Judgment ( 1. ) THE petitioner has preferred this revision petition under Section 22-A (2) of the Chartered Accountants Act, 1949 (in short the Act) against an order dated 21-10-2004, passed by the respondent No. 2 in ref. No. 25-CA (229)/02 exonerating the respondent No. 1, a Chartered Accountant and a member of the Institute of Chartered Accountants of India of the charges levelled against him by the petitioner in his complaint dated 25-4-2002 (Annex. P-3 ). ( 2. ) THE material facts leading to this revision petition are that Shri Gokul Chandramaji mandir Trust, Burhanpur is a registered public trust. In the year 1969-70 the respondent No. 1 was appointed as Auditor and auditing the accounts of the said Trust. On 17-2-1991 he was appointed as Trustee of the said Trust. Shri Gokul Chandramaji mandir Trust is registered under the M. P. Public Trust Act, 1951 and its registration number is 62. The respondent No. 1 was auditing the accounts of the said Trust since 1969-70. The Trust was registered in the year 1955 having exclusively object of religious and charitable purpose. Since 1970 its accounts are audited and reports are being submitted regularly to the Sub-Registrar of Public Trust, Burhanpur. On 18-7-1994 respondent No. 1 received a sum of rs. 1,000/- for auditing the accounts of 1990-91 to 1993-94 (four years ). ( 3. ) THE petitioner on 25-4-2002 lodged a complaint against the respondent No. 1 before the respondent No. 2 for professional misconduct alleging therein that : - (i) respondent No. 1 is auditing the accounts of the Trust and also getting fees where he himself is a Trustee, and thus he is guilty of professional misconduct under clause (4) of Part I of Second Schedule framed under Sections 21 (4) and 22 of the act, and (ii) the respondent No. 1 knowingly failed to show the fixed deposit receipts in the financial statement worth Rs. 6,00,000. 00 of the Dena Bank, City Branch, Burhanpur and thus was guilty of professional misconduct under Clause (5) of Part I of Second schedule of the Act. A copy of the complaint was sent to the respondent No. 1 to submit his reply vide annex. P/10. Thereafter the petitioner on 28-6-2002 lodged an additional complaint vide Annex. P/6 which was replied by the respondent No. 1 in the shape of rejoinder vide Annex. P/11. A copy of the complaint was sent to the respondent No. 1 to submit his reply vide annex. P/10. Thereafter the petitioner on 28-6-2002 lodged an additional complaint vide Annex. P/6 which was replied by the respondent No. 1 in the shape of rejoinder vide Annex. P/11. The respondent No. 2 considered the complaint in accordance with the provisions of Regulation 12 (11) (i) of the chartered Accountants Regulations, 1988 (in short the Regulations ). The Council was prima facie of the opinion that the respondent No. 1 is not guilty of any professional or other misconduct and as such the papers relating to the case have been filed. The said decision dated 21-10-2004 was communicated to the parties vide Annex. P/1. After receipt of Annex. P/1 dated 21/10/ 2004 the petitioner wrote a letter to the respondent No. 2 to furnish him with a copy of the detailed grounds on which the respondent No. 2 did not find the respondent No. 1 prima facie guilty of professional misconduct. The respondent No. 2 vide communication dated 2-11-2004 (Annex. P/19) intimated him that the deliberations of the council are confidential and only the decision of the Council is to be conveyed to the parties as required under Regulation 12 (11 ). The petitioner is aggrieved by the communication dated 21-10-2004 and filed this revision petition on the ground that reason is must and contended that as per the Act and Regulations, the respondent No. 2 is bound to disclose the reasons by passing a speaking order. In the present case no reason has been assigned and; therefore, the impugned order is bad in law. ( 4. ) CLAUSE 4 and 5 of Part I of Second schedule of the Act reads as under : - " (4) expresses his opinion on financial statements of any business or any enterprise in which he, his firm or a partner in his firm has a substantial interest, unless he discloses the interest also in his report; (5) fails to disclose a material fact known to him which is not disclosed in a financial statement; but disclosure of which is necessary to make the financial statement not misleading;" ( 5. ) IN spite of service of notice to the respondent No. 1 no reply has been filed by him. ) IN spite of service of notice to the respondent No. 1 no reply has been filed by him. The respondent No. 2 has filed its detailed reply and raised a preliminary objection regarding the maintainability of this revision petition on the ground that under the Act there is no provision to file revision under Section 22-A (2) of the Act. The present revision filed by the petitioner is not maintainable and prayed for its dismissal. ( 6. ) SECTION 22a of the Act reads as under: - "section 22a. Appeals.- (1) Any member of the Institute aggrieved by any order of the Council imposing on him any of the penalties referred to in sub-section (4) of Section 21, may within thirty days of the date on which the order is communicated to him, prefer an appeal to the High court. Provided that the High Court may entertain any such appeal after the expiry of the said period of thirty days, if it is satisfied that the member was prevented by sufficient cause from filing the appeal in time. (2) The High Court may, on its own motion or otherwise, after calling for the records of any case, revise any order made by the council under sub-section (2) or sub-section (4) of Section 21 and may : - (a) Confirm, modify or set aside the order; (b) impose any penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order; (c) remit the case to the Council for such further inquiry as the High Court considers proper in the circumstances of the case; or (d) pass such other order as the High court thinks fit; provided that no order of the Council shall be modified or set aside unless the Council has been given an opportunity of being heard and no order imposing or enhancing a penalty shall be passed unless the person concerned has also been given an opportunity of being heard. Explanation : - In this section "high court" and "member of the Institute" have the same meanings as in Section 21. " ( 7. ) A right of appeal is provided to the high Court under Section 22-A (1) of the Act. Explanation : - In this section "high court" and "member of the Institute" have the same meanings as in Section 21. " ( 7. ) A right of appeal is provided to the high Court under Section 22-A (1) of the Act. Besides the High Court has also suo motu powers as well under Section 22-A (2) of the act to examine the correctness of the order of the Council vis-a-vis its allegation of misconduct. As such it is not as if the party aggrieved, is left with no remedy to ventilate his grievances. Thus, it cannot be said that the revision filed by the petitioner is not maintainable. Remedy of revision is provided under Section 22-A (2) of the Act. Therefore, i am of the considered view that the present revision petition filed by the petitioner is maintainable. ( 8. ) THE Chartered Accountants Act, 1949 has been brought on Statute Book with the object of developing and establishing a system in which the accountants will, in autonomous association of themselves, largely assume responsibilities involved in the discharge of their public duties by securing maintenance of the requisite standards of professional qualifications, discipline and conduct. That the control of the Central government shall be confined to a very few specified matters. Preamble of the Act makes it clear that it is expedient to make provision for the regulation of profession of Chartered Accountants. Section 2 (1) (e) of the Act defines institute to mean the Institute of chartered Accountants of India constituted under the Act. Section 3 provides for incorporation of the Institute and takes within its fold all persons whose names are entered in the Register under the provisions of the act so as to constitute a body corporate with perpetual succession and common seal. Section 9 of the Act provides for constitution of the Council of the Institute which will manage the affairs of the Institute and discharge the functions assigned to it under the Act. Section 9 of the Act provides for constitution of the Council of the Institute which will manage the affairs of the Institute and discharge the functions assigned to it under the Act. Section 15 of the Act lays down the functions of the Council and under subsection (2) of Section 15 of the Act in particular without prejudice to the generality of the foregoing power under sub-section (1)- the duties of the Council shall include various items denoted from (a) to (1) Section 17 of the Act empowers the Council to constitute from amongst its members the Standing Committees namely (i) Executive Committee, (ii) Examining committee, (iii) Disciplinary Committee. Sub-section (3) of Section 17 specifies the composition of each of such Standing Committees, namely, the president and the Vice-President, ex officio, and three other members of the Council elected by the Council; but the Proviso under sub-section (3) specifies that out of such three other members of the Council, elected by the Council, two shall be elected by the council and the third shall be nominated by the Central Government, from amongst the persons nominated to the Council by central Government under Section 9 of the act. Therefore, the legislature has advisedly, to remove the charge of bias, provided by virtue of Section 9 and 17 (3) of the Act, nomination of certain members by Central government. ( 9. ) CHAPTER V of the Act deals with misconduct. Section 21 provides for procedure in inquiries relating to misconduct of members of Institute. Sub-section (1) of Section 21 states that Council shall refer a case to the Disciplinary Committee where the council is in receipt of information or is in receipt of a complaint and is of prima facie opinion that any members of the Institute in regard to whom the information or complaint has been received, has been guilty of any professional or other misconduct. Upon such reference being made the Disciplinary committee shall hold inquiry in the manner prescribed and shall report the result of the inquiry to the Council. Sub-section (2)of Section 21 provides that if the Council on receipt of such report finds that the member is not guilty of any professional or other misconduct it shall record such a finding accordingly and direct the proceeding to be filed or the complaint to be dismissed. Sub-section (2)of Section 21 provides that if the Council on receipt of such report finds that the member is not guilty of any professional or other misconduct it shall record such a finding accordingly and direct the proceeding to be filed or the complaint to be dismissed. Subsection (3) of Section 17 of the Act lays down that upon receipt of the report of the Disciplinary Committee if the Council finds the member guilty of any professional or other misconduct, it shall proceed in the manner laid down in the succeeding sub-sections. Sub-section (4) of Section 21 of the Act specifies that where the Council finds a member guilty of professional misconduct specified in First Schedule, the Council shall afford an opportunity of hearing to the member before an order is passed against such member and the orders that may be passed shall be any one of the following : - (a) reprimand the order; (b) remove the name of the member from the Register for such period not exceeding five years, as the Council thinks fit. ( 10. ) IT is further provided by way of proviso thereunder that where the Council thinks it fit that the case is one in which the name of the member ought to be removed from the register either permanently or for a period exceeding five years, no order under Clause (a) or Clause (b) referred above shall be made, but the case shall be forwarded with the recommendation of the council to the High Court. Similarly under sub-clause (5) of Section 21 of the Act, where the Council finds a member guilty of misconduct other than misconduct as it referred to in sub-section (4), the Council shall forward the case to the High Court with the recommendation of the Council. ( 11. ) UPON receipt Of a case either under section 21 (4) or 21 (5) of the Act, the High court, after calling upon the parties specified in sub-section (6) of Section 21 of the act, may make any of the following orders, namely : - " (a) direct that the proceeding 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. " Section 22 of the Act defines professional misconduct. ( 12. ) SECTION 30 of the Act grants power to the Council to make regulations which shall be published by Notification in the Gazette of India, and Section 30b of the Act provides that every regulation made under the act shall be laid before each House of Parliament. Thus, Chartered accountants Regulations, 1988 have been duly framed by virtue of the aforesaid power and have the force of a statute. ( 13. ) THE Chartered Accountants Regulations, 1988 provide for various procedural requirements in relation to members, Examinations, Article Clerks and Audit Clerks, etc. Regulation 12 which falls in Chapter II (dealing with MEMBERS) pertains to complaints and enquiries relating to misconduct of members. Regulation 12 (1) provides that a complaint against a member under Section 21 of the Act shall be investigated and all other inquiries relating to the misconduct alleged shall be held by the Disciplinary Committee. Sub-regulations (2) and (3)provide for modality and the form in which the complaint shall be made, while sub-regulation (4) provides for payment of the requisite fees accompanying the complaint. In case of failure to comply with the requirements of sub-regulations (2), (3) or (4) the secretary is required to return the complaint as provided in sub-regulation (5 ). A copy of the complaint is required to be sent to the secretary to the Member against whom such a complaint is made, ordinarily within a period of 60 days. Sub-regulation (7) provides that written statement of defence shall be forwarded to the Secretary to the member against whom such complaint is made within a period of 14 days from the date of service of the copy of the complaint under sub-section (6 ). The written statement is then forwarded by the Secretary to the complainant and the complainant Is entitled to forward in triplicate, his rejoinder to the written statement within a period of 14 days from the receipt of the written statement. On receipt of such rejoinder from the complainant a copy thereof is to be forwarded to the member and the member is entitled to offer his comments again within a period of 14 days from the date of service of the copy of the rejoinder. On receipt of such rejoinder from the complainant a copy thereof is to be forwarded to the member and the member is entitled to offer his comments again within a period of 14 days from the date of service of the copy of the rejoinder. Thereafter, papers are placed before the President and upon consideration of the complaint, written statement, rejoinder and the comments thereon it will be open to the President to call for such additional particulars or documents from either of the parties, if it is considered to be expedient. Otherwise, or after receipt of such additional particulars or documents, the papers are placed before the Council, and where the Council is, prima facie of the opinion that the member is guilty of professional and/or other misconduct, the Council shall cause an inquiry to be made in the matter by Disciplinary Committee. It is also open to the Council to arrive at a prima facie opinion that the member is not guilty of the misconduct alleged in the complaint and in such an eventuality the complaint shall be filed and both the parties be informed accordingly. It is pertinent to note that sub-regulation (12) provides for the mode of service of notice and the procedure to be adopted in case of notice being returned unserved. ( 14. ) REGULATION 17 provides for procedure in a hearing before the Council. As per sub-regulation (1) of Regulation 17, if the Council, in light of its finding arrives at an opinion that an order under Section 21 (4) of the act is required to be passed, the Council shall furnish to the delinquent member a copy of its findings and give him notice calling upon him to appear before the Council on specified date, or in the alternative, if no personal hearing is requested send within a specified time such representation in writing in connection with the order that may be passed against him under Section 21 (4)of the Act. Sub-regulation (2) of Regulation 17 specifically provides for the scope of hearing or the written representation and lays down that the same shall be restricted to the order to be passed under Section 21 (4)of the Act. Sub-regulation (2) of Regulation 17 specifically provides for the scope of hearing or the written representation and lays down that the same shall be restricted to the order to be passed under Section 21 (4)of the Act. It will be open to the Council after hearing the delinquent member or after considering his representation to pass such orders as the Council thinks fit, and such order passed by the Council is required to be communicated to the complainant and the delinquent member. ( 15. ) 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 fade of the opinion that there is substance in the allegations it refers the case to the Disciplinary Committee. Here in the present case after receiving the reply and rejoinder from the respondent No. 1 the matter was considered by the Council under Regulation 12 (11) at its 245th meeting held in September, 2004. After considering the entire material, the Council was prima facie of the opinion that the respondent No. 1 was not guilty of any professional and/or other misconduct. This opinion of the Council was conveyed to the petitioner. The respondent No. 1 in his written statement took a categorical plea that he was not having any substantial interest in the Trust in question, namely, Shri Gokul Chandramaji mandir Trust and said Trust was a religious and Charitable Trust and was not engaged in any business or enterprise. He also categorically pleaded in his reply that he was having no interest in the Trust. It is submitted by learned counsel for the respondent No. 2 that clause (4) of Part-I of Second Schedule of the act was not attracted in the present case. The respondent No. 1 is auditing accounts of the Trust since 1969-70 and in the year 1989-90 he was unanimously appointed as Trustee of the said trust. The fees charged by the respondent no. 1 is very nominal @ Rs. The respondent No. 1 is auditing accounts of the Trust since 1969-70 and in the year 1989-90 he was unanimously appointed as Trustee of the said trust. The fees charged by the respondent no. 1 is very nominal @ Rs. 250/- per annum and that too only for typing charges and other sundry expenses and, therefore, it cannot be said that he was guilty of professional misconduct under the provisions of the Act and Regulations framed therein. ( 16. ) IN respect of fixed deposit amount of rs. 6,00,00. 00 it is submitted that fixed deposit is in the name of Ramcharit Manas gyan Yagya, which is an independent unit and Shri Chhaganlal Agrawal was appointed as President and other office bearers are vinodbhai Kapadia, Rajendra Khadiwal and girish Lad. They have maintained independent records and book of Accounts and have separate independent bank account etc. and its audit was done by M/s. Pankaj Somaiya and Associates, Chartered Accountants, burhanpur. It is further submitted that petitioner suppressed the fact that amount of rupees six lacs is lying in Dena Bank in the name of Ramcharit Manas Gyan Yagya and said information was disclosed by auditor in his statement duly signed by Chartered accountant Shri Pankaj Somaiya. It is lastly submitted that the matter was considered by the respondent No. 2 under Regulation 12 (11) of the Regulations, the Council also examined the complaint, written statement, rejoinder and comments of the petitioner and on examining the above documents Council was prima facie of the opinion that no case of professional or other misconduct is made out against the respondent No. 1. The action of respondent No. 2 is just, proper and as per the provisions of the Act and regulations framed thereunder. ( 17. ) IT is not in dispute that no reasons have been assigned by the Council in its communication dated 21-10-2004. In fairness and justice, the complainant is entitled to know why respondent No. 1 has not been found guilty. To exercise his right of revision/appeal effectively, he must know the basis on which the Council has not found him guilty. In the impugned communication no reason has been assigned. Therefore, I am of the considered opinion that the Council must, state reasons for its finding and the said finding must be by a speaking order. To exercise his right of revision/appeal effectively, he must know the basis on which the Council has not found him guilty. In the impugned communication no reason has been assigned. Therefore, I am of the considered opinion that the Council must, state reasons for its finding and the said finding must be by a speaking order. It is just and fair that when the Council records findings it should support its findings with reasons. The council being a statutory body exercising quasi-judicial functions, must record its reasons in support of the order it makes, which is a basic rule of natural justice. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice, which must inform every quasi judicial process, which must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. ( 18. ) NECESSITY to give reasons for recording finding that a member of the Institute is guilty of misconduct was considered by the apex Court in the case of Institute of Chartered Accountants of India v. L. K. Ratna, air 1987 SC 71 , wherein after considering the provisions of Sections 21 and 22 of the act, while dealing with the point whether the Council is obliged to give reasons for its finding that the member is guilty of misconduct, it observed in para 30 : "in fairness and justice, the member is entitled to know why he has been found guilty. The case can be so serious that it can attract the harsh penalties provided by the Act. Moreover, the member has been given a right of appeal to the High Court under S. 22a of the Act. To exercise his right of appeal effectively he must know the basis on which the Council has found him guilty. We have already pointed out that a finding by the Council is the first determinative finding on the guilt of the member. It is a finding by a Tribunal of first instance. The conclusion of the Disciplinary Committee does not enjoy the status of a "finding". Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council. It is a finding by a Tribunal of first instance. The conclusion of the Disciplinary Committee does not enjoy the status of a "finding". Moreover, the reasons contained in the report by the Disciplinary Committee for its conclusion may or may not constitute the basis of the finding rendered by the Council. The Council must, therefore, state the reasons for its finding. " ( 19. ) THE principle of recording of reasons for arriving at a finding of guilt shall also equally apply to a case where a member is not found to be guilty, because the High court while exercising revisional jurisdiction has power under Section 22a (2) of the Act to; (a) confirm, modify or set aside the order; (b) impose any penalty or set aside, reduce, confirm, or enhance the penalty imposed by the order; (c) remit the case to the council for such further inquiry as the High court considers proper in the circumstances of the case; or (d) pass such other order as the High Court thinks fit. Of course, before passing an order falling in any of the clauses (a) to (d) of Section 22a, the Council and the person concerned have to be afforded an opportunity of hearing. Therefore, when the order of the Council can be reversed or modified, or any other order can be passed by the High Court, as it deemed fit in the circumstances of the case, the basic principle of recording finding supported by reasons must be observed to appreciate the finding recorded by the Council. As alluded, the finding recorded by the Council is slipshod without giving any reasons and, hence, is liable to be set aside. ( 20. ) FOR the above mentioned reasons, the impugned order/communication dated 21-10-204 (Annex. P/1) is hereby set aside. The matter is remitted to the respondent No. 2-Council to pass a speaking order under the provisions of the Act and Regulations framed therein and communicate the same to the parties expeditiously, as early as possible within a period of six months from the date of receipt of copy of the order. ( 21. ) IN the result, the revision petition is allowed and disposed of in the manner aforesaid, but without any order as to costs. Petition allowed.