Full Judgment Text
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PETITIONER:
THE COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF
Vs.
RESPONDENT:
B. MUKHERJEA
DATE OF JUDGMENT:
10/09/1957
BENCH:
GAJENDRAGADKAR, P.B.
BENCH:
GAJENDRAGADKAR, P.B.
BHAGWATI, NATWARLAL H.
DAS, S.K.
CITATION:
1958 AIR 72 1958 SCR 371
ACT:
Chartered Accountant-Misconduct during appointment as
liquidator by Court-If amounts to professional misconduct-
Reference-Power of High Court-Chartered Accountants Act,1949
(XXXVIII Of 1949), SS. 2(2), 21 and 22.
HEADNOTE:
Respondent, a chartered accountant and a member of the
Institute of Chartered Accountants, was appointed liquidator
of three insurance companies in pursuance of the orders of
the High
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372
Court. He received records, cash and securities on behalf
of these companies. The Assistant Controller of Insurance
found that his conduct as liquidator was wholly
unsatisfactory and that he would not even reply to the
letters addressed to him. His appointment was cancelled and
another person was appointed. In spite of repeated demands
he failed to return all the records, cash and securities. A
complaint was lodged against him with the Council of the
Institute of Chartered Accountants. After inquiry the
respondent was found guilty of misconduct, and the report
was forwarded by the Council to the High Court for necessary
action under S. 21 of the Chartered Accountants Act 1949.
The High Court rejected the reference on the ground that the
conduct of which the respondent was found guilty could not
be said to be professional misconduct and did not attract
the provisions of ss. 21 and 22 of the Act.
Held, that the respondent, when working as a liquidator,
must be deemed to have been in practice as a chartered
accountant within the meaning Of S. 2(2) of the Act. The
definition of misconduct in S. 22 is inclusive and the
Council may hold an inquiry and find a member guilty of
conduct which, in its opinion, renders him unfit to be a
member of the Institute, even though such conduct does not
attract any of the provisions of the schedule referred to in
S. 22. The conduct of the respondent was grossly improper
and unworthy and amounted to professional misconduct within
the meaning of the Act.
In a reference under S. 21 of the Act the High Court has
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ample powers to adopt any course which would enable it to do
complete justice between the parties. It can examine the
correctness of the findings recorded by the Council or refer
the matter back for further inquiry and call for a fresh
finding. The High Court is not bound to deal with the
merits of the finding as it has been recorded and either to
accept or reject it.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 170 of 1956.
Appeal by special leave from the judgment and order dated
the 12th January, 1955, of the Calcutta High Court in
exercise of its Special Jurisdiction under the Chartered
Accountants Act, 1949, in Matter No. 107 of 1954.
M. C. Setalvad, Attorney-General for India, S. N. Andley,
J. B. Dadachanji and Rameshwar Nath, for the
appellants.
Aswini Kumar Ghose, T. S. Venkataraman and K. R.
Chaudhury, for the respondents.
373
1957. September 10. The following Judgment of the
Court was delivered by
GAJENDRAGADKAR J.-The material facts leading to the present
appeal are not in dispute and may be conveniently stated at
the outset. On July 17, 1933, the respondent was enrolled
as a registered accountant under the Auditors Certificate
Rules, 1932. When the Chartered Accountants Act, 1949, came
into, operation, the respondent’s name was entered as a
Member of the Institute of Chartered Accountants of lndia on
July 1, 1949. On September 13, 1950, the respondent was
appointed a Liquidator of three companies. The respondent
obtained refund of the sums and securities deposited on
behalf of the three companies with the Reserve Bank of
India. He, however, made no report about the progress of
liquidation of the said three companies. Repeated requests
made to him by the Assistant Controller of Insurance found
no response. As Liquidator the respondent gave a cheque to
Shri S. K. Mandal, Solicitor to the Central Government at
Calcutta, towards payment of the taxed costs in the winding-
up proceedings of one of the companies. The said cheque
was, however, returned dishonoured on the ground that the
payment had not been arranged for. When the Assistant
Controller of Insurance found that the conduct of the
respondent as Liquidator was wholly unsatisfactory and that
he would not even show the ordinary courtesy of replying to
the letters addressed to him, he proceeded to cancel the
appointment of the respondent as Liquidator by his letter
dated October 29, 1952. The respondent was then called upon
to hand over all books of account, records, documents, etc.,
to Shri N. N. Das, who was appointed a Liquidator in his
place. Shri Das as well as the Assistant Controller of
Insurance then made repeated demands on the respondent to
deliver to Shri Das the assets and records of the three
companies. It is common ground that the respondent had with
him securities of the value of Rs. 11,950 and a cash sum of
Rs. 642 on account of the United Common
374
Provident Insurance Co. Ltd. He had also with him
securities to the value of Rs. 12,100 on account of the
-Asiatic Provident Co. Ltd., and securities and cash on
account of the Citizens of India Provident Insurance Co.
Ltd. Out of these amounts the respondent returned only
securities of the face value of Rs. 10,000 and Rs. 350 of
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Asiatic Provident Co. Ltd., and United Common Provident
Insurance Co. Ltd., respectively. He failed to send any
further securities or cash held by him on account of the
said three companies. It was at this stage that a complaint
was lodged against the respondent with the Council of the
Institute of Chartered Accountants of India in Calcutta. As
required by the provisions of the Act, the disciplinary
committee of the Council inquired into the matter. Notice
was served on the respondent but he filed no written
statements within the time fixed. On August 1, 1953, a
letter was received from the respondent that he was ill and
was unable to attend personally. The respondent had also
requested for the adjournment of the case. Proceedings were
accordingly adjourned to August 29, 1953, on which date the
respondent was represented by a counsel who filed the
respondent’s affidavit stating that he was prepared to hand
over the entire cash, books of account, etc., to the newly
appointed Liquidator without rendering the necessary
accounts. It appears that Shri Das, the subsequently
appointed Liquidator, gave evidence before the disciplinary
committee. Though several opportunities were given to the
respondent to appear before the disciplinary committee he
failed to appear or to take part in the proceedings.
Ultimately the committee made its report on September 13,
1953, and found that the respondent was guilty of gross
negligence in the conduct of his professional duty in not
handing over charge of the assets and the books of account
of the said companies to the newly appointed Liquidator.
This report was considered by the Council itself as required
by the Act. Tile Council agreed with the finding recorded
by the disciplinary committee in substance, but took the
view that the
375
acts and omissions of the respondent were more serious than
what can be described as gross negligence. The finding of
the Council was then forwarded to the High Court of
Judicature at Calcutta as required by section 21 (1) of the
Act and the matter was heard by the learned Chief Justice
and Mr. Justice Lahiri. By their judgment delivered on
January 12, 1955, the reference was rejected on the ground
that no action could be taken against the respondent under
the Act though the facts proved against the respondent
showed that " he had been guilty of grossly improper conduct
if not dishonesty". On these facts the main point which
arises for our decision is what is the nature, scope and
extent of the disciplinary jurisdiction which can be
exercised under the provisions of this Act against the
respondent.
It would now be necessary to examine the scheme of the
material provisions of the Act. This Act came into force in
1949 and it was passed, because the Legislature thought it
expedient to make provision for the regulation of
professional accountants and for that purpose it has
provided for the establishment of the Institute of Chartered
Accountants. Section 2, sub-s. (1) (b) defines a Chartered
Accountant as meaning "a person who is a member of the
Institute and who is in practice". Section 2, sub-s. (2)
provides that a member of the Institute shall be deemed to
be in practice when, individually or in partnership with
chartered accountants, he, in consideration of the
remuneration received or to be received, does any of the
acts mentioned in the following 4 sub-clauses: .........
Sub-clause (iv) is relevant for our purpose:
" S. 2 (2) (iv): " (Where a member) renders such other
services as in the opinion of the Council are or may be
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rendered by a chartered accountant, (he is deemed to be in
practice)."
Section 4 provides for the entry of names in the register of
chartered accountants. Section 5 divides the members of the
Institute into two classes designated respectively as
Associates and Fellows. Section 6 lays down that no member
of the Institute shall be
376
entitled to practise unless he has obtained from the
’Council a certificate of practice. Under s. 7, every
member of the Institute in practice shall be designated as
a chartered accountant and no person practising the
profession of accountancy in India shall use any other
designation whether in addition thereto or in substitution
therefor. Section 8 deals with disabilities. Any person
who incurs any one of the disabilities enumerated in sub-
cls. (i) to (vi) of s. 8 shall not be entitled to have his
name entered in or borne on the Register. Sub-clause (v)
deals with the disability arising by reason of conviction by
a competent court whether within or without India of an
offence involving moral turpitude and punishable with
transportation or imprisonment or of an offence not of a
technical nature committed by him in his professional
capacity unless in respect of the offence committed be has
either been granted a pardon or, on an application made by
him in this behalf, the Central Government has, by an order
in writing, removed the disability. Sub-clause (vi) deals
with the disability in cases where the chartered accountant
is found on an inquiry to be guilty of conduct which renders
him unfit to be a member of the Institute. Chapter III
deals with the constitution of the Council, the committees
of the Council and the finances of the Council. Chapter IV
deals with the register of members and the removal from the
Register of the name of a chartered accountant, as provided
by s. 20, sub-cls. (a), (b) and (c). Under s. 20, sub-s.
(2), it is provided that the Council shall remove from the
Register the name of any member who has been found by the
High Court to have been guilty of conduct which renders him
unfit to be a member of the Institute. Chapter V deals with
the question of misconduct. It consists of ss. 21 and 22.
Chapter VI deals with the constitution and functions of the
Regional Councils; chapter VII deals with penalties and
chapter VIII deals with miscellaneous matters. Section 21
deals with the procedure of enquiries relating to
misconduct of members of the Institute. It reads thus:
377
" S. 21. (1)-Where on receipt of information or on receipt
of a complaint made to it, the Council is of opinion that
any member of the Institute has been guilty of conduct
which, if proved, will render him unfit to be a member of
the Institute, or where a complaint against a member of the
Institute has been made by or on behalf of the Central
Government, the Council shall cause an inquiry to be held in
such manner as may be prescribe and the finding of the
Council shall be forwarded to the High Court.
(2)....................
(3)....................
(4)....................
Sub-sections (2), (3) and (4) of s. 21 deal with the powers
of the High Court in dealing with the reference made to it,
under s. 21, sub-s. (1). Section 22 defines misconduct. It
reads thus:
" S. 22. For the purposes of this Act, the expression
conduct which, if proved, will render a person unfit to be a
member of the Institute " shall be deemed to include any act
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or omission specified in the Schedule, but nothing in this
section shall be construed to limit or abridge in any way
the power conferred on the Council under sub-s. (1) of
section 21 to inquire into the conduct of any member of the
Institute under any other circumstances."
The learned Judges of the Calcutta High Court have held that
the conduct of which the respondent is proved to have been
guilty cannot be said to be professional misconduct properly
so-called and cannot, therefore, attract the provisions of
ss. 21 and 22 of the Act. "There, thus, seems to be no room
for contending"# observes the learned Chief Justice in his
judgment, " that misconduct not connected with the exercise
of the profession is also within the ambit of the Act,
provided it involves moral turpitude or appears to render a
person unworthy to remain a member of a responsible
profession". It has also been found by the learned Judges
that even if they were to hold that the misconduct proved
against the respondent attracted the provisions of ss. 21
and 22 of
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the Act it would not be open to them to take any action
against the respondent on that ground because the Institute
cannot expect the Court to take action in the present case
on the footing that the respondent had been guilty of
misconduct otherwise than in his professional capacity since
that is not the finding which the Council arrived at and
which is reported to the Court. It is the correctness of
these findings that is challenged before us by the learned
Attorney General. lie contends that the learned Judges of
the Calcutta High Court have put an unduly restricted and
narrow construction on the provisions of s. 21 and s. 22 in
holding that the respondent’s conduct does not amount to
professional misconduct; and he has also urged that the
technical reason given by the learned Judges in not taking
any action against the respondent even if they had accepted
the broader interpretation of the two said sections proceeds
on a misconception about the nature and extent of the powers
of the High Court while hearing references made to it under
the provisions of s. 21, sub-ss. (2), (3) and (4). In our
opinion, the contentions raised by the learned Attorney-
General are well-founded and must be upheld.
Let us first consider whether the conduct of the respondent
amounts to professional misconduct or not. In dealing with
this question it is necessary to bear in mind the provisions
of s. 2, sub-s. (2) (iv) of the Act. A member of the
Institute under this provision shall be deemed to be in
practice when he renders such other services as in the
opinion of the Council are or may be rendered by a chartered
accountant. In other words, just as a member of the
Institute Who engages himself in the practice of accountancy
is by such conduct deemed to be in practice as a chartered
accountant, so is he deemed to be in practice as a chartered
accountant when he renders other services mentioned in s. 2,
sub-s.(2) (iv). What other services attract the provisions
of this sub-section has to be determined in the light of the
regulations framed under provisions of this Act. Section 30
of the Act confers power on the Council to make regulations
by notification
379
in the Gazette of India for the purpose of carrying out the
object of the Act and it provides that a copy of such
regulation should be sent to each member of the Institute.
Section 30, sub-s. 2 sets out the several topics in respect
of which regulations can be framed though, as usual, it
provides that the enumeration of the different topics is
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without prejudice to the generality of the powers conferred
by s. 30, sub-s.(1). Sub-s. (4) lays down that,
notwithstanding anything contained in sub-ss. (1) and (2),
the Central Government may frame the first regulations for
the purposes mentioned in the section and such regulations
shall be deemed to have been made by the Council and shall
remain in force from the date of coming into force of this
Act until they are amended, altered or revoked by the
Council. Regulation 78 is one of the regulations originally
framed by the Central Government under s. 30, sub-s. (4)..
It reads thus:
" Regulation 78. Without prejudice to the discretion vested
in the Council in this behalf, a Chartered Accountant may
act as liquidator, trustee, executor, administrator,
arbitrator, receiver, adviser, or as representative for
costing financial and taxation matter or may take up an
appointment that may be made by Central or State Governments
and Courts of law or any Legal Authority, or may act as
Secretary in his professional capacity not being an
employment on a salary-cum-full time basis."
The last clause has been added by the Council by a
notification dated August 22, 1953. Now it is clear that
when the respondent accepted his appointment as liquidator
of the three companies in question he agreed to work as a
liquidator in pursuance of an order passed by the High Court
of Judicature at Calcutta and there can be no doubt that in
working as such liquidator he was rendering services which
in the opinion of the Council may be rendered by a chartered
accountant. The provisions of Regulation 78 must inevitably
be considered in the light of s. 2, sub-s.(2), cl.(iv) and
the result of considering the two provisions together
obviously is that when the respondent was working as a
liquidator in pursuance of an order passed by the Calcutta
High Court he
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380
must be deemed to be in practice within the meaning of s. 2,
sub-s.(2). We feel no difficulty in holding that chartered
accountants who render services falling within s. 2, sub-s.
(2), cl. (iv) are as much entitled to be deemed to be in
practice as those whose duties attract the provisions of
cls. (i), (ii) and (iii) of sub-s. (2). If that be the true
position it is difficult to accept the view that the conduct
of the respondent while he discharged his duties as a
liquidator is not the professional conduct of a chartered
accountant even within the narrow and restricted sense of
the term. If, while acting as liquidator, the respondent
must be deemed to be in practice as a chartered accountant,
all acts and omissions proved against him in respect of such
conduct as liquidator must be characterised as his
professional acts and omissions. "Practice" according to
Webster’s New International Dictionary means Cc exercise of
any profession or occupation " and if the performance of the
duties as liquidator attracts the provisions of s. 2, sub-s.
(2), whatever the chartered accountant does as a liquidator
must be held to be conduct attributable to him in the course
of his practice. The object with which cl. (iv) in sub-s.
(2) of s. 2 has been deliberately introduced by the
Legislature’ in our opinion, appears to be to bring within
the disciplinary Jurisdiction of the statutory bodies
recognized under the Act, conduct of chartered accountants
even while they are rendering services otherwise than as
chartered accountants properly so-called. It is because the
Legislature wanted to provide for a self-contained code of
conduct in respect of chartered accountants that the
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denotation of the expression " to be in practice " has been
in a sense deliberately and artificially extended by virtue
of s. 2, sub-s. (2), el. (iv). We must, therefore, hold
that, on the facts proved, the respondent is clearly guilty
of professional misconduct.
This would really dispose of the appeal before us, because
once it is held that the respondent is guilty of
professional misconduct it would be obviously necessary to
deal with him on that basis and make an appropriate order
under s. 21, sub-s. (3) of the Act. However,
381
since the learned Attorney-General has alternatively urged
before us that in confining the exercise of disciplinary
jurisdiction only to cases of professional misconduct,
technically so-called, the learned Judges of the Calcutta
High Court have misconstrued the relevant provisions of the
Act, we propose to deal very briefly with that question
also.
Section 21, sub-s. (1), deals with two categories of cases
in which the alleged misconduct of members of the Institute
can be inquired into. If information is received or
complaint is made to the Institute against the conduct of
any chartered accountant the Council is not bound to hold an
inquiry straightaway. The Council is required. to examine
the nature of the information or complaint made and decide
whether, if the facts alleged against the member are proved,
they would render the member unfit to be a member of the
Institute. In other words, in the case of a private
complaint made against members, it is only where the Council
is satisfied prima.facie that facts alleged against the
member, if proved, would justify the exercise of
disciplinary jurisdiction against the member that the
Council is required to hold an inquiry. The conduct alleged
must be such as, if proved, would render the member unfit to
be a member of the Institute. The other class of cases has
reference to. the complaint received by the Council from the
Central Government. In regard to this class of cases, the
Council is not required,-and indeed has no jurisdiction to
apply the primarily test-before holding an inquiry. The
Council is required to cause an inquiry to be held on such
complaint straightaway. In both the cases when the inquiry
is concluded, the findings of the Council are to be
forwarded to the High Court. Section 22 purports to define
the expression "conduct which, if proved, will render a
person unfit to be a member of the Institute". It is an
inclusive definition ; it includes any act or omission
specified in the schedule but the latter portion of s. 22
clearly lays down that nothing contained in this section
shall be construed to limit or abridge in any way the power
conferred on the Council under sub-s. (1) of s. 21. The
position thus
382
appears to be that though the definition of the Material
expression used in s. 21, sub-s. (1), refers to the acts and
omissions specified in the schedule, the list of the said
acts and omissions is not exhaustive;and, in any event, the
said list does not purport to limit the powers of the
Council under s. 21, sub-s. (1), which may otherwise flow
from the words used in the said sub-s. itself. The schedule
to which s. 22 refers has enumerated in cls. (a) to (v)
several acts and omissions and it provides that, if any of
these acts or omissions is proved against a chartered
accountant, he shall be deemed to be guilty of professional
misconduct which renders him unfit to be member of the
Institute. Clause (v) is rather general in terms since it
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provides for cases where the accountant is guilty of such
other act or omission in his professional capacity as may be
specified by the Council in this behalf by notification in
the Gazette of India. It must be conceded that the conduct
of the respondent in the present case cannot attract any of
the provisions in the schedule and may not therefore be
regarded as falling within the first part of s. 22; but if
the definition given by s. 22 itself purports to be an
inclusive definition and if the section itself in its latter
portion specifically preserves the larger powers and
jurisdiction conferred upon the Council to hold inquiries by
s. 21, sub-s. (1), it would not be right to hold that such
disciplinary jurisdiction can be invoked only in respect of
conduct falling specifically and expressly within the
inclusive definition given by s. 22. In this connection it
would be relevant to mention s. 8 which deals with
disabilities. Section 8, sub-ss. (v) and (vi), support the
argument that disciplinary jurisdiction can be exercised
against chartered accountants even in respect of conduct
which may not fall expressly within the inclusive definition
contained in s. 22. We, therefore, take the view that, if a
member of the Institute is found, prima facie, guilty of
conduct which, in the opinion of the Council, renders him
unfit to be a member of the Institute, even though such
conduct may not attract any of the provisions of the
schedule, it would still be open to the Council to hold an
inquiry against the
383
member in respect of such conduct and a finding against him
in such an inquiry would justify appropriate action. being
taken by the High Court under s. 21, sub-s. (3). It is true
that the High Court would take action against the offending
member only if the High Court accepts the finding made by
the Council and not otherwise. This conclusion is
strengthened if we bear in mind the extended meaning of the
expression "to be in practice" given in s. 2, sub-s. (2),
which we have already dealt with. In this view of the
matter we must reverse the conclusion of the learned Judges
of the Calcutta High Court that the conduct proved against
the respondent does not fall within as. 21 and 22 because it
is not conduct connected with the exercise of his profession
as a chartered accountant in the narrow sense of that term.
The next question to consider is in regard to the extent of
the jurisdiction and powers of the High Court when the High
Court deals with references under s. 21, sub-ss. (2), (3)
and (4). The learned Judges of the Calcutta High Court took
the view that even if they had agreed to put a wider
construction on the material words used in ss. 21 and 22,
they would not be justified in passing any orders against
the respondent in the present proceedings because the
finding which had been referred to the High Court was only
one and that was that the respondent was guilty of
professional misconduct in the narrow sense of the term. In
other words, the High Court thought that in accepting, and
acting or the larger construction of the material words the
High Court would be making out a new case on the reference
and the High Court would not be justified in adopting such a
course. In our opinion, this view is not well-founded.
Section 2 1, sub-s. (2), lays down the procedure to be
followed by the High Court when a finding made by the
Council is referred to it under s. 21, sub-s. (1). Notice
of the day fixed for the hearing of the reference has to be
given to the parties specified in s. 21, subs. (1) and an
opportunity of being heard has to be given to them. Section
21, sub-s. (3), then lays down that the High Court may
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either pass such final orders on the case as it thinks fit
or refer it back for further
384
inquiry by the Council and, upon receipt of the finding
after such inquiry, deal with the case in the manner
provided in sub-s. (2) and pass final orders thereon. It is
clear that, in hearing references made under s. 21, sub-s.
(1), the High Court can examine the correctness of the
findings recorded by the statutory bodies in that behalf.
The High Court can even refer the matter back for further
inquiry by the Council and call for a fresh finding. It is
not as if the High Court is bound in every case to deal with
the merits of the finding as it has been recorded and either
to accept or reject the said finding. If, in a given case,
it appears to the High Court that, on facts alleged and
proved, an alternative finding may be recorded, the High
Court ’can well send the case back to the Council with
appropriate directions in that behalf. The powers of the
High Court under s. 21, sub-s. (8), are undoubtedly wide
enough to enable the High Court to adopt any course which in
its opinion will,, enable the High Court to do complete
justice between the parties. Besides, in the present case,
no such technical considerations can really come into
operation because the material facts have not been in
dispute between the parties at any stage of the proceedings.
The only point in dispute between the parties has been
whether on the facts proved disciplinary jurisdiction can be
invoked against the respondent under the provisions of the
Act. We, therefore, take the view that the learned Judges
of the High Court were in error in holding that, even if
they had accepted the broader interpretation of s. 21 and s.
22, they could not make an appropriate order in the present
case against the respondent having regard to the specific
finding recorded by the Council in the inquiry in question.
It would now be necessary to refer to some judicial
decisions to which our attention has been invited. In G. M.
Oka, In re (1), it has been held by a Division Bench of the
Bombay High Court that, when a chartered accountant gives
evidence before a court of law and he is in the witness box
not as a chartered
(1) [1952] 22 Comp. Cas. 168.
385
accountant but as a witness, the falsity of his ,statement
does not give rise to any disciplinary proceedings against
him as a chartered accountant. If he gives false evidence
he may be guilty of perjury and if he is convicted the
conviction itself may call for disciplinary action. These
observations undoubtedly lend support to the view taken by
the Calcutta High Court. It is of course. true that the
conviction of a chartered accountant would attract the
provisions of s. 8, sub-a. (vi) and in that sense the
conclusion of the Bombay High Court that the conviction
itself may be the basis of disciplinary action is, with
respect, wholly correct; but the other observations on which
reliance is placed by the respondent before us are obiter
and it also appears from the judgment that the attention of
the learned Judges was not drawn to the provision of s. 2
(2) (iv) and other relevant considerations do not appear to
have been urged before them in that case. As the judgment
itself points out, apart from the technical points which
were urged before the court on behalf of the chartered
accountant, there was a large volume of other evidence
produced against him which conclusively proved that he was
guilty of misconduct. Mr. Ashwini Kumar Ghosh, for the
respondent, has also sought to rely on Haseldine v. Hosken
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(1). In this case the solicitor had taken out an indemnity
policy which insured him against loss arising by reason of
any neglect, omission or error while acting in his.
professional capacity. During the subsistence of this
policy, the solicitor sustained loss through having, without
realizing the fact, entered into a champertous agreement.
When the solicitor made a claim to be indemnified, it was
held that the loss in respect of which indemnity was claimed
did not arise by reason of any neglect, omission or error
committed by the solicitor in his professional capacity but
arose from his entering into a personal speculation. We do
not see how this case can assist the respondent in any way.
In considering the question as to whether the respondent has
been guilty of professional misconduct in the present case,
we are concerned with
(1) [1933] 1 K.B. 822.
386
the material provisions of the Chartered Accountants Act
itself. Observations made by the learned Judges in
Haseldine’s case can afford no assistance to us in
interpreting the said provisions. Similarly the decision in
Krishnaswamy v. The Council of the Institute of Chartered
Accountants (1) where the court was primarily concerned with
the question as to whether orders passed under s. 21 (2) of
the Act are orders passed in civil proceedings or not is
wholly inapplicable and gives us no help in deciding the
points before us.
The only question which now remains to be considered is the
final order to be passed against the respondent. The
conduct of the respondent is, in our opinion, wholl-
yunworthy of a chartered accountant in practice. His
refusal to give prompt replies to the letters received from
the Assistant Controller of Insurance followed by his
failure to return the documents and all securities and cash
received by him as liquidator leave no room for doubt that
he was unable to return the said amount and the said
securities and cash and that he was merely employing
delaying tactics with the object of postponing the evil day.
It is not conduct which is only technically improper or
unworthy; it is conduct which is grossly improper and
unworthy and as such it calls for a deterrent order. The
respondent was appointed a liquidator by the Calcutta High
Court presumably because he was a chartered accountant in
practice. He thus received the benefit of this appointment
as a result of his status as chartered accountant in
practice and in acting as a liquidator he has been guilty of
conduct which is absolutely unworthy of his status and it
renders him unfit to be a member of the Institute. We,
therefore, think that the ends of justice require that the
respondent’s name should be removed from the Register for
four years. In regard to costs we direct that the
respondent should pay the costs of the appellants in this
Court and that the parties should bear their own costs in
the court below.
Appeal allowed.
(1) A.I.R. 1953 Madras 79.
387