Order of a Four-Member Appellate Authority constituted under Chartered Accountants Act is Valid: Delhi HC [Read Judgment]

Chartered Accountants - UDIN

The Delhi High Court, on Monday dismissed a petition by a Chartered Accountant and held that a four-member Appellate Authority constituted under section 22A of the Chartered Accountants Act can hear and decide the appeal, in spite of recusal of one of the members.

The petitioner, in the instant case, has challenged the order of the Appellate Authority wherein the four-member authority upheld the order of the Disciplinary Committee holding him guilty of professional misconduct within the meaning of clauses (5) to (9) of the Second Schedule to the CA Act.

Before the High Court, the petitioner contended that as per the provisions of the Act, the AA ought to have included five members. He, therefore, sought for a direction from the Court for the constitution of the Appellate Authority of five members and for passing a restraint order against the four-member Appellate Authority from proceeding till reconstitution.

Rejecting the plea of non-quorum, the bench observed that the Appellate Authority of four members can hear and decide the appeal, in spite of recusal of one of the members.

After analyzing the provisions of the Chartered Accountants Act in the light of settled judicial decisions, the bench observed that “the CA Act does prescribe that the Appellate Authority will be a body constituted of five persons, but does not prescribe and does not fix a minimum quorum. The statute is silent on the procedure to be followed and adopted when one or more members cannot participate. In absence of a provision and stipulation to the contrary, the quorum in such cases is in order and complete when the majority of the members are present and participate. Therefore, if one of the members of the Appellate Authority for valid and good reason has recused and does not want to participate, hearing in the appeal can proceed and would not suffer invalidity on the ground of lack of quorum.”

“The rationale behind the Rule is that the litigation cannot be a non-sequitur. In other words, there cannot be a litigation system in which it is impossible to litigate a given case. It is on the aforesaid principle that we have examined the statutory provisions of the CA Act and the effect of recusal of one member of the five members of the Appellate Authority and held that recusal will not stall hearing and decision of the appeal. The contention of lack of quorum on account of recusal of one member of the five-member Appellate Authority for the aforesaid reasons fails and is rejected,” the bench said.

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