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PETITIONER: THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

       Vs.

RESPONDENT: M/S. PRICE WATERHOUSE & ANR.

DATE OF JUDGMENT:       11/07/1997

BENCH: K. RAMASWAMY, G. B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T K. Ramaswamy, J.      Leave granted.      This appeal  by special  leave arises from the Judgment and Order  of the High Court of Delhi, made on September 12, 1996 in Civil Writ No. 676 of 1994.      The Export-Import  Bank of  India (for short, the ’EXIM BANK) commissioned  the services  of the  respondent firm to assist it  in the  preparation of  a book  entitled "India - Your Software  Opportunity". The  need for  such booklet was explained by  the EXIM  Bank at  the  inside  cover  of  the booklet which reads as under :      "The information  set out  in  this      publication,  meant   for   general      guidance,  has   been  compiled  by      Price  Waterhouse  (India)  at  the      instance of  the  Export  -  Import      Bank of  India (EXIM  BANK).  While      the booklet  is not  intended to be      an  exhaustive   Treatment  of  the      subject, the  information contained      is    based    on    sources    and      interpretations of applicable Legal      provisions believed  to be reliable      for which,  however, both Exim Bank      and Price  Waterhouse  (India)  are      unable to assume any Liability. For      further information, clarifications      and assistance,  interested parties      may    communicate    with    Price      Waterhouse offices located at:      1102/1107, Raheja Chambers, Nariman      Point, Bombay - 400021.      Telephones :  235138/2870466. Talex      : (011) 5791.      B-102, Himalaya House, 23, Kasturba      Gandhi Marg, New Delhi - 110001.      Telephones : 3313591/3312656. Telex      : (031) 63070."      The  appellant-Council   had  at   treated   the   said

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publication as  amounting to  solicitation  of  professional attainments, violating  clauses (6)  and (7)  of Part  I  of First Schedule  to the  Chartered Accountants Act, 1949 (for short,  the   ’Act’)  and  called  upon  the  respondent  by proceedings dated  December 13, 1990 to send the name of the members who  were answerable to the charge of misconduct. On January  26,  1991,  respondent  No.2,  Shri  Amal  Ganguli, partner of the first respondent filed his written statement. On consideration thereof, by proceedings dated 5-6th August, 1991,  the  Council  prima  facie  opined  that  the  second respondent  and   referred  the  case  to  the  Disciplinary Committee for enquiry and report. The Disciplinary Committee submitted its  report on  January 16, 1993. The Disciplinary Committee sent a copy of the report to the second respondent informing him  that if  he  so  desired,  he  may  send  his representation against  the said  report within  30 days. By further letter  dated July  6, 1993,  it was communicated to him that  the report  of the Disciplinary Committee would be considered by the Council in its meeting from August 5 to 7, 1993 and  that he  can appear in person or through a member. On August  5, 1993, he sent a letter stating that the report of the  Disciplinary Authority  may be accepted. On the even date,  the  Council,  after  considering  the  report  dated January 16,  1993 and  the written submissions of the second respondent dated 5, 1993 came to the conclusion that further enquiry was  necessary and  decided that the further enquiry should  be  made  by  the  Disciplinary  Committee.  It  was communicated to  him by  letter dated  December 21, 1993. On receipt thereof,  the from  respondent on  February 2, 1994, filed the  above writ petition in the High Court challenging the power of the Council to refer the matter to Disciplinary Committee  for  further  enquiry.  The  High  Court  in  the impugned judgment opined that by operation of the Regulation 16 made  under the  Act, the Council was devoid of the power to  direct   the  Disciplinary  Committee  to  hold  further enquiry. Accordingly,  it quashed  the letter dated December 21, 1993 and allowed the writ petition. Thus, this appeal by special leave.      Shri Vaidyanathan,  learned counsel  appearing for  the appellant, contends  that the  view taken  by  the  Division Bench is not correct in law. Section 21 of the Act read with Regulation 16(3)  and (4)  gives power  to  the  Council  to direct the  Disciplinary Committee,  which is a fact-finding committee, to  make further  enquiry and to submit a report. The power under Section 21(2) of the Act should be used only after the  Council reaches  the conclusion  that the  second respondent was  not guilty  of  professional  misconduct  of other misconduct. The council would take further action only after consideration of further report to be submitted by the Disciplinary  Committee.   The  view   of  the  High  Court, therefore, is  incorrect. If  the view  of the High Court is upheld, the  primacy would  be given  to the  report of  the Disciplinary Committee  denuding the power to the Council to maintain discipline among the members of the Institute which is deleterious  to maintain  discipline among  its  members. Shri P.P.  Rao, learned  senior counsel  appearing  for  the respondents,  on   the  other   hand,  contends   that   the provisions, being  penal in  nature, require to be construed strictly.  The   Disciplinary  Committee   is  a  high-power committee constituted  under the  Act. If  the  Disciplinary Committee finds  that the  guilt of  misconduct has not been proved, the Council is left with no option but to accept the finding of  no-guilt and  record the  same under sub-section (2) of  Section 21.  In case the finding of the Disciplinary Committee that the member is guilty is not acceptable to the

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Council, only  then, the  Council has  power to remit to the Disciplinary Committee for further enquiry and the operation of  Regulation   16(4)  would   come  into   play.  In  that perspective, on  a  harmonious  interpretation  of  all  the provisions, the finding of the high power committee, namely, the Disciplinary  Committee, should  always be given primacy and serious consideration by the Council before accepting or calling for  further report. From this perspective, the view of the  High Court  is correct in law. He also contends that the Council  has not  applied its  mind to the imputation of misconduct as reflected in paragraph 10 of the Special Leave Petition.  Therefore,  it  has  not  applied  its  mind  and mechanically  acted   upon  to  refer  to  the  Disciplinary Committee for  further enquiry. A reading of the publication itself does  not posit  of any  professional  misconduct  or other misconduct  to be dealt with under the Act. Therefore, there is  no case  made out  warranting  interference  under Article 136 of the Constitution.      Having  regard   to  the  respective  contentions,  the question that  arises for consideration is: whether the view taken by the High Court is correct in law? The High Court in the impugned judgment has held thus:      "The scheme  of  Regulation  16  is      clear and  unambiguous that in case      of      disciplinary      committee      concluding that  a  member  is  not      guilty, it is the end of the matter      and  the  disciplinary  proceedings      have to  be dropped by the Council.      In   case   the   report   of   the      disciplinary  committee  finds  the      member guilty,  another opportunity      is granted  to the  member to  make      representation and on consideration      of    the     report    and     the      representation, if any, the Council      can cause  further  enquiry  to  be      held. The  finding of misconduct is      a serious  matter for  a member and      casts  a   stigma   on   him   and,      therefore, it  appears that Council      has been empowered to get a further      enquiry conduct  on being satisfied      on the  representation of  a member      or otherwise  even after receipt of      a  report   from  the  disciplinary      committee  to  the  effect  that  a      member  is  guilty  of  misconduct.      There is,  however, no  such  power      when     disciplinary     committee      exonerates    a    member    since.      Regulation  16   does  not   permit      further enquiry  to be  held by the      disciplinary committee  when it has      concluded that  the member  is  not      guilty of any professional or other      misconduct.  When  we  compare  old      Regulation  14   with  the  present      Regulation  16,  we  find  a  clear      departure  in   the   language   of      Regulation 16.  Regulation  14  was      wider in its scope and ambit. Under      the   said    Regulation   it   was      permissible   to    cause   further      enquiry being  held even  where the

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    report    of    the    disciplinary      committee was  that the  member  is      not guilty  of any  professional or      other misconduct.  Regulation 16 is      narrow in  its scope and ambit when      compared to  the old Regulation 14.      The Regulation  cannot  be  without      any purpose."      On that  basis, it  was held  that the  report  of  the Disciplinary Committee  being that  the respondent  was  not guilty of  any professional misconduct within the meaning of clauses (6)  and (7)  of Part I of the First Schedule of the Act,  the  Council  had  no  power  to  direct  Disciplinary Committee to hold further enquiry. With a view to appreciate the correctness  of the  above view, it is necessary to look into the  relevant provisions of the Act and the Regulations made thereunder.      Section 2(b)  defines ’Chartered  Accountant’ to mean a person who  is a  member  of  the  Institute.  Section  2(c) defines ’Council’  to mean  the Council  of  the  Institute. Under  Section  2(e)  ’Institute’  means  the  Institute  of Chartered Accountants  of India  constituted under  the Act. ’Registered Accountant’ is define under Section 2(h) to mean any  person  who  has  been  enrolled  on  the  register  of Accountants maintained  by the  Central Government under the Auditor’s  Certificates   Rules,  1932.   A  member  of  the Institute  shall   be  deemed  "to  be  in  practice",  when individually or in partnership with Chartered Accountants in practice, he,  in consideration  of remuneration received or to be  received, as  postulated by  sub-section (2) thereof, engages himself  in the practice of accountancy or offers to perform or  performs  services  involving  the  auditing  or verification of  financial transactions,  books, accounts or records, or  the preparation,  verification or certification of financial  accounting and  related  statements  or  holds himself out  to the  public as  an  accountant;  or  renders professional services  or assistance  in or about matters of principle or  detail relating to accounting procedure or the recording presentation  or certification  of financial facts or date or renders such other services as, in the opinion of the  Council,   are  or  may  be  rendered  by  a  chartered accountant in  practice and  the words  ’to be  in practice’ with their  grammatical variations  and cognate  expressions shall be  construed  accordingly.  The  explanation  is  not relevant for  the purpose,  hence omitted.  Section 5  deals with "Fellows  and Associates"  of the  Institute. Section 6 deals with  certificate of  practice. Section  7 deals  with "Members to  be known  as Chartered  Accountants". Section 9 deals  with   the  "Constitution   of  the  Council  of  the Institute"  for   the  management  of  the  affairs  of  the Institute and  for discharging  the functions assigned to it under the  Act, the details thereof are not relevant for the purpose of  this case.  The "duration and dissolution of the Council" is  dealt with  under Section  14.  Section  19  in Chapter IV  deals with  the "Register" of Members, Chapter V with the  heading ’Misconduct"  which comprise. Sections 21, 22 and  22A. Section  21 is relevant for the purpose of this case which reads as under:      "21. Procedure     in     inquiries      relating to  misconduct of  members      of Institute      (1)  Where    on     receipt     of      information by,  or of  a complaint      made to  it, the  Council is  prima      facie of opinion that any member of

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    the Institute  has been  guilty  of      any    professional     or    other      misconduct, the Council shall refer      the  case   to   the   Disciplinary      Committee shall thereupon hold such      enquiry and  in such  manner as may      be prescribed, and shall report the      result  of   its  inquiry   to  the      Council.      (2)  If on  receipt of  such report      the Council  finds that  the member      of the  Institute is  not guilty of      any    professional     or    other      misconduct,  it  shall  record  its      finding accordingly and direct that      the proceedings  shall be  filed or      the complaint  shall be  dismissed,      as the case may be.      (3)  If on  receipt of  such report      the Council  finds that  the member      of the  Institute is  guilty of any      professional or  other  misconduct,      it   shall    record   a    finding      accordingly and  shall  proceed  in      the  manner   laid  down   in   the      succeeding sub-sections.      (4)  Where the  finding is  that  a      member of  the Institute  has  been      guilty of a professional misconduct      specified in  the  First  Schedule,      the Council  shall  afford  to  the      member of  an opportunity  of being      heard  before   orders  are  passed      against him  on the  case, and  may      thereafter   make    any   of   the      following orders, namely:-           (a)  reprimand the member ;           (b)  remove the  name  of  the      member from  the Register  for such      period, not  exceeding five  years,      as the Council thinks fit :      Provided that  where it  appears to      the Council that the case is one in      which the  name of the member ought      to be removed from the Register for      a period  exceeding five  years  or      permanently, it  shall not make any      order referred  to in clause (a) or      clause (b),  but shall  forward the      case to  the High  Court  with  its      recommendations thereon.      (5)  Where   the    misconduct   in      respect of  which the  Council  has      found any  member of  the institute      guilty is misconduct other than any      such misconduct  as is  referred to      in  sub-section   (4),   it   shall      forward the  case to the High Court      with its recommendations thereon.      (6)  On receipt  of any  case under      sub-section (4) or sub-section (5),      the High Court shall fix a date for      the hearing  of the  case and shall      cause notice  of the  date so fixed      to be  given to  the member  of the

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    Institute  concerned,  the  Council      and to  the Central Government, and      shall afford  such member,  and the      Central Government  an  opportunity      of being  heard, and may thereafter      make any  of the  following orders,      namely :-           (a)  direct      that      the      proceedings be  filed,  or  dismiss      the complaint, as the case may be;           (b)  reprimand the member;           (c)  remove      him      from      membership of  the Institute either      permanently or  for such  period as      the High Court thinks fit;           (d)  refer  the  case  to  the      Council  for  further  inquiry  and      report.      (7)  Where it  appears to  the High      Court that the transfer of any case      pending before  it to  another High      Court  will  promote  the  ends  of      justice  or  tend  to  the  general      convenience of  the parties, it may      so transfer  the case,  subject  to      such  conditions,  if  any,  as  it      thinks fit  to impose, and the High      Court  to   which  such   case   is      transferred shall  deal with  it as      if the  case had  been forwarded to      it by the Council.      Explanation  I:-  In  this  section      "High  Court"   means  the  highest      civil   court    of   appeal,   not      including   the    Supreme   Court,      exercising jurisdiction in the area      in which  the person  whose conduct      is being  inquired into  carried on      business,  or   has  his  principal      place   of    business    at    the      commencement of the inquiry:      Provided  that   where   the   case      relating to  two or more members of      the Institute  have to be forwarded      by the  Council to  different  High      Courts,  the   Central   Government      shall, having regard to the ends of      justice and the general convenience      of the  parties, determine which of      the High Courts to the exclusion of      others shall hear the cases against      all the members.      Explanation II:- For the purpose of      this   section   "member   of   the      Institute" includes  a  person  who      was a  member of  the Institute  on      the date  of the alleged misconduct      although he  has  ceased  to  be  a      member of the Institute at the time      of the inquiry.      (8)  For  the   purposes   of   any      inquiry  under  this  section,  the      Council   and    the   Disciplinary      Committee  shall   have  the   same      powers as  are vested  in  a  civil

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    court  under   the  Code  of  Civil      Procedure, 1908,  in respect of the      following matters, namely:-           (a)  summoning  and  enforcing      the attendance  of any  person  and      examining him on oath;           (b)  the     discovery     and      production of any document; and           (c)  receiving   evidence   on      affidavit.      "Professional    misconduct"     is      defined in  Section 22, which reads      as under ;      "22.    Professional     misconduct      defined           For the  purposes of this Act,      the    expression     "professional      misconduct"  shall   be  deemed  to      include   any   act   or   omission      specified in  any of  eh Schedules,      but nothing  in this  section shall      be construed to limit or abridge in      any way the power conferred or duty      cast  on  the  Council  under  sub-      section  (1)   of  Section   21  to      inquire into  the  conduct  of  any      member of  the Institute  under any      other circumstances."      The procedure  to enquire  into the  misconduct on  the part of  the members  of the  Institute  is  dealt  with  in Section 21.  Sub-sections (1),  (2), (3),  (4) and  (5)  are relevant for the purpose of this case.      By exercise  of the power under Section 30, the Council is empowered  to make Regulations to carry out the object of the Act.  Sub-section (2)  postulates that in particular and without prejudice  to the generality of the foregoing power, "such  regulations  may  provide  for  all  or  any  of  the following  matters".   Section  30(2)  (s)  speaks  of  "the exercise of  disciplinary powers  conferred by  the Act" and Section 30(2)  (l) of "any other matter which is requited to be or  may be prescribed under the Act". Regulation 16 which was amended in 1988 read as under :      "Report   of    the    Disciplinary      Committee.      (1)  The   Disciplinary   Committee      shall  submit  its  report  to  the      Council.      (2)  Where  the   finding  of   the      Disciplinary Committee  is that the      respondent     is     guilty     of      professional    and     or    other      misconduct, a copy of the report of      the Disciplinary Committee shall be      furnished to  the respondent and he      shall be  given the  opportunity of      marking a representation in writing      to the Council.      (3)  The Council shall consider the      report    of    the    Disciplinary      Committee    along     with     the      representation in  writing  of  the      respondent, if  any, and if, in its      opinion,  a   further  enquiry   is      necessary, shall cause such further      enquiry  to  be  made  whereupon  a

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    further   enquiry    to   be   made      whereupon a further report shall be      submitted   by   the   Disciplinary      Committee.      (4)  The  Council   shall,  on  the      consideration of the report and the      further report,  if  any,  and  the      representation in  writing  of  the      respondent,  if   any,  record  its      findings.      Provided that  if the report of the      Disciplinary Committee  is that the      respondent is  not  guilty  of  any      professional or  other  misconduct,      the Council  shall not  record  its      findings contrary  to the report of      the Disciplinary Committee.      (5)  The  finding  of  the  Council      shall  be   communicated   to   the      complainant and the respondent."      Section 21  read with Regulation 16 would indicate that where the  Council, upon  receipt of information by, or of a complaint made  to it,  is prima  facie of  opinion that any member of  the Institute has been guilty of any professional or other  misconduct defined under Section 22 of the Act, it is enjoined to refer the case to the Disciplinary Committee. The  Disciplinary  Committee  shall,  thereupon,  hold  such enquiry and  in such a manner as may be prescribed and shall report the  result of  its enquiry  to the  Council.  If  on receipt of such report, the Council finds that the member of the institution  is not  guilty of any professional or other misconduct, it  shall record a finding under sub-section (2) thereof and accordingly direct that the proceedings shall be filed or complaint shall be dismissed, as the case may be.      As seen  earlier, under  Regulation 16(1),  it shall be the duty  of the Disciplinary Committee to submit its report to the  Council under  clause  (1)  thereof.  In  case,  the finding   of    guilt   of    a   member   of   professional misconduct/other misconduct  is reported by the Disciplinary Committee,  a   copy  thereof  shall  be  furnished  to  the delinquent member  and he  shall be  given an opportunity to make representation in writing to the Council. This would be done under  sub-regulation (2) of Regulation 16. Thereon, by operation of  sub-regulation (3), the Council shall consider the report  of the  Disciplinary Committee  along  with  the representation in  writing of the delinquent member, if any. If on  consideration thereof,  the Council is of the opinion that the  further enquiry is necessary, it shall direct such further enquiry to be made, whereupon a further report shall be submitted  by the  Disciplinary Committee. Sub-regulation (4) of  Regulation 16  envisages that  the Council shall, on the consideration  of the  report and the further report, if any, and  the representation  in writing  of the  respondent record its  findings. Under  the  proviso  thereto,  if  the report of  the Disciplinary Committee is that the respondent is not  guilty of  any professional or other misconduct, the Council shall not record its findings contrary to the report of  the   Disciplinary  Committee.   Sub-section  (3)   also envisages that  if on  receipt of  such report  the  Council finds that  the member  of the  Institute is  guilty of  any professional or  other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in the succeeding sub-sections,  namely, sub-section  (4), (5)  and (6) in  awarding appropriate  punishment or may refer to the High Court,  under sub-section  (6),  for  award  of  higher

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penalties which  the High  Court may  deal with  under  sub- section (7) thereof.      A combined  reading of  the above  statutory provisions would indicate  that in  case the  Council  finds  that  the report of the Disciplinary Committee recording "no-guilt" is not correct  or relevant  material was not considered by the Disciplinary Committee,  the Council  has the power the call further report from the Disciplinary Committee. Though prima facie the  arguments of  Shri P.P.  Rao  is  attractive,  on deeper probe,  it is  difficult to  give acceptance  to  the contention that the report of "no-guilt" by the Disciplinary Committee should  be given  primacy as  it would deplete the content of  the  power  to  maintain  discipline  among  the members of  the  power  to  maintain  discipline  among  the members of  the Institute. The ultimate control over conduct of the members is by the Council. The Disciplinary Committee is a  fact-finding body  which is  a body subordinate to the Council as  a fact-finding  body which is a body subordinate to the  Council as  a fact-finding authority. If its finding of guilt  or non-guilt  receives finality,  it  denudes  the Council of  the  power to direct further appropriate enquiry into the  professional or  other misconduct  not  adequately dealt with  by the  Disciplinary Committee.  Similarly,  the Council would  be disabled  to exercise  effective vigil and supervision over the professional or other misconduct of the members of  the Institute.  The Parliament has invested that power with the Council and the construction suggested allows the tail  to wag  while the  controlling body,  the  council lamentably  look   at  it.  Such  a  construction  would  be deleterious  to   the  maintenance   of  discipline  or  the professional conduct  on the  part of  the  members  of  the Institute or Associate Members of the Institute, as the case may be.  It  is  true  that  the  discipline  sought  to  be maintained is  penal in  nature; nonetheless, maintenance of discipline or  professional or  other conduct of the members or associate  members is  salutary and paramount to maintain public confidence  in the  members of  the Institute  and to inculcate  sense   of  discipline   and  excellence  in  the performance of  the functions  as member of the Institute or associate member  of the  Institute, as the case may be. The contrary view would easily defeat the purpose of the Act and the object  behind  the  regulatory  measures  envisaged  in Section 21  of the  Act. Regulation  16 is  only an enabling provision to  conduct by the Disciplinary Committee which is a fact-finding  subordinate delegated  body whose finding is not conclusive on the non-guilt of the professional or other misconduct of  the  member  of  the  Institute.  A  combined reading of  relevant provisions in Section 21 and Regulation 16 does indicate that the recording of a finding of guilt or non-guilt by the Council is mandatory to take further action or to  dismiss the  complaint or  for further  process.  The Council  is   required   to   consider   independently   the explanation submitted by the member and the evidence adduced in the  enquiry before  the Disciplinary  Committee and  the report of  the Disciplinary  Committee. It  provides an  in- built mechanism  under which  the Council itself is required to examine the case of professional or other misconduct of a member of  the Institute or associate member, taking the aid of the  report submitted  by the Disciplinary Committee, the evidence adduced  before the  Committee and  the explanation offered  by   the   delinquent   member.   Entire   material constitutes the record of the proceedings before the Council to reach  a finding  whether or  not the  delinquent  member committed professional  or other  misconduct, Otherwise, the primacy accorded to the report of the Disciplinary Committee

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attains finality,  denuding the  Council  of  the  power  of discipline over  the member  of the  Institute;  that  would render deleterious  effect on  the maintenance of discipline among the  members or associate members of the Institute. In this behalf,  it is  necessary to  consider the view of this Court prior  to the amendment of the Regulations in 1988. In Institute of Chartered Accountants of India vs. L.K. Ratna & Ors. [(1986) 4 SCC 537], this Court, in paragraph 11, summed up the legal position as under :      "It is  apparent that in the scheme      incorporated in  Section 21  of the      Act     there      are     separate      functionaries,   the   Disciplinary      Committee,  the   Council  and,  in      certain cases,  the High Court. The      controlling   authority    is   the      Council, which  is only logical for      the Council  is the  governing body      of the  Institute. When the Council      receives information or a complaint      alleging  that   a  member  of  the      Institute is  guilty of misconduct,      and it  is prima  facie of  opinion      that  there  is  substance  in  the      Disciplinary     Committee.     The      Disciplinary  Committee   plays   a      subordinate role.  It  conducts  an      inquiry into the allegations. Since      the inquiry  is into allegations of      misconduct  by   the   member,   it      possesses the character of a quasi-      judicial      proceeding.       The      Disciplinary  Committee  thereafter      submits a  report of  the result of      the inquiry  to  the  Council.  The      Disciplinary Committee  is merely a      Committee of  the Institute  with a      function  specifically  limited  by      the provisions  of the  Act.  As  a      subordinate body, it reports of the      Council, the  governing  body.  The      report will  contain a statement of      the   allegations,    the   defence      entered by  the member, a record of      the evidence  and  the  conclusions      are   the    conclusions   of   the      Committee. They are tentative only.      They   cannot    be   regarded   as      ’findings’.    The     Disciplinary      Committee is  not vested by the Act      with power  to render any findings.      It  is   the   Council   which   is      empowered  to   find  whether   the      member  is  guilty  of  misconduct.      Both  Section   21(2)  and  Section      21(3) are  clear as  to that. If on      receipt of  the report  the Council      finds that the member is not guilty      of   misconduct,    Section   21(3)      requites it  to  record  a  finding      accordingly,  and   thereafter   to      proceed in  the manner laid down in      the  succeeding  sub-sections.  So,      the finding  by the  Council is the      determinative decision  as  to  the

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    guilt of the member, and because it      is determinative  the  Act requires      it to be recorded. A responsibility      so grave  as the determination that      a member  is guilty  of misconduct,      and the  recording of that finding,      has been  specifically assigned  by      the Act  to the governing body, the      Council. It  is also  apparent that      it is  only upon  a  finding  being      recorded by  the Council  that  the      Act  moves  forward  to  the  final      stage    of    penalisation.    The      recording of  the  finding  by  the      Council   is   the   jurisdictional      springboard   for    the    penalty      proceeding which follows."      And in  paragraph 13,  it was held that "at this point, it is  necessary to  advert to  the fundamental character of the power conferred on the Council. The Council is empowered to find  a member  guilty of  misconduct. The  penalty which follows is  so harsh  that it may result in the removal from the Register of members for substantial number of years." In that case,  the question  was: whether the delinquent member was entitled  to hearing  before the  delinquent member  was entitled  to  a  hearing  before  the  Council  reached  the conclusion of  the guilt of professional misconduct. In that perspective, this  Court  read  into  it  the  principle  of natural justice and held that an opportunity of hearing is a facet of  fair  procedure  and  accordingly  the  delinquent member was  entitled to  a hearing before the Council, prior to the Council recorded the finding of guilt of professional misconduct. Here,  it may  be illustrated that the effect of giving primacy  to the  finding recorded by the Disciplinary Committee is to make it conclusive. Take for instance, where the Committee  records a  finding of  guilt of  professional misconduct. When  the matter comes up before the Council and the Council  finds that  the  evidence  adduced  before  the Disciplinary Committee  in proof  of professional  or  other misconduct is  not established,  then the Committee will not have any  power to  record a  finding except  to call  for a further finding  from the  Disciplinary  Committee  in  that behalf which does not appear to be warranted. If the Council reaches the conclusion that professional or other misconduct was not  proved, without calling for any further finding, it can straightaway  exonerate the  delinquent  member  of  the charge of  professional or  other misconduct  and would drop the action  or dismiss  the complaint. On the other hand, if the finding  of  not  guilt  recorded  by  the  Disciplinary Committee is  not consistent  with the  evidence on  record, then the Disciplinary Committee will be denuded of the power to call  for further report, obviously, rendering Regulation 16(3) as  surplusage. It  is settled  rule of interpretation that all  the provisions would be read together harmoniously so as  to give  effect to all the provisions as a consistent whole rendering  no part  of the  provisions as  surplusage. Otherwise, by  process of  interpretation,  a  part  of  the provision or a clause would be rendered otiose. Keeping this legal  principles,   perspectives,  practical   effect   and contents of  the power  of  the  Disciplinary  Committee  or Council in  the backdrop  of our above consideration, we are of the  considered view  that the view expressed by the High Court is clearly incorrect and it would defeat the object of the  Act   of  maintaining  professional  standards  of  the professional conduct  or other  conduct consistent  with the

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dignity of the profession of the accountants. We, therefore, hold that  the Council  has the  power to  call for  further report from  the Disciplinary  Committee on non-guilt of the professional or  other misconduct of the respondent. In this backdrop, the proviso to sub-regulation (4) of Regulation 16 becomes relevant.  In case,  on  the  second  occasion,  the report  of   the  Disciplinary  Committee  still  holds  the delinquent member  not guilt holds the delinquent member not guilty, there  is no  option left  to the Council except, by operation of  proviso to sub-regulation (4) of Regulation 16 read with  Section 21(2),  as the  Council is  enjoined,  to record finding  of no  guilt since  the power of calling for further report would stand exhausted. Any other view, in our considered opinion, would defeat the object of the Act.      The contention  of Shri  Rao that  the Council  had not applied its  mind to  the facts of this case is not correct. In fact,  the proceedings dated December 21, 1993, viz., "on consideration of  the report  of Disciplinary  Committee and your written  statement, the  Council decided  that  further enquiry in  the  case  was  necessary  to  be  made  by  the Disciplinary Committee keeping in view the following issues:      1.   What  were   the   terms   and      details of  engagement accepted  by      your firm  from EXIM  Bank relating      to publication of booklet entitled,      "India     -      Your     Software      Opportunity"?      2.   Were    the     contents    of      ’insertion’    in    the    booklet      containing  your   firms  name  and      address  in   accordance  with  the      engagement accepted?      3.   Whether  you/your   firm   had      rendered assistance,  as offered in      the ’insertion’, to the "interested      parties"?      4.   Whether  you/your   firm   had      communicated with  the  "interested      parties" for rendering information,      clarifications and assistance?      5.   Whether    you/your     firm’s      communications with the "interested      parties" were  limited to providing      information and  clarifications  on      the  matters   contained   in   the      booklet?      6.   Nature of  assistance provided      by you/your firm to the "interested      parties"?      7.   Whether    the    remuneration      accepted by  you/your firm from the      EXIM  Bank  included  the  jobs  of      rendering              information,      clarifications  and  assistance  to      the "interested parties"?      8.   Whether  you/your   firm   had      accepted  remuneration   from   the      "interested parties"  for rendering      information,   clarifications   and      assistance separately?      9.   Whether  you/your   firm   had      received any professional work from      the      "interested       parties"      communicated or contracted pursuant      to publication  of the  booklet  or

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    from their associates?      10.  Whether   the   communications      effected by  you/your firm with the      "interested parties" were either on      your or your firm’s letter-head? If      so, the manner and style of signing      the letters."      do indicate  the active  application of  its  mind  and consideration  to   various   aspects   mentioned   in   the questionnaire based thereon and, therefore, it is not a case of  mechanical   incantation  of   the  provisions  in  sub- regulation (3)  of Regulation 16. It is true that in para 10 of the Special Leave Petition, they have mentioned that what they are  required to  consider is  the report  and not  the evidence adduced before the Disciplinary Committee is only a mistaken impression  of the  Council as  projected,  but  by reason thereof, it is difficult to conclude that the Council has not  applied its  mind  to  the  relevant  facts  before calling for further report.      Though Shri  Rao sought  to impress  upon us  that on a reading of  the report  originally taken  note of  from  the cover  of  the  booklet  of  the  EXIM  Bank,  it  does  not constitute professional  misconduct. We  decline to  go into that question  for the  reason that  any finding recorded by this Court  would adversely  affect either party. Therefore, we do  not propose to express any opinion in that behalf. It is for  the Council  to consider the same, after the receipt of  further  report  from  the  Disciplinary  Committee.  We accordingly allow  the appeal, set aside the judgment of the High Court and uphold the direction issued by the Council to Disciplinary Committee to make further enquiry and to submit a further report in that behalf.      The  appeal   is  accordingly   allowed  but,   in  the circumstances, without costs.