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Professional Conduct & EthicsSupreme Court of India

D.K. Agrawal v. Council of the Institute of Chartered Accountants of India

Civil Appeal · 2021 INSC 535Decided 23 Sept 2021
Civil Appeal No. 6337 of 2021
Justice S. Abdul Nazeer · Justice Krishna Murari

Background

D.K. Agrawal, a chartered accountant, faced two sets of misconduct complaints dating back to the 1980s: one alleging he deposited only a fraction of tax amounts collected from clients while claiming the full amount from them, and another alleging he evaded taxes and bribed tax officials. In both cases, the Institute's Disciplinary Committee found him guilty after lengthy proceedings (with many delays caused by Agrawal's own repeated adjournment requests), and the Council of the Institute accepted those findings and recommended removal from the register of members. The Allahabad High Court confirmed the Council's recommendations in both matters, ordering removal for five years in one case and permanently in the other. Agrawal appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that under the (then-applicable) Chartered Accountants Act, it is the Council itself, not merely the Disciplinary Committee, that must independently apply its mind and record its own reasoned findings on a member's guilt, since the Disciplinary Committee's report is only material for the Council to consider, not a finding with automatic finality. Examining the record, the Court found the Council had mechanically accepted the Disciplinary Committee's report without engaging with Agrawal's written and oral submissions, and had falsely claimed in its order that it had done so: a breach of the fundamental requirement that quasi-judicial bodies give reasons for their decisions. Because the High Court had also failed to catch this defect, the Supreme Court set aside both the Council's recommendations and the High Court's orders, and remitted the matters back to the Council to be reconsidered afresh after giving Agrawal a proper hearing, with directions to decide within three months.

Lesson Learnt

A quasi-judicial disciplinary body cannot merely rubber-stamp a subordinate committee's report: it must independently examine the evidence and give its own reasoned findings; a decision affecting someone's livelihood that lacks genuine reasoning can be struck down and sent back for a fair redo, however old the case.

D.K. Agrawal v. Council of the Institute of Chartered Accountants of India – Legal Case Shots | LegalAware