Case Note & Summary
The petitioner, M/s. Ameyas Infraprojects Pvt. Ltd. (formerly Ameya Developers Pvt. Ltd.), was a partner in a partnership firm M/s. AAP Construction Company along with Atlanta Ltd. and PBA Infrastructure Ltd. The partnership was formed on 1 February 2002. The petitioner retired from the firm on 1 November 2004, after which disputes arose regarding settlement of accounts. The petitioner alleged that the Lucknow office of the firm prepared base accounts as on 30 November 2004 and circulated them among partners for comments. Atlanta Ltd. thereafter made changes in the accounts without the petitioner's consent, which were detrimental to the petitioner's interest. The petitioner contended that the first respondent, a chartered accountant and member of the Institute of Chartered Accountants of India (ICAI), did not take proper care while certifying the accounts of the firm for the broken period of financial year 2004-05. During arbitration proceedings initiated by Atlanta Ltd. against the petitioner and other partners, Atlanta Ltd. submitted a purported audited accounts as on 10 November 2004 along with an affidavit of its Managing Director. The petitioner filed a complaint against the chartered accountant before the Council of ICAI under Section 21 of the Chartered Accountants Act, 1949. The Council, by order dated 7 October 2008, dismissed the complaint as frivolous and filed the papers. The petitioner challenged this order by way of a writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash the order and a direction to decide the complaint after complying with principles of natural justice. The High Court observed that the Council had not given any opportunity of hearing to the petitioner before dismissing the complaint as frivolous. The court held that the principles of natural justice required that before branding a complaint as frivolous, the complainant must be heard. The court noted that the Council had not even issued notice to the petitioner before passing the impugned order. The court also noted that the respondent no.1 (the chartered accountant) was served but remained absent. The court set aside the order dated 7 October 2008 and remanded the matter to the Council for fresh consideration after giving an opportunity of hearing to the petitioner. The court directed the Council to decide the complaint in accordance with law and in light of the observations made in the judgment. The petition was allowed with no order as to costs.
Headnote
A) Administrative Law - Principles of Natural Justice - Audi Alteram Partem - Chartered Accountants Act, 1949, Section 21 - The Council of ICAI dismissed a complaint as frivolous without hearing the complainant. The High Court held that before branding a complaint as frivolous, the complainant must be given an opportunity of being heard. The order was quashed and the matter remanded for fresh consideration after hearing the petitioner. (Paras 2, 6-8) B) Professional Misconduct - Chartered Accountant - Duty of Care - Chartered Accountants Act, 1949, Section 21 - The petitioner alleged that the respondent chartered accountant failed to take proper care while certifying accounts of a partnership firm. The court did not decide on merits but directed the Council to consider the complaint afresh after hearing the petitioner. (Paras 3-5, 8)
Issue of Consideration
Whether the Council of the Institute of Chartered Accountants of India could dismiss a complaint as frivolous without affording an opportunity of hearing to the complainant, and whether such dismissal violated principles of natural justice.
Final Decision
The High Court allowed the writ petition, quashed the order dated 7 October 2008 passed by the Council of the Institute of Chartered Accountants of India, and remanded the matter to the Council for fresh consideration after giving an opportunity of hearing to the petitioner. The Council was directed to decide the complaint in accordance with law and in light of the observations made in the judgment. No order as to costs.
Law Points
- Principles of natural justice
- duty to hear complainant before dismissing complaint as frivolous
- Chartered Accountants Act 1949 Section 21
- Regulation 12 of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules 2007
