Degree Of Proof In Professional Misconduct Cases Is Higher Than Balance Of Probability, But Not Beyond Reasonable Doubt: Delhi High Court

The chartered accountant had argued that to bring home the guilt of professional misconduct under the Chartered Accountants Act, the charges have to be proven beyond reasonable doubt. However, it is the petitioner /Council of Institute of Chartered Accountants of India argued that proceedings under the Act cannot be equated to criminal proceedings, and the standard of proof would be either balance of probabilities or slightly more, but not beyond reasonable doubt as projected by the respondent chartered accountant. 

Finding merit in the Council's argument a division bench of Justice Vibhu Bakhru and Justice Swarana Kanta Sharma in its order referred to a passage on 'Standard of Proof' in the Halsbury Laws of England, which states that in "civil cases the standard of proof is satisfied on a balance of probabilities", whereas in cases of crime or professional misconduct, a higher degree of proof will be required, though not of a criminal standard.

The bench thereafter said, "Thus, in cases of professional misconduct, the degree of proof may be higher than the balance of probabilities, yet the same would not reach the criminal standard of proof beyond reasonable doubt.The aforesaid passage was also cited by the Hon‟ble Supreme Court in case of Maya Gopinathan v. Anoop S.B. & Anr., 2024 SCC OnLine SC 609". 

Background

The Court was hearing a reference made by the petitioner/Council of Institute of Chartered Accountants of India (Council) under Section 21(5) of the Chartered Accountants Act, 1949 (prior to the Amendment Act, 2006) seeking an appropriate order from the Court with respect to its decision to remove a Chartered Accountant (respondent no.1) from the Register of Members of the Institute of Chartered Accountants of India (ICAI) for a period of one year. 

The CA/respondent no.1 was found guilty of professional misconduct by a Disciplinary Committee, after a complaint was filed against him in 2005. After considering the disciplinary committee's report, the Council in 2013 recommended the removal of his name from the Register of Members of the ICAI for one year. Thereafter a reference was made to the high court; however in 2017 the court quashed the Council's decision and directed the Council to reconsider the Disciplinary Committee‟s report in its next meeting, after giving an opportunity of hearing to both the sides. 

Subsequently the Disciplinary Committee's report was considered afresh after both sides were given an opportunity. Eventually in 2018 the Council accepted the conclusion of the Disciplinary Committee, and held that the respondent no. 1 was guilty of professional misconduct falling within the meaning of clause (7) of Part I of the Second Schedule to the Act. The Council further recommended that respondent no. 1‟s name be removed from the Register of Members for a period of one year. Thereafter another reference was moved before the high court in for seeking appropriate orders. 

Findings

The CA contended that to prove professional misconduct under the Chartered Accountants Act, the charges have to be proven beyond reasonable doubt. He argued that that the disciplinary enquiries relating to professional misconduct are quasi-criminal in nature and thus they ought to be proved beyond a reasonable doubt.

However, the Council contended that the proceedings under the Act cannot be equated to criminal proceedings and that the standard of proof would be either balance of probabilities or slightly more, but not beyond reasonable doubt.

The Court referred to Institute of Chartered Accountants of India v. Mukesh Gang (2011), where a Division Bench of Andhra Pradesh High Court observed that in disciplinary proceedings, the standard of proof required to establish a charge is on a preponderance of probabilities and that the charge cannot be equated with the standard of proof in a criminal prosecution where it is required to be proved beyond a reasonable doubt.

The bench also referred to the decision of the high court in Lalit Agrawal v. The Institute of Chartered Accountants of India & Anr. (2019) where it was held  while the standard of proof as required in criminal proceedings is beyond reasonable doubt, the standard of proof as required in disciplinary proceedings under the Act is preponderance of probabilities. 

It then remarked, "However, as the weight of the authorities indicates, it is higher than preponderance of probabilities, but not as high as beyond reasonable doubt".

The CA relied on the case in H.V. Panchaksharappa v. K.G. Eshwar, (2006), where the Supreme Court held that the charge of professional misconduct under the Advocates Act, 1961 must be proved beyond a reasonable doubt. He contended that the same standard should be followed in cases of chartered accountants too.

However, the Court did not accept this contention and distinguished between the duties and responsibilities of advocate and chartered accountants. It observed that the duties of advocates are closely intertwined with the ethical standards of courtroom conduct, which requires them to maintain a high degree of accountability towards the legal system. Whereas, chartered accountants are tasked with delivering accurate financial information, advising on taxation and ensuring compliance with accounting standards and regulatory requirements.

The Court noted that while the profession of chartered accountants also demands honesty, integrity and accuracy, the focus is more on financial integrity and regulatory compliance. It remarked, “Chartered accountants, having specialized expertise in financial management and auditing, often deal with confidential financial information. Thus, the nature of misconduct in each profession, the type of harm caused, and the expectations from these professionals vary significantly.”

The Court was thus not convinced with respondent no. 1's submission that the charges of professional misconduct will have to be proven akin a criminal prosecution. It held that the charges under the Chartered Accountants Act need not be proved beyond a reasonable doubt.

On charges against the CA/respondent no.1, the Court noted that they were proved with 'reasonable certainty;, which it remarked was higher than the preponderance of probabilities.

“When the material placed before the Disciplinary Committee and the Council in this case is analysed, even after considering the defense of the respondent no. 1, we find that the charges against the respondent no. 1 have been proven with reasonable certainty, which is higher than the standard of preponderance of probabilities and evidence," the bench said. 

It held that the Council had not erred in finding respondent CA guilty of professional misconduct. However, the Court set aside the decision to remove his name from the Register of Members for one year.

It noted that the CA had been a member of Institute of Chartered Accountants of India (ICAI) for approximately three decades, with no history of any other complaint or allegation of misconduct and that the present proceedings had been pending for 19 years.

It remarked, “Thus, considering that the present proceedings have continued for 19 years without any history of professional misconduct by the respondent no. 1, we believe that ends of justice would be served by severely reprimanding the respondent no. 1, under Section 21(6)(b) of the Act, for his professional misconduct.”

The Court thus modified the Council's decision to this extent and disposed of the petition.

Case title: The Institute Of Chartered Accountants Of India vs. CA Shri Subhajit Sahoo & Anr

(CHAT A. REFERENCE CASE NO. 2 OF 2019)