Passing of Final Order by Persons Who Did Not Hear Arguments Violates Principles of Natural Justice

The petitioners are Chartered Accountants who were found guilty of professional misconduct following a sting operation alleging they offered to legitimize "black money" for a commission.

The Board of Discipline (BoD) initially removed their names from the Register of Members for three months and imposed fines of ₹1,00,000 each.

Following a remand for readjudication by the Appellate Authority in 2018, the BoD passed fresh orders in 2020 maintaining the same punishment.

While four members of the Appellate Authority heard the final arguments and reserved judgment on 06.08.2023, the final impugned order dated 19.10.2023 was signed and delivered by a bench of three members, one of whom (Mr. Pankaj Tyagee) was not part of the bench that heard the arguments.

The Court applied the fundamental principle of natural justice that "he who hears must decide," as established by the Supreme Court in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation.

This principle dictates that dividing the responsibility between the person who hears and the person who decides is destructive of the concept of a judicial hearing.

The Court also relied on Automotive Tyre Manufacturers Association v. Designated Authority, which held that personal hearing becomes an empty formality if the successor of an authority records findings without hearing the parties.

The Court referred to the Delhi High Court precedent in Jindal Films India Ltd. v. Delhi Development Authority regarding the correlation between hearing and decision-making.

The Court observed that the record clearly showed four specific members concluded and reserved the matter for judgment on 06.08.2023.

However, the impugned judgment revealed that one member who heard the case (Mr. Anil Satyanarayan Bhandari) was replaced by a new member (Mr. Pankaj Tyagee) at the time of signing the order.

The Court reasoned that since Mr. Tyagee had no occasion to hear the oral arguments, his participation in the decision-making process rendered the personal hearing an "empty formality".

The Court found that such a discrepancy in the composition of the bench between the hearing and the decision stage vitiates the order and offends basic judicial procedure.

The Court declined to rule on the academic question of quorum requirements as the procedural lapse was sufficient for disposal.

The Appellate Authority was granted liberty to re-hear the petitioners and pass a fresh order in accordance with the law; the petitions were disposed of without any opinion expressed on the merits of the misconduct allegations.