D.K. AGRAWALversusCOUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

                        [2021] 7 S.C.R. 1043                            1043


                         D.K. AGRAWAL                                   A
                                 v.
       COUNCIL OF THE INSTITUTE OF CHARTERED
               ACCOUNTANTS OF INDIA
                  (Civil Appeal No. 6337 of 2021)                       B
                      SEPTEMBER 23, 2021
     [S. ABDUL NAZEER AND KRISHNA MURARI, JJ.]
       Chartered Accountants Act, 1949 – ss.9, 17, 21, 22-A –
Complaints against appellant-Chartered Accountant received by
                                                                        C
respondent-Institute – Council of the Institute prima facie opined
that the appellant was guilty of professional and/or other misconduct
– Case referred to Disciplinary Committee – Disciplinary Committee
submitted its report to the Council also opining the appellant to be
guilty of other misconduct – Report accepted by Council –
Recommendations made to High Court for removal of the appellant’s       D
name from the Register of the Members – Accepted by High Court –
On appeal, held: Observations of the Disciplinary Committee cannot
by any stretch of imagination be treated as findings – It is only the
Council which is empowered to find out whether the member is guilty
of misconduct – Power exercised by the Council u/s.21 is quasi--
                                                                        E
judicial in nature – Recording of reasons is a principle of natural
justice and every judicial/quasi--judicial order must be supported
by reasons to be recorded in writing – In the present case,
recommendations of the Council show that it did not discuss the
report of the Disciplinary Committee, written statement and oral
submissions of the appellant while coming to the conclusion that he     F
is guilty of misconduct – Recommendations were made mechanically
– High Court equally erred in accepting the said recommendations
– Recommendations passed by the Council set aside – Orders of the
High Court also set aside – Matters remitted back to the Council
for fresh consideration – Chartered Accountants Regulations, 1964
                                                                        G
– Regulations 13-15 – Principles of Natural Justice.
     Principles of Natural Justice – Recording of reasons –
Necessity of – Discussed.


                                                                        H
                                1043
1044           SUPREME COURT REPORTS                      [2021] 7 S.C.R.


 A           Allowing the appeals, the Court
              HELD:1.1 The Institute of Chartered Accountants of India
       is a statutory body created by an Act of Parliament, the Chartered
       Accountants Act, 1949. In accordance with Section 9, the
       management of the affairs of the Insitute are vested in the Central
 B     Council. The Council performs its functions through three
       different standing committees. The function of the Institute is to
       regulate the provisions of the Act and it is also empowered to
       take action against its members for any misconduct as
       contemplated in the Act and relevant regulations framed
       thereunder. Section 21 of the Act prescribes the procedure to be
 C     followed with regard to an inquiry relating to the misconduct of
       the members of the Institute. Section 22-A provides for filing of
       an appeal by a member against imposition of penalty. Regulation
       13 of the Chartered Accountants Regulations, 1964 provides for
       the procedure of an inquiry before the Disciplinary Committee.
 D     The report of the Disciplinary Committee will contain a statement
       of the allegations, the defence entered by the members, the
       recorded evidence and the conclusions expressed by the
       Disciplinary Committee. The conclusions of the Disciplinary
       Committee are tentative and the same are not recorded as
       findings. It is only the Council which is empowered to find out
 E     whether the member is guilty of misconduct. If on receipt of the
       report, the Council finds that the member is not guilty of
       misconduct, Section 21(2) requires that it shall record its finding
       accordingly and direct that the proceedings shall be filed or the
       complaint shall be dismissed. On the other hand, if the Council
 F     finds that the member is guilty of misconduct, Section 21(3)
       requires it to record a finding accordingly and to proceed in the
       manner laid down in the succeeding sub--sections. The findings
       by the Council constitute the determinative decision as to the
       guilt of the member and because it is determinative in character,
       the Act requires it to be recorded. Thus, the Council has to
 G     determine that a member is guilty of misconduct and the task of
       recording of the findings has been specifically assigned to the
       Council. Sub--section (4) of Section 21 mandates that where a
       member of the Institute has been guilty of professional
       misconduct specified in the First Schedule of the Act, the Council
 H     shall afford to such member an opportunity of being heard before
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                  1045
                 ACCOUNTANTS OF INDIA

any orders are passed against him. After recording a finding that      A
a member is guilty of misconduct, the Act moves forward to the
final stage of penalisation. [Paras 15-17][1052-D-G; 1055-D-E;
1056-E-H; 1057-A]
      Institute of Chartered Accountants of India v. L.K. Ratna
      and Ors. (1986) 4 SCC 537 : [1986] 3 SCR 1049;                   B
      Institute of Chartered Accountants of India v. Price
      Waterhouse and Ors. (1997) 6 SCC 312 : [1997] 2
      Suppl. SCR 267 – relied on.
        1.2 As per sub- section (5) of Section 21, where the Council
has found any member of the Institute to be guilty of misconduct       C
other than any such misconduct as is referred to in sub-section
(4), it is required to forward the case to the High Court with its
recommendations and, under sub-section (6) of Section 21, the
High Court has to pass the orders in accordance with sub-section
(6)(a) to (d) of Section 21 of the Act. Section 22-A provides for
appeal by a member against imposition of penalty. The power            D
exercised by the Council under Section 21 is quasi--judicial in
nature. Perusal of the recommendations of the Council shows
that it did not discuss the report of the Disciplinary Committee,
the written statement and the oral submissions of the appellant
while coming to the conclusion that he is guilty of misconduct.        E
However, the concluding portion of the recommendations of the
Council made an incorrect statement that the Council had
considered all the materials on record and the written and oral
submissions of the appellant. The observations of the Disciplinary
Committee cannot by any stretch of imagination be treated as
findings. At best, they may be termed as the material which falls      F
within the domain of consideration by the Council. The Council
has failed to give its own independent findings. The
recommendations made by the Council are not supported by
independent reasons. The recommendations have been made
mechanically by the Council. [Paras 20, 21][1059-C-G]                  G
      1.3 Recording of reasons is a principle of natural justice
and every judicial/quasi-judicial order must be supported by
reasons to be recorded in writing. It ensures transparency and
fairness in the decision-making process. The person who is
                                                                       H
1046           SUPREME COURT REPORTS                      [2021] 7 S.C.R.


 A     adversely affected wants to know as to why his submissions have
       not been accepted. Giving of reasons ensures that a hearing is
       not rendered as a meaningless charade. Unless an adjudicatory
       body is required to give reasons and make findings of fact
       indicating the evidence upon which it relied, there is no way of
       knowing whether the concerned body genuinely applied itself to
 B
       and evaluated the arguments and the evidence advanced at the
       hearing. Giving reasons is all the more necessary because it gives
       satisfaction to the party against whom a decision is taken. Justice
       should not only be done but should also be seen to be done. An
       unreasoned decision may be just, but it may not appear to be so
 C     to the person affected. A reasoned decision, on the other hand,
       will have the appearance of fairness and justice. [Para 22][1059-
       G-H; 1060-A-C]
             M/s. Woolcombers of India Ltd. v. Woolcombers Workers
             Union and Ors. (1974) 3 SCC 318 : [1974] 1 SCR
 D           504; State of West Bengal v. Atul Krishna Shaw and
             Anr. (1991) 1 Suppl. SCC 414 – relied on.
              1.4 Where the Council has found any member of the
       Institute to be guilty of misconduct, it is required under the Act
       to forward the matter to the High Court with its recommendations
 E     and the High Court has to pass final order either dismissing the
       complaint or penalizing the member of the Institute. The order
       of the Council, imposing penalty upon the member, is also
       appealable by the members aggrieved before the High Court. In
       the circumstances, it is all the more necessary that the
       recommendation/order of the Council should contain reasons for
 F     the conclusion. The High Court has equally erred in accepting
       the recommendations of the Council without applying its own logic
       to this aspect of the matter. The Council has to reconsider the
       matter afresh after granting the appellant an opportunity of being
       heard. The recommendations/order(s) passed by the Council of
 G     the Institute of Chartered Accountants of India which were the
       subject matter of the aforesaid two reference cases, are set aside.
       Consequently, the orders of the High Court impugned are also
       set aside. These matters are remitted back to the Council for
       fresh consideration and disposal in accordance with law and in
       the light of the observations made above. [Paras 25-27][1061-F-
 H     H; 1062-A-C]
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                          1047
                 ACCOUNTANTS OF INDIA

                         Case Law Reference                                    A
[1986] 3 SCR 1049                  relied on        Para 18
[1997] 2 Suppl. SCR 267            relied on        Para 19
[1974] 1 SCR 504                   relied on        Para 23
        CIVIL APPELLATE JURISDICTION: Civil Appeal No.6337 of                  B
2021.
      From the Judgment and Order dated 25.04.2017 of the High Court
of Judicature at Allahabad in Reference Against Misc. Acts No.1 of
1999.
                                                                               C
        With
        Civil Appeal Nos. 6340, 6339 And 6338 of 2021
        Anubhav Kumar, Kanhaiya Priyadarshi, Advs. for the Appellant.
     Pankaj Garg, Miling Garg, Ms. Nikita Jain Garg, Yaksh Garg,
Suvidutt M. S., Advs. for the Respondent.                                      D

        The following Order of the Court was passed
                               ORDER
        S. ABDUL NAZEER, J.
                                                                               E
        1. Leave granted.
      Civil Appeal No. 6337 of 2021 (Arising out of SLP (Civil)
No. 24350 of 2017, and Civil Appeal No. 6338 of 2021 (Arising
out of SLP (Civil) No.5652 of 2018)
       2. The appellant-D.K. Agrawal is a chartered accountant having          F
his Office as M/s, Dinesh K. Agrawal & Co., Chartered Accountants,
46-A, Madhav Kunj, Pratap Nagar, Agra. Information was received by
the Institute of Chartered Accountants of India (for short, “the Institute”)
from the Office of the Inspecting Assistant Commissioner of the Income
Tax alleging that the appellant had deposited in local treasury unit of
Income-tax Department at Agra a total sum of Rs.2514/- being the last          G
digit of amount, outstanding against the assessees. The Office of the
Inspecting Assistant Commissioner of the Income Tax further alleged
that the appellant had interpolated assessees’ copies of challans to show
higher figures and claimed the higher amount from them. The said
information was conveyed to the appellant vide Institute’s letter dated        H
1048             SUPREME COURT REPORTS                            [2021] 7 S.C.R.


 A     14.02.1980 and he was requested to send his written statement in
       response. The appellant submitted his duly verified written statement
       dated 18.10.1980. At its 96th meeting held on 20/21.07.1981, the Council
       of the Institute (for short, “the Council”)was of the prima facie opinion
       that the appellant was guilty of professional and/or other misconduct
       and accordingly referred the case to the Disciplinary Committee
 B
       constituted under the Chartered Accountants Act, 1949 (for short, “the
       Act”).
              3. The Disciplinary Committee held various meetings between
       05.10.1981 and 21/22.02.1989 for the purpose of enquiry. After hearing
       the parties, recording the evidence of the witnesses and on perusal of
 C     the documents which were produced before the Disciplinary Committee,
       the Disciplinary Committee submitted its report on 12.09.1989 to the
       Council. The Disciplinary Committee was of the view that the appellant
       had involved himself in respect of two parties, namely, M/s. United
       Pulverisers and M/s. Bharat Gas Agencies, for depositing money only to
 D     the extent of last digit and claiming from them full amount as indicated in
       the information and that the appellant was guilty of other misconduct
       under Section 22 read with Section 21 of the Act. A copy of the report of
       the Disciplinary Committee was forwarded to the appellant vide Institute’s
       letter dated 20.08.1990 and he was requested to send his written
       representation, if any, and also if he so desired, to appear before the
 E     Council on 14.09.1990 either in person and/or through a member of the
       Institute duly authorized him and to make his oral submissions. The
       appellant submitted his representation dated 05.09.1990. However, at
       the request of the appellant, that his counsel has expressed his difficulties
       to appear before the Council, the consideration of the report was
 F     postponed by the Council. Thereafter, the appellant was informed vide
       Institute’s letter dated 12.11.1990 that the report of the Disciplinary
       Committee would be considered by the Council at its meeting to the held
       from 6th to 8th December, 1990 and if he so wished, he might appeal
       before the Council either in person and/or through a member of the
       Institute duly authorized by him on 07.12.1990. The consideration of the
 G     report by the Council was adjourned at an oral request of the appellant
       and his authorized representative made at the time of meeting on the
       ground of preoccupation of the appellant’s authorized representative.
       By his letter dated 19.01.1991, the appellant requested that the report of
       Disciplinary Committee might not be placed before the Council in March
 H     1991 which was scheduled to be held at Bangalore. His request was
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                        1049
      ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

acceded to. The appellant was further informed vide Institute’s letter       A
dated 8th July, 1993 that the report of the Disciplinary Committee would
be considered by the Council at its meeting scheduled to the held from
5th to 7th August, 1993. The appellant appeared before the Council on
06.08.1993 and made his oral submissions that his counsel was out of
Delhi and in his absence, it was not possible for him to proceed with the
                                                                             B
case. He again requested for postponement of the hearing. This process
went on till the month of September 1994. On 02.09.1994 the appellant
appeared before the Council and made his oral submissions. The Council
passed the following orders:
      “On consideration of the report of the Disciplinary Committee,
      written representations and the oral submissions made by the           C
      respondent-D.K. Agrawal before the Council on 2nd September,
      1994, the Council accepted the Report of the Disciplinary
      Committee and found that the respondent was guilty of “other
      misconduct” under Section 22 read with Section 21 of the
      Chartered Accountants Act, 1949.                                       D
      The Council also decided to recommend to the High Court that
      the name of the respondent be removed from the Register of
      Members for a period of two years.”
       4. The respondent-Institute, after the lapse of about five years of
the report of the Disciplinary Committee, made a reference bearing           E
Reference No.1 of 1999 before the High Court of Judicature at Allahabad
for removal of the name of the appellant from the register of the
membership for two years. The High Court, on consideration of the
reference, confirmed the Resolution of the Council that the appellant
was guilty of “other misconduct” warranting appropriate punishment           F
and, therefore, ordered the removal of the name of the appellant from
the membership of the respondent-Institute for a period of five years.
       5. The appellant filed a review petition before the High Court for
review of the aforesaid order. The said review petition was also dismissed
by the High Court. The appellant has challenged the aforesaid two orders     G
in these appeals.
     Civil Appeal No. 6340 of 2021 (Arising out of SLP (Civil)
No.8118 of 2018) and Civil Appeal No. 6339 of 2021 (Arising out
of SLP (Civil) No.5733 of 2018)
                                                                             H
1050             SUPREME COURT REPORTS                           [2021] 7 S.C.R.


 A             6. These two appeals have also been filed by the aforesaid D.K.
       Agrawal. In these cases, the respondent-Institute received a complaint
       dated 07.02.1986 from Shri A.K. Swahney, the then Inspecting Assistant
       Commissioner of Income-tax, (Assessment), Agra, alleging that: (i) the
       appellant had been found to be indulging in acts which were unbecoming
       of a professional holding the position of Chartered Accountant and was
 B
       guilty of professional misconduct; (ii) by his unethical practice, the
       appellant had duped the exchequer and deprived it of a large chunk of
       money by way of evading taxes; (iii) by his corrupt practices, the appellant
       had also lured the personnel of Income-tax Department by giving them
       illegal gratification.
 C            7. A copy of the complaint was forwarded by the Institute to the
       appellant on 30.05.1986 asking him to submit his written statement by
       20.06.1986. In these cases as well, several rounds of correspondence
       took place between the respondent-Institute and the appellant. The matter
       was referred to the Disciplinary Committee for the purpose of an inquiry
 D     to be held on 07.03.1988. The appellant submitted several paper books
       before the Disciplinary Committee. Again, in these cases as well, the
       appellant went on taking time on one pretext or another before the
       Disciplinary Committee. The Disciplinary Committee on perusal of the
       documents produced before it, upon recording the evidence of the
       witnesses and after hearing the submission made by the complainant
 E     and the appellant, submitted its report to the Council on 12.09.1989. The
       Disciplinary Committee was of the opinion that the appellant was guilty
       of “other misconduct” under Section 21 read with Section 22 of the Act.
       A copy of the report of the Disciplinary Committee was forwarded to
       the appellant as also to the complainant vide Institute’s letter dated
 F     08.08.1991 and they were informed that the report would be considered
       by the Council at one of its forthcoming meeting and that they were
       required to send their written representations, if any, and also if they so
       desired, to appear before the Council either in person and/or through a
       member of the Institute duly authorized by them at the time of the
       consideration of the report.
 G
               8. The report of the Disciplinary Committee was fixed for
       consideration by the Council at its meeting scheduled to the held from
       5th to 7th August, 1993. At the request of the appellant, the matter was
       adjourned. The appellant went on taking time for hearing. Finally, on
       consideration of the report of the Disciplinary Committee and the written
 H
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                           1051
      ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

representations of the appellant, the Council accepted the report of the        A
Disciplinary Committee and found that the appellant guilty of “other
misconduct” under Section 21 read with Section 22 of the Act insofar as
the first two charges were concerned and he was also found guilty of
professional misconduct under Clause 10 of Part I of first schedule to
the Act in respect of the third charge. The council decided to recommend
                                                                                B
to the High Court that the name of the appellant be removed from the
Register of the Members for a period of five years. Accordingly, in
terms of Section 21(5) of the Act, the disciplinary case was forwarded
to the High Court to pass necessary orders in accordance with Section
21(6) of the Act.
        9. The High Court, by its order dated 28.09.2016 in Reference           C
No. 2 of 1999 accepted the Resolution of the Council and directed removal
of the appellant’s name from the Register of the Membership permanently.
      10. Feeling aggrieved by the aforesaid order of the High Court,
the appellant filed a review application which was dismissed by the High
Court. The appellant has challenged the validity and correctness of the         D
aforesaid Judgments and orders of the High Court in these appeals.
        11. The learned counsel appearing for the appellant has mainly
contended that the conclusion reached by the Council was on the basis
of conjectures and surmises. In fact, the appellant has filed his written
submissions objecting to the report of the Disciplinary Committee. The          E
appellant has presented his case before the Council. However, without
independently considering any of the materials placed before it, including
the written and the oral submissions made by the appellant, the Council
unilaterally accepted the report of the Disciplinary Committee and found
that that appellant was guilty of “other misconduct”. The Council had           F
failed to appreciate the materials produced by the appellant, the appellant’s
written submissions and his oral submissions made before it. In this
connection, he has drawn our attention to the report of the Council and
also Section 21 of the Act.
       12. Apart from the above, it was also argued that the opinion            G
formed by the Council was not guided by the doctrine of benefit of
doubt. The Council was under an obligation to record a finding that the
guilt of the appellant was beyond reasonable doubt which, it was argued,
is not so in the instant case. It was further argued that the High Court
ought to have accepted the submissions of the appellant and set aside
                                                                                H
1052            SUPREME COURT REPORTS                           [2021] 7 S.C.R.


 A     the recommendations, considering the fact that the recommendation of
       the Council was violative of the principles of natural justice. He has also
       attacked the report of the Disciplinary Committee which, according to
       him, was made with a pre-determined mind and that it is perverse and
       contrary to the materials placed on record.
 B             13. On the other hand, learned counsel appearing for the
       respondent-Institute has submitted that taking into consideration the
       materials on record and also the written statements and submissions of
       the appellant, the Council had come to the conclusion that the appellant
       was guilty of misconduct. The High Court has very rightly confirmed
       the recommendations of the Council and has allowed the references
 C     accordingly. There is no error in the report of the Disciplinary Committee
       or in the order of the Council. Therefore, the appellant cannot find fault
       with the judgment of the High Court. He prays for dismissal of the
       appeals.
             14. We have carefully considered the submission of the learned
 D     counsel for the parties and also perused the materials placed on record.
              15. The Institute of Chartered Accountants of India is a statutory
       body created by an Act of Parliament that is the Chartered Accountants
       Act, 1949. In accordance with Section 9 of the Act, the management of
       the affairs of the Institute are vested in the Central Council. The Council
 E     performs its function through three different standing committees
       constituted under Section 17 of the Act and various other committees.
       One of the standing committees of the Institute is the Disciplinary
       Committee. The function of the Institute is to regulate the provisions of
       the Act and it is also empowered to take action against its members for
 F     any misconduct as contemplated in the Act and relevant regulations
       framed thereunder. Section 21 of the Act prescribes the procedure to be
       followed with regard to an inquiry relating to the misconduct of the
       members of the Institute. Section 22-A provides for filing of an appeal
       by a member against imposition of penalty. The Act was amended on
       08.08.2006 by Act 9 of 2006. However, since the alleged misconduct
 G     relates to the year 1978, we are concerned with the unamended Sections
       21 and 22-A which are as under:
             “21. Procedure in inquiries relating to misconduct of members
             of Institute:

 H
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                  1053
      ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

    “(1) Where on receipt of information by, or of a complaint         A
    made to it, the Council if prima facie of opinion that an 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 Committee shall thereupon
    hold such inquiry and in such manner as may be prescribed,
                                                                       B
    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 misconduct, 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.                                                          D
    (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 an
    opportunity of being heard before orders are passed against
    him on the case, and may thereafter make any of the following      E
    orders, namely :
    (a) reprimand the member;
    (b) remove the name of the member from the Register for such
    period, not exceeding five years, as the Council thinks fit:
                                                                       F
    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 shall forward the case to the High Court
    with its recommendations thereon.                                  G
    (5) Where the misconduct in respect of which the Council has
    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
1054      SUPREME COURT REPORTS                           [2021] 7 S.C.R.


 A     (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 shall cause notice of the date so fixed to be given to
       the member of the Institute concerned, the Council and to the
       Central Government, and shall afford such member, the
       Council and the Central Government an opportunity of being
 B
       heard, and may thereafter make any of the following orders,
       namely:
       (a) direct that the proceedings be filed, or dismiss the
       complaint, as the case may be;
 C     (b) reprimand the member;
       (c) remove him from membership of the Institute either
       permanently or for such period as the High Court thinks fit;
       (d) refer the case to the Council for further inquiry and report.
       (7)       xxx                       xxx                        xxx
 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
 E
       and examining him on oath;
       (b) the discovery and production of any document; and
       (c) receiving evidence on affidavit.”
       “22-A. Appeals :- (1) Any member of the Institute aggrieved by
 F     any order of the Council imposing on him any of the penalties
       referred to in sub-section (4) of section 21, may, within thirty days
       of the date on which the order is communicated to him, prefer an
       appeal to the High Court:
               PROVIDED that the High Court may entertain any such
 G     appeal after the expiry of the said period of thirty days, if it is
       satisfied that the member was prevented by sufficient cause from
       filing the appeal in time.
       (2) The High Court may, on its own motion or otherwise, after
       calling for the records of any case, revise any order made by the
 H
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                            1055
      ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

      Council under sub-section (2) or sub-section (4) of section 21 and         A
      may-
         (a) confirm, modify or set aside the order;
         (b) impose any penalty or set aside, reduce, confirm, or enhance
         the penalty imposed by the order;
                                                                                 B
         (c) remit the case to the council for such further inquiry as the
         High Court considers proper in the circumstances of the case;
         or
         (d) pass such other order as the High Court thinks fit:
               PROVIDED that no order of the Council shall be                    C
         modified or set aside unless the Council has been given an
         opportunity of being heard and no order imposing or enhancing
         a penalty shall be passed unless the person concerned has also
         been given an opportunity of being heard.”
       16. Regulation 13 of the Chartered Accountants Regulations, 1964          D
(for short “Regulation”) provides for the procedure of an inquiry before
the Disciplinary Committee. Regulations 14 and 15 which are relevant
for the purpose of this case are as under:
      “14. Report of the Disciplinary Committee
      (1) The Disciplinary committee shall submit its report to the              E
      Council.
      (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.                   F

      (3) The Council shall, on the consideration of the report and the
      further report, if any, record its findings.
      (4) If the finding is that there is no case for passing one of the
      orders specified in clauses (a) or (b) of sub-section (4) of section,      G
      the complainant and the respondent shall be informed accordingly.
      15. Procedure in a hearing before the Council.
      (1) If the Council, in view of its findings, is of opinion that there is
      a case for passing one of the orders specified in clauses (a) or (b)
      of sub-section (4) of Section 21, is shall—                                H
1056             SUPREME COURT REPORTS                            [2021] 7 S.C.R.


 A               (a) furnish to the respondent a copy of the report of the
                 Disciplinary Committee and a copy of its findings: and
                 (b) give him a notice indicating the order proposed to be passed
                 against him and calling upon him to appear before it on a
                 specified date or if he does not wish to be heard in person, to
 B               send within a specified time, such representation in writing as
                 he may wish to make against the proposed order.
             (2) The scope of the hearing or of the representation in writing, as
             the case may be, shall be restricted to the order proposed to be
             passed.
 C           (3) The Council shall, after hearing the respondent, if he appears
             in person, or after considering the representation, if any, made by
             him, pass such orders as it may think fit.
             (4) The orders passed by the Council shall be communicated to
             the complainant and the respondent.”
 D
               17. It is clear from the above provisions that the report of the
       Disciplinary Committee will contain a statement of the allegations, the
       defence entered by the members, the recorded evidence and the
       conclusions expressed by the Disciplinary Committee. The conclusions
       of the Disciplinary Committee are tentative and the same are not recorded
 E     as findings. It is only the Council which is empowered to find out whether
       the member is guilty of misconduct. If on receipt of the report, the Council
       finds that the member is not guilty of misconduct, Section 21(2) requires
       that it shall record its finding accordingly and direct that the proceedings
       shall be filed or the complaint shall be dismissed. On the other hand, if
 F     the Council finds that the member is guilty of misconduct, Section 21(3)
       requires it to record a finding accordingly and to proceed in the manner
       laid down in the succeeding sub-sections. The findings by the Council
       constitute the determinative decision as to the guilt of the member and
       because it is determinative in character, the Act requires it to be recorded.
       Thus, the Council has to determine that a member is guilty of misconduct
 G     and the task of recording of the findings has been specifically assigned
       to the Council. Sub-section (4) of Section 21 mandates that where a
       member of the Institute has been guilty of professional misconduct
       specified in the First Schedule of the Act, the Council shall afford to
       such member an opportunity of being heard before any orders are passed
       against him. After recording a finding that a member is guilty of
 H
    D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                        1057
          ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

misconduct, the Act moves forward to the final stage of penalisation.            A
The recording of the finding by the Council is the jurisdictional springboard
for the penalty proceedings which follow.
     18. In Institute of Chartered Accountants of India v. L.K. Ratna
and Ors.1 this Court considered the duties of the Council as under :
         “12. Now when it enters upon the task of finding whether the            B
         member is guilty of misconduct, the Council considers the report
         submitted by the Disciplinary Committee. The report constitutes
         the material to be considered by the Council. The Council will
         take into regard the allegations against the member, his case in
         defence, the recorded evidence and the conclusions expressed            C
         by the Disciplinary Committee. Although the member has
         participated in the inquiry, he has had no opportunity to demonstrate
         the fallibility of the conclusions of the Disciplinary Committee. It
         is material which falls within the domain of consideration by the
         Council. It should also be open to the member, we think, to point
         out to the Council any error in the procedure adopted by the            D
         Disciplinary Committee which could have resulted in vitiating the
         inquiry. Section 21(8) arms the Council with power to record oral
         and documentary evidence, and it is precisely to take account of
         that eventuality and to repair the error that this power seems to
         have been conferred. It cannot, therefore, be denied that even          E
         though the member has participated in the inquiry before the
         Disciplinary Committee, there is a range of consideration by the
         Council on which he has not been heard. He is clearly entitled to
         an opportunity of hearing before the Council finds him guilty of
         misconduct.
                                                                                 F
         13. At this point it is necessary to advert to the fundamental
         character of the power conferred on the Council. The Council is
         empowered to find a member guilty of misconduct. The penalty
         which follows is so harsh that it may result in his removal from
         the Register of Members for a substantial number of years. The
         removal of his name from the Register deprives him of the right         G
         to a certificate of practice. As is clear from Section 6(1) of the
         Act, he cannot practice without such certificate. In the
         circumstances there is every reason to presume in favour of an
         opportunity to the member of being heard by the Council before it
1
    1986 4 SCC 537                                                               H
1058                SUPREME COURT REPORTS                         [2021] 7 S.C.R.


 A              proceeds to pronounce upon his guilt. As we have seen, the finding
                by the Council operates with finality in the proceeding, and it
                constitutes the foundation for the penalty imposed by the Council
                on him. We consider it significant that the power to find and record
                whether a member is guilty of misconduct has been specifically
                entrusted by the Act to the entire Council itself and not to a few
 B
                of its members who constitute the Disciplinary Committee. It is
                the character and complexion of the proceeding considered in
                conjunction with the structure of power constituted by the Act
                which leads us to the conclusion that the member is entitledto a
                hearing by the Council before it can find him guilty. Upon the
 C              approach which has found favour with us, we find no relevance
                in James Edward Jeffs v. New Zealand Dairy Production and
                Marketing Board – (1967) 1 AC 551 cited on behalf of the
                appellant. The Court made observations there of a general nature
                and indicated the circumstances when evidence could be recorded
                and submissions of the parties heard by a person other than the
 D
                decision-making authority. Those observations can have no play
                in a power structure such as the one before us.”
              19. Similarly, in Institute of Chartered Accountants of India v.
       Price Waterhouse and Ors. 2 it was held by this Court that the
       Disciplinary Committee is a fact-finding body which is subordinate to
 E     the Council as a fact-finding Authority. After analysing Section 21 and
       Regulation 15, this Court held that the Council is required to independently
       consider the explanation submitted by the member and the evidence
       adduced in the inquiry before the Disciplinary Committee and the report
       of the Committee. It was held thus:
 F              “14.…A combined reading of relevant provisions in Section
                21 and Regulation 16 does indicate that the recording 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
 G              the explanation submitted by the 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 to
                examine the case of professional or other misconduct of a
       2
 H         (1997) 6 SCC 312
D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                         1059
      ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

      member of the Institute or associate member, taking the aid of          A
      the report submitted by the Disciplinary Committee, the
      evidence adduced before the Committee 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
                                                                              B
      professional or 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.”                                 C
       20. It is also necessary to notice yet another aspect. As per sub-
section (5) of Section 21, where the Council has found any member of
the Institute to be guilty of misconduct other than any such misconduct
as is referred to in sub-section (4), it is required to forward the case to
the High Court with its recommendations and, under sub-section (6) of         D
Section 21, the High Court has to pass the orders in accordance with
sub-section (6)(a) to (d) of Section 21 of the Act. Section 22-A provides
for appeal by a member against imposition of penalty.
       21. Needless to say that, the power exercised by the Council
under Section 21 is quasi-judicial in nature. Perusal of the                  E
recommendations of the Council shows that it did not discuss the report
of the Disciplinary Committee, the written statement and the oral
submissions of the appellant while coming to the conclusion that he is
guilty of misconduct. However, the concluding portion of the
recommendations of the Council made an incorrect statement that the
Council had considered all the materials on record and the written and        F
oral submissions of the appellant. The observations of the Disciplinary
Committee cannot by any stretch of imagination be treated as findings.
At best, they may be termed as the material which falls within the domain
of consideration by the Council. The Council has failed to give its own
independent findings. The recommendations made by the Council are             G
not supported by independent reasons. The recommendations, in our
opinion, have been made mechanically by the Council.
       22. Recording of reasons is a principle of natural justice and every
judicial/quasi-judicial order must be supported by reasons to be recorded
in writing. It ensures transparency and fairness in the decision-making       H
1060                SUPREME COURT REPORTS                             [2021] 7 S.C.R.


 A     process. The person who is adversely affected wants to know as to
       why his submissions have not been accepted. Giving of reasons ensures
       that a hearing is not rendered as a meaningless charade. Unless an
       adjudicatory body is required to give reasons and make findings of fact
       indicating the evidence upon which it relied, there is no way of knowing
       whether the concerned body genuinely applied itself to and evaluated
 B
       the arguments and the evidence advanced at the hearing. Giving reasons
       is all the more necessary because it gives satisfaction to the party against
       whom a decision is taken. It is a well-known principle that justice should
       not only be done but should also be seen to be done. An unreasoned
       decision may be just, but it may not appear to be so to the person affected.
 C     A reasoned decision, on the other hand, will have the appearance of
       fairness and justice.
             23. In M/s. Woolcombers of India Ltd. v. Woolcombers Workers
       Union and Ors.3, while dealing with an award of an Industrial Tribunal,
       this Court found that the award stated only the conclusions and did not
 D     providing the supporting reasons. The matter was remitted back to the
       Tribunal to record fresh findings and it was observed that providing reasons
       in support of the conclusion is essential. The reasoning has been
       enumerated below:
                “5. …The giving of reasons in support of their conclusions by
 E              judicial and quasi-judicial authorities when exercising initial
                jurisdiction is essential for various reasons. First, it is calculated to
                prevent unconscious unfairness or arbitrariness in reaching the
                conclusions. The very search for reasons will put the authority on
                the alert and minimise the chances of unconscious infiltration of
                personal bias or unfairness in the conclusion. The authority will
 F              adduce reasons which will be regarded as fair and legitimate by a
                reasonable man and will discard irrelevant or extraneous
                considerations. Second, it is a well-known principle that justice
                should not only be done but should also appear to be done.
                Unreasoned conclusions may be just but they may not appear to
 G              be just to those who read them. Reasons conclusions, on the other
                hand, will have also the appearance of justice. Third, it should be
                remembered that an appeal generally lies from the decisions of
                judicial and quasi-judicial authorities to this Court by special leave
                granted under Article 136. A judgment which does not disclose

 H     3
           (1974) 3 SCC 318
    D.K. AGRAWAL v. COUNCIL OF THE INSTITUTE OF CHARTERED                          1061
          ACCOUNTANTS OF INDIA [S. ABDUL NAZEER, J.]

         the reasons, will be of little assistance to the Court. The Court will    A
         have to wade through the entire record and find for itself whether
         the decision in appeal is right or wrong. In many cases this
         investment of time and industry will be saved if reasons are given
         in support of the conclusions. So it is necessary to emphasise that
         judicial and quasi-judicial authorities should always give reasons
                                                                                   B
         in support of their conclusions.”
      24. Further, this Court in State of West Bengal v. Atul Krishna
Shaw and Anr.4 has held that failure to give reasons does not instill
public confidence in the correctness of the decisions rendered by the
adjudicatory bodies. It was held thus:
                                                                                   C
         “7. ……it is indisputably true that it is a quasi-judicial proceeding.
         If the appellate authority had appreciated the evidence on record
         and recorded the findings of fact, those findings are binding on
         this Court or the High Court. By process of judicial review, we
         cannot appreciate the evidence and record our own findings of
         fact. If the findings are based on no evidence or based on                D
         conjectures or surmises and no reasonable man would, on given
         facts and circumstances, come to the conclusion reached by the
         appellate authority on the basis of the evidence on record, certainly
         this Court would oversee whether the findings recorded by the
         appellate authority is based on no evidence or beset with surmises        E
         or conjectures. Giving of reasons is an essential element of
         administration of justice. A right to reason is, therefore, an
         indispensable part of sound system of judicial review. Reasoned
         decision is not only for the purpose of showing that the citizen is
         receiving justice, but also a valid discipline for the Tribunal itself.
         Therefore, statement of reasons is one of the essentials of justice.”     F

       25. As noticed above, where the Council has found any member
of the Institute to be guilty of misconduct, it is required under the Act to
forward the matter to the High Court with its recommendations and the
High Court has to pass final order either dismissing the complaint or
penalizing the member of the Institute. The order of the Council, imposing         G
penalty upon the member, is also appealable by the members aggrieved
before the High Court. In the circumstances, it is all the more necessary
that the recommendation/order of the Council should contain reasons
for the conclusion.
4
    (1991) Supp (1) SCC 414                                                        H
1062             SUPREME COURT REPORTS                           [2021] 7 S.C.R.


 A            26. We are of the view that the High Court has equally erred in
       accepting the recommendations of the Council without applying its own
       logic to this aspect of the matter. We are also of the view that the Council
       has to reconsider the matter afresh after granting the appellant an
       opportunity of being heard. Having regard to the above, we do not
       propose to consider the other contentions of the parties.
 B
              27. Resultantly, the recommendations/order(s) passed by the
       Council of the Institute of Chartered Accountants of India which were
       the subject matter of the aforesaid two reference cases, are set aside.
       Consequently, the orders of the High Court impugned herein are also set
       aside. The appeals are accordingly allowed. These matters are remitted
 C     back to the Council for fresh consideration and disposal in accordance
       with law and in the light of the observations made above. The Council is
       directed to consider and dispose of the matter(s) as expeditiously as
       possible but not later than three months from the date of receipt of a
       copy of this order. All the contentions of the parties are left open. Having
 D     regard to the facts and circumstances of the cases, both the parties are
       directed to bear their respective costs.
             28. Pending applications, if any, shall also stand disposed of.


       Divya Pandey                                                 Appeals allowed.
 E




 F




 G




 H