Holding

The Council may order a further enquiry by the Disciplinary Committee even after an initial "not guilty" report, but if the second report also records "not guilty", the Council must record a finding of no guilt.

Summary

The Institute of Chartered Accountants of India (the Council) issued a notice to Price Waterhouse for alleged professional misconduct in preparing a booklet for EXIM Bank. After a written statement, the Council referred the matter to its Disciplinary Committee, which reported a finding of "not guilty". The Council then directed a further enquiry by the Committee, which the respondent challenged in the Delhi High Court. The High Court held the Council lacked power to order a further enquiry after a "not guilty" finding. On appeal, the Supreme Court examined the interplay of Section 21 of the Chartered Accountants Act, 1949 and Regulation 16, concluding that the Council may call for a further report even after an initial "not guilty" finding, but must accept a second "not guilty" report and record a finding of no guilt. The Court also held that the Council had applied its mind to the facts. Consequently, the appeal was dismissed.

Issues considered

The scope of the Council's power under Section 21 of the Chartered Accountants Act, 1949 read with Regulation 16 to direct further enquiry after a Disciplinary Committee report of "not guilty".
Whether the Council must accept the Disciplinary Committee's "not guilty" finding and cannot order a further enquiry.
Whether the Council applied its mind to the material before directing a further enquiry.
Interpretation of the proviso to sub‑regulation (4) of Regulation 16 in relation to Section 21(2).

Legislation cited

Chartered Accountants Act, 1949s. Section 21, s. Section 30
Code of Civil Procedure, 1908

Subjects

Chartered Accountants ActDisciplinary CommitteeCouncilProfessional misconductStatutory interpretationRegulation 16Further enquiryNot guilty finding

Judgment

THE INSTITUTE OF CHARTERED ACCOUNTANTS A
OF INDIA
v.
MIS PRICE WATERHOUSE AND ANR.

JULY 11, 1997
B
[K. RAMASWAMY, S. SAGHIR AHMAD
AND G.B. PATTANAIK, JJ.]

Cha1tered Accountants Act, 1949-S-21(2) read with Regulation 16 (3)
& (4),-771e Council being empowered by Parliament and also by vi1tue of C
being the ultimate body colltrolling the conduct of its members can refer a
matter to the Disiplina1y Committee for fwther enquily even when an enquiry
has already been conducted and rep01t submitted-If on fwther enqui1y, the
report does not suppo1t action, then the Council has to give a verdict of not
guilty since it does not have any power to direct fwther enquiry-Cowicil to D
consider the explanation of the member, the evidence led and the report of
the Disciplinary Committee each independently, before coming to a con-
clusion.

Chartered Accountants Act 1949-Pmt I, First Schedule Clause (6) &
(7)-Solicitation of professional attainments. E
I11tepretatio11 of Statute~~A/l provisions aie to be read hannoniously
so as not to render any provision suplus-Unlike inte1preti11g the Constitution
where the Cowt has wider powers, if the language of a Statute is unambiguous
and clear, the Cowt cannot innovate or alter the statut01y provisions.
F
The appellant Council, on learning that the respondent had profes-
sionally helped the Exim Bank prepare a book, issued notice to them for
violating the provisions of Part I of the First Schedule to the Chartered
Accountants Act, 1949. After receipt of the written statement from the
respondent, the Council referred the matter to the Disciplinary Commit- G
tee. On the Committee submitting a report, the Council asked the Com·
mittee to conduct a further enquiry. The Respondent challenged this action
of the Council before the High Court. The High Court upheld the conten·
tion of the respondent.

In appeal to this Court, it was submitted on behalf of the appellant H
267
268 SUPREME COURT REPORTS [1997] SUPP. 2 S.C.R.

A that the High Court erred in as much as the provisions of the Act read
with the Regulation gave power to the Council to refer the matter for
further enquiry. On the other hand the respondent argued inter alia, that
the High Court was right since the Council can refer the matter to the
Committee for further enquiry only on a finding by the Committee that the
member is not guilty and this finding is not acceptable to it; that the
B Council did not apply its mind, and that the consequences are penal in
nature.

Allowing the appeal this Court, per majority (K. Ramaswamy J, for
himself and G.B. Pattanaik J)
c
HELD : 1. The Council has the power to call for further report from
the Disciplinary Committee on the non-guilt of the professional or other
misconduct of the respondent. In this backdrop, the proviso to sub-regula-
tion (4) of Regulation 16 becomes relevant. In case on the second occasion,
D the report of the Disciplinary Committee still holds the delinquent member
not guilty, there is no option left to the Council except, by operation of
proviso to sub-regulation (4) of Regulation 16 read with Section 21 (2), as
the Council is enjoined to record finding of no guilt since the power of
calling for further report would stand exhausted. Any other view, in the
Courts considered opinion, would defeat the object of the Act. A combined
E reading of the above statutory provisions would indicate that in case the
Council finds that the report of the Disciplinary Committee recording "no
guilt" is not correct or relevant material was not consid"ered by the
Disciplinary Committee, the Council has power to ca:ll further report from
the Disciplinary Committee. It is ditlicult to give acceptance to the conten-
F tion that the report of "no guilt" by the Disciplinary Committee should be "
given primacy as it would deplete lhe content of the power to maintain
discipline among the members of the Institute. The ultimate control over
conduct of members is by the Council. The Disciplinary Committee is a
fact finding body which is a body subordinate to the Council as a fact
finding authority. If its finding of guilt or non-guilt receives finality, it
G denudes the Council of the power to direct further appropriate enquiry
into the professional or other misconduct not adequately dealt with by the
Disciplinary Committee. Similarly, the Council would be disabled to exer-
cise effective vigil and supervision over the professional or other miscon-
duct of the members of the Institute. The Parliament has invested that
H power with the Council and the construction suggested allows the tail to
INSIITUTEOFCHARTEREDACCOUNrANfS v. PRICEWATERHOUSE '26')

wag while the controlling body, the Conncil lamentably look at it. Such a A
construction would be deleterious to the maintenance of discipline or the
professional conduct on the part of the members of the Institute, as the
case may be. It is true that the discipline sought to be maintained is penal
in nature; nonetheless, maintenance of discipline or professional or other
conduct of the members or associate members is salutary and paramount B
to maintain public confidence in the members of the Institute and to
inculcate sense of discipline and excellence in the performance of the
functions as member of the Institute or associate member of the Institute,
as the case may be. The contrary view would easily defeat the purpose of
the Act and object behind the regulatory measures envisaged in Section 21
of the Act. [287-E-G; 284-B-G] C
2. Regulation 16 is only an enabling provision to conduct by the
Disciplinary Committee which is a fact finding subordinate delegated body
whose finding is not conclusive on the non-guilt of the professional or other
misconduct of the member of the Institute. A combined reading of relevant
provisions of Section 21 and Regulation 16 does indicate that the recording D
of a finding of guilt or non-guilt 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 mem-
ber and the evidence adduced in the enquiry before the Disciplinary Com-
mittee and the report of the Disciplinary Committee. It provides an in-built E
mechanism under which the Council itself is required to examine the case
of professional or other misconduct of a member of the Institute or as-
sociate member, taking the aid of the report submitted by the Disciplinary
Committee, the evidence adduced before the Committee and the explana-
tion offered by the delinquent member. Entire material constitutes the
record of the proceedings before the Council to reach a finding whether or F
not the delinquent member committed professional or other misconduct.
Otherwise, the primacy accorded to the report of the Disciplinary Commit-
tee attains finality denuding the Council of the power of discipline over the
members of the Institute that would render deletarious effect on the main-
tenance of discipline among the members or associate members of the G
Institute. [284-G-H; 285-D-E]

Institute of Chartered Accountants of India v.L.K Ratna & Ors., [1986]
4 sec 537, referred to.

3. Here, it may be illustrated that the effect of giving primacy to the H
270 SUPREME COURT REPORTS [1997) SUPP. 2 S.C.R.

A finding recorded by the Disciplinary Committee is to make it conclusive.
Take for instance, where the Committee records a finding of guilt of
professional misconduct. When the matter comes before the Council and
the Council finds that the evidence adduced before the Disciplinary Com-
mittee in proof of professional or other misconduct is not established, then
the Committee will not have any power to record a finding exct!pt to call
B for a further finding from the Disciplinary Committee in that behalf which
does not appear to be warranted. If the Council reaches the conclusion
that professional or other misconduct was not proved, without calling for
any further finding, it can straightaway exonerate the delinqm:nt member
of the charge of professional or other misconduct and would drop the
C action or dismiss the complaint. On the other hand, if the finding of non
guilt recorded by the Disciplinary Committee is not consistenlt with the
evidence on record, then the Disciplinary Committee will be denuded of
the power to call for further report, obviously, rendering Regulation 16 (3)
as surplusage. [286-G-H; 287-A-C]

D 4. It is settled rule of interpretation that all the provisions would be
read together harmoniously so as to give effect to all the provisions as a
consistent whole rendering no part of the provision as surplusage. Other-
wise, by process of interpretation, a part of the provision or a clause would
be rendered otiose. Keeping this legal principles, perspectives, practical
E effect and contents of the power of the Disciplinary Committee or Council
the view expressed by the High Court is clearly incorrect and it would
defeat the object of the Act of maintaining professional standards of the
professional conduct or other conduct consistent with the dignity of the
profession of the accountants. [287-C-E]
F
5. That the Council had not applied its mind to the facts of this case
is not correct. In fact, the proceedings dated December 21, 1993, viz., "on
consideration of the report of Disciplinary Committee and your written
statement, the Council decided that further enquiry in the case was neces-
sary to be made by the Disciplinary Committee keeping in view the follow-
G ing issues" do indicate the active application of its mind and consideration
to various aspects mentioned in the questionaire based thereon and,
therefore; it is not a case of mechanical incantation of the provisions of
sub-regulation (3) of Regulation 16. [287-G-H; 288-A; G-H]

H Per S. Saghir Ahmad J. (Dissenting) :
272 SUPREME COURT REPORTS (1997] SUPP. 2S.C.R.

A delinquent employee was guilty and proceed to. inflict the appropriate
'
-~
punishment according to law.
[297-D-H; 298-A-B]
3. A further enquiry can be ordered only where the Disciplinary
Committee has initially found the member to be "guilty" and has recorded
B a finding to that effect. An order for furth~r enquiry can bt: passed only
on a consideration of the report of the Disciplinary Committee and the
representation of the member made against such report. What is implicit
in this provision is that a member to whom a copy of the finding is
furnished may have the occasion to challenge or to accept the findings. On
C copy being furnished, the Member gets an opportunity to look into the
contents of the report. He may find that the procedure adlopted by the
Disciplinary Committee was not proper and was not in consonance with
the requirements of law or principles of natural justice or that the manner
in which the evidence was scrutinised by the Committee was incorrect or
that the case required certain material evidence to be brought on record.
D In such a situation, the President, who is the Chief Executiv1: Authority of
the Council and is also the President of the Disciplinary Committee as also
other members will come to know of the grievances of the delinquent
Member through his representation. The Council may, on a 1wnsideration
of the report and the representation, feel that it was a case where further
E enquiry was to be made by the Disciplinary Committee in the light of the
various contentions raised by the delinquent Member. It will then call
upon the Disciplinary Committee to hold further enquiry and submit a
further report. On the submission of the further report by th1~ Disciplinary
Committee, the Council will take the final decision in the matter either
itself or refer the case to the High Court together with its recommenda-
F tions. This exercise is not to be undertaken where the Committee has
recorded a finding that the delinquent member was not "guilfry". (299-B-Fl

4. In the earlier Regulation, there was undoubtedly a power in the
Council· to order further enquiry even where the finding was recorded by
the Disciplinary Committee that the member was "not guilty". There was
G no distinction between the finding of "not Guilty" and finding of "guilty".
Separate procedures were not prescribed, and therefore, \'lith regard to
amended provision it could be validly said that even where a report was
submitted by the Disciplinary Committee that the member was "not guilty",
the Council could still direct further enquiry. This cannot be said in respect
H of Regulation 16 as introduced in place of Regulation 14 by an Amendment
INSTITUTEOFCHARIBREDACCOUNfANfS v. PRICEWAIBRHOUSE 273

in 1988. Here two separat~ procedures have been indicated and it has been A
provided in the Proviso appended to Regulation 16 (4) that ifthe l'eport of
the Committee was that the Member was "not guilty", the Council would
not record its findings contrary to that report. The Council is injuncted
from taking a contrary view and has to adopt the report of the Disciplinary
Committee that the Member was "not guilty". If it is held that the Council B
can still order a further enquiry even in those cases in which a finding of
"not guilty", has been recorded, it would amount to altering the provisions
of the Act and the Regulations, which are not permissible under the law.
Reading into the provisions that the Council has power to call for a further
... report even in those cases where the finding given by the Committee is that
the delinquent Member is "not guilty'', would amount to altering the terms C
of the Statue and introducing a provision which did not exist, unless it is a
case of Casus Omissus, which, admittedly, it is not. (300-C-E; 301-C-DJ

5. It is said that a Statute is an edict of Legislature. The elementary
Princi pie of interpreting or construing a Statute is to gather the Mens or D
Sententia Legis of the Legislature. The tragedy is that although in the matter
of correspondence or conversation the person who has spoken the words or
used the language can be approached for clarification, the Legislature can-
not be approached as the Legislature, after enacting a law or Act, becomes
Functus Officio as for as that particular Act is concerned and it cannot itself
interpret it. Statute being an edict of the Legislature, it is necessary that it is E
expressed in clear and unambiguous language. Where, however, the words
were clear, there is in obscurity, there is no ambiguity and the intention of the
Legislature is clearly conveyed, there is no scope for the Court to innovate or
take upon itself the task of amending or alterir 'he Statutory provisions. A
construction which requires, for its support, addition or substitution of
words or which results in rejection of words, has to be avoided, unless it is F
covered by the rule of exception, including that of necessity, which is not the
case here. Applying the above principles to the instant case and applying all
the basic principles of interpretation, including the guiding rules, the rule of
mischief, the rule of harmonious construction, the rule of internal and exter-
nal aid to construction, the rule of reading all the provisions together as also G
the rule of giving effect to a particular part of the Statute so as not to render
the other part as otiose, together with all other principles, relating to inter-
pretation of Statutes, it cannot but be said that the provisions contained in
Regulation 16 are not capable of the meaning which is being assigned to
these provisions. The decision of this Court in In~titute of Cha1tered Account-
ants Of India v. L.K Rama and Ors., [1986] 4 SCC 537 is not a judg· H
274 SUPREME COURT REPORTS [1997] SUJPP. 2 S.C.R.

A ment on the question involved in this case. It was rendered 11rior to the
amendment introduced in the Regulation in 1988.
[301·E; F-G; 302-A; C; 303-D·F]
Palace Administration Board v. RVB Thampuran and Ors., AIR (1980)
SC 1187 (1195) =
(1980] 3 SCR 187; Kirby v. Leather, (1965] 2 ALL ER
B 441; Gwalior Rayon Silk Mfg. (Wvg) Co Ltd. v. Custodian of Vested Forests
Pa/ghat & Anr., AIR (1990) SC 1747 (1752) = (1990] 2 SCIR 401; Smt.
Shyam Kishori Devi v. Patna Municipal Corporation & AllT., AIR (1966) SC
1678 (1682) = (1966] 3 SCR 466; A.R. Antulay v. Ramdas S1illivas Nayak
& Anr., (1984] 2 SCC 500 (518, 519) = (1984] 2 SCR 914; State of Kera/a
C v. Mathai Verghese & Ors., [1986] 4 SCC 746 (749) = (1987] 1 SCR 317
and Union of India & Anr., v. Deoki Nandan Aggarwal, AIR (1992) SC 96
(101) = (1991) 3 SCR 873, referred to.
Frankfurter. "Some Reflections OD the reading or statutes." Essays
on Jurisprudence from Columbia Law Review p-51; Justice G.P. Singh's
D Principles of Statutory Interpretation 6th Edn, 1996, p-15-Rderred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4600 of
1997.

From the Judgment and Order dated 12.9 .96 of the Delhi High Court
E in C.W. No. 676 of 1994.

C.S. Vaidyanathan, K.K. Jain, Ajay K. Jain, Pramod Dayal and Shashi
Bhushan for the Appellant.

P.P. Rao and N. Ganpathy for the Respondents.
F
The Judgments of the Court were delivered by

K. RAMASWAMY, J. Leave granted.

G This appeal by special leave arises from the Judgment and Order of
the High Court of Delhi, made on September 12, 1996 in Civil Writ No.
676of1994.

The Export-Import Bank of India (for short, the 'EXIM Bank')
commissioned the services of the respondent firm to assist it in the prepara-
H tion of a book entitled "India - Your Software Opportunity". The need for
INSTI11JIBOFCHARTEREDACCOUNTANTS v. PRICEWATERHOUSE (K.RAMASWAMY,J.] 275

such booklet was explained by the EXIM Bank at the inside cover of the A
• booklet which reads as under:

"The information set out in this publication, meant for general
guidance, has been complied by Price Waterhouse (India) at the
instance of the Export-Import Bank of India (EXIM BANK). B
While the booklet is not intended to be an exhaustive treatment
of the subject, the information contained is based on sources and
interpretations of applicable legal provisions believed to be reliable
for which, however, both Exim Bank and Price Waterhouse (India)
are unable to assume any liability. For further information,
clarifications and assistance, interested parties may communicate c
with Price Waterhouse offices located at :

1102/1107, Raheja Chambers, Nariman Point, Bombay - 400 021.

Telephones : 235138/2870466. Telex : (011) 5791.
D
B-102,·Himalaya House, 23, Kasturba Gandhi Marg, New Delhi -
110 001.

Telephones : 3313591/3312856. Telex : (031) 63070."

The appellant-Council had treated the said publication as amounting E
to solicitation of professional attainments, violating clauses (6) and (7) of
Part I of First Schedule to the Chartered Accountants Act, 1949 (for short,
the 'Act') and called upon the respondent by proceedings dated December
13, 1990 to send the name of the members who were answerable to the
charge of misconduct. On January 28, 1991, respondent No. 2, Shri Amal F
Ganguli, partner of the first respondent filed his written statement. On
consideration thereof, by proceedings dated 5-6th August, 1991, the Coun-
cil prime f acie opined that the second respondent was guilty of professional
and/or other misconduct and referred the case to the Disciplinary Com-
mittee for enquiry and report. The Disciplinary Committee submitted its G
report on January 16, 1993. The Disciplinary Committee sent a copy of the
report to the second respondent informing him that if he so desired, he
may send his representation against the said report within 30 days. By
further letter dated July 8, 1993, it was communicated to him that the
report of the Disciplinary Committee would be considered by the Council
in its meeting from August 5 to 7, 1993 and that he can appear in person H
276 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.

A or through a member. On August 5, 1993, he sent a letter stating that the
report of the Disciplinary Authority may be accepted. On the even date, •
the Council, after considering the report dated January 16, 1993 and the
written submissions of the second respondent dated 5.8.1993 came to the
conclusion that further enquiry was necessary and decided that the further
B enquiry should be made by the Disciplinary Committee. It was communi-
cated to him by letter dated December 21, 1993. On receipt thereof, the
from respondent on February 2, 1994, filed the above writ petition in the
High Court challenging the power of the Council to refer the matter to
Disciplinary Committee for further enquiry. The High Court in the im-
pugned judgment opined that by operation of the Regulation 16 made
C under the Act, the Council was devoid of the power to direct the Discipli-
nary Committee to hold further enquiry, Accordingly, it quashed the letter
dated December 21, 1993 and allowed the writ petition. Thus, this appeal
by special leave.

D Shri Vaidyanathan, learned senior counsel appearing for the appel-
lant, contends that the view taken by the Division Bench is not correct in
law. Section 21 of the Act read with Regulation 16(3) and (4) gives power
to the Council to direct the Disciplinary Committee, which is a fact-finding
committee, to make further enquiry and to submit a report. The power
under Section 21(2) of the Act should be used only after the Council
E reaches the conclusion that the second respondent was not guilty of profes-
sional misconduct or other misconduct. The council would take further
action only after consideration of further report to be submitted by the
Disciplinary Committee. The view of the High Court, therefore, is incor-
rect. If the view of the High Court is upheld, the primacy would be given
F to the report of the Disciplinary Committee denuding the power to the
Council to maintain discipline among the members of the Institute which
is deleterious to maintain discipline among its members. Shri P .P. Rao,
learned senior counsel appearing for the respondents, on the other hand,
contends that the provisions, being penal in nature, require to be construed
strictly. The Disciplinary Committee is a high-power committee constituted
G under the Act. If the Disciplinary Committee finds that the guilt of mis-
conduct has not been proved, the Council is left with no option but to
accept the finding of no-guilt and record the same under sub-section (2)
of Section 21. In case the finding of the Disciplinary Committee that the
member is guilty is not acceptable to the Council, only then, the Council
H has power to remit to the Disciplinary Committee for further e:nquiry and
INSTITIJTE OF CHARTERED ACCOUNTANTS v. PRICE WATERHOUSE {K. RAMASWAMY, J.J 277

the operation of Regulation 16(4) would come into play. In that perspec- A
tive, on a harmonious interpretation of all the provisions, the finding of the
high power committee, namely, the Disciplinary Committee, should always
be given primacy and serious consideration by the Council before accepting
ot calling for further report. From this perspective, the view of the High
Court is correct in law. He also contends that the Council has not applied . B
its mind to the imputation of misconduct as reflected in paragraph 10 of
the Special Leave Petition. Therefore, it has not applied its mind and
mechanically acted upon to refer to the Disciplinary Committee for further
enquiry. A reading of the publication itself does not posit of any profes-
sional misconduct or other misconduct to be dealt with under the Act.
Therefor!!, there is no case made 'out warranting interference under Article C
136 of the Constitution.

Having regard to the respective contentions, the question that arises
for consideration is; whether the view taken by the High Court is correct
in law? The High Court in the impugned judgment has held thus : D

"The scheme of Regulation 16 is clear and unambiguous that in
case of disciplinary committee concluding that a member is not
guilty, it is the end of the matter and the disciplinary proceedings
have to be dropped by the Council. In case the report of the
disciplinary committee finds the member guilty, another oppor- E
tunity is granted to the member to make representation and on
consideration of the report and the representation, if any, the
Council can cause further enquiry to be held. The finding of
misconduct is a serious matter for a member and casts a stigma
on him and, therefore, it appears that Council has been empowered F
to get a further enquiry conduct on being satisfied on the repre-
sentation of a member or otherwise even after receipt of a report
from the disciplinary committee to the effect that a member is
guilty of misconduct. There is, however, no such power when
disciplinary committee exonerates a member since. Regulation 16 G
does not permit further enquiry to be held by the disciplinary
committee when it has concluded that the member is not guilty of
any professional or other misconduct. When we compare old
Regulation 14 with the present Regulation 16, we find a clear
departure in the language of Regulation 16. Regulation 14 was
wider in its scope and ambit. Under the said Regulation it was H
278 SUPREME COURT REPORTS (1997] SUPP. 2 S.C.R.

A permissible to cause further enquiry being held even where the
~"""j
report of the disciplinary committee was that the member is not
guilty of any professional or other misconduct. Regulation 16 is
narrow in its scope and ambit when compared to the old Regula-
tion 14. The ·change in language of these two Regulation cannot
be without any purpose."
B
On that basis, it was held that the report of the Disciplinary Com-
mittee being that the respondent was not guilty of any professional miscon-
duct within the meaning of clauses (6) and (7) of Part I of the First
Schedule of the Act, the Council had no power to direct Disciplinary
c Committee to hold further enquiry. With a view to appreciate the correct-
ness of the above view, it is necessary to look into the relevant provisions
of the Act and the Regulations made thereunder.

Section 2 (b) defines 'Chartered Accountant' to mean a person who
D is a member of the Institute. Section 2(c) defines 'Council' to mean the
Council of the Institute. Under Section 2( e) 'Institute' means the Institute
to Chartered Accountants of India constituted under the Act. 'Registered
Accountant' is defined under Section 2 (h) to mean any person who has
been enrolled on the register of Accountants maintained by the Central
Government under the Auditor's Certificates Rules, 1932. A member of
E the Institute shall be deemed "to be in practice", when individually or in
partnership with Chartered Accountants in practice, he, in consideration
of remuneration received or to be received, as postulated by sub-section
(2) thereof, engages himself in the practice of accountancy or offers to
perform or performs services involving the auditing or ve:rification of
F financial transactions, books, accounts or records, or the preparation,
verification or certification of financial accounting and related statements
or holds himself out to the public as an accountant; or renders professional
services or assistance in or about matters of principle or detail relating to
accounting procedure or the recording presentation or certification of
financial facts or date or renders such other services as, in the opinion of
G the Council, are or may be rendered by a chartered accountant in practice
and the words 'to be in practice' with their grammatical variations and
cognate expressions shall be construed accordingly. The explanation is not l
relevant for the purpose, hence omitted. Section 5 deals with "Fellows and
Associates" of the Institute. Section 6 deals with certificate of practice.
H Section 7 deals with "Members to be known as Chartered Accountants".
INSTIT!ITEOFCHARTEREDA=UNTANTS v. PRICE WATERHOUSE (K.RAMASWAMY.J.j '279

Section 8 concurms "disabilities" of members. Section 9 deals with the A
"Constitution of the Council of the Institute" for the management of. the
affairs of the Institute and for discharging the functions assigned to it under
the Act, the details thereof are not relevant for the purpose of this case.
The "duration and dissolution of the Council" is dealt with under Section
14. Section 19 in Chapter IV deals with the "Register" of Members. B
Chapter V with the heading 'Misconduct' which comprise Sections 21, 22
and 22A. Section 21 is relevant for the purpose of this case which reads as
under:

"21. Procedure in inquiries relating to misconduct of members of
Institute. C
(1) Where on receipt of information by, or of a complaint made
to it, the Council is prim a f acie of opinion that any 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 Commitlee shall thereupon hold such inquiry and D
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 miscon-
duct, it shall record its finding accordingly and direct that the E
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, F
it shall record a finding accordingly and shall proceed in the
manner laid down in the succeeding sub-sections.

(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 of an opportunity of being G
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 H
280 SUPREME COURT REPORTS [1997) SUPP. 2 S.C.R.

A period, nor 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
B shall forward 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
c any such misconduct as is referred to in sub-section (4), it shall
forward the case to the High Court with its recommendations
thereon.

(6) On receipt of any case under sub-section (4) or sub-section
(5), the High Court shall fix a date for the hearing of the case and
D shall cause notice of the date so fixed to be given to the member
of the Institute concerned, the Council and to the Central Govern-
ment, and shall afford such member, the Council and the Central
Government an opportunity of being heard, and may thereafter

E
make any of the following orders, namely :-

(a) direct that the proceedings be filed, or dismiss the com·
plaint, as the case may be;
-
(b) reprimand the member;

F (c) remove him from membership of the Institute either per-
manently or for such period as the High Court thinks fit;

(d) refer the case to the Council for further inquiry and report;

(7) Where it appears to the High Court that the transfer of any
G case pending before it to another High Court will promote the
ends of justice or tend to the general convenience of the parties,
it may so transfer the case, subject to such conditions, if any, as it
things fit to impose, and the High Court to which such case is
transferred shall deal with it as if the case had been forwarded to
H it by the Council.
INSI1TUTEOFCHAR1EREDACCOUNTANTS v. PRICEWAIBRHOUSE [K.RAMASWAMY,J.J 281

Explanation I : In this section "High Court" means the highest civil A
court of appeal, not including the Supreme Court, exercising
jurisdiction in the area in which the person whose conduct is being
inquired into carried on business, or has his principal place of
business at the commencement of the inquiry :

Provided that where the case relating to two or more members of B
the Institute have to be forwarded by the Council to different High
Courts, the Central Government shall, having regard to the ends
of justice and the general convenience of the parties, determine
which of the High Courts to the exclusion of others shall hear the
cases against all the members. C
Explanation II :- For the purpose of this section "member of the
Institute" includes a person who was a member of the Institute on
the date of the alleged misconduct although he has ceased to be
a member of the Institute at the time of the inquiry.
D
(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 E
examining him on oath;

(b) the discovery and production of any document; and

( c) receiving evidence on affidavit.
F
"Professional misconduct" is defined in Section 22, which reads as
under: ·

"22. Professional misconduct defined.

For the purposes of this Act, the expression "professional G
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 the Council under sub-section (1) of Section 21 to
inquire into the conduct of any member of the Institute under any H
282 SUPREME COURT REPORTS (1997] SUPP. 2S.C.R.

A other circumstances."

The procedure to enquire into the misconduct on the part of the
members of the Institute is dealt with in Section 21. Sub- sections (1), (2),
(3), ( 4) and (5) are relevant for the purpose of this case.

B By exercise of the power under Section 30, the Council is empowered
to make Regulations to carry out the object of the Act. Sub-section (2)
postulates that in particular and without prejudice to the generality of the
foregoing power, "such regulations may provide for all or any of the
following matters". Section 30(2)(s) speaks of "the exercise of disciplinary
C powers conferred by the Act" and Section 30(2)(L) of "any other matter
which is required to be or may be prescribed under the Act". Regulation
16 whcih was amended in 1988 reads as under :

"Report of the Disciplinary Committee.

D (1) The Disciplinary Committee shall submit its report to the
Council.

(2) Where the finding of the Disciplinary Committee is that the
respondent is guilty of professional and or other misconduct, a
copy of the report of the Disciplinary Committee shall be furnished
E
to the respondent and he shall be given the opportunity of making
a representation in writing to the Council.

(3) The Council shall consider the report of the Disciplinary
Committee along-with the representation in writing of the respon-
F dent, if any, 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.

(4) The Council shall, on the consideration of the report and the
further report, if any, and the representation in writing of the
G respondent. if any, record its findings.

Provided that if the report of the Disciplinary Committee is that
the respondent is not guilty of any professional or other miscon-
duct, the Council shall not record its findings contrary to the report
H of the Disciplinary Committee.
INSTo11JTEOFCHARTEREDACCOUNTANTS "PRICE WATERHOUSE [K.RAMASWAMY,J.] 283

(5) The finding of the Council shall be communicated to the A
complaint and the respondent."

Section 21 read with Regulation 16 would indicate that where the
Council, upon receipt of information by, or of a complaint made to it, is
prim a f acie of opinion that any member of the Institute has been guilty of B
any professional or other misconduct defined under Section 22 of the Act,
it is enjoined to refer the case to the Disciplinary Committee. The Discipli-
nary Committee shall, thereupon, hold such enquiry and in such a manner
as may be prescribed and shall report the result of its enquiry to the
Council. If on receipt of such report, the Council finds that the member of
the institution is not guilty of any professional or other misconduct, it shall C
record a finding under sub-section (2) thereof and accordingly direct that
the proceedings shall be filed or complaint shall be dismissed, as the case
may be.

As seen earlier, under Regulation 16(1), it shall be the duty of the D
Disciplinary Committee to submit its report to the Council under clause
(1) thereof. In case, the finding of guilt of a member of professional
misconduct/other misconduct is reported by the Disciplinary Committee, a
copy thereof shall be furnished to the delinquent member and he shall be
given an opportunity to make representation in writing to the Council. This
would be done under sub-regulation (2) of Regulation 16. Thereon, by E
operation of sub-regulation (3), the Council shall consider the report of
the Disciplinary Committee along with the representation in writing of the
· delinquent member, if any. If on consideration thereof, the Council is of
the opinion that the further enquiry is necessary, it shall direct such further
enquiry to be made, whereupon a further report shall be submitted by the F
Disciplinary Committee. Sub-regulation (4) of Regulation 16 envisages that
the Council shall, on the consideration of the report and the further report,
if any, and the representation in writing of the respondent record its
findings. Under the proviso thereto, if the report of the Disciplinary
Committee is that the respondent is not guilty of any professional or other G
misconduct, the Council shall not record its findings contrary to the report
of the Disciplinary Committee. Sub-section (3) also envisages that 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
sub-sections, namely, sub-sections (4), (5) and (6)in awarding appropriate H
284 SUPREME COURT REPORTS [1997) SUPP. 2S.C.R.

A punishment or may refer to the High Court, under sub-section (6), for
award of higher penalties which the High Court may deal with under
sub-section (7) thereof.

A combined reading of the above statutory provisions would indicate
B that in case the Council finds that the report of the Disciplinary Committee
recording "no-guilt" is not correct or relevant material was noi: considered
by the Disciplinary Committee, the Council has the power to call further
report from the Disciplinary Committee. Though prim a f acie the arguments
of Sri P.P. Rao is attractive, on deeper probe, it is diffo~ult to give
acceptance to the contention that the report of "no-guilt" by the Discipli-
C nary Committee should be given primacy as it would deplete the content
of the power to maintain discipline among the members of the Institute.
The ultimate control over conduct of the members is by the Council. The
Disciplinary Committee is a fact-finding body which is a body subordinate
to the Council as a fact-finding authority. If its finding of guilt or non-guilt
D receives finality, it denudes the-Council of the power to direct further
appropriate enquiry into the professional or other misconduct not ade-
quately dealt with by the Disciplinary Committee. Similarly, the Council
would be disabled to exercise effective vigil and supervision over the
professional O! other misconduct of the members of the Institute. The
Parliament has invested that power with the Council and the construction
E suggested allows the tail to wag while the controlling body, the council
lamentably look at it. Such a construction would be deleterious to the
maintenance of disciplim; or the professional conduct on the part of the
members of the Institute or Associate Members of the Institute, as the case
may be. It is true that the discipline sought to be maintained is penal in
F nature; nonetheless, maintenance of discipline or professional or other
conduct of the members or associate members is salutary and paramount
to maintain public confidence in the members of the Institute and to
inculcate sense of discipline and excellence in the performance of the
functions as member of the Institute or associate member of the Institute,
as the case may be. The contrary view would easily defeat the purpose of
G the Act and the object behind the regulatory measures envisage:d in Section
21 of the Act. Regulation 16 is only an enabling provision to conduct by
the Disciplinary Committee which is a fact-finding subordinaite delegated
body whose finding is not conclusive on the non-guilt of the professional
or other misconduct of the member of the Institute. A combined reading
H of relevant provisions in Section 21 and Regulation 16 does indicate that
INSIITUTEOFCHAR1EREDACCOUNTANTS v. PRICEWA1ERHOUSE (K.RAMASWAMY,J.] 285

the recording of a finding of guilt or non-guilt by the Council is mandatory A
to take further action or to dismiss the complaint or for further process.
The Council is required to consider independently the explanation sub-
mitted by thr, member and the evidence adduced in the enquiry before the
Disciplinary Committee and the report of the Disciplinary Committee. It
provides an in-built mechanism under which the Council itself is required B
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 Commit-

- tee 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 C
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. In this behalf, it is necessary to consider D
the view of this Court prior to the amendment of the Regulations in 1988.
In !11stitute of Chaltered Accountants of India. v. L.K. Ratna and Ors., (1986)
4 SCC 537, this Court, in paragraph 11, summed up the legal position as
under:

"It is apparent that in the scheme incorporated in Section 21 of E
the Act there are separate functionaries, the Disciplinary Commit-
tee, the Council and, in certain cases, the High Court. The con-
trolling authority is the Council, which is only logical for the
Council is the governing body of the Institute. When the Council
receives information or a complaint alleging that a member of the F
Institute is guilty of misconduct, and it is prim a f acie of opinion
that there is substance in the allegations it refers the case to the
Disciplinary Committee. The Disciplinary Committee plays a sub-
ordinate role. It conducts as inquiry into the allegations. Since the
inquiry is into allegations of misconduct by the member, it posses-
ses the character of a quasi-judicial proceeding. The Disciplinary G
Committee thereafter submits a report of the result of the inquiry
to the Council. The Disciplinary Committee is merely a Committee
of the Institute with a function specifically limited by the provision
of the Act. As a subordinate body,. it reports to the Council, the
governing body. The report will contain a statement of the allega- H
286 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.

A tions, the defence entered by the member, a record of the evidence
and the conclusions upon that material. The conclusions are the
conclusions of the Committee. They are tentative only. They cannot
be regarded as 'findings'. The Disciplinary Committee is not vested
by the Act with power to render any findings. It is the Council
which is empowered to find whether the member is guilty of
B
misconduct. Both Section 21(2) and Section 21(3) are clear as to
that. If on receipt of the report the Council finds that the members
is not guilty of misconduct. Section 21(2) requires it to record its
finding accordingly, and to direct that the proceedin1~s shall be
filed or the complaint shall be dismissed. If, on the other hands, •
c the Council finds that the member is guilty of misconduct, Section
21(3) requires it to record a finding accordingly, and thereafter to
proceed in the manner laid down in the succeeding sub-sections.
So, the finding by the Council is the determinative decision as to
the guilt of the member, and because it is determinative the Act
requires it to be recorded. A responsibility so grave as the deter-
D
mination that a member is guilty of misconduct, and the recording
of that finding, has been specifically assignP.d by the Act to the
governing hody, the Council. It is also apparent that it is only upon
a finding being recorded by the Council that the Act moves forward
to the final stage of penalisation. The recording of the finding by
E the Council is the jurisdictional springboard for the penalty
proceeding which follows."

And in paragraph 13, it was held that "at this point, it is necessary
to advert to the fundamental character of the power conferred on the
p Council. The Council is empowered to find a member guilty of misconduct.
The penalty which follows is so harsh that it may result in the removal from
the Register of member for substantial number of years." In that case, the
question was : whether the delinquent member was entitled to a hearing
before the Council reached the conclusion of the guilt of professional
misconduct. In that perspective, this Court read into it the principle of
G natural justice and held that an opportunity of hearing is a facet of fair
procedure and accordingly the delinquent member was entitled to a hear-
ing before the Council, prior to the Council recorded the finding of guilt
of professional misconduct. Here, it may be illustrated that the effect of
giving primacy to the finding recorded by the Disciplinary Committee is to
H make it conclusive. Take for instance, where the Committee records a
INSTJ'IUl'EOFCHARTEREDACCOUNTANTS v. PRICl!WATllRHOUSE [K.RAMASWAMY,J.] '},f!,7

finding of guilt of professional misconduct. When the matter comes up A
before the Council and the Council finds that the evidence adduced before
the Disciplinary Committee in proof of professional or other misconduct
is not established, then the Committee will not have any power to record
a finding except to call for a further finding from the Disciplinary Commit-
tee in that behalf which does not appear to be warranted. If the Council B
reaches the conclusion that professional or other misconduct was not
proved, without calling for any further finding, .it can straightaway ex-
onerate the delinquent member of the charge of professional or other
misconduct and would drop the action or dismiss the complaint. On the
other hand, if the finding of not guilt recorded by the Disciplinary Com-
mittee is not consistent with the evidence on record, then the Disciplinary C
Committee will be denuded of the power to call for further report, obvious-
ly, rendering Regulation 16(3) as surplusage. It is settled rule of interpreta-
tion that all the provisions would be read together harmoniously so as to
give effect to all the provisions as a consistent whole rendering no part of
the provision as surplusage. Otherwise, by process of interpretation, a part D
of the provision or a clause would be rendered otiose. Keeping this legal
principles, perspectives, practical effect and contents of the power of the
Disciplinary Committee or Council in the backdrop of our above con-
sideration, we are of the considered view that the view expressed by the-
High Court is clearly incorrect and it would defeat the object of the Act
of maintaining professional standards of the professional conduct or other E
conduct consistent with the dignity of the professional of the accountants.
We, therefore, hold that the Council has the power to tall for further report
from the Disciplinary Committee on non-guilt of the professional or other
misconduct of the respondent. In this backdrop, the proviso to sub-regula-
tion (4) of Regulation 16 becomes relevant. In case, on the second oc- F
casion, the report of the Disciplinary Committee still holds the delinquent
member not guilty, there is no option left to the Council except, by
operation of proviso to sub-regulation (4) of Regulation 16 read with
Section 21(2), as the Council is enjoined, to record finding of no guilt since
the power of calling for further report would stand exhausted. Any other
view, in our considered opinion, would defeat the object of the Act. G

The contention of Shri Rao that the Council has not applied its mind
to the facts of this case is not correct. In fact, the proceeding dated
December 21, 1993, viz., "on consideration of the· report of Disciplinary
Committee and your written statement, the Council decided that further H

.J,
i
288 SUPREME COURT REPORTS [1997) SUPP. 2 S.C.R.

A enquiry in the case was necessary to be made by the Disciplinary Commit-
tee keeping in view the following issues :

1. What were the terms and details of engagement accepted by your
firm from· EXIM Bank relating to publication of booklet entitkd, "India -
Your Software Opportunity"?
B
2. Vf ere the contents of 'insertion' in the booklet containing your
firms name and address in accordance with the engagement accepted?

3. Whether you/your firm had rendered assistance, as offered in the
'insertion', to the "interested parties"?
c 4. \\'.hether you/your firm had communicated with the "interested
parties" for rendering information, clarifications and assistance?

5. Whether you/your firm's communications with the "interested
parties" were limited to providing information and clarifications on the
D matters contained in the booklet?

6. Nature of assistance provided by you/your firm to the "interested
parties"?
' ,

7.. Whether the remuneration accepted by you/your firm from the
E EXIM .Bank included the jobs of rendering information, clarifications and
assistance .to the "interested parties"?

8. Whether you/your firm had accepted remuneration from the "in-
terested parties" for rendering information, clarifications and assistance
separately?
F
· 9. Whether you/your firm had received any professional work from
the "interested parties" communicated or contracted pursuant to publica-
tion of the booklet or from their associates?

10. Whether the communications effected by you/your firm with the
G "interested parties" were either on your or your firm's letter-head? If so,
the manner and style of signing the letters."

do· indicate the active. application of its mind and consideration to various
aspects mentic:med in the questionnaire based thereon and, therdore, it is
not a case of mechanical incantation of the provisions in sub-regulation (3)
H of Regulation 16. It is true that in para 10 of the Special Leave Petition,
INS'IITUTEOFCHARTEREDACCOUNTANTS v. PRICE WATERHOUSE [S.SAGHIRAHMAD,l.J 289

"-· they have mentioned that what they are required to consider Is the report A
~d not the evidence adduced before the Disciplinary Coinmittee is only
a mistaken impression of the Council as projected, but by reason thereof,
it is difficult to conclude that the Council has not applied its mind to the
relevant facts before calling for further report.

S. SAGHIR AHMAD, J. Leave granted. 2. I have gone through the
judgment prepared by my Esteemed Brother, Hon. Ramaswamy, J., but
for the reasons which I shall shortly indicate, I am uiiable to agree with the E
interpretation placed· on Section 21 of the Chartered Accountants Act,
1949 (for short, the "Act"), as also on the Regulation 16 framed there-
under. Consequently, I do not also agree with the proposed final decision
as, in my opinion, the present Appeal is liable to be dismissed and the
judgment of the High Court has to be upheld.
F
3. The facts have been set out in the judgment prepared by Brother
Ramaswamy, J., and therefore, they need not be set out here. Since I differ
only on the question of interpretation of Section 21 read with Regulation
16, I quote those provisions hereinbelow :
G
Section 21. Procedure in inquiries relatfog to misconduct of mem-
bers of Institute.

(1) Where on receipt of information by, or of a complaint made
to it, the Council is prima facie of opinion that any member of the
Institute has been guilty of any professional or other misconduct, H
•

290 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.

A 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
B of the Institute is not guilty of any professional or other miscon-
duct, 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.

c (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 sub-sections.

(4) Where the finding is that a member of the Institute has been
D guilty of a professional misconduct specified fothe 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
E
(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 remove from
F 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 the case to the High Court with it~ recommen-
dations thereon.

(5) Where the misconduct in respect of which the Council has
G
found any member of the Institute guilty is misconduct other than
any such misconduct as is referred to in sub-section (4), it shall
forward the case to the High Court with its recommendations
thereon.

H (6) On receipt of any case under sub-section (4) or sub-section
INSITIVTllOFCHARTEREDACCOUNTANTS v. PRICEWATERHOUSE (S.SAGHIRAHMAD,J.) 291

(5), the High Court shall fix a date for the hearing of the case and A
shall tause notice of the date so fixed to be given to the member
of the I!lstitute concerned, the Council and to the Central Govern-
ment, and shall afford such member, the Council and the Central
Government an opportunity of being heard ~d may thereafter
make any of the following orders, namely :
B
(a) direct that the proceedings be filed, or dismiss the complaint,
as the case inay be;

(b) reprimand the member

(c) remove him from membership of the Institute either per- C
mane~tly or for such period as the High Court thinks fit;

(d} refer the case to the Council for further inquiry and report.

. (7) Where it appears to the High Court that the transfer of any
case pending before it to another High Court will promote the D
ends of justice or tend to the general convenience of the parties,
it may so transfer the case, subject to such conditions, if any, as it
thinks fit to impose, and the High Court to which such case is
transferred shall deal with it as if the case had been forwarded to
it by the Council.
E
Explanation I : In "this section "High Court" means the highest civil
court of appeal, not includiiig the Supreme Court, exercising
jurisdiction in the area in which the person who~e conduct is being
inquired into carries on business, or has his principal place of
business at the commencement of the inquiry;
F
Provided that where the cases relating to two or more members
of the Institute have to be forwarded by the Council to different
High Courts, the Central Government shall having regard to ~he
ends of justice and the general convenience of the parties, deter-
mine wh.ich of the High Courts to the exclusion of others shall hear G
the cases against all the members.

Explanation II : For the purposes of this section "member of the
Institute" includes a person who was a member of the Institute on
the date of the alleged misconduct although he has ceased to be
a member of the Institute at the time of the inquiry. H
292 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.

A (8) For the purposes of any inquiry under this section, the
Council and the Disciplinary Committee shall have the same
powers as arc 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
B
examining him on oath;

(b) the discovery and production of any document; and

(c) receiving evidence on affidavit."
c "Regulation 16 : Report of the Disciplinary Committee:

(1) The Disciplinary Committee shall submit its report to the
Council.

D (2) Where the findings of the Disciplinary Committee is that the
. respondent is guilty of professional and or other misconduct, a
copy of the report of the Disciplinary Committee shall be furnished
_to the respondent and he shall be given the opportun'ity of making
. a representation in writing to the Council.
E (3) The Council shall consider the report of the Disciplinary
Committee along with the representation in writing of the respon-
dent, if any, 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.
F
(4) The Council shall, on the consideration of the report and the
· further report, if any, and the representation in writing of the
' respondent, if any, record its findings.

Provided that if the report of the Disciplinary Committee. is
G that the respondent is not guilty of any professional or other
misconduct, the Council shall not record its findings contrary to
the report of the Disciplinary Committee.
\'"'· .·. -' (5) The finding of the Council shall be communicated to the
H · ~omplainant and the respondent."
'
INSITI1JIEOFCHARTEREDACCOUNTANTS v. PRICEWATERHOUSE [S.SAGHIRAHMAD,J.J 293

4. The interpretation placed by Brother Ramaswamy, J., on Section A
21 read with Regulation 16 is that where a finding of "not guilty'' is
returned by the Disciplinary Committee, the Council still has the power to
call for a further report from the Disciplinary Committee and if the
Disciplinary Committee again holds the delinquent member "not guilty'',
no option is left to the Council except to accept the findings of the B
Disciplinary Committee and record a finding of "not guilty". The only
question is whether the Council has the power to call for a further report
from the Disciplinary Committee in case it submits a report of "not guilty"
in respect of the Member against whom proceedings for misconduct, as
defined in the Act, were conducted against him.
c
5. Institute of Chartered Accountants of India (for short, the
"Institute"), is defined in Section 2( e) of the Act. Section 3 which provides
for the incorporation of the institute lays down as under :

"3. Incorporation of the Institute :
D
(1) All persons whose names are entered in the Register at the
commencement of this Act and all persons who may hereafter have
their names entered in the Register un4er the provisions of this
Act, so long as they continue to have their names borne on the
said Register, are hereby constituted a body corporate by the name E
of the Institute of Chartered Accountants of India, and all such
person shall be known as members of the Institute.

(2) The. Institute shall have perpetual succession and a common
seal and shall have power to acquire, hold and dispose of property,
both movable and immovable, and shall by its name sue or be F
sued."

6. Section 4 specifies the persons who shall be entitled to have their
names entered in the Register maintained under this Act. Section 6
provides that no Member of the Institute shall be entitled- to practice
whether in India or elsewhere, unless he has obtained from the Council, a G
certificate of practice. Section 7 provides that every Member of the In-
stitute in practice shall have the right to use the designation of "Chartered
Accountant." Section 8 specifies the disabilities for which a person shall
not be entitled to have his name entered in or borne on the Register.
Section 9 which provides for the constitution of the Council of the Institute H
294 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.

A is as under :
"9. Constitution of the Council of the Institute.

(1) There shall be a Council of the Institute for the management
of the affairs of the Institute and for discharging the functions
B assigned to it under this Act.

(2) The Council shall be composed of the following persons,
namely:

(a) not more than twenty-four persons elected by members of the
c Institute from, amongst the fellows of the Institute chosen in such
manner and from such regional constituencies as may bi: specified
in this behalf by the Central Government by notification in the
Official Gazette;

(b) six persons nominated by the Central Government.'"
D
7. Section 12 provides that the Council shall, at its first meeting, elect
two of its Members to be President and Vice-President thereof.
Sub-section (2) of Section 12 provides that the President shall be the Chief
Executive Authority of the Council.
E
8, Ftmctions of the Council have been specified in Section 15 which
include granting or refusal of certificate of practice under the Act,
maintenance and publication of a Register of persons qualified to practice
as Chartered Accountants, removal of names from the Register and the
F restoration to the Register of names which have been removed, the
regulation and maintenance of the status and standard of prnfessional
qualifications of the members and the exercise of disciplinary powers
conferred by this Act.

9. Section 17 provides as under:
G
"Committees of the Council.

(1) The Council shall constitute from amongst its members the
following Standing Committees, namely :

H (i) an Executive Committee,
INSITIUTEOFCHARTERBDACCOUNTANTS v. PRICEWATERHOUSE (S.SAGHIRAHMAD,J.J 295

(ii) an Examination Committee, and A
(iii) a Disciplinary Committee.

(2) The Council may also form such other committees from
amongst its members as it deems necessary for the purpose of
carrying out the provisions of this Act, and any committee so B
framed may, with the sanction of the Council, co-opt such other
members of the Institute not exceeding two-thirds of the members
of the committee as the committee thinks fit, and any member so
co-opted shall be entitled to exercise all the rights of a member of
the committee. c
(3) EACH OF THE STANDING COMMITTEES SHALL CON-
SIST OF THE PRESIDENT AND THE VICE PRESIDENT
EX-OFFICIO, AND THREE OTHER MEMBERS OF THE
COUNCIL ELECTED BY THE COUNCIL :
D
Provided that in the case of the Disciplinary Committee, out
of the members to be elected, two shall be elected by the Council,
and the third nominated by the Central Government from amongst
the persons nominated to the Council by the Central Government.
... (4) The President and the Vice-President of the Council shallbe E
the Chairman and Vice-Chairman respectively of each of the
Standing Committees.

(5) Every member of the Standing Committee other than the
Chairman and the Vice-Chairman shall hold office for one year
froin the date of his election, but, subject to being a member of F
the Council, he shall be eligible for re-election.

(6) The Standing Committees shall exercise such functions and be
subject to such conditions in the exercise thereof as may be
prescribed." G

- 10. Section 19 provides that the Council shall maintain a Register of
the Members of the Institute. Section 20 gives power to the Council to
remove from the Register the name of any Member of the Institute for
various reasons set out therein. The Council is required to remove from
the Register the name of any Member in respect of whom as order has H

-
296 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.

A been passed under that Act that his name be removed from the Member-
ship of the Institute.

11. Professional misconduct has been defined in Section 22. Section
21 which· has already been quoted above, indicates the procedure which
has to be adopted in enquiries relating to misconduct of Members of
B Institute: One of the punishments which can be inflicted upon a Member,
on misconduct being established, is the removal of his name from the
Membership of the In~titute. Section 30 speaks of the power of the Council
to make Regulations for various purposes, including exercise of disciplinary
powers conferred by the Act. It is in exercise of this power that Regula-
C tions, including Regulation 16 quoted above, have been made by the
Council.

12; From a perusal of these statutory provisions, it will be seen that
the Council has got three Standing Committees, including a Disciplinary
Committee. The President and Vice-President of the Council are the
D President and Vice-President of each of these Standing Committees, in-
cluding t,he Disciplinary Committee. The Disciplinary C~mmittee is, there-
fore, ·a high power Committee as the Chief Executive Authority of the
Council, namely the President, is also present in the Disciplinary Commit -
tee as its President.
E
13. 'Let me now proceed to consider the provisions of Section 21 so
far as they are relevant. for the present case in which the Disciplinary
Committee had returned a finding of "not guilty" and when the Council on •
perusal of that report called for a further report, the matter was brought
before the High Court in a Writ Petition and the High Court, by the
F impugned judgment, held that the Council had no power to call for a
further report.

14. Under Sub-section (1) of Sections 21, the Council, on receipt of
information or of a complaint made to it that any Member of the Institute
G is guilty of any professional or other misconduct, has to refer the case to
the Disciplinary Committ~e which has to hold an enquiry, in such manner
as may be prescribed, and report the result of its enquiry to the Council.

15. Sub-section (2) lays down as to what the Council would do if it
-
finds, on the receipt of the report that the Member is "guilty'' of any
H professional or other misconduct. It has, in that event, to record the finding
INSTI1VIEOFCHAR1EREDACCOUNTANTS v. PRICEWA1ERHOUS!i (S.SAGHIRAHMAD,J.( 297

that the Member is not "guilty" with the direction that the proceedings be A
filed or the complaint be dismissed.

16. Sub-section (4) and other Sub-sections specify the procedure
which is to be adopted by the Council where it finds, after receipt of the
report of the Disciplinary Committee that the. Member is "guilty'' of B
professional or other misconduct. So far as the question of "not guilty" is
concerned, the relevant provisions of the Regulation 16 made by the
Council under Section 30 of the Act may be considered. This is contained
in the proviso to Sub-Regulation (4) of Regulation 16. It reads as under :

"Provided that if the report of the Disciplinary Committee is C
that the respondent is not guilty of any professional or other
misconduct, the Council shall not record its findings contrary to
the report of the Disciplinary Committee."

17. If Sub-section (2) of Section 21 and the Proviso extracted above D,
Me read together, it will come out that if the Disciplinary Committee
submits report of "not guilty", the Council has to accept this report and
close the proceedings as the mandate of law is that the Council shall not
record its findings contrary to the report of the Disciplinary Committee.
This provision does not affect the primacy of the Council. It does not have
the effect of making the Council a body subordinate to the Disciplinary E
Committee which remains one of the Standing Committees of the Council.
Now if the President and Vice-President of the Council, who arc also the
President and Vice-President of the Disciplinary Committee, have together
with other Members of the Committee, "decided on the basis of the material
on record, that the Member against whom disciplinary proceedings were F
initiated either on the information received by the Council or on a specific
complaint made to it, that the Member is "not guilty'', the same President
and Vice-President sitting in the Council are required not to adopt a
contrary finding but to adopt the findings of the Disciplinary Committee
and close the proceedings. In view of this provision, the disciplinary
proceedings cannot be equated with the disciplinary proceedings conduct G
against Government servants where the Appointing Authority which is the
authority competent to inflict ultimate· punishment, including that of dis-
missal, usually, under the rules made under Article 309 or under executive
instructions issued by the Government, appoints an enquiry officer to hold
the disciplinary proceedings and submit a report whether or not the H
298 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.
A employee against whom such Proceedings were initiated was guilty or not
guilty. There, the authority competent to inflict punishment retains the
jurisdiction to accept or not to accept the findings of the enquiry officer.
It can ultimately differ with the finding of "not guilty'' recorded by the
enquiry officer and may give a contrary finding that the delinquent
B employee was guilty and then proceed to inflict the appropriate punish-
ment according to law.

18. Under the present Act and the Regulations made thereunder, the
Disciplinary Committee is a Committee headed by the PresideE1t of the
Council who is the Chief Executive Authority of the Council under Section
C U(2) and sits on the Disciplinary Committee along with the Vice-Presi-
dent. The highest authority of the Council, therefore, heads the Discipli-
nary Committee .as also other Standing Committees of the Council. If,
therefore, the Regulation says that where the finding of the Committee is c
that the Member is "not guilty'', the Council shall not pass any order
contrary to that finding, it is quite understandable as the Disciplinary
D Committee being headed by the Chief Executive Authority of the Council
is not expected to overrule itself.

19. Let me now proceed to consider the case where th1: finding
recorded by the Disciplinary Committee is that the Member is "Guilty'~.
E
20. Section 21(3) and (4) require that where the finding recorded by
the Disciplinary Committee is that a Member is "guilty'', the Council shall
afford to the Member an opportunity of being heard before proceeding to
inflict punishment upon that Member or referring the case to the High
F Court under Sub-section (4) or Sub-section (5). How the High Court will
proceed in the matter has been indicated in Sub-section (6) and (7) of
Section 21.

21. Regulation 16(2) provides that where the finding of the Discipli-
G nary Committee is that the Member is "guilty'', a copy of the report shall
be furnished to the Member and he shall be given an opportunity of making
a representation in writing to the Council. The Council shall then consider
the report of the Disciplinary Committee along with the representation of
the Member and if in its opinion a further enquiry is necessary, it shall
cause such further enquiry to be made whereupon a further report shall
H be submitted by the Disciplinary Committee.
INS1TIUTl!OP CHAR11!RI!DACCOUNTAN'll! v. PRICE WATERHOUSE (S. SAGHIRAHMAD, J.) 299

22. Regulation 16(4) provides that the Council, shall on the con- A
sideration of. the report and the further report, if any, and the repre-
sentation of the Member, record its findings.

23. This will show that a further enquiry can be ordered only where
the Disciplinary Committee has initially found the Member to be "guilty" B
and has recorded a finding to that effect. An order for further enquiry can
be passed only on a consideration of the report of Disciplinary Committee
and the representation of the Member made against such report. What is
implicit in this provision is that a Member to whom a copy of the finding
is furnished may have the occasion to challenge or to accept the findings.
On copy being furnished, the Member gets an opportunity to look into the C
contents of the report. He may find that the procedure adopted by the
Disciplinary Committee was not proper and was not in consonance with
the requirements of law or principles of natural justice or that the manner
in which the evidence was scrutinised by the Committee was incorrect or
that the case required certain material evidence to be brought on record.
In such a situation, the President, who is the Chief Executive Authority of D
the Council and is also the President of the Disciplinary Committee as also
other Members will come to know of the grievance of the delinquent
Member through his. representation. The Council may, on a consideration
of the report and the representation, feel that it was a case where further
enquiry was to be made by the Disciplinary Committee in the light of the E
various contentions raised by the delinquent Member. It will then call upon
the Disciplinary Committee to hold further enquiry and submit a further
report. On the submission of the further report by the Disciplinary Com-
mittee, the Council will take the final decision in the matter either itself or
refer the case to the High Court together with its recommendations. This
exercise is not to be undertaken where the Committee has recorded a F
finding that the delinquent Member was not "guilty''.

24. In order to bring out the point more effectively, I may refer to
the provisions of Regulation 14 which have since been replaced by an
amendment made in 1988 by the present Regulation. Regulation 14 is
quoted below : G

"Report of the Disciplinary Committee.

(1) The Disciplinary Committee shall submit· its report to the
Council. H
300 SUPREME COURT REPORTS (1997] SUPP. 2 S.C.R.

A (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 ~nd
B further report, if any, record its findings.

(4) The findings of the Council shall be Communicated to the
complainant and the respondent."

C 25. In the earlier Regulation, there was undoubtedly a power in the
Council to order further enquiry even where the finding was recorded by
the Disciplinary Committee that the Member was "not guilty". There was
no distinction between the finding of "not guilty" and finding of "guilty''.
Separate procedures were not prescribed and, therefor<,:, with regard to
unamended provision it could be validly said that even where a report was
D submitted by the Disciplinary Committee that the Member was "not
guilty", the Council could still direct further enquiry. This cannot be said
in respect of Regulation 16 as introduced .in place of Regulation 14 by an
amendment in 1988. Here two separate procedures have been indicated
and it has been provided in the proviso appended to Regulation 16(4) that
E if the report of the Committee was that the Member was "not guilty", the
Council would not record its findings contrary to that report. The Council
is injuncted from taking a contrary view and has to adopt the report of the
Disciplinary Committee that the Member was "not guilty''.

26. If it is held that the Council can still order a further enquiry even
F in those cases in which a finding of "not guilty'' has been recorded, it would
amount to altering the provisions of the Act and the Regulations, which is
not permissible under law.

27. Brother Ramasawamy, J., has himself indicated that:

G "The Council has the power to call for further report from the
Disciplinary Committee on non-guilt of the professional or other
misconduct of the respondent. In this backdrop the proviso to
sub-regulation (4) of Regulation 16 becomes relevant. In case, on
the second occasion, the report of the Disciplinary Committee still
H holds the delinquent member not guilty, there is no option :left to
INsrmlTEOFCHARTEREDACCOUNTANTS v. PRICEWATERHOUSE [S.SAGHIRAHMAD,l.J 301

the Council except, by operation of proviso to sub-regulation (4) A
of Reg~lation 16 read with· Section 21(2), as the Council is en-
joined, to record finding of no-guilt since the power of calling for
further report would stand exhausted. Any other view, in our
considered opinion, would defeat the object of the Act."

28. What is, therefore, indicated is that the Council has the power to
B
call for further report from the Disciplinary Committee even in those cases
where the Committee has recorded a· finding of "not guilty'', although, if
the said finding is repeated by the Disciplinary Committee in its further
report, the Council has no option but accept i\. The helplessness of the
Council has, therefore, been postponed as it allows one-time exercise to C
the Council to call for further report and thereafter to mutely accept the
finding if the findings of "not guilty" .are repeated by the Disciplinary
Committee. Why has this been done when the Statute clearly wants
immediate acceptance of the findings by the Council, is not
comprehensible. Reading into the provisions that the Council has power to D
call for a further report even in those cases where the finding given by the
Committee is that the delinquent Member is "not guilty'', would amount
to altering the terms of the Statute and introducing a provision which did
not exist, unless it is a case of casus omissus, which admittedly it is not.
E
29. It is said that a Statute is an edict of Legislature. The elementary
principal of interpreting or construing a Statute is to gather the mens or
se11te11tia legis of the Legislature.

30. Interpretation postulates the search for the· true meaning of the
words used in the Statute as a medium of expression to communicate a
F
particular thought. The task is not easy as the "language" is often
misunderstood even in ordinary conversation or correspondence. The
tragedy is that although in the matter of correspondence or conversation
t~e person who has spoken the words or used the language can be
approached for clarification, the Legislature cannot be approached as the G
Legislature, after enacting a law or Act, becomes functUs officio so far as
that particular Act is concerned and it cannot itself interpret it. No doubt,
the Legislature retains the power tci amend or repeal the law so made and
can also declare its meaning, but that can be done only by making another
law or Statute after undertaking the whole process of law-making. H
302 SUPREME COURT REPORTS [1997) SUPP. 2 S.C.R.
A 31. Statute being an edict of the Legislature, it is necessary that it is
expressed in clear and unambiguous language. In spite of Courts saying so
innumberable times, the draftsmen have paid little attention and they still
boast of the old British jingle "I am the Parliamentary draftsman. I
compose the country's laws. And of half of the litigation, I am undoubtedly
B the cause", which was referred to by this Court in Palace Administration
Board v. RVB Thampuran and Ors., AIR 1980 SC 1187 (1195) = (1980) 3
SCR 187. In Kirby v. Leather, (1%5) 2 All ER 441, the Draftsmen were
Severely criticised in regard to Section 22(2) (b) of the (UK) Limitation
Act, 1939, as it was said that the Section was so obscure that the Draftsman
must have been of unsound mind.
c
32. Where, however, the words were clear, there is no obscruity,
there is no ambiguity and the intention of the Legislature i1s clearly
conveyed, there is no scope for the Court to innovate or take upon itself
the task of amending or altering the statutory provisions. In that Situation
D the Judges should not proclaim that they are playing the role of a
law-maker merely for an exhibition of judicial valour. They have to
remember that there is a line, though thin, which separates adjudication
from legislation. That line should not be Crossed. This can be vouchsafed
by "an alert recognition of the necessity not to cross it and instinctive, as
E well as trained reluctance to do so." (See : FRANKFURTER, Some
reflections on the reading of statutes, "Essays on Jurisprudence from the
Columbia Law Review, p-51. See also : Justice G.P. Sing/J's Principles of
Statutory Interpretation 6th Edn. 1996. p-15).

33. It is true that this Court in interpreting the Constitution enjoys a
F
freedom which is not available in interpretating a Statute and, therefore, it
will be useful at this stage to reproduce what Lord Diplock said in D11port
Steels Ltd. v. Sirs and Ors., (1980) 1 All ER 529 (HL) p-551 :

"It endangers continued public confidence in the political impar·
G tiality of the judiciary, which is essential to the continuance of the
rule of law, if Judges, under the guise of interpretation,, provide
their own preferred amendments to Statutes which experience of
their operation has shown to have had consequences that members
of the court before whom the matter comes consider to be injurious
H to public interest."
INSTJTIJTEOFCHARTEREDACCOUNTAN'P.i v. PRICEWATERHOUSE (S.SAGHIRAHMAD.J.) 303·

34. Where, therefore, the "language" is clear, the intention of the A
Legislature is to be gathered from the language used. What is to be borne
in mind is as to what has been said in the Statute as also what has not been
said. A construction which requires, for its support, addition or substitution
of words or which results in rejection of words, has to be avoided, unless
it is covered by the rule of exception including that, of necessity, which is
B
not the case here, (See : Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v.
Custodian of Vested Forests Pa/ghat and Anr., AIR (1990) SC 1747 (1752)
= [1990] 2 SCR 401; Smt. Shyam Kishori Devi v. Patna Municipal Corpora-
tion and Am:, AIR (1966) SC 1678 (1682) = [1966] 3 SCR 466; A.R.
Antulay V. Ramdas S1i11ivas' Nayak and Anr., [1984] 2 sec 500 (518, 519)
= [1984] 2 SCR 914. Indeed, the Court cannot re-frame the legislation as c
it has no power to legislate. (See : State of Kera/a v. Mathai Verghese and
Ors., [1986] 4 SCC 746 (749) = [1987] 1 SCR 317 and Union of India and
Am: v. Deoki Nandan Aggarwal, AIR (1992) SC 96 (101) = [1991] 3 SCR
873).
D
35. Applying the above principles to the instant case and applying all
the basic principles of interpretation, including the guiding rules, the rule
of mischief, the rule of harmonious construction, the rule of internal and·
"
external aid to construction, the rule of reading all the provisions together
as also the rule of giving effect to a particular part of the Statute so as not
to render the other part as otiose, together with all other principles, E
relating to Interpretation of Statutes, it cannot but be said that the
provisions contained in Section 21 as also those contained in Regulation
16 are not capable of the meaning which is being assigned to those
provisions.
F
36. The decision of this Court in Institute of Chartered Accoi~nta11ts
of India v. L.K. Ratna a11d Ors., [1986] 4 SCC 537 is not a judgment on the
' question involved in this case. It was rendered prior to the amendment
introduced in the Regulation in 1988. The basic law laid down by this Court
in that case that the Council shall have primacy and that principles of
~

natural justice are applicable to the proceedings held by the Disciplinary
G
i Committee and the Council, is not disputed but that does not improve the
--;
matter and the question whether the Council had the power to call for a
-I further report or order further enquiry in a case where the Disciplinary
Committee had returned a finding of "not guilty" was not covered by that
decision, specially after amendment of the Regulation. H
304 SUPREME COURT REPORTS (1997) SUPP. 2 S.C.R.
A 37. I have already given my own interpretation and I stick to it after
having given my thoughtful consideration to the judgment prepared by
Brother Ramaswamy, J.

38. In view of the above, the appeal fails and is dismissed with costs.

B I.MA. Appeal allowed.