Civil Appeals Nos 1911 and 1912 of 1980
From the Judgment and Order dated 1641980 of the Bombay High Court in Appeal No 203 and 205 of 1980
FS Nariman Anil B Divan KK Jain SK Gupta Promod Dayal G Banerjee and AD Sanger for the Appellant
Atul Setalvad Atul Rajadhya and Mrs AK Verma for the Respondents
The Judgment of the Court was delivered by PATHAK J
These appeals raise some fundamental questions in regard to the conduct and procedure of disciplinary proceedings taken under the 
Two of the questions are 1 Whether a member of the Institute of Chartered Accountants of India is entitled to a hearing by the Council of the Institute after the Disciplinary Committee has sub 1056 mitted its report to the Council of its enquiry into allegations of misconduct against the member 2
When the Council proceeds to consider the Report of the Disciplinary Committee is the proceeding vitiated by the presence of the members of the Disciplinary Committee who include the President and the Vice President of the Council and three other members of it The appellant is the Institute of Chartered Accountants of India the Institute
The Institute was created as a body corporate under the the Act and its members are Chartered Accountants
The affairs of the Institute are managed by a body known as the Council of the Institute which is headed by a President and a Vice President below him
There are three Standing Committees of the Council and one of them is the Disciplinary Committee
The Disciplinary Committee consists of the President and the Vice President ex officio of the Council two members elected by the Committee from its members and a third member nominated by the Central Government
Chapter V of the Act contains provisions dealing with cases of misconduct of members of the Institute
Section 21 provides for conducting enquiries relating to such misconduct and the penalties which may be imposed and section 22A provides for an appeal by a member against the imposition of a penalty
As the sections are material they may be set forth S21
Procedure in inquiries relating to misconduct of members 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 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 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
1057 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 section
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 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 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
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 subsection 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 subsection 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 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 1058 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         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 examining him on oath b the discovery and production of any document and c receiving evidence on affidavit
22A Appeals 1 Any member of the Institute aggrieved by any order of the Council imposing on him any of the penalities 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 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 Council under sub section 2 or sub section 4 of Section 21 and may 1059 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 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 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
 The Act provides for the framing of Regulations
Regulations 11 to 15 set forth the procedure for an enquiry into allegations of misconduct
Messrs AF Ferguson  Co Ferguson  Co is a reputed firm of Chartered Accountants
The respondent Lalit Kumar Ratna is a partner and the respondents Ashok Kumar Behl and PR Bhoopatkar are employees in the firm
All three are Chartered Accountants and members of the Institute
In 1967 Ferguson  Co established a Management Consultancy Division
Ratna was head of the Division and Behl and Bhoopatkar worked under him
On April 15 1970 Ferguson  Co wrote to the Institute enquiring whether it could send out letters to Auditor Firms apprising them of the existence of the Management Consultancy Service and whether it was forbidden from doing so by any rules of the Institute
The Secretary of the Institute replied that the Council had appointed a Sub Committee for considering the ethical problems arising out of the functioning of the Institute s members in the area of Management Consultancy Service and the firm was requested to wait for the recommendations of the Sub Committee
On December 8 1971 Ratna issued a circular to the partners and principals of the firm setting forth guidelines on bringing the Management Consultancy Service brochures to the attention of their 1060 respective clients
Meanwhile Ferguson  Co also referred the matter to their solicitors and the solicitors advised that making available of printed informative material in the form of a brochure would not be in contravention of Clauses 6 and 7 in Part I of the First Schedule to the Act or otherwise amount to professional misconduct
A few days later the Council published an exposure draft setting forth the proposals under consideration by the Council regarding the regulations and ethical rules in respect of Management Consultancy Services by Chartered Accountants and invited members to send their suggestions on the proposals
It was pointed out further that the recommendations to be made by the Council would require appropriate amendments in Part I of the First Schedule to the Act which contained rules in respect of professional misconduct
Meanwhile Ratna had prepared a brochure relating to the Management Consultancy Service to be provided by Ferguson  Co It was stated that the brochure was intended for the use of the clients of the firm who requested information regarding such services and that it was for limited circulation only the clients themselves being warned of that restriction
On February 19 1973 the Council wrote to Ferguson and Co inviting its attention to the brochure and alleging that it contained information against the firm under Section 21 of the read with clauses 6 and 7 of of the First Schedule to the Act and in accordance with Regulation 115 b read with Regulation 12 of the Chartered Accountants Regulations 1964 the firm was required to disclose to the Council the name of the member answerable to the charge of misconduct
In reply the firm named Ratna as the member responsible for the brochure
On April 14 1973 Ratna submitted a written statement to the Institute denying that he was guilty of professional misconduct and he set forth a detailed statement of the reasons in support of his stand
The Council considered the matter in its meeting of September 13 14 and 15 1973 and being of prima facie opinion that Ratna was guilty of professional misconduct referred the case to the Disciplinary Committee
The Disciplinary Committee consisted of the President SK Gupta the Vice President NC Krishnan two members of the Institute RK Khanna and Bansi section Mehta and the Government nominee Ganapathi
The Disciplinary Committee gave a personal hearing on January 4 1974 to Ratna and his counsel
On February 14 1974 the Disciplinary Committee submitted its report to the Council opining 1061 that Ratna was guilty of professional misconduct under clauses 6 and 7 of Part I of the First Schedule to the Act insofar as he solicited clients directly or indirectly and also advertised professional attainments of his services
In its meeting of February 16 1974 the Council considered the report of the Disciplinary Committee and found that Ratna was guilty of the misconduct
In February 25 1974 the Institute wrote to Ratna that the Council had found him guilty of professional misconduct as charged and that it was proposed to remove his name from the Register of Members for a period not exceeding five years in accordance with the procedure laid down in section 214 of the Act
He was informed that he would be called upon to appear before the Council at its next meeting but in case he did not wish to be heard in person he was entitled to send a written representation against the proposed action
He was required to take note that the scope of the oral hearing for consideration of the written representation would be restricted to the penalty proposed
Copies of the Report of the Disciplinary Committee and the findings of the Council were forwarded to him
On March 4 1974 Ratna applied for extension of time to enable him to make his representation and the Council granted him time up to April 13 1974 for that purpose
It may be stated at this stage that parallel proceedings were taken in the case of Behl and Bhoopatkar
The brochure was treated as information against them also and on April 14 1973 they sent their written statements to the Institute
Their submissions were considered by the Council which being of opinion that they were prima facie guilty of misconduct referred the matter to the Disciplinary Committee
On January 4 1974 the Disciplinary Committee granted a full personal hearing to these two respondents who were represented by counsel
As in the case of Ratna the Disciplinary Committee made its report to the Council that these two respondents were guilty of professional misconduct under clauses 6 and 7 of Part I of the First Schedule to the Act and in its meeting on February 16 1974 the Council held them guilty accordingly and proposed the same penalty as in Ratna s case
They were also invited to appear in person or to make a written representation against the penalty proposed before the Council
Ratna now filed WP No 426 of 1974 and Behl and Bhoopatkar filed WP No 428 of 1974 in the High Court of Bombay
The Writ Petitions were allowed by Lentin J by separate orders dated March 3 1980 on the finding that the Council should have given an opportunity to the members to represent before it against the report of the Disci 1062 plinary Committee and that the President the Vice President and the two members of the Institute who were members of the Disciplinary Committee were disqualified from participating in the proceedings of the Council when it considered the report of the Disciplinary Committee and that as the decision of the Council was consequently vitiated the orders imposing penalty on the respondents were quashed and the case remanded to the Council for fresh consideration
The Institute appealed to a Division Bench of the High Court and the appeals have been summarily rejected by separate orders dated April 16 1980
It is apparent that in the scheme incorporated in section 21 of the Act there are separate functionaries the Disciplinary Committee the Council and in certain cases the High Court
The controlling 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 Institute is guilty of misconduct and it is prima facie of opinion that there is substance in the allegations it refers the case to the Disciplinary Committee
The Disciplinary Committee plays a subordinate role
It conducts an inquiry into the allegations
Since the inquiry is into allegations of misconduct by the member it possesses the character of a quasi judicial proceeding
The Disciplinary 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 provisions of the Act
As a subordinate body it reports to the Council the governing body
The report will contain a statement of the allegations 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 misconduct
Both section 212 and section 213 are clear as to that
If on receipt of the report the Council finds that the member is not guilty of misconduct section 212 requires it to record its finding accordingly and to direct that the proceedings shall be filed or the complaint shall be dismissed
If on the other hand the Council finds that the member is guilty of misconduct section 213 requires it to record a finding accordingly and thereafter to proceed in the manner laid down in the succeeding subsections
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 determina 1063 tion that a member is guilty of misconduct and the recording of that finding has been specifically assigned by the Act to the governing body 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 the Council is the jurisdictional springboard for the penalty proceeding which follows
Now when it enters upon the task of finding whether the 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 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 Disciplinary Committee which could have resulted in vitiating the inquiry
section 218 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 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
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 members 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 to a certificate of practice
As is clear from section 61 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 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 1064 Act to the entire Council itself and not to a few 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 entitled to a hearing by the Council before it can find him guilty
Upon the approach which has found favour with us we find no relevance in James Edward Jeffs and others vs New Zealand Dairy Production and Marketing Board and others 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 decision making authority
Those observations can have no play in a power structure such as the one before us
Our attention has been invited to the difference between the terms in which section 213 and section 214 have been enacted and it is pointed out that while in section 214 Parliament has indicated that an opportunity of being heard should be accorded to the member nowhere in section 213 do we find such requirement
There is no doubt that there is that difference between the two provisions
But to our mind that does not affect the question
The textual difference is not decisive
It is the substance of the matter the character of the allegations the far reaching consequences of a finding against the member the vesting of responsibility in the governing body itself all these and kindred considerations enter into the decision of the question whether the law implies a hearing to the member at that stage
Learned counsel for the appellant relies on Chandra Bhavan Boarding and Lodging Bangalore vs The State of Mysore and Anr   where this Court found that the procedure adopted by the Government in fixing a minimum wage under section 51 of the was not vitiated merely on the ground that the Government had failed to constitute a committee under section 51 a of that Act
Reference was also made to KL Tripathi vs State Bank of India and Others 1984 1 SCC 43 where the petitioner complained of a breach of the principles of natural justice on the ground that he was not given an opportunity to rebut the material gathered in his absence
Neither case is of assistance to the appellant
In the former the Court found that reasonable opportunity had been given to all the concerned parties to represent their case before the Government made the impugned order
In the latter the Court held that no real prejudice had been suffered by the complainant in the circumstances of the case
1065 It is next pointed out on behalf of the appellant that while Regulation 15 requires the Council when it proceeds to act under section 214 to furnish to the member a copy of the report of the Disciplinary Committee no such requirement is incorporated in Regulation 14 which prescribes what the Council will do when it receives the report of the Disciplinary Committee
That it is said envisages that the member has no right to make a representation before the Council against the report of the Disciplinary Committee
The contention can be disposed of shortly
There is nothing in Regulation 14 which excludes the operation of the principle of natural justice entitling the member to be heard by the Council when it proceeds to render its finding
The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary
It is then urged by learned counsel for the appellant that the provision of an appeal under section 22 A of the Act is a complete safeguard against any insufficiency in the original proceeding before the Council and it is not mandatory that the member should be heard by the Council before it proceeds to record its finding
Section 22 A of the Act entitles a member to prefer an appeal to the High Court against an order of the Council imposing a penalty under section 214 of the Act
It is pointed out that no limitation has been imposed on the scope of the appeal and that an appellant is entitled to urge before the High Court every ground which was available to him before the Council
Any insufficiency it is said can be cured by resort to such appeal
Learned counsel apparently has in mind the view taken in some cases that an appeal provides an adequate remedy for a defect in procedure during the original proceeding
Some of those cases are mentioned in Sir William Wades erudite and classic work on Administrative Law But as that learned author observes in principle there ought to be an observance of natural justice equally at both stages and if natural justice is violated at the first stage the right of appeal is not so much a true right of appeal as a corrected initial hearing instead of fair trial followed by appeal the procedure is reduced to unfair trial followed by fair trial
 And he makes reference to the observations of Megarry J in Leary vs National Union of Vehicle Builders 1971 1 Ch
Treating with another aspect of the point that learned Judge said If one accepts the contention that a defect of natural justice 1066 in the trial body can be cured by the presence of natural justice in the appellate body this has the result of depriving the member of his right of appeal from the expelling body
If the rules and the law combine to give the member the right to a fair trial and the right of appeal why should he be told that he ought to be satisfied with an unjust trial and a fair appeal Even if the appeal is treated as a hearing de novo the member is being stripped of his right to appeal to another body from the effective decision to expel him
I cannot think that natural justice is satisfied by a process whereby an unfair trial though not resulting in a valid expulsion will nevertheless have the effect of depriving the member of his right of appeal when a valid decision to expel him is subsequently made
Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice
As a general rule at all events I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body
 The view taken by Megarry J was followed by the Ontario High Court in Canada in Re Cardinal and Board of Commissioners of Police of City of Cornwall The Supreme Court of New Zealand was similarly inclined in Wislang vs Medical Practioners Disciplinary Committee and so was the Court of Appeal of New Zealand in Reid vs Rowley But perhaps another way of looking at the matter lies in examining the consequences of the initial order as soon as it is passed
There are cases where an order may cause serious injury as soon as it is made an injury not capable of being entirely erased when the error is corrected on subsequent appeal
For instance as in the present case where a member of a highly respected and publicly trusted profession is found guilty of misconduct and suffers penalty the damage to his professional reputation can be immediate and far reaching
Not all the King s horses and all the King s men can ever salvage the situation completely notwithstanding the widest scope provided to an appeal
To many a man his professional reputation is his most valuable possession
It affects his standing and dignity among his fellow members in the profession and guarantees the esteem of his clientele
It is often the carefully garnered fruit of a long period of scrupulous 1067 conscientious and diligent industry
It is the portrait of his professional honour
In a world said to be notorious for its blase attitude towards the noble values of an earlier generation a man s professional reputation is still his most sensitive pride
In such a case after the blow suffered by the initial decision it is difficult to contemplate complete restitution through an appellate decision
Such a case is unlike an action for money or recovery of property where the execution of the trial decree may be stayed pending appeal or a successful appeal may result in refund of the money or restitution of the property with appropriate compensation by way of interest or mesne profits for the period of deprivation
And therefore it seems to us there is manifest need to ensure that there is no breach of fundamental procedure in the original proceeding and to avoid treating an appeal as an overall substitute for the original proceeding
Upon the aforesaid considerations we are of definite opinion that a member accused of misconduct is entitled to a hearing by the Council when on receipt of the report of the Disciplinary Committee it proceeds to find whether he is or is not guilty
The High Court is therefore right in the view on this point
Accordingly the respective findings of the Council that Ratna Behl and Bhoopatkar are guilty of misconduct are vitiated and must be quashed
Consequently the penalty imposed on each of them is also liable to be quashed
Our decision on the first question is sufficient to dispose of these appeals
But the appellant is anxious to obtain our opinion on the second question also as it is said the question is bound to arise in future in cases of disciplinary proceedings
As it was one of the points on which the High Court allowed the writ petitions and as we have already heard full agrument on it we proceed now to consider the point
The question is whether the respective findings of the Council holding the three members guilty of misconduct can be said to be vitiated by bias because the members of the Disciplinary Committee participated in those proceedings
As has been pointed out section 17 of the Act provides for a Disciplinary Committee consisting of the President and the Vice President ex officio of the Council who will be the Chairman and Vice Chairman respectively of the Disciplinary Committee and three other members of the Council two of them 1068 being elected by the Council to the Committee and the third being nominated by the Central Government from amongst the persons nominated to the Council by the Central Government
Therefore all the five members of the Disciplinary Committee are drawn from the Council
Now the Council is vested with power under section 21 to find whether the member is guilty of misconduct
There is nothing in section 21 of the Act however to indicate whether the members of the Disciplinary Committee should be excluded when the Council enters upon its task
The answer must be found from the general scheme of the Act and the fundamental principles of law
There can be no dispute that the function of the Disciplinary Committee of holding an enquiry under section 211 of the Act into the conduct of the member calls for a recording of evidence by the Committee
Its duty does not end there
It must consider the evidence and come to its conclusions
As section 212 of the Act plainly says it must report the result of its enquiry to the Council
In the absence of express or implied statutory intendment to the contrary it appears to us that the members of such a Committee would be disqualified from participating in the deliberations of the Council when it proceeds to consider the report in order to find whether the member is guilty of misconduct
For that alone would be consistent with the fundamental principle that justice must not only be done but must also appear to be done
The nature of the function discharged by the Council in rendering its finding is quasi judicial and we are reminded of the observations of this Court as far back as Manek Lal vs Dr Prem Chand  It is well settled that every member of a tribunal that is called upon to try issues in judicial or quasi judicial proceedings must be able to act judicially and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially objectively and without any bias
In such cases the test is not whether in fact a bias has affected the judgment the test always is and must be whether a litigant could reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision of the tribunal
It is in this sense that it is often said that justice must not only be done but must also appear to be done 1069 We must remember that the President and the Vice President of the Council and 3 members of the Council compose the Disciplinary Committee
The President and the Vice President do certainly hold significant status in the meetings of the Council
A member whose conduct has been the subject of enquiry by the Disciplinary Committee ending in conclusions adverse to him can legitimately entertain an apprehension that the President and the Vice President of the Council and the other members of the Disciplinary Committee would maintain the opinion expressed by them in their report and would press for the acceptance of the report by the Council
To the member whose conduct has been investigated by the Committee the possibility of the Council disagreeing with the report in the presence of the President and the Vice President and the other members of the Committee would so rather remote
His fears would be aggravated by the circumstance that the President would preside over the meeting of the Council and would thus be in a position to control and possibly dominate the proceedings during the meeting
We do not doubt that the President and the Vice President and also the three other members of the Disciplinary Committee should find it possible to act objectively during the decision making process of the Council
But to the member accused of misconduct the danger of partisan consideration being accorded to the report would seem very real indeed
The objection on the ground of bias would have been excluded if the statute had expressed itself to the contrary
But nowhere do we find in the Act any evidence to establish such exclusion
It is true that by virtue of section 173 it is obligatory that the Disciplinary Committee should be composed of the President and the Vice President of the Council and three other members of the Council
While that is so there is nothing in the Act to suggest that the meetings of the council must always be presided over by the President or the Vice President and that no meeting can be held in their absence
We find that Regulation 140 framed under the Act contemplates that the Council may meet in the absence of the President and the Vice President and provides that in their absence a member elected from among the members who are present should preside
There is an element of flexibility which makes it possible for the Council to consider the report of the Disciplinary Committee without the participation of the members of the Committee
Because of the flexibility  potential in the scheme the doctrine of necessity to which reference has been made on behalf of the Institute cannot come into play
We must admit that it does appear anomalous that the President and the Vice President of the Council should be disabled from participating in a meeting of the 1070 Council because they are bound by statute to function as the Chairman and the Vice Chairman of the Disciplinary Committee and were it not for the factor of flexibility which we see in the scheme we would have been compelled to the conclusion that the Act implies an exclusion of the doctrine of bias
But as we have observed no such exclusion is implied by the scheme of the Act or its policy
We suggest the removal of the anomaly by suitable legislative amendment of section 173 of the Act so that the constitution of the Disciplinary Committee should not necessarily include the President and the Vice President of the Council
It is only appropriate that due recognition should be given to the fundamental principles and accepted axioms of law
Learned counsel for the Institute relies on Re Dancyger and Alberta Pharmaceutical Association  Re Prescott  Re Merchant and Benchers of the Law Society
and the majority opinion in Law Society of Upper Canada vs French in support of the contention that participation by the members of the Disciplinary Committee does not vitiate the proceedings of the Council
The principal basis on which the Canadian courts proceeded in upholding the validity of the meeting of the parent body despite the participation therein of the members of the Disciplinary Committee lay in this that the entire proceeding that is to say the enquiry by the Committee and the subsequent consideration of its report by the parent body constituted a single proceeding and had to be distinguished from a case where the decision by a subordinate body was assailed in appeal before a superior authority
This distinction it seems to us can be of little assistance if full play is given to the maxim that no man shall be a Judge in his own cause
We are impressed by the soundness of the minority opinion pronounced by that learned and distinguished Judge Laskin CJC in Law Society of Upper Canada vs French supra decided by the Supreme Court of Canada
He observed I do not think that the issue herein falls to be decided according to whether the proceedings in Convocation are or amount to an appeal or are or amount to a review under a two stage scheme of inquiry into allegations of professional misconduct
No doubt characterization of the proceedings as an appeal may lend weight to the contention of the appellant solicitor but the principle underlying his position rises above any such formalistic approach
The principle is immanent in the ancient maxim nemo judex in causa sua expressed by Coke in Dr Benham s case 1610   77ER 646
 1071 The conclusion reached by us has not been an easy one
The authorities on the subject have oscillated from one extreme to the other and an analysis of the cases points at times to some rather slender element in the mosaic of facts which has influenced the outcome
There is good reason ultimately for adopting a liberal view for as has been observed by the late Professor SA De Smith in his Judicial Review of Administrative Action  Fourth Edition p 261   a report will normally include a statement of findings and recommendations which may be controverted before the parent body and in such a case the participation of members of the sub committee in the final decision may be of dubious validity
The problem is not merely one of strict law it is also one of public policy Accordingly we concur with the High Court that the finding of the Council holding the respondents Ratna Behl and Bhoopatkar guilty of misconduct is vitiated by the participation of the members of the Disciplinary Committee
Before we conclude we may refer to a third point raised before us the point being whether the Council is obliged to give reasons for its finding that a member is guilty of misconduct
It seems to us that it is bound to do so
In fairness and justice the member is entitled to know why he has been found guilty
The case can be so serious that it can attract the harsh penalties provided by the Act
Moreover the member has been given a right of appeal to the High Court under section 22 A of the Act
To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty
We have already pointed out that a finding by the Council is the first determinative finding on the guilt of the member
It is a finding by a Tribunal of first instance
The conclusion of the Disciplinary Committee does not enjoy the status of a finding
Moreover the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council
The Council must therefore state the reasons for its finding
The appeals fail and are dismissed but in the circumstances of the case we make no order as to costs
MLA Appeals dismissed


Summary:
The appellant the Institute of Chartered Accountants of India was created as a body corporate under the 
Its members are Chartered Accountants
The affairs of the Institute are managed by a body known as the Council of the Institute which is headed by the President
Below him is the Vice President
One of the Standing Committees of the Council is the Disciplinary Committee
It consists of the President and the Vice President ex officio of the Council two members elected by the Committee from its members and a third member nominated by the Central Government
Section 21 of the Act lays down the procedure for conducting inquiries relating to cases of misconduct by the members and the penalty which may be imposed
Sub section
1 of section 21 provides that where 1050 the Council is prima facie of opinion that any member has been guilty of any professional or other misconduct it shall refer the case to the Disciplinary Committee which is to hold an inquiry and report the result to the Council
Sub section
4 lays down that where the finding of the Disciplinary Committee is that a member has been guilty of professional misconduct it shall afford an opportunity of being heard and may thereafter make an order either to a reprimand the member or b remove the name of the member from the Register for such period not exceeding five years or c 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 or if the member is guilty of 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
Section 22A of the Act entitles a member to prefer an appeal to the High Court against an order of the Council
The respondents Chartered Accountants and members of the Institute were charged for committing the offences of professional misconduct under clauses 6  7 of of the First Schedule to the Act in that they had prepared and brought out a brochure relating to Management Consultancy Services and had sent out letters to Auditor Firms appraising them of its existence
The Council considered their replies and being of the prima facie opinion that they were guilty of professional misconduct referred the cases to the Disciplinary Committee which after affording a personal hearing to the respondents submitted its report to the Council opining that they were guilty of professional misconduct
The Council considered the aforesaid report and after having found the respondents guilty of the misconduct proposed to remove their names from the register of members for a period not exceeding five years in accordance with the procedure laid down in section 214
The respondents were informed that they would be called upon to appear before the Council to make a representation against the proposed action and that the scope of the oral hearing or written representation would be restricted to the penalty proposed
Aggrieved by the order of the appellant the respondents filed Writ Petitions in the High Court
A Single Judge of the High Court allowed the petitions quashed the orders imposing penalty on the respondents and remanded the cases to the Council for fresh consideration on the finding i that the Council should have given an opportunity to the respondents to represent before it against the report of the Disciplinary Committee and ii that the decision of the Council was 1051 vitiated inasmuch as the President the Vice President and the two members of the Institute who were also members of the Disciplinary Committee were disqualified from participating in the proceedings of the Council when it considered the report of the Disciplinary Committee
The appeals filed by the appellant having been summarily rejected by the Division Bench the Institute appealed to this Court
Dismissing the appeals of the appellant this Court  HELD 11 A member accused of misconduct is entitled to a hearing by the Council when on receipt of the report of the Disciplinary Committee it proceeds to find whether he is or is not guilty
1067D 12 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 to a certificate of practice
In these circumstances there is every reason to presume in favour of an opportunity to the member of being heard by the Council before it proceeds to pronounce him guilty of misconduct
1063F G 21 In the scheme incorporated in section 21 of the Act there are separate functionaries the Disciplinary Committee the Council and in certain cases the High Court
The controlling authority is the Council
The Disciplinary Committee plays a subordinate role
It conducts an inquiry into the allegations
Since the inquiry is into allegations of misconduct by the member it possesses the character of a quasi judicial proceedings
The Disciplinary 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 provisions of the Act
Its conclusions 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 misconduct
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
1062C H A responsibility so grave as the determination that a member is guilty of misconduct and the recording of that finding has been specifically assigned by the Act to the governing body the Council
It is also 1052 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 the Council is the jurisdictional spring board for the penalty proceeding which follows
1062H 1063A B 22 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 by the Disciplinary Committee
The nature of the function discharged by the Council in rendering its finding is quasi judicial
A member whose conduct has been the subject of inquiry by the Disciplinary Committee ending in conclusions adverse to him can legiti mately entertain an apprehension that the President and the Vice President of the Council and the other members of the Disciplinary Committee would maintain the opinion expressed by them in their report and would press the acceptance of the report by the Council
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 the material which falls within the domain of consideration by the Council
It should also be open to the member to point out to the Council any error in the procedure adopted by the Disciplinary Committee which could have resulted in vitiating the inquiry
1063B D section 218 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 has been conferred
It cannot therefore be denied that even 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
1063D E 31 The finding by the Council operates with finality in the proceedings and it constitutes the foundation for the penalty by the Council on him
1063G H 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 of its members who constitute the Disciplinary Committee
1063H 1064A 32 It is the character and complexion of the proceeding consi 1053 dered in conjunction with the structure of power constituted by the Act which leads to the conclusion that the member is entitled to a hearing by the Council before it can find him guilty
1064A B Manek Lal vs Dr Prem Chand   referred to
There is no doubt that there is difference between the provisions of section 213 and 214 in that while in section 214 Parliament has indicated that an opportunity of being heard should be accorded to the member nowhere in section 213 there is such requirement
But that does not affect the question
The textual different is not decisive
It is the substance of the matter the character of the allegations the far reaching consequences of a finding against the member the vesting of responsibility in the governing body itself all these and kindred considerations enter into the decision of the question whether the law implies a hearing to the member at that stage
1064D E 5
There is nothing in Regulation 14 which excludes the operation of the principle of natural justice entitling the member to be heard by the Council when it proceeds to render its finding
1065B C The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary
1065C 6
There are cases where an order may cause serious injury as soon as it is made an injury not capable of being entirely erased when the error is corrected on subsequent appeal
Where a member of a highly respected and publicly trusted profession is found guilty of misconduct and suffers penalty the damage to his professional reputation can be immediate and far reaching
To many a man his professional reputation is his most valuable possession
It is often the carefully garnered fruit of a long period of scrupulous conscientious and diligent industry
It is the portrait of his professional honour
In such a case after the blow suffered by the initial decision it is difficult to contemplate complete restitution through an appellate decision
Therefore there is manifest need to ensure that there is no breach of fundamental procedure in the original proceeding and to avoid treating an appeal as an overall substitution for the original proceeding
1066F H 1067A C 71 By virtue of section 173 it is obligatory that the Disciplinary Committee should be composed of the President and the Vice President of the Council and three other members of the Council
While that is so 1054 there is nothing in the Act to suggest that the meetings of the Council must always be presided over by the President or the Vice President and that no meeting can be held in their absence
There is an element of flexibility which makes it possible for the Council to consider the report of the Disciplinary Committee without the participation of the members of the Committee
Because of the flexibility  potential in the scheme the doctrine of necessity cannot come into play
1069E H 72
There is nothing in section 21 of the Act to indicate whether the members of the Disciplinary Committee should be excluded when the Council enters upon its task
The function of the Disciplinary Committee of holding an inquiry under section 211 of the Act into the conduct of the member calls for a recording of evidence by the Committee
Its duty does not end there
It must consider the evidence and come to its conclusions
Section 212 of the Act plainly says it must report the result of its enquiry to the Council
In the absence of express or implied statutory intendment to the contrary the members of such a committee would be disqualified from participating in the deliberations of the Council when it proceeds to consider the report in order to find whether the member is guilty of misconduct
For that alone would be consistent with the fundamental principle that justice must not only be done but must also appear to be done
1068B F Re Daneyger and Alberta Pharmaceutical Association  Re Prescott  Re Merchant and Benchers of the Law Society and Law Socieety of Upper Ganada vs French  distinguished
The Council is obliged to give reasons for its finding that a member is guilty of misconduct
In fairness and justice the member is entitled to know why he has been found guilty
107 1E G The member has been given a right of appeal to the High Court under section 22 A of the Act
To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty
Further a finding by the Council is the first determinative finding on the guilt of the member
It is a finding by a Tribunal of first instance
The conclusion of the Disciplinary Committee does not enjoy the status of a finding
Moreover the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council
The Council must therefore state the reasons for the finding
1071F G 1055 9
Due recognition should be given to the fundamental principles and accepted axioms of law
1070B C Removal of the anomaly by suitable legislative amendment of section 173 of the Act so that the constitution of the Disciplinary Committee should not necessarily include the President and the Vice President of the Council was suggested by the Court 1070B C James Edward Jeffs and Others vs New Zealand Dairy Production and Marketing Board and others 1967 1 AC 551 Chandra Bhavan Boarding and Lodging Bangalore vs The State of Mysore and Anr1970 2 SCR 600 and KL Tripathi vs State Bank of India and Others  inapplicable
Leary vs National Union of Vehicle Builders  Re Cardinal and Board of Commissioners of Police of City of Cornwall  Wisland vs Medical Practioners Disciplinary Committee and Reid vs Rowley  referred to