Law:

Section:

Section 21 of the Chartered Accountants Act, 1949 - Procedure in inquiries relating to misconduct of members of the Institute - Whether member accused of misconduct is entitled to a hearing by the Council of the Institute of Chartered Accountants when on receipt of the report of the Disciplinary Committee, it proceeds to find whether he is or is not guilty - Held, yes - Whether members of the Disciplinary Committee could be disqualified from participating in deliberations of the Council, when it proceeds to consider the report in order to find whether the member is guilty of misconduct - Held, yes - Whether Council is obliged to give reasons for its finding that a member is guilty of misconduct - Held, yes FACTS One R was partner of a chartered accountants firm, F & Co., and B and H were its employees. All three were chartered accountants and members of the Institute of Chartered Accountants. In 1967 F & Co. established a Management Consultancy Division, R was head of the Division, and H worked under him. On 15-4-1970, F & 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 8-12-1971, R 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 respective clients. Meanwhile, F & 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 of Part I of the First Schedule to the Chartered Accountants Act or otherwise amount to professional misconduct. Meanwhile, R had prepared a brochure relating to the Management Consultancy…

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