Delhi High Court
Delhi High Court
Litigation News

ICAI must provide reasons to a complainant when it closes case against a member: Delhi HC

Aditi Singh

The Delhi High Court has held that the Institute of Chartered Accountants of India is under an obligation to provide reasons to a complainant in case it arrives at prima facie conclusion that its member is not guilty of any misconduct. (Trideep Raj vs ICAI)

It is further clarified that such reasons need not be elaborate and would not widen the scope of interference of the Courts while exercising powers of judicial review.

The order was passed by a single Judge Bench of Justice Navin Chalwa.

The Petitioner had made a Complaint with the ICAI against the Internal Auditor of a company in which he had invested.

The complaint was closed by ICAI and its decision was communicated to the Petitioner.

It was the Petitioner’s grievance that the ICAI had failed to record and convey the reasons for closing the complaint against the Internal Auditor.

The ICAI argued that proceedings before the Disciplinary Committee and the Board of Discipline under the Chartered Accountants Act were principally between the Institute and its Members.

Since the same could not be viewed as a private dispute, reasons for closing the complaint need not be conveyed to the Complainant/Petitioner, the ICAI argued.

It was further submitted that the record can be produced before the Court when any challenge is made and in any case, the reason could be obtained under the Right to Information Act, 2005.

After considering the provisions of the Chartered Accountants Act and The Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007, the Court noted that a "complainant" had a wider right as compared to a mere "Informant" who had no right to be represented during the investigation or hearing and the ICAI also had no obligation to inform the Informant.

The Court took into account Rule 9(3) to note that when Director (Discipline) is of the prima facie opinion that a member is not guilty of any misconduct, he shall place the matter before the Board of Discipline. If the Board of Discipline agrees with the Director's opinion, it shall pass the order for closure.

The Court further noted Rule 14 (1) which prescribed that the Board of Discipline shall follow the summary disposal procedure for dealing with all cases before it.

In view of the above, the Court opined that where an inquiry is initiated on a complaint, the Complainant is entitled to receive a copy of the order closing such inquiry against the member, along with the reasons for the closure.

"The Rules having themselves created this right in favour of the Complainant, it cannot be accepted that the Complainant would only be supplied with the “Information” of the closure of the complaint.", the Court said.

The Court added,

Even otherwise, the duty to assign reasons is one of the essential concomitant of the principles of natural justice. It is not the case of the respondent that the Act or the Rules exempt the Director (Discipline) or the Board of Discipline from recording reasons for the prima facie opinion of the member being not guilty of any misconduct.
Delhi High Court

The Court thus held that the ICAI was under an obligation to provide reasons to the Petitioner for its prima facie conclusion that the Internal Auditor was not guilty of any misconduct.

The petition was accordingly allowed with a direction to ICAI to communicate the reasons for its decision to the Petitioner.

The Petitioner was represented by Advocates Anu Sura, Sameer Jain, Anant Gupta from PSL Advocates & Solicitors.

ICAI was represented by Advocate Vibhooti Malhotra.

Read the Judgment:

Trideep Raj Bhandari v. ICAI.pdf
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