other act or omission" in cl.
(ii) should be an act or- omission other than those-
provided in the Regulations. Elaborating this argument it
was said that under Regulation 54-A(2) the appellant in
Civil Appeal No. 447 of 1965 had a legal right to canvass
within the meaning of the said proviso, that the notifica-
tion in effect depriving him of that right was in derogation
of the the said Regulation and, was, therefore, illegal. It
was also argued that the said notification was inconsistent
with cl.(4B) of Regulation 54A, as under that clause
canvassing for votes or soliciting votes of electors was
prohibited within a distance of 200 meters from the polling
booths, thereby impliedly permitting canvassing beyond that
distance, and that, therefore, the notification prohibiting
canvassing generally was in direct conflict with the same.
The further argument was that cl. (4B) of Regulation 54-A
detracted only to a limited extent from the legal right to
canvass and that any prohibition against general canvassing
beyond the limits laid down by cl. (4B) of Regulation 54-A
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contravened both cl. (2) and cl. (4B) of Regulation 54-A and
was bad.
The argument at first sight appears to be attractive, but it
involves a fallacy. The Regulations enumerated different
heads for disciplinary action in connection with the conduct
of an election; but they did not, either expressly or by
necessary implication, prohibit the Council from adding
additional heads of disciplinary action. While the
Regulations provide for disciplinary action for undue
influence and for canvassing for votes etc. within a
distance of 200 metres from a polling booth, the
notification placed other acts and omissions under different
heads of misconduct. There is no inherent conflict between
undue influence and canvasisng of votes by visiting the
places of business or the residence of the voters.
263
So took there is no conflict between canvassing of votes
within. a distance of 200 meters from a polling booth and
canvassing of votes by visiting places of business or
residence of voters or in any other manner. All the three
can stand together.
Nor can we agree that apart from the fundamental rights,
which the appellant does not claim in this appeal, he has an
unlimited right to canvass for votes, either statutory or
otherwise. Nothing has been placed before us to sustain any
such right. His rights are defined by the statute and we
cannot say that such an unlimited right to canvass is
implicit in the right to stand for election.
We cannot also agree with the learned counsel for the
appellant that the notification is unreasonable in the sense
that expression is understood in law. As noticed earlier,
the electorate is art enlightened body and the elections are
to a council designed to maintain high standards of the
profession. The voters are expected to know the
qualifications of every candidate and they are certainly in
a ,position to vote for the best candidate. Canvassing may
be necessary for explaining to an illiterate voter the
qualifications of a candidate and the principles for which
he stands or in the case of vast electorate to which the
candidate may not be familiar, but no such necessity exists
in the case of enlightened voters of a compact electorate.
If the Council thought that malpractices existed and undue
and unwholesome pressures were brought to bear on the voters
and for that reason, with a view to purify the conduct of
elections, if it issued the said notification prohibiting
canvassing, we cannot say that the Council acted
unreasonably in issuing the said notification. It issued
the notification in the best interests of the purity of the
elections and ultimately in the interests of the profession
itself. We, therefore, hold that the Council had not only
power to issue the notification prohibiting canvassing of
votes but also that the said notification was not
inconsistent with either the provisions of the Act or the
Regulations made thereunder.
Now coming to the cross-appeal, the High Court held that
issuing illegible manifestoes or circulars directly came
into conflict with the proviso to cl. (2) of Regulation 54-A
which says that a declaration of policy or a promise of a
particular action, or the mere exercise of a legal right
without intent to interfere with an electoral right, shall
not be deemed to be interference within the meaning of the
said clause. Doubtless the proviso to Regulation 54-A(2)
saves issuing of manifestoes and circulars from the
operation of the substantive part of the clause. The act of
issuing a manifesto or a circular, therefore, does not
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amount to undue influence with in the meaning of that
clause. If the notification says that such issuing of
manifestoes or circulars is undue influence, it certainly
comes into conflict with that clause. But the notification
does not, and indeed it cannot, amend the definition of
"undue influence". The
264
said Act, though it does not amount to an undue influence,
is constituted a different head of professional misconduct
which the Council is authorized to do under cl. (ii) of Part
11 of the Second Schedule to the Act. From this perspective
no conflict between the two arises. We cannot, therefore,
agree with the reasoning of the High Court that the
notification in so far as it prohibited issuing of
manifestoes and circulars was illegal.
In the result, we hold that the entire notification is
valid. Civil Appeal No. 447 of 1965 is dismissed with costs
and Civil Appeal No. 501 of 1965 is allowed, but, in the
circumstances, without costs.
R.K.P.S. C. A. 447 of 1965 dismissed.
C. A. 501 of 1965 allowed.
265