Anil Kumar Jain & Ors. vs Board Of Discipline Of Institute Of Charted Accountants Of India & Ors.

Court
Delhi High Court

$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 4977/2023
Date of Decision – 19.05.2026
IN THE MATTER OF:
ANIL KUMAR JAIN & ORS. ......Petitioners

Through: Mr. Vidur Mohan, Mr. Indresh
Upadhyay, Mr. Kaushal Kumar
Singh, Ms. Prachi Batra Advocates.

Versus

BOARD OF DISCIPLINE OF INSTITUTE OF CHARTED
ACCOUNTANTS OF INDIA & ORS.
......Respondents

Through: Mr. Robin Ratnakar David, Advocate.


CORAM:
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
J U D G E M E N T

PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
1. The petition assails the communication dated 19.10.2022 and opinion
dated 24.06.2022 (“Impugned Orders”) issued by the Board of Discipline,
Institute of Chartered Accountants of India (“ICAI”) , whereby, the
complaint filed by the petitioners alleging professional misconduct against
certain Chartered Accountants was closed.
2. The dispute originates from a long-standing family and partnership
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By:PURUSHAINDRA
KUMAR KAURAV
Signed By:AMIT KUMAR
SHARMA
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property dispute which was originally the subject matter of civil suit titled as
1
Shanti Dei Jain & Ors. V. Mohini Devi Jain & Ors . Vide order dated
15.05.2014 the matter was referred to arbitration. Thereafter, vide interim
award dated 21.03.2015, directions were issued for rendition and settlement
of accounts of various partnership firms and parties were permitted to
suggest names of Chartered Accountants for carrying out the exercise.
3. Vide order dated 25.03.2019, respondent nos. 3 to 5 (Chartered
Accountants and their firm) were appointed as Local Commissioners and
were directed to undertake rendition of accounts.
4. A rendition report dated 05.09.2019 was submitted by respondent nos.
3 to 5. It is the case of the petitioner that rendition report had multiple
deficiencies. Aggrieved thereby, the petitioners filed a complaint dated
25.02.2020 before disciplinary mechanism of ICAI alleging professional
misconduct against respondent nos. 3 to 5.
5. Subsequently a prima facie opinion dated 24.06.2022 was formed by
Directorate (Discipline) ICAI concluding that respondent nos. 3 to 5 were
not guilty of professional misconduct and placed the matter before the Board
of Discipline.
6. Vide communication dated 19.10.2022 the Board of Discipline
communicated that it had concurred with the prima facie opinion dated
24.06.2022 and accordingly closed the petitioner’s complaint.
7. Mr. Robin Ratnakar David, learned counsel appearing on behalf of
respondents submits that the impugned orders do not require to elaborately
deal with the reasons. According to him, the authority has concurred with
the prima facie opinion of the Director. He, then, explains from the prima

1
CS(OS)178/1997
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facie opinion of the Director that the reasons have been adequately assigned.
8. Additionally, he also submits that in the instant case, the private
respondent, against whom the complaint is made was the Local
Commissioner appointed by the Arbitrator, whereas, the cited case relates to
statutory auditor. He, therefore, tries to draw distinction from the judgment
relied upon by the petitioner.
9. The Court has considered the submissions made by learned counsel
appearing on behalf of the parties and has perused the record. The impugned
order is extracted as under:
“Dear Sir

Sub: In the matter of Complaint made by Shri Anil Kumar Jain, Shrl
Sunil Kumar Jain and Shri Subhash Chand Jain, New Delhi. against you,
under Section 21 of the Chartered Accountants Act, 1949.

I have been directed to inform you that the above Complaint, your
Written Statement, Rejoinder of the Complainant and additional
documents on record along with the prima facie opinion formed by the
Director (Discipline) under Rule 9(1) of the Chartered Accountants
(Procedure of Investigations of Professional and Other Misconduct and
Cond.uct of Cases) Rules, 2007, were considered by the Board of
Discipline. The Board on consideration of the same, concurred with the
reasons given against the charge(s) and thus, agreed with the Prima
Facie Opinion of the Director (Discipline) that the Respondent is NOT
GUILTY of 'Professional Misconduct' falling within the meaning of Item
(5), (6),(7), (8) and (9) of Part-1 of Second Schedule to the Chartered
Accountants Act, 1949.
Accordingly, under Rule 9(3) (a), the Board ordered for closure of the
aforesaid Complaint.
The above-mentioned Complaint against you thus stands closed.”

10. Perusal of the aforesaid would transpire that except recording
concurrence with the prima facie opinion formed by the Director
(Discipline), no independent reasons, whatsoever, have been assigned by the
Board of Discipline in the impugned communication. The communication
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SHARMA
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merely reflects the ultimate conclusion arrived at by the authority without
disclosing the process of reasoning that led to such conclusion. The Court in
the case of Trideep Raj Bhandari Vs. Institute of Chartered Accountants
2
of India in paragraph no. 8 was considering a complaint filed with the
Institute of Chartered Accountants of India against the intern auditors for
company and complaint against the statutory auditor to the company. The
order for rejection in the cited case is almost similar, which has been
captured by the Court in paragraph no. 9 therein. The Court, however, in
paragraph nos. 28 to 32 of Trideep Raj Bhandari has held as under:
“28. Reading the above three provisions together, therefore, it is clear
that where the inquiry is initiated on a complaint filed under Rule 3 of
the Rules, the Complainant is entitled to receive a copy of the order
closing such inquiry against the member. „Order‟ would necessarily
include the reasons for the same. The Rules having themselves created
this right in favour of the Complainant, it cannot be accepted that the
Complainant would only be supplied with the “Information” of the
closure of the complaint.
29. Even otherwise, the duty to assign reasons is one of the essential
concomitant of the principles of natural justice. It is not the case of the
respondent that the Act or the Rules exempt the Director (Discipline) or
the Board of Discipline from recording reasons for the prima facie
opinion of the member being not guilty of any misconduct. The only
defence taken is that such reasons need not be communicated to the
Complainant. I cannot agree with the said submission. Ordinarily, the
reasons for the order ought to be communicated to the affected person.
Whenever the authority is required to record reasons for taking an
action, the Authority has to communicate the same to the concerned
party. Communication of the reasons to the affected party is essential for
the Complainant to know as to why his complaint has been rejected. It
also constitutes a safeguard against arbitrariness of the Authority. It
would also allow the Complainant to take an informed decision to accept
the decision of the Institute or, if aggrieved, to challenge the same in
accordance with law.
30. The respondents, infact, do not claim any privilege over the reasons
recorded for the prima facie finding of not guilty. Respondent’s own case
is that such reasons can be obtained by the Complainant under the Right

2
W.P.(C) 9032/2018 order dated 06.03.2020
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to Information Act, 2005 or could be produced before the Court of Law
in answer to such direction of the Court. In light of such submission, the
reluctance of the respondent to provide the reasons for its prima facie
opinion to the Complainant in the first instance itself, while
communicating the order of closure of the complaint bears no logic. It
merely results in adding further litigation and/or compliance with the
procedural formalities without serving any benefit and therefore, cannot
be accepted.
31. In Assistant Commissioner, Commercial Tax Department, Works
Contract and Leasing, Kota vs. Shukla and Brothers, (2010) 4 SCC 785,
the Supreme Court held as under:-

“….. The doctrine of audi alteram partem has three basis
essentials. Firstly, a person against whom an order is
required to be passed or whose rights are likely to be
affected adversely must be granted an opportunity of being
heard. Secondly, the authority concerned should provide a
fair and transparent procedure and lastly, the authority
concerned must apply its mind and dispose of the matter by a
reasoned or speaking order. This has been uniformly applied
by courts in India and abroad.”

32. In S.N. Mukherjee vs. Union of India, (1990) 4 SCC 594, the Supreme
Court explained the benefit of recording the reasons as under:-

“35. The decisions of this Court referred to above indicate
that with regard to the requirement to record reasons the
approach of this Court is more in line with that of the
American courts. An important consideration which has
weighed with the court for holding that an administrative
authority exercising quasi-judicial functions must record the
reasons for its decision, is that such a decision is subject to
the appellate jurisdiction of this Court under Article 136 of
the Constitution as well as the supervisory jurisdiction of the
High Courts under Article 227 of the Constitution and that
the reasons, if recorded, would enable this Court or the High
Courts to effectively exercise the appellate or supervisory
power. But this is not the sole consideration. The other
considerations which have also weighed with the Court in
taking this view are that the requirement of recording
reasons would (i) guarantee consideration by the authority;
(ii) introduce clarity in the decisions; and (iii) minimise
chances of arbitrariness in decision-making. In this regard a
distinction has been drawn between ordinary courts of law
and tribunals and authorities exercising judicial functions on
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the ground that a Judge is trained to look at things
objectively uninfluenced by considerations of policy or
expediency whereas an executive officer generally looks at
things from the standpoint of policy and expediency. 36.
Reasons, when recorded by an administrative authority in an
order passed by it while exercising quasi-judicial functions,
would no doubt facilitate the exercise of its jurisdiction by the
appellate or supervisory authority. But the other
considerations, referred to above, which have also weighed
with this Court in holding that an administrative authority
must record reasons for its decision, are of no less
significance. These considerations show that the recording of
reasons by an administrative authority serves a salutary
purpose, namely, it excludes chances of arbitrariness and
ensures a degree of fairness in the process of decision-
making. The said purpose would apply equally to all
decisions and its application cannot be confined to decisions
which are subject to appeal, revision or judicial review. In
our opinion, therefore, the requirement that reasons be
recorded should govern the decisions of an administrative
authority exercising quasi-judicial functions irrespective of
the fact whether the decision is subject to appeal, revision or
judicial review. It may, however, be added that it is not
required that the reasons should be as elaborate as in the
decision of a court of law. The extent and nature of the
reasons would depend on particular facts and circumstances.
What is necessary is that the reasons are clear and explicit so
as to indicate that the authority has given due consideration
to the points in controversy. The need for recording of
reasons is greater in a case where the order is passed at the
original stage. The appellate or revisional authority, if it
affirms such an order, need not give separate reasons if the
appellate or revisional authority agrees with the reasons
contained in the order under challenge.”

11. The Court, thus, finds that the duty to assign reasons is one of the
essential concomitants of the principle of natural justice. If the Superior
Court is called upon to examine the veracity of a decision, it would not be in
appropriate position to examine the same in absence of there being sufficient
reason.
12. For the similar reasons recorded by this Court in the case of Trideep
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Raj Bhandari , the impugned decision deserves to be set aside. The same is
accordingly set aside.
13. The matter is remitted back to the concerned authority for fresh
decision with speaking order.
14. All rights and contentions on merits of the parties are left open.
15. With the aforesaid observations, the instant petition stands disposed
of.

(PURUSHAINDRA KUMAR KAURAV)
JUDGE
MAY 19, 2026
SH/SS


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By:PURUSHAINDRA
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