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PETITIONER: H. A. K. RAO, CHARTERED ACCOUNTANT

       Vs.

RESPONDENT: COUNCIL OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA,  NEW

DATE OF JUDGMENT: 13/12/1966

BENCH: RAO, K. SUBBA (CJ) BENCH: RAO, K. SUBBA (CJ) SHAH, J.C. SIKRI, S.M. RAMASWAMI, V. VAIDYIALINGAM, C.A.

CITATION:  1967 AIR 1257            1967 SCR  (2) 256

ACT:      Chartered  Accountants Act 1949--Clause (ii), Part  II, Second  Schedule--Council’s  power  to specify  any  act  or omission  other than those covered by Act or Regulations  as ’professional misconduct’--scope of.

HEADNOTE:      The Council of the Institute of Chartered  Accountants, by  a notification issued on February 22, 1964, in  exercise of  powers  conferred by cl. (ii) of Part 11 of  the  Second Schedule  to the Chartered Accountants Act, 1949,  notified, inter  alia, that a member of the Institute shall be  deemed to be guilty of misconduct if, in connection with  elections to the Councils of the lnstitute., he took part directly  or indirectly  in  (1) issuing manifestoes  or  circulars;  (2) canvassing votes by visiting places of business or residence of the voters or in any other manner. The appellant, who was a prospective candidate for  election to  the  Central  Council of the  Institute,  filed  a  writ petition to quash the notification.  It was contended on his behalf that the power of the Council to issue a notification is limited by the express provisions of cl. (ii) of Part  II of  the  Second  Schedule to the Act.   Under  cl.  (i)  any contravention  of  the  provisions  of the  Act  or  of  the Regulations  made  thereunder was  professional  misconduct; therefore the expression "other act or omission" in cl. (ii) must  be an act or omission other than those covered by  the Act  or the Regulations.  Under cl. (2) of Regulation  54-A, undue influence by interfering with the free exercise of any electoral rights was misconduct, but the proviso to cl.  (2) which  permitted a declaration of policy or a promise  of  a particular  action  saved  the issuing  of  manifestoes  and circulars from the operation of the substantive part of  the clause.  The appellant therefore claimed that he had a legal right  to issue circulars or manifestoes within the  meaning of  the proviso and that the impugned notification being  in derogation of the Regulation, was illegal. It   was  further  contended  that  the   notification   was inconsistent  with cl. (4B) of Regulation 54A, because  that

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clause  only  prohibited  canvassing  for  votes  within   a distance  of  200 meters from the  polling  booths,  thereby impiedly  permitting  canvassing beyond that  distance;  cf. (4B) detracted only to a limited extent from the legal right to  canvass  and  the  impugned  notification  containing  a prohibition  against general canvassing beyond these  limits contravened both cl. (2) and cl. (4B) of Regulation 54-A and was therefore bad. The High Court held that the impugned notification in so far as it directed that the issuing of manifestoes or  circulars was  misconduct,  was illegal; but that the rest of  it  was valid.  On appeal to this Court by the appellant and upon  a cross-appeal by the respondent. HELD: The entire notification was valid. Although the act of issuing a manifesto or a circular  would not  amount to undue influence by virtue of the  proviso  to Regulation 54-A(2) such                             257 act was constituted by the notification a different head  of professional misconduct which the Council was authorised  to do  under cl. (ii) of Part II of the Second Schedule to  the Act. [263 H] The  Council  had  the  power  to  issue  the   notification prohibiting canvassing of votes and the notification was not inconsistent  with either the provisions of the Act  or  the Regulations. [263 F] While  the Regulations provide for disciplinary  action  for undue  influence  and  for canvassing  for  votes  within  a distance   of   200  meters  from  a  polling   booth,   the notification placed other acts and omissions under different heads of misconduct.  There is no inherent conflict  between undue influence, canvassing of votes by visiting the  places of  business or the residence of the voters, and  canvassing within  a distance of 200 metres from a polling booth.   All the three can stand together. [262 H] The  appellant did not have any unlimited right  to  canvass for  vote  either statutory or otherwise.  His  rights  were defined by the statute and it could not be said that such an unlimited right to canvass is implicit in the right to stand for election. [263 B] The  electorate  was an enlightened body and  the  elections were to a council designed to maintain high standards of the profession.   Canvassing may be necessary for explaining  to an  illiterate voter the qualifications of a  candidate  and the principles for which he stands or in the case of a  vast electorate with which the candidate may not be familiar, but no  such necessity exists in the case of enlightened  voters of  a compact electorate The impugned notification  was  not therefore  unreasonable  in  the sense  that  expression  is understood in law. [263 C] [The  question  whether the notification  was  violative  of Article  19  of the Constitution and  whether  that  Article could  be invoked notwithstanding the fact that a  state  of emergency was in force, was left open.] [259 A-B]

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  447  and 501 of 1965. Appeals  by special leave from the judgment and order  dated July  2, 1964 of the Mysore High Court in Writ Petition  No. 473 of 1964. K.   Srinivasan and R. Gopalakrishnan, for the appellant (in C  A. No. 447 of 1965) and the respondent (in C. A. No.  501

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of 1965). M.   C.  Setalvad,  K.  K.  Jain and H.  K.  Puri,  for  the respondent (in C. A. No. 447 of 1965) and the appellant  (in C. A. No. 501 of 1965). The Judgment of the Court was delivered by Subba Rao, C. J. These are cross-appeals-the appeal has been filed  by  H.  A. K. Rao, a Chartered  Accountant,  and  the cross-appeal  has  been  filed by  the  respondent  therein- against  the  judgment and order of the  Mysore  High  Court passed in Writ Petition No. 473 of 1964 filed by the  former challenging  the validity of the notification issued by  the latter  regulating the conduct of elections to  the  Central Council  and  the  Regional Councils  of  the  Institute  of Chartered Accountants of India. M1Sup.CI/67-3 258 The  facts  are  not in dispute and,  they  may  be  briefly stated, H. A., K. Rao, the appellant in Civil Appeal No. 447 of  1965, is a chartered accountant by profession and  is  a fellow  member of the Institute of Chartered Accountants  of India,  hereinafter  referred to as  the  "Institute".   The election to the Central Council and the Regional Councils of the  Institute  was to take place in the  month  of  August, 1964.  On February 22, 1964, the President of the  Institute issued a notification in exercise of the powers conferred by cl. (ii) of Part 11 of the Second Schedule to The  Chartered Accountants  Act, 1949 (38 of 1949), hereinafter called  the Act,  notifying  that  a member of the  Institute  shall  be deemed  to be guilty of misconduct, if, in  connection  with election  to the Councils of the Institute, he was found  to have  taken part, directly or indirectly, either himself  or through   any  other  person,  in  any  of   the   following activities:-(I)   issuing  manifestoes  or  circulars;   (2) canvassing votes by visiting places of business or residence of  the  voters or in any other manner; and  (3)  organising parties to entertain voters.  The appellant in Civil  Appeal No. 447 of 1965 was a prospective candidate for the  Central Council  of  the  Institute.  He filed  the  aforesaid  writ petition to quash the said notification on various  grounds, which  we will consider in the course of the judgment.   The High Court held that the impugned notification, in so far as it  directed  that issuing of manifestoes or  circulars  was misconduct   was   illegal  and  that  that  part   of   the notification  in so far as it directed canvassing  of  votes was misconduct was valid.  Both the parties are  challenging the said order in so far as it is against each of them. Mr.  K.  Srinivasan, learned counsel for  the  appellant  in Civil Appeal No. 447 of 1965, attacked the validity of.  the notification on three grounds, namely, (1) it was beyond the competence of the Central Council, (2) it purported to amend the   Regulations,   (3)  it  was  in  conflict   with   the Regulations, and (4) it was in violation of cls. (1)(a)  and (1)(g) of Art. 19 of the Constitution. ,Mr.  M. C. Setalvad, appearing for the Institute, canvassed the correctness of the order of the High Court in so far  as it  held that the issuing of manifestoes and  circulars  was illegal.   He contended that the impugned  notification  was well  within the competence of the Institute and was not  in conflict  with any of the Regulations, but it was really  an additional  head  of  disqualification  introduced  by   the Institute in the interests of maintaining high standards  in the profession. At  the  outset it may be mentioned that  the  appellant  in Civil  Appeal  No. 447 of 1965 did not seek to  sustain  his claim  on the basis of his fundamental right  presumably  in

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view  of  the fact that its operation was and  is  suspended under  Art.  358 of the Constitution during  the  emergency, though  he  sought to draw an anology on the  provisions  of Art. 19 and the decisions thereon in support                             259 of  his  contentions.   We do not  propose  to  express  any opinion  either  on  the question whether  Art.  19  of  the Constitution   can   be   invoked  in   the   instant   case notwithstanding  the fact that the state of emergency is  in force  or on the question whether the Institute is  a  State within  the meaning of Art. 12 of the Constitution.  We  put aside Art. 19 altogether, as the appellant did not rely upon it and proceed to consider his other arguments.. Before we consider the relevant provisions of the Act it  is necessary to notice at the outset the nature and the objects of the Institute.  The Institute is a statutory body  having perpetual  successION and a common seal.  It is governed  by the  Act  and the Chartered Accountants  Regulations,  1949, hereinafter called the Regulations.  The Central Council  of the Institute shall be composed of not more than 24  members elected  by  the  members of the Institute  from  among  the fellows  thereof  and  6 persons nominated  by  the  Central Government.   There are Regional Councils which function  in their respective regions subject to the control, supervision and  direction  of  the  Central  Council  or  any  of   its committees.   Elections  to the Councils are  held  once  in three  years.  Therefore, the Act, through  its  provisions, regulates  the  profession  of  chartered  accountants.   It establishes  an  Institute  of  Chartered  Accountants   and provides for the constitution of a Council for carrying  out the objects of the Act.  The Central Council,inter alia, has the  power  to  admit  members to  the  Institute,  to  take disciplinary action, and to regulate and maintain the status and  standard  of  the professional  qualifications  of  the members  of the Institute.  It is needless to say  that  the profession of chartered accountant is a respectable one  and the   duties  of  chartered  accountants  are  onerous   and responsible.  They are all educated and qualified men and on their efficiency and integrity depends the stability of many of  the institutions in the country.  It cannot,  therefore, be gainsaid that the candidates seeking to become members of the  said Council which regulates the conduct of  chartered accountants  shall necessarily be persons of high  integrity and above criticism. With  this background we shall now proceed to  consider  the arguments raised in the appeals. To appreciate the contentions of the parties it will be con- venient  to collect at one place the relevant provisions  of the Act and the Regulations. The Act                .Section  22.  For the purpose of  this  Act,               the expression professional misconduct"  shall               be  deemed  to include any  ,act  or  omission               specified in any of the Schedules, but nothing               in  this section shall be construed  to  limit               or .abridge in any way the power conferred  or               duty cast on 260                the Council under sub-section (1) of  section               21  to inquire into the conduct of any  member               of    the    Institute   under    any    other               circumstances.                Section   30  (1).   The  Council   may,   by               notification  in  the Gazette of  India,  make               regulations  for the purpose of  carrying  out

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             the  objects of this Act, and a copy  of  such               regulations  shall be sent to each  member  of               the Institute.                (2)  In particular, and without prejudice  to               the  generality of the foregoing  power,  such               regulations may provide for all or any of  the               following matters                (b)  the  manner  in which elections  to  the               Council and the Regional Councils may be held.                     THE SECOND SCHEDULE                            Part I                A  chartered accountant in practice shall  be               deemed   to   be   guilty   of    professional               misconduct, if he-                Clauses (1) to (10)                           Part II                A   member  of  the  Institute,  whether   in               practice or not, shall be deemed to be  guilty               of professional misconduct, if he-                (i)  contravenes  any  of the  provisions  of               this Act or the regulations made thereunder.                (ii) is guilty of such other act or  omission               as  may  be specified by the Council  in  this               behalf,  by  notification in  the  Gazette  of               India.                Regulation 54-A.  Disciplinary action against               member in connection with conduct of  election               :                A member of the Institute shall be liable for               disciplinary  action  by  the  Council  if  he               adopts one or more of the following  practices               with  regard to the election to  the  Council,               namely                (1)                (2)  Undue  influence,  that is to  say,  any               direct or indirect interference or attempt  to               interfere on the                             261                part  of a candidate or of any  other  person               with the connivance of the candidate, with the               free exercise of any electoral right ;                Provided that-                A  declaration  of policy or a promise  of  a               particular  action, or the mere exercise of  a               legal  right without intent to interfere  with               an electoral right, shall not be deemed to  be               interference   within  the  meaning  of   this               clause.                (4B).    The   canvassing   for   votes,   or               soliciting   the  vote  of  any  elector,   or               persuading  any elector not to vote,  for  any               particular   candidate,  or   persuading   any               elector  not  to  vote  at  the  election,  or               exhibiting  any  notice or sign  board  (other               than  an  official  notice)  relating  to  the               election,  by  a  candidate or  by  any  other               person  with  the connivance  of  a  candidate               within a distance of 200 meters from a polling               booth. In exercise of the power conferred under cl. (ii) of Part 11 of the Second Schedule to the Act, on February 22, 1964, the Council issued the following notification :                ......  a  member of the Institute  shall  be               deemed   to   be   guilty   of    professional               misconduct, if in connection with election  to

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             the  Central Council and/or Regional  Councils               of  the Institute, he is found to  have  taken               part,  directly or indirectly, either  himself               or  through  any other person, in any  of  the               following activities :-                (i)  issuing manifestoes or circulars.                (ii)  canvassing votes by visiting places  of               business  or residence of voters in any  other               manner; and                (iii) organising parties to entertain voters. The gist of the said provisions may be stated thus : For the purpose of the Act the expression "professional  misconduct" includes  the act or omission specified in the  Schedule  to the  Act.   The  Council  also  may  by  notification   make regulations  in  connection with the conduct  of  elections. Under Regulation 54-A(2) and (4B) a member of the  Institute shall be liable to disciplinary action by the Council if  he was guilty of the practice, among others, of undue influence and  canvassing as defined therein.  On February  22,  1964. the  Council issued a notification specifying that a  member of the Institute shall be deemed to be guilty of misconduct, if,  in connection with the election to the Councils of  the Institute,  he  is  found to have taken  part,  directly  or indirectly, either himself or 262 through any. other person, or to have issued manifestoes  or circulars  or to have canvassed votes by visiting places  of business.  or residence, of voters or in any  other  manner. Part I of the Second Schedule to the Act describes the  acts of   professional  misconduct  in  relation   to   chartered accountants  in practice requiring action by the High  Court and  Part II thereof states, generally that a member of  the Institute.’  whether in practice or not, shall be deemed  to be guilty of professional misconduct, if’ he contravenes any of the provisions of the Act or the Regulations or is guilty of  such  other act or omission as may be specified  by  the Council  in this behalf, by notification in the  Gazette  of India.   Now the question is whether the said  notification is  invalid for any of the reasons mentioned above.   It  is said  that the power of the Council to issue a  notification is limited by the express provisions of cl. (ii) of Part  11 of the Second Schedule to the Act.  As under cl. (i) of Part 11 of the.  Second Schedule to the Act, the contravention of the  provisions  of  the  Act or  of  the  Regulations  made thereunder   was  professional  misconduct,   the   argument proceeded,  the  expression "other act or omission"  in  cl. (ii)  should  be  an  act or-  omission  other  than  those- provided  in the Regulations.  Elaborating this argument  it was  said  that under Regulation 54-A(2)  the  appellant  in Civil  Appeal No. 447 of 1965 had a legal right  to  canvass within  the meaning of the said proviso, that the  notifica- tion in effect depriving him of that right was in derogation of the the said Regulation and, was, therefore, illegal.  It was also argued that the said notification was  inconsistent with  cl.(4B)  of  Regulation  54A,  as  under  that  clause canvassing  for  votes or soliciting votes of  electors  was prohibited within a distance of 200 meters from the  polling booths, thereby impliedly permitting canvassing beyond  that distance, and that, therefore, the notification  prohibiting canvassing  generally was in direct conflict with the  same. The  further argument was that cl. (4B) of  Regulation  54-A detracted  only to a limited extent from the legal right  to canvass and that any prohibition against general  canvassing beyond  the limits laid down by cl. (4B) of Regulation  54-A

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contravened both cl. (2) and cl. (4B) of Regulation 54-A and was bad. The argument at first sight appears to be attractive, but it involves  a fallacy.  The Regulations  enumerated  different heads for disciplinary action in connection with the conduct of  an  election; but they did not, either expressly  or  by necessary  implication,  prohibit the  Council  from  adding additional   heads  of  disciplinary  action.    While   the Regulations  provide  for  disciplinary  action  for   undue influence  and  for  canvassing  for  votes  etc.  within  a distance   of   200  metres  from  a  polling   booth,   the notification placed other acts and omissions under different heads of misconduct.  There is no inherent conflict  between undue  influence  and canvasisng of votes  by  visiting  the places of business or the residence of the voters.                             263 So  took  there is no conflict between canvassing  of  votes within.  a distance of 200 meters from a polling  booth  and canvassing  of  votes  by visiting  places  of  business  or residence  of voters or in any other manner.  All the  three can stand together. Nor  can  we agree that apart from the  fundamental  rights, which the appellant does not claim in this appeal, he has an unlimited  right to canvass for votes, either  statutory  or otherwise.  Nothing has been placed before us to sustain any such  right.  His rights are defined by the statute  and  we cannot  say  that  such an unlimited  right  to  canvass  is implicit in the right to stand for election. We  cannot  also  agree with the  learned  counsel  for  the appellant that the notification is unreasonable in the sense that  expression is understood in law.  As noticed  earlier, the electorate is art enlightened body and the elections are to  a  council designed to maintain high  standards  of  the profession.    The   voters  are  expected   to   know   the qualifications of every candidate and they are certainly  in a ,position to vote for the best candidate.  Canvassing  may be  necessary  for  explaining to an  illiterate  voter  the qualifications  of a candidate and the principles for  which he  stands  or in the case of vast electorate to  which  the candidate may not be familiar, but no such necessity  exists in  the case of enlightened voters of a compact  electorate. If  the Council thought that malpractices existed and  undue and unwholesome pressures were brought to bear on the voters and  for that reason, with a view to purify the  conduct  of elections,  if it issued the said  notification  prohibiting canvassing,   we   cannot  say  that   the   Council   acted unreasonably  in issuing the said notification.   It  issued the notification in the best interests of the purity of  the elections and ultimately in the interests of the  profession itself.   We, therefore, hold that the Council had not  only power  to issue the notification prohibiting  canvassing  of votes   but  also  that  the  said  notification   was   not inconsistent  with either the provisions of the Act  or  the Regulations made thereunder. Now  coming  to the cross-appeal, the High Court  held  that issuing  illegible  manifestoes or circulars  directly  came into conflict with the proviso to cl. (2) of Regulation 54-A which  says that a declaration of policy or a promise  of  a particular  action,  or the mere exercise of a  legal  right without  intent to interfere with an electoral right,  shall not  be deemed to be interference within the meaning of  the said  clause.  Doubtless the proviso to  Regulation  54-A(2) saves   issuing  of  manifestoes  and  circulars  from   the operation of the substantive part of the clause.  The act of issuing  a  manifesto  or a circular,  therefore,  does  not

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amount  to  undue  influence with in  the  meaning  of  that clause.   If  the  notification says that  such  issuing  of manifestoes  or circulars is undue influence,  it  certainly comes into conflict with that clause.  But the  notification does  not,  and indeed it cannot, amend  the  definition  of "undue influence".  The 264 said  Act, though it does not amount to an undue  influence, is  constituted a different head of professional  misconduct which the Council is authorized to do under cl. (ii) of Part 11 of the Second Schedule to the Act.  From this perspective no  conflict between the two arises.  We cannot,  therefore, agree  with  the  reasoning  of  the  High  Court  that  the notification   in  so  far  as  it  prohibited  issuing   of manifestoes and circulars was illegal. In  the  result,  we hold that the  entire  notification  is valid.  Civil Appeal No. 447 of 1965 is dismissed with costs and  Civil  Appeal No. 501 of 1965 is allowed, but,  in  the circumstances, without costs. R.K.P.S.                        C. A. 447 of 1965 dismissed.                               C.   A. 501 of 1965 allowed. 265