Y. K. SABHARWAL, J.

(1) M/s. Price Waterhouse--Petitioner No. I is a firm of Chartered Accountants. Petitioner No. 2 is one of the partners of the said firm. The respondent-The Institute of Chartered Accountants of India (for short the Institute) has been established under the Chartered Accountants Act, 1949 (hereinafter referred to as the Act). The council" constituted under Chapter III of the Act initiated disciplinary action for professional misconduct against the petitioner firm and on receipt of the renort from the disciplinary committee that the member is not guity of any professional misconduct, the Council instead of accepting the report has directed the discipimary committee to conduct a turner enquiry, which action is under challenge in this petition. Briefly the facts which lie in a narrow compass are :--

(2) THE Export-Import Bank (for shirt exim BANK) commissioned the services of petitioner firm to assist the bank in the preparation of a booklet entitled "india-Your Software Opportunity". The need for such a booklet has been explained by EXIM Bank in the inside cover of the booklet, which reads as under :-

"as part of the overall strategy to put India on the world map as a major developer and exporter of software, the Government announced, in December 1986, the Policy on Computer Software. This policy simplifies the procedures for undertaking software development export activity, offers a number of incentives, and provides for the building up of a comprehensive and modern infrastructure. The software policy, for the first time, designates a financial institution, Exim Bank. as an agency for facilitating Government clearances and providing the finance required by software exporters. Government clearances and finance are thus covered by Exim Bank under a single umbrella. Proposals from software exporters handled by Exim Bank are simultaneously appraised for extending the necessary finance, with the result that the exporters can get both clearances and financial support within a maximum of 90 days. The Exim Bank offers an integrated financing package to software exporters. It covers Foreign Currency Term Loans (FCTL), Deferred Payment Guarantees (DPG) and Rupee Term Loans. As part of his package, Exim Bank also arranges Working Capital Finance through commercial banks. Software exporters will also benefit through Exim Banks overseas offices and its advisory services. In addition, software exporters will benefit through Exim Banks financing programme for overseas marketing, and other programmes for export financing. "

(3) AT the end of the Contents page, the booklet states 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, howerver, 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, Narimnan Point, Bombay-400021. Telephones: 232816/235138/235190. Telex: (O1l) 5791. B-102, himalaya House, 23, Kasturba Gandhi Marg, New Delhi-1 10001. Telephones: 3314591/3312856. Telex: (031.) 63070. "

(4) THE charge against the petitioner firm is that the aforesaid information amounts to solicitation of professional work and advertisement of professional attainments which are in violation of clauses 6 and 7 of Part I of the First Schedule to the Act. The Council at its meeting on 5th/6th August 1991 being prima facis of the opinion that the petitioner firm was guilty of professional and other misconduct decided to cause an enquiry to be made in the matter by its Disciplinary Committee. The Disciplinary Committee consisting of 4 senior members including the President and Vice-President of the Institute examined the matter, recorded the evidence, heard the submission of the petitioner and by its report dated 16th January, 1993 concluded that taking into consi deration the nature of the assignment, the nature of the statement made in the booklet, primary objective and intention behild the statement made in the publication, all the surrounding circumstances and the arguments and evidence put forward by the petitioner firm and its counsel and in view of the facts of the case, the petitioner firm is not guilty of solicitation and/or advertising of its professional attainments and, as such, clauses 6 and 7 of Part I of the First Schedule to the Act have not been contravened. The Disciplinary Committee in terms of Section 21 (1) of the Act transmitted the report dated 16th January 1993 to the Council. The Council on receipt of the said report by impugned order dated 21st December, 1993 decided that further enquiry in the case was necessary to be made by the Disciplinary committee. The 223 Chartered Accountants of India A impugned order states that further enquiry would 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, clarification and assistance 5. Whether youjyour firms communications with the "interested parties" were limited to providing informations and clarifications on the matters contained in the booklet 6. Nature of assistance provided by youjyour firm to the "interested parties" 7. Whether the remuneration accepted by you/your firm from the Exim Bank included the jobs of rendering infomation, clarifications and assistance to the "interested parties" 8. Whether you/your film had accepted remuneration from the "interested parties" for rendering informations, 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 from their associates 10. Nature of the parties to whom booklets were issued and their number 11. Whether the communications effected by you/your firm with the "interested parties" were either on your or your firms letter-head If so, the manner and style of signing the letters. "

(5) ACCORDING to the petitioner all the aforesaid points/issues had been raised by the Disciplinary Committee at its hearings and had been answered by the petitioner and are part of either the report already submitted or the evidence recorded by the Disciplinary Committee and the impugned order is a result of total non-application of mind. The other contention is that on the facts of the present case, the Council has no powder or jurisdiction to direct holding of further enquiry. With a view to properly appreciate this contention let us examine certain provisions of the Act and the regulation framed thereunder.

(6) SECTION 30 (1) of the Act empowers the Council to make Regulations. The said section interalia provides that the Council may, by notification in the "gazettee of India" make regulations for the purpose of canning cut the objects of the Act. Section 30 (2), interalia, provides that without prejudice to the generality of power to make regulations, such regulations may provide for all or any of the matters enumerated in clauses (a) to (t). Clause (s) deals with the powder to make regulations for the exercise of disciplinary powers conferred by the Act. Section 30 (3) stipulates that all regulations made by the Council under the Act shall be subject to the condition of previous publication and to the approval of the Central Government. Every Regulation made under the Act is required to be laid before each House of Parliament.

(7) IN exercise of powers conferred under Section 30, the Institute has made the Chartered Accountants Regulations, 1988 (for short 1988 Regulations). The question for determination is regarding the powers of the Council under Regulation 16 which reads 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 making 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 Chartered Accountants of India 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. "

(8) THE relevant part of Section 21 of the Act, which provides tor procedure in, inquiries relating to misconduct of the Members of Institute may also be reproduced as under:

"section 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 the Institute has been guilty of any professional or other misconduct the Council shall refer the case to the Disciplinary Committee and the Disciplinary Committee shall thereupon hold such inquiry 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 profesional 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, profes sional or other misconduct, it shall record a finding accordingly and shall proceed in the manner laid down in. the succeeding sub-sections. (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) IN order to appreciate the respective contentions, it would also be useful to reproduce Regulation. 14 of the Chartered Accountants Regulations, 1964, which was in force prior to 1988 Regulations. The said Regulation 14 reads as under:

"14. Report of the Disciplinary Committee (1) The Disciplinary Committee shall submit its report to the Council (2) The Council shall consider the report of the Disciplinary Committee and if, in its opinion, a further enquiry is necessary, shall cause such further enquiry to be made whereupon a further report shall be submitted by the Disciplinary Committee. (3) The Council shall, on the consideration of the report and the further report, if any, record its findings. (4) The findings of the Council shall be communicated to the complainant and the respondent. "

(10) THE point in issue is whether, on. receipt of report of the disciplinary committee that a member is not guilty of misconduct, can the Council refer back the report to the disciplinary committee for further enquiry in exercise of power under Regulation 16 of 1988 Regulations;

(11) MR. Jain very rightly and correctly conceded that in view of proviso to Regulation 16 (4) the Council cannot record a finding of professional or other misconduct when the report of the Disciplinary Committe is that the member is not guilty of any such misconduct. The contention, however, is that there is no bar in the Regulation 16 putting an embargo on the power of the Council to direct a further enquiry to be conducted by the disciplinary committee even after receipt of the report from the disciplinary committee that a member is not guilty of any such misconduct and even in such a case the Council in exercise of power under Regulation 16 can direct the disciplinary committee to conduct a further enquiry. Mr. Jain submits that if after the further enquiry still the report of the disciplinary committee is that member is not guilty of any such misconduct, then under the aforesaid proviso the Council is obliged not to record its findings contrary to the report of the disciplinary committee and in that event proceeding are liable to be dropped.

(12) WHERE the finding of the disciplinary committee is that member is guilty of professional and/or other misconduct then alone a copy of the report of the disciplinary committee is required to be furnished to the member and he is required to be given an opportunity of making a representation in writing to the Council [regulation 16 (2)]. On consideration of the report of the disciplinary committe concluding the member to be guilty of such misconduct alongwith the representation in writing of the member, if any, the Council can ask for further enquiry. The Council can direct the further enquiry to be held whereupon a further report is required to be submitted to the Council by the disciplinary committee [regulation 16 (3)] Regulations 16 (2) and 16 (3) are to be read together. Proviso to Regulation 16 (4) puts an. embargo on the power of the Council to record a finding contrary to the report of the disciplinary committe where the report of the disciplinary committee is that the member is not guilty of any such misconduct. 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 conducted 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 where 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 report of the disciplinary conmmittee 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 change in language of these two Regulations cannot be without any purpose,

(13) IN view of Regulation 16 we are of the opinion that in the prcsent case the report of the disciplinary committee being that the petitioner s 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.

(14) THE decision of the Supreme Court in Institute of Chartered Accountants of India Vs. L. K. Ratna and others, 1986 (4) SCC 537 [LQ/SC/1986/398] that the finding of the Council is the determinative decision as to the guilt of the member, renders no assistance for interpreting Regulation 16. We may note that 1988 Regulations were framed after the decision of Supreme Court in L. K. Ratnas case.

(15) IN view of our interpretation of Regulation 16 it is not necessary to consider the other submission urged for the petitioner that all issues noticed in the impugned communication dated 21st December 1993 directing further enquiry to be held had already been considered by the disciplinary committee and thus the impugned order shows non application of mind.

(16) FOR the aforesaid reasons the impugned communication dated 21st December 1993 is quashed. We direct that matter shall be disposed of on the basis of the report dated 16th January 1993 in terms of Regulation 16 (4). The writ petition is, accordingly, allowed and rule made absolute. The parties are, however, left to bear their own costs.