Society of Auditors and Etc Vs Comptroller and Auditor General of India and ors - Citation 803476 - Court Judgment

Judgment:
ORDER

P.D. Dinakaran, J.

1. Chartered Accountants Study Circle, the petitioners in W.P. Nos. 12631 and 12479 of 1999, as well as the Society of Auditors the petitioners in W.P. Nos. 12480 and 12630 of 1999 are societies registered under the Societies Registration Act, bearing Regn. Nos. 68/80 and 6/1932-33 respectively.

2. Petitioners in W.P, Nos. 12479 and 12480 of 1999 seek for a Writ of Declaration to declare the Form of Application for Multi Purpose Empanelment as published in the Journal of Institute of Chartered Accountants, June, 1999. Pages 74-106 issued by the first respondent as ultra vires the provisions of Chapter VII of the Chartered Accountants Act, 1949. Chapter X of the Chartered Accountants Regulations, 1988. Articles 14, 19(1)(g) and 21 of the Constitution of India insofar as the petitioners are concerned.

3. The petitioners in W.P. Nos. 12630and 12631 of 1999 seek a Writ of Declaration to declare the Form of Empanelment to the Office of the first respondent therein as published in the Journal of Institute of Chartered Accountants, June. 1999, Pages 65-72 read with notice issued in the newsletter of the Southern India Regional Council of the Institute of Chartered Accountants of India, Vol. 25. Part I. 1st July. 1999 at page 7, issued by the first respondent as ultra vires the provisions of the Chartered Accountants Act, 1949. Chapter X of the Chartered Accountants Regulations, 1988. Articles 14, 19(1)(g) and 21 of the Constitution of India insofar as the petitioners are concerned.

4. The Chartered Accountants Act, 1949 (hereinafter referred to as 'the Act') was enacted to make provisions for the regulation of profession of Chartered Accountants and for that purpose to establish an Institute of Chartered Accountants (hereinafter referred to as 'the Institute').

4.1. The following provisions of the Act are relevant to be mentioned.

The terms 'Chartered Accountant', 'Council', 'Institute', 'holder of restricted certificate' and 'Registrar' arc defined as follows :

'Section 2(1)(b) : 'chartered accountant' means a person who is a member of the institute.'

Section 2(1)(c): 'Council' means the Council of the Institute :

Section 2(1)(d) : 'Holder of a restricted certificate' means a person holding a permanent or temporary restricted certificate granted by a Provincial Government under the Restricted Certificate Rules. 1932 : Section 2(1)(e) : 'Institute' means the Institute of Chartered Accountants of India constituted under this Act :

Section 2(1)(g) : 'Registrar' means the Register of Members maintained under this Act.'

4.2. As per Section 2(2). 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 (i) engages himself in the practice of accountancy, or (ii) offers to perform or perform services involving the auditing or verification of financial transactions, books, accounts or records, or the reparation, verification or certification of financial accounting and related statements or holds himself out to the public as an accountant, or (ill) 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 data, or (iv) 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 expression shall be construed accordingly.

4.3. Section 3 provides for the incorporation of the Institute.

4.4. Section 5 of the Act divides the members of the Institute Into two categories, viz. 'associates' and 'fellows'. An associate is a person whose name is entered in the Registrar and who is entitled to use the letters 'A.C. A.'. A fellow is a person who, after becoming an associate member of the Institute, and has been in continuous practice in India for at least five years, and who is entitled to use the letters 'F.C,A.'

4.5. Section 9 of the Act provides for 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.

4.6. Section 17(1) enables the Council to constitute from amongst its members the Committee such as (I) an Executive Committee, (ii) an Examination Committee, and (iii) a Disciplinary Committee. That apart, under Section 17(2), the Council may also form such other committee for the purpose of carrying out the provisions of the Act.

4.7. Section 19 requires the Council to maintain a Registrar of Members of the Institute, which registrar as per Section 19(2) shall contain the particulars of every member of the Institute, such as (i) full name, date of birth, domicile, residential and professional address, (ii) the date on which his name is entered in the Registrar, (iii) his qualifications (iv) whether he holds a certificate of practice and (v) any other particulars which may be prescribed. The Council, as per Section 19(3), shall publish the list of members of the Institute as on the 1st day of April of each year and shall send a copy thereof to every member of the Institute. Every member of the Institute shall, on his name being entered in the Registrar, pay such annual membership fee as may be prescribed.

4.8. Section 21 prescribes the procedure to be followed in inquiries relating to misconduct of members of the Institute in case of any alleged professional misconduct by any member of the Institute.

4.9. Section 22 defines the professional misconduct.

4.10. Section 30 empowers the council to make regulations for the purpose of carrying the Council to make regulations for the purpose of carrying out the objects of the Act and notify the same in the Gazette of India. A copy of such regulations shall be sent to each member of the Institute. As per Section 30(2), in particular , and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters;

(a).....

(b) the qualifications for the entry of the name of any person in the Registrar as a member of the Institute:

(d) the conditions under which any foreign qualification may be recognised;

(e) the manner in which and the conditions subject to which applications for entry in the Register may be made ;

(f) & (g) .....

(h) the particulars to be entered in the Register;

(i) & (j) .....

(k) the regulation and maintenance of the status and standard of professional qualifications of members of the Institute;

(i) to (s) .....

(t) any other matter which is required to be or may be prescribed under this Act.

4.11. Section 30A empowers the Central Government to direct the Council to make any regulations or to amend or revoke any regulations already made within a specified period and if the Council fails to comply with such directions, the Central Government may make the regulations or amend or revoke the regulations made by the Council.

4.12. Section 30B provides for laying of the regulations before each House of Parliament.

4.13. Part I, Part II and Part III of the First Schedule to the Act deal with the professional misconduct in relation to Chartered Accountants who are in practice, in service and that of the members generally respectively.

4.14. Part I of the Second Schedule to the Act deals with the professional misconduct in relation to Chartered Accountants in practice requiring action by a High Court, of which, the following clauses are relevant to be referred to;

(1) discloses information acquired in the course of his professional engagement to any person other than his client without the consent of his client.;

or otherwise than as required by any law for the time being in force;

(2) to (4) .....

(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.

(6) fails to report a material mis-statements known to him to appear in a financial statement with which he is concerned in a professional capacity:

(7) is grossly negligent in the conduct of his professional duties.

(8) fails to obtain sufficient information to warrant the expression of an opinion or his exceptions or sufficiently material to negate the expression of an opinion;

Clause (i) of Part II of the Second Schedule deals with the professional misconduct in relation to members of the Institute generally requiring action by a High Court who contravenes any of the provisions of the Act or the regulations made thereunder.

5. The Council, by exercising its powers under Section 30 of the Act, framed the Chartered Accountants Regulations, 1988 (hereinafter referred to as the Regulations) for the purpose of carrying out the objects set out in the Act and notified the same in the Gazette. The following regulations are relevant to be referred :

5.1. Regulation 3 provides for the maintenance of the Register of members as per Form '1' in Schedule A, which register shall contain the particulars such as Membership Number, R.A. Enrolment No. Name in full; Date of Birth, Domicile. Residential address; Professional address; Date of entry in the Register, Qualifications; Whether holding a certificate of practice. Date of admission as Fellow; Whether practising independently, in partnership or employed in a firm of Chartered Accountants in practice; Whether holding a salaried employment, if not in practice. Change of address, if any and Remarks.

5.2. Regulation 5(1)(b) provides that an associate who desires to be admitted as fellow shall submit an application, as prescribed in Form '2' in Schedule A, by furnishing the particulars such as name: date of birth, qualification, the name of the Chartered Accountant(s) in practice or the firm of Chartered Accountants in practice under whom the applicant served as an Article Clerk/Audit Clerk; Articles/Audit Registration No. Details of practical training, period of residence in India; etc. In case of an associate to be registered as a fellow, he shall comply with the particulars given in Form '3' in Schedule A such as membership number and date of admission as Associate Professional address; whether practising independently or as a partner of a firm of practising members of the Institute, etc.

5.3. Regulation 185 enables the Council, while publishing the list of members under Section 19(3), to distinguish between the associates and fellows in practice and between the associates and fellows not in practice.

5.4. Regulation 186 authorises the Council, for the publication of list of members, to call for such information as it considers relevant from the members and it may also call for additional information as may be required for statistical purposes.

5.5. While Regulation 187 provides that every member in practice shall have a professional address in India in his own charge or in charge of another member. Regulation 188 provides that all notices required by the Act or the Regulations to be given to the members shall be forwarded by post to such professional address.

5.6. Regulation 190A bars a Chartered Accountant in practice not to engage in any other business or occupation other than the profession of accountancy, except with the permission granted in accordance with a resolution of the Council.

5.7. Regulation 191; however, permits the Chartered Accountants in practice to accept part time employment such as a liquidator, trustee, executor, administrator, arbitrator, receiver, adviser or representative for costing, financial or taxation matter, or may take up an appointment that may be made by the Central Government or a State Government or a Court of law or any other legal authority or may act as a security in his professional capacity provided his employment is not on a salary cum full time basis. In pursuance of Regulation 191, the Council resolved to grant general permission to the members with respect to certain part time assignments which are enumerated in Appendix No. (1) to the Regulations.

6. It is also relevant to refer Sections 29, 30(1), 30(1A) and 31 of the Banking Regulation Act, 1949, which are intended to consolidate the law relating to banking.

6.1. Section 29 contemplates that at the expiration of the calendar year or at the expiration of a period of twelve months every banking company whether incorporated in India in respect of business transacted by it and every banking company incorporated outside India in respect of business, transacted business through its branches in India, shall prepare a balance sheet and profit and loss account as on the last working day of the year or the period of as the case may be.

6.2. Section 30(1) of the Banking Regulation Act, 1949, contemplates that the balance sheet and profit and loss accounts prepared in accordance with Section 29 of the Banking Regulation Act. shall be audited by a person duly qualified under any law for the time being in force. Section 30(1A) of the Banking Regulation Act states that notwithstanding anything contained in any law for the time being in force or in any contract to the contrary every banking company shall before appointing or re-appointing or removing any auditor or auditors obtain the prior approval of the Reserve Bank of India.

6.3. Section 31 of the Banking Regulation Act contemplates that the balance sheet and profit & loss accounts as referred to in Section 29 of the said Act, along with the report of the auditors shall be furnished as returns to the Reserve Bank of India within three months from the end of the period to which they refer and the Reserve Bank of India may extend the said period of three months by a further period not exceeding three months.

6.4. A bare reading of the provisions of Sections 29, 30(1), 30(1A) and 31 of the Banking Regulation Act makes it clear that the balance sheet and profit & loss accounts of all banks are subject to scrutiny of the Reserve Bank of India and the same shall be audited by the qualified auditors appointed by the Reserve Bank of India.

7. Accordingly, at the request of the Reserve Bank of India (hereinafter referred to as 'RBI') the first respondent Institute, for the last fifteen years, used to prepare a panel of qualified auditors for auditing the accounts of the nationalised banks and rural banks and submit such panel every year to the RBI, who, on receipt of such panel, scrutinise the same and allot audit work of the nationalised banks and rural banks to the qualified auditors as contemplated under Sections 29, 30(1), 30(1A) and 31 of the Banking Regulation Act.

8. It is therefore clear that the Register maintained by the Institute under Section 19(1) of the Act read with Regulation 3 of the Regulations, the List of Members published by the Institute under Section 19(3) of the Act read with Regulations 185 and 186 and the Empanelment of Chartered Accountants for the purpose of Sections 29, 30(1), 30(1A) and 31 of the Banking Regulation Act are all quite distinct from each other.

9. It appears that the President of the Institute received a letter dated 25-9-1998 from the RBI enclosing a representation dated 19-8-1999 from one Badyala & Co. a firm of Chartered Accountants, explaining the necessity for elimination of bogus firms from the empanelment.

10. Taking note of the above letter of the RBI alleging mushroom growth of bogus audit firms, the Institute, by exercising their powers under Section 17(2) of the Act, constituted a Committee called Professional Development Committee the second respondent in W. P. Nos. 12479 and 12480 of 1999 to suggest appropriate recommendations to eliminate any malpractice by any members, to weed out the mushroom growth of bogus firms and to cull out the authenticate and correct information from the Chartered Accounts.

11. The Committee, after taking note of the fact that in recent times, apart from the banking sector, several other authorities have shown interest in obtaining panel of auditors from the Institute for carrying out their audit work and other assignments, and the necessity to check the mushroom growth of bogus audit firm, to arrest malpractice in furnishing false and incorrect particulars by the audit firms and to prepare a panel of genuine and bona fide firms, in the broader interest of the society at large, decided to prepare a multi purpose empanelment, by way of a composite data base information, to satisfy the requirements of the RBI and other authorities to facilitate the allotment of audit and other diversified assignments and accordingly recommended a comprehensive application form requiring all relevant and material details and documents for the multipurpose empanelment.

12. The Council, in their meeting held in April and May, 1999, approved the recommendations of the second respondent committee, and invited the members to apply in a composite format for the purpose of empanelment with all relevant details and documents required therein. The comprehensive application format was thus published in the Journal of the Chartered Accountants of India, June, 1999, and notified the last date as 31-4-1999, notifying that no extension of time beyond the aforesaid time limit would be granted.

13. The application form consists of five parts.

13.1. Part I contains the basic information such as Code Number, name of the Concern with status, Firm Registration Number. P.A.N./G.I.R, No. Service-tax Registration Number, Address, Telephone Number, E-mail, etc.

13.2. Part II deals with the relevant information for the purpose of empanelment of auditors for different branches of public sector undertakings, banks and statutory and central branches of regional and rural banks.

13.3. Part III deals with the information for updating the database of the Institute.

13.4. Part IV enumerates the list of documents to be attached along with the application form, viz.

i. a copy of the latest financial statements of the partnership firm or of the sole proprietary concern or individual, as the case may be;

ii. a copy of the statement of income forming part of the latest income tax return of the firm/proprietor/individual along with a copy of acknowledgment;

iii. a copy of the latest available assessment order for the firm/proprietor/individual;

iv. a copy of the statement of income forming part of the latest income tax return of each of the partners along with a copy of acknowledgment;

v. a copy of the latest available assessment order for each of the partners; and

vi. a copy of the partnership deed.

13.5. Part V provides for a declaration to be furnished by the applicant.

14. That apart, the Committee also enlisted nine discrepancies that were noticed while processing the applications for empanelment during the previous years, putting the members on notice that the applications would be rejected on account of these discrepancies: viz.

(i) Applications that were not signed in the manner required;

(ii) Applications made by the partners/ proprietors on behalf of more than one firm;

(iii) Applications containing incomplete information relating to their establishment/ membership number and year of enrolment not given, complete details of partners/proprietor of the concern not filled in, interest in other partnership firms/sole proprietary concern/individual practice not disclosed, applications not in the prescribed format, etc.;

(iv) Applications that were not legible; (v) Applications that were made by the partners of the firm in their individual names/ proprietary concern's name in spite of clear instructions that no partner of a concern shall apply in his individual or proprietary name when he is a partner in a firm and that applications in such cases shall be in the name of partnership firm only;

(vi) Multiple applications -- Different applications made by the members of the same firm and later on requested for withdrawal of one or more of the same;

(vii) Applications that were received after the last date;

(viii) Applications received from the members whose main occupation was not practice; and

(ix) Applications with incorrect information.

15. The applicants are also required to take note of the following points carefully, while filling up the form, the relevant of which are referred to as follows :

(i) to (iv) .....

(v) The Members/firms should give the particulars in the form on the basis of the constitution of the firm and the staff position as on April 1, 1999. If the names of the erstwhile partners are shown, such applications are liable to be rejected.

(vi) In case of the applications by members practising individually, the reference to the proprietor/concern should be cons trued as referring to such individual members and all the relevant details should be furnished accordingly.

(vii) The expression 'experience' mentioned in the form refers to the total experience of the partner/proprietor in rendering the specific type of service also includes such experience gained by him/her while associated with other concerns as partners or proprietor or while practising as an individual.

(viii) Application should be sent in duplicate under registered post with acknowledgment due or by band delivery or by courier. In case of no information is to be provided against any column, they should indicate 'NIL' or Not Applicable' against that column. Under no circumstances should any column in the application form be left blank.

(ix) Application must be signed by the Individual or by the proprietor in the case of a sole proprietary concern and by all the partners of the firm in the case of a partnership firm.

(x) If any member is a common member or partner in more than one firm it must be ensured that the application for empanel-ment should be made in respect of only one firm which the member wants to be empanelled. If the application is sent in respect of more than one firm where any one of the members is common, the applications for all the firms are liable to be rejected.

(xi) .....

(xii) No partner of a firm shall apply in his individual name/proprietary firm's name when he/they is/are partner(s) in a firm. The application in such cases shall be in the name of the partnership firm only. However, if a member is not a partner in any partnership firm, the application may be made by the sole proprietary firm or in his individual name if his main occupation is professional practice.

(xiii) Only a member of the Institute, whose main occupation has been treated as the practice of the profession of accountancy is entitled to apply. Similarly, a firm can apply only if it has at least one partner whose main occupation has been treated as the practice of the profession of accountancy. Members who are in whole-time employment in firms of Chartered Accountants or with a practising Chartered Accountant are not entitled to apply.

(xiv) .....

(xv) The member/firm should ensure to quote the correct Unique Code No. In case of any mistake in the Unique Code No. the application is liable to rejection.

(xvi) No request of any change in the particulars supplied in the form would be entertained.

(xvii) Mere submission of the application form to the Institute does not ensure that the name of the applicant will be placed on the panel. The Institute reserves the right to use the information received from members for any purpose in the interest of the profession, in addition to submitting the same to appropriate authorities. The Institute also reserves the right to call for any further information or explanations from the member(s) concerned to verify the correctness of the particulars furnished in the application form. The allotment of audits or other assignments would be done by the authorities on the basis of multivariate criteria which are confidential and the Institute does not interfere in the allotment of the assignments. Members are advised not to correspond directly with the authorities on matters relating to empanelment.

16. That apart, the application form contains annexures (A) to (R) to be enclosed therewith. Of the said annexures, the following are relevant to be referred to :

16.1. Annexure A deals with the details of the partners and their respective main occupation as well as number of hours devoted for audit work per week, etc.

16.2. Anenxure B deals with the details of paid Chartered Accountant employees in the concern. The applicant should furnish information such as name, membership number, year of enrolment, date of beginning of continuous employment in the concern, whether ACA or FCA, are they in service as full-time basis or part-time basis, usual place of residence and signature. The signatures should correspond to those in the Institute's records.

16.3. Annexure G calls for the details of indebtedness to Public Sector Banks/Regional Rural Banks (for amounts exceeding Rs. 1,000/-, including outstandings in respect of credit cards).

16.4. Annexure H deals with the details of Directorship in Public Sector Banks and Regional Rural Banks.

16.5. Annexure J deals with the particulars of professionals employed in the Firm other than the Chartered Accountants, who may be classified as per the respective area of specialisation, e.g. cost accountants, lawyers, engineers, etc.

16.6. Annexure K calls for the details relating to previous experience of the applicant concern and partners/proprietor (only those who have signed the Audit Report/ conducted the Audit) as statutory auditor of companies other than the Government Companies and Banks and Insurance Companies and such particulars should be only in respect of assignments handled during the preceding eight years.

16.7. Annexure L Deals with the previous experience of the Concern and Partners/Proprietor (only, those who have signed the Audit Report/Condueted the Audit) as statutory Auditor of Head/Central Office(s) or Branches of Insurance Companies and such particulars should be given only in respect of assignments handled during the preceding eight years.

16.8. Annexure M calls for the details relating to the experience as Concurrent/ Internal Auditor of Head/Central Office/ Branches of Insurance companies of the Concern and Partners/Proprietor (only those who have signed the Audit Report/Conducted ihe Audit) and such particulars should be given only in respect of assignments handled during the preceding three years.

16.9. Annexure N deals with the previous experience in rendering professional services to Government Companies and the details of the partners/proprietors who have signed the audit report/rendered the relevant service.

17. The applications are further required to declare that the information furnished by them in Annexures (A) to (K) are complete and correct as on 1-4-1999 and that no separate application for any of the branches or associate concern having common partner or proprietor had been made and that they have not infringed any of the terms and conditions prescribed therein; and that their applications are liable to be rejected in case of any infringement of the terms and conditions. If the statement made or information furnished are not correct, it would render them liable for disciplinary action under the Act and the Regulations framed thereunder; they should not accept any audit or any other assignment allotted on the basis of the information furnished if the application form is accepted but the firm is not in existence at the time of audit; and that the signatures should correspond to those in the Institute's records.

18. Similarly, the Comptroller and Auditor General of India (hereinafter referred to as 'C & AG'), the first respondent in W. P. Nos. 12630 and 12631 of 1999. a constitutional authority appointed by the President of India, by a warrant issued under Article 148 of the Constitution of India, while discharging his duties under Article 149 of the Constitution of India read with Section 619(3) of the Companies Act. is empowered to appoint auditors for auditing the accounts of the Government Companies and Public Seetor Undertakings and also empowered to direct the manner in which the accounts of such Government Companies and Public Sector Undertakings shall be audited by the auditors so appointed by the C &AG.;

19. The C & AG, accordingly, invited applications in the prescribed format, from the Chartered Accountants for the purpose of empanelment of auditors for allotment of audit work of Government Companies and Public Sector Undertakings, as required under Section 619(3) of the Companies Act and published the application form at pages 65 to 72 in the June 1999 issue of Journal of the Institute of Chartered Accountants of India, requiring the Chartered Accountants to furnish similar details and documents as required by the Institute.

20. The last date for submitting the filled in application forms to the C & AG was 7th July, 1999 and the applications should be in the prescribed format. If the application forms are not supported with specific documentary evidence they are liable to be rejected summarily and no correspondence will be entertained in that regard. Firms already empanelled must also send their particulars in the prescribed format, enclosing the attested true copies of the certificates as well as other documents required under the application form. The firms which are already empanelled, but do not send their particulars afresh are liable to be suspended from the panel and they are not eligible to afresh and consequently the audits if any allotted to t he existing firms whieh are under the panel but which do not fulfil any of the criteria for the empanelment would be withdrawn.

20.1. The notification also prescribed the eligibility criteria for empanelment in Special Regions, such as Jammu & Kashmir. Orissa, North-Eastern States, Sikkim, Andaman Nicobar Islands and Lakshadweep Island, as well as other regions anywhere in the country. The eligibility criteria are as follows :

Special Regions :

i. Sole Proprietorship Firms : Sole proprietorship firm whose proprietor is an FCA and is engaged full-time with the firm.

ii. Partnership Firm : Partnership firms with at least one full-time partner who should be an FCA.

Anywhere in the Country :

Partnership firms with at least two full-time partners, one of whom should be an FCA.

Partnership firms with at least two FCA partners (of whom at least one should be a full-time partner based in India) and 20 full-time Chartered Aceountant employees in India.

20.2. The following guidelines have been framed for allotment of audit :

(a) The ranking of the firms would be decided inter alia on the basis of only full time partners in case of partnership firms or full time Sole Proprietors in case of Sole Proprietorship firms.

(b) The status of partners/CA employees of a firm will be reckoned as on 1-4-99.

(c) The allotment of audits of public sector undertakings would be done according to the ranking of the firm which will be based on the aggregate point-score. Points have been given for the experience of the firm: for the partners of the firm; for the long association of the partners; and for the employees of the firm.

(d) the selection of statutory auditors for the audit of major public sector undertakings falling in sectors specified in the Annexure to the Application form would be done through a judgmental process taking into consideration the firm's seniority, number of partners/number of Chartered Accountant employees in the firm and the experience of the firm in the requisite areas as given in the annexure.

20.3. The application form also clearly states that in case of two or more firms have partners in common only one of the firms would be considered for empanelment. While determining the ranking of the empanelled firm no point will be given on account of partners shared with other (sister) firms. The application also provides columns to mention the details of the technically qualified employees, viz. Engineers, Cost Accountants, lawyers, Valuers, Surveyors and also the non-technical staff and their qualifications. The applicants should also give the particulars indicating the name of the company audited, whether it is a public limited company or a private limited company, the turnover of the company, nature of business, years of audit, etc.

21. Thereafter, in the letter dated 1-7-1999 issued in the Southern India Regional Council of the Institute of Chartered Accountants. Vol. 25, published in July, 1999, the C & AG required the attested true copies of the following documents :

(a) Latest income-tax returns of the firm as well as of the partners.

(b) Latest partnership deed, and

22. The petitioners complain that the details and the documents required to be furnished as per the comprehensive application forms, notified by the Institute and C & AG referred to above, have no nexus to the object of preparing a multi purpose empanelment; violates Articles 14, 19(1)(g) and 21 of the Constitution of India and also ultra vires the provisions of the Act as well as ChapterXof the Regulations, and hence, the above writ petitions.

23. The grievance of the petitioners, legal contentions and the reliefs sought for in the above writ petitions are identical in nature, and therefore, all the above writ petitions are heard together.

24. Mr. Arvind P. Datar, learned counsel for the petitioner, contends that certain information sought for and the documents to be enclosed with the application form are more personal in nature and they are not in any way either related or relevant to the professional competency required for the preparation of the panel, nor for any statistical purpose, much less, to update the same; these information and documents cannot be the yardstick to assess the professional proficiency or competency of the petitioners or their technical ability; the information and documents hitherto called for by the Institute for the purpose of preparation of the panel themselves are self sufficient; and existing system of preparation of panel was going on smoothly for all these years without any grievance or complaint from any quarter.

24.1. Mr. Arvind P. Datar contends that the information and documents already furnished by the members for the maintenance of the Register as required under Section 19(1) read with Section 2(1)(g) of the Act as well as Regulation 3 read with Form '1' in Schedule A to the Regulations and the information and details furnished in the List of Members prepared under Section 19(3) of the Act read with Regulations 185 and 186(1) themselves are self-sufficient for the purpose of empanelment. Assuming the Council proposes to prescribe any other particulars in order to maintain the status and standard of the professional qualification of the members of the Institute as required under Section 30(2)(c) or for the purpose of maintaining the said registered of the members of the Institute under Section 19(1) read with Sections 19(2)(c) and 30(2)(b). (d), (e) and (h) or for publishing such list of members under Section 19(3) of the Act or for any other matter to achieve the object of the Act as per Section 30(2)(t) of the Act, the same shall be given effect to only by framing appropriate Regulation, getting the approval of the Central Government as per Section 30(3) notifying the same in the Gazette of India by exercising powers under Section 30(1) and tabling the same as per Section 30B of the Act. Otherwise, the prescription of such particulars would suffer from want of authority of law.

24.2. According to Mr. Arvind P. Datar, there is no necessity to insist for the details and production of the documents relating to the income-tax returns of the firm as well as the personal income of the individual partners of the firm and that of the companies audited with their respective network/turnover, income-tax returns and- assessment orders, except as provided under Section 138 of the Income-tax Act; the requirement to furnish the income-tax returns and assessment orders of the audit firms and the partners as well are highly arbitrary and irrational; and similarly there is no requirement for furnishing the particulars relating to the indebtedness and the credit card details of the individual partners of the firm, professionals employed in the firm such as Cost Accountants, Engineers, Lawyers, etc. and other employees of the firm.

24.3. Mr. Arvind P. Datar further contends that except a bald allegation, no material is placed before this Court as to the alleged malpractice of furnishing false or incorrect particulars by the audit firms for the empanelment nor any details are available as to the alleged mushroom growth of bogus firms or as to the misuse of their office by filing wrong declaration for the purpose of empanelment. Placing reliance on the decision in Laxmi Khandsari v. State of U.P. reported in : [1981]3SCR92 , Municipal Corporation, Ahmedabad v. Jan Mohammed reported in : [1986]2SCR700 and Indian Council of Legal Aid & Advice v. Bar Council of India reported in : [1995]1SCR304 , it is contended that the onus of proving to the satisfaction of the Court that the restriction imposed is reasonable, lies upon the State. However, it is contended that the respondents have not discharged their onus to establish the mischief in the existing system.

24.4. Mr. Arvind P. Datar complains that rendering those who do not furnish such information and documents contemplated under the impugned application as ineligible for empanelment is punitive, unreasonable, arbitrary and violates Articles 14 and 19(1)(g) of the Constitution of India as they would, consequently, be deprived of the opportunity of being considered for appointment as auditors of the Nationalised Banks and Regional Rural Banks under the control of the RBI as well as that of Public Sector Undertakings under the control of C & AG.

24.5. Mr. Arvind P. Datar contends that the refusal to empanel the members who do not comply with the requirements under the impugned application forms and the consequential classification created among the members whose names are found in the Register prepared under Section 19(1) read with Section 2(1)(g) of the Act as well as Regulation 3 read with Form' 1' in Schedule A to the Regulations and those names found in the List of Members prepared under Section 19(3) of the Act read with Regulations 185 and 186(1) cannot be said to be reasonable under Article 19(6) of the Constitution of India inasmuch as the respondents have not discharged their onus to prove that the information and documents are relevant for the multi purpose empanclment and in this regard, Mr. Arvind P. Datar has relied on the decisions in Laxrni Khandsari v. State of U.P., reported in : [1981]3SCR92 and Indian Council of Legal Aid & Advice v. Bar Council of India reported in : [1995]1SCR304 .

24.6. Even though the respondents would contend that the above particulars and documents called for from the members would be kept secret, the respondents have also reserved their right to use such information and documents sought to be furnished by the petitioners for any other purpose they deem fit, which is arbitrary and unreasonable and such reservation is punitive and violates the principles of natural justice.

24.7. Mr. Arvind P. Datar, while elaborating his arguments, further contends that the particulars relating to professionals employed in the firm, previous experience as statutory auditor of companies other than Government Companies and Banks and Insurance Companies, Partners/Proprietors those who have signed the audit report/ conducted the audit, previous experience as statutory auditor of Head/Central Office(s) or branches of Insurance Companies. Partners/Proprietor those who have signed the audit report/conducted the audit, experience as Concurrent/Internal Auditor of Head/Central Office/Branches of Insurance Companies and the details of partners/proprietor who have signed the audit report/ conducted the audit, previous experience in rendering professional services to Government Companies and the details of partners/proprietor who signed the audit report-rendered the relevant service, and previous experience in rendering professional services to Co-operative Institutions including Co-operative Banks and the details relating to the concern and partners/proprietor who signed the audit report/rendered the relevant services vide Annexures J. K, L, M, N and O have no relevance to the object of preparation of panel. The creation of a category of foreign firms will obviously discriminate against Indian firms not fulfilling the foreign criteria. Even assuming that the object and purpose behind insisting for furnishing such information and documents are noble and laudable, the Institute have no legal sand ity or authority to insist the same for the purpose of empanelment, without following the procedure known to law. Placing reliance on (i) State of U.P. v. Singhara Singh reported in : [1964]4SCR485 and (if) State of U. P. v. Kishori Lal reported in : [1980]2SCR724 . It is contended that since there is no law under which the Institute could ask for these information and documents from the applicants, the applicants cannot be compelled to furnish such particulars and documents by informing them that unless such information and documents are furnished, their applications will not be considered for empanelment. It is further contended that the Institute cannot seek such particulars through the impugned application form indirectly, which the Institute cannot seek directly under Form-A of Schedule '1'.

24.8. Mr. Arvind P. Datar contends that the Act itself intends to regulate the profession of Chartered Accountants, and therefore, these particulars and documents are not at all relevant for assessing the professional and technical competency of the applicants for the purpose of empanelment. The details relating to personal financial status of the members at any stretch of imagination cannot be construed as a legitimate yardstick to assess the professional and technical competency of the members; nor such criteria can be said to weigh the status and standard of professional qualification of members of the Institute.

24.9. Mr. Arvind P. Datar further contends that even assuming that the Institute require these particulars and documents in order to regulate the profession of Chartered Accountants and to maintain the standard of profession, the Institute can call for these particulars and documents only by framing appropriate regulation in that regard, approving the same by the Central Government as per Section 30(3), tabling the same before each House of Parliament as per Section 30B and notifying the same in the Gazette of India as per Section 30(1) and 30B of the Act, but not by enlarging the powers conferred under Regulation 186(2). The ratio laid down in State of U.P. v. Singhara Singh reported in : [1964]4SCR485 has been relied on in this regard.

24.10. Mr. Arvind P. Datar further contends that since the Act and Regulations itself provide for taking appropriate disciplinary action against the erring members who furnish false and incorrect information for preparing the list under Section 19(3) read with Regulations 185 and 186(1), there is no necessity to call for these information and documents through the impugned application forms, from all the Chartered Accountants in the country. That apart, in the absence of any guidelines as to how these particulars are to be used for the purpose of empanelment, the requirement of such particulars by the Institute is arbitrary and unreasonable.

24.11. Referring to the decision in (i) Neera Mathur v. Life Insurance Corporation of India reported in : (1992)ILLJ322SC and (ii) R. Rajagopal v. State of Tamil Nadu, reported in : AIR1995SC264 , wherein, the Apex Court held that the right of privacy is implicit in right to life and liberty guaranteed under Article 21 of the Constitution of India, it is contended that the compulsion imposed by the respondents on the petitioners to produce such particulars and documents relating to income-tax returns, assessment orders and credit cards under Annexures G. J, K, L, M, N and O to the impugned application forms is not only Irrelevant, irrational, arbitrary, unreasonable and suffers from want of nexus to the purpose of empanelment, but also infringes the right of privacy of individual partners protected under Article 21 of the Constitution of India. Placing reliance on the decision in Neera Mathur v. Life Insurance Corporation of India, reported in : (1992)ILLJ322SC , It is contended that even though certain personal details are required for administrative reasons, such details should not be insisted if they are embarrassing though not humiliating: and therefore the details regarding the personal income-lax return, income-tax assessment orders and credit cards of the members should not be insisted as it would otherwise offend Article 21 of the Constitution of India.

24.12. It is therefore contended that the decision of the Institute to call for such information and documents is arbitrary and unreasonable, violating Articles 14, 19(1)(g) and 21 of the Constitution of India.

25. Per contra, Mr. N. R. Chandran, learned senior counsel appearing for the Institute, at the outset, raised a preliminary objection that the above writ petitions are not maintainable for the following reasons;

i. Firstly, the decision of the professional Development Committee, as approved by the Council of the Institute, requiring the members to furnish the details and documents as per the impugned application form for the multi purpose empanelment as well as such decision of the C & AG are policy decisions of statutory/constitutional expert bodies respectively, and such policy decisions cannot be challenged by seeking a Writ of Declaration, and in such a case, the only proper remedy for the petitioners is to seek a Writ of Certiorari. In this regard, Mr. N.R. Chandran, learned senior counsel, cited the decision in Prabodh Verma v. State of U. P., reported in : [1985]1SCR216 .

ii. Secondly, it is contended that many of the members of the petitioner-Societies have already submitted their application forms, furnishing the required particulars and documents and therefore, the petitioners have no locus standi to maintain the above writ petitions.

25.1. Assuming the above writ petitions are maintainable. Mr. N. R. Chandran. learned senior counsel, contends that RBI is under a statutory obligation to appoint auditors to audit the accounts of the Nationalised Banks and Regional Rural Banks, as per Sections 29, 30 and 31 of the Banking Regulation Act, 1949. Similarly, as per Section 619(2) of the Companies Act, C & AG has an obligation to appoint the auditors to the public sector undertakings. Mr. N.R. Chandran. learned senior counsel, points out that these appointment of auditors should satisfy Section 226 of the Companies Act. It is optional for the members to apply for empanelment and the same is not compulsory or mandatory as the empanelment is totally different from the Register maintained by the Institute under Section 19(1) read with Section 2(q) as well as Regulation 3 read with Form I in Schedule A to the Regulations and the list prepared under Section 19(3) read with Regulations 185 and 186(1).

25.2. According to Mr. N. R. Chandran. learned senior counsel, the empanclment of auditors is thus prepared by the Institute and C & AG of the past 15 years. However, by experience, the Institute has come across certain failures on the part of the members in disclosing certain material facts known to them, which are necessary to make their financial statements not misleading; failure to report the material misstatement known to them to appear in financial statement with which they are concerned in professional capacity: failure to notify attention to any material departure from the generally accepted procedure of audit application to the circumstances, etc., and other discrepancies like filing multiple applications by the firms having common partners, filing applications by members whose main occupation is not practising, etc. Taking note of these failures and discrepancies, the Council, by exercising power under Section 17(2) of the Act appointed an expert body viz., Professional Development Committee, the second respondent in W.P. Nos. 12479 and 12480 of 1999, to go into the above failures and discrepancies and provide appropriate recommendations for preparing a multi purpose empanelment of the Chartered Accountants as per the requirements of the statutory authorities and in accordance with the provisions of the Act.

25.3. Mr. N.R. Chandran, learned senior counsel explains that these particulars and supporting documents are required to check certain alleged malpractice that were brought to the notice of the Professional Development Committee.

25.4. Mr. N.R. Chandran, learned senior counsel, contends that since the requirement of these particulars and documents does not amount to a new regulation, there is no reason to test the same by the doctrine of mischief.

25.5. Mr. N.R. Chandran, learned senior counsel, further contends that these particulars are, though diverse in nature relevant to assess the professional competency and experience of the Chartered Accountants.

25.6. Placing reliance on the ratio laid down in Somanna v. Subba Rao reported in AIR 1958 A P 200 that the income-tax returns and assessment orders are public documents, Mr. N.R. Chandran learned senior counsel, contends that the requirement to produce such income-tax returns and assessment orders will not, in any way offend the personal rights and privacy of the petitioners inasmuch they are intended to avoid multiple applications and to facilitate equal distribution of work to more members, nor Section 138 of the Income-tax Act prohibits such disclosure. It is therefore clear that the impugned requirements have a direct nexus to the object of preparation of multi purpose empanelment, and hence, it cannot be complained that the requirement of these details and documents suffers from want of nexus.

25.7. Mr. N.R. Chandran, learned senior counsel, further contends that the disciplinary powers available under the Act and Regulations cannot be a bar for requiring the members to furnish the above details and documents to prepare a foolproof panel of auditors in order to achieve the object of the Act; the requirement of such details and documents, therefore, would not amount to a professional misconduct, nor a violation of Article 14 of the Constitution of India; and the reservation of rights to use the information received from the members for any purpose, also cannot be complained as punitive and arbitrary.

25.8. Mr. N. R. Chandran, learned senior counsel, contends that as the petitioners have no right for appointment merely because they were empanelled, as notified by the Institute, there is no violation of Article 19(1)(g) of the Constitution of India, and consequently, there is no necessity for the respondents to prove that these details and documents required under the impugned applications are reasonable nor to prove that the refusal to empanel the members for want of such details and documents amounts to a reasonable restriction, within the meaning of Article 19(6) of the Constitution of India. Hence, the ratio laid down in M/s. Laxmi Khandsari case, : [1981]3SCR92 , Ahmedabad Municipal Corporation case, : [1986]2SCR700 and Bar Council case, : [1995]1SCR304 Dare not applicable to the facts and circumstances of the present case.

25.9. Mr. N.R. Chandran, learned senior counsel, further contends that the question of providing an opportunity before rejecting the application for empanelment for want of details and documents does not arise as such a decision is only ministerial in nature, but not a quasi-Judicial decision inasmuch as even the inclusion of the members in the panel itself does to confer any right for allotment of audit to the petitioner, and as such. Article 19(1)(g) is not attracted.

25.10. Placing reliance on the decision of the Apex Court in Mohammed Shujat All v. Union of India, : (1976)IILLJ115SC as followed in Chandra Gupta, I.F.S. v. Secretary Govt. of India. : AIR1995SC44 , Mr. N. R. Chandran. learned senior counsel, contends that the right to be considered for promotion is a condition of service, but the mere chance of promotion is not a condition of service. Quoting the above ratio, Mr. N. R. Chandran, learned senior counsel, argues that the petitioners get only a chance of allotment of work by being empanelled, and therefore, such chance of allotment of work by being on the panel or denial of work by not being on the panel, in any way, will not attract Article 19(1)(g) of the Constitution of India, as the right to practice are not in any way curtailed and the mere inconvenience in the profession cannot be a ground for widening the scope of Article 19(1)(g).

25.11. Again, relying on the decision in Haniraj Chulani v. Bar Council of Mahar-ashtra & Goa, : AIR1996SC1708 , Mr. N. R. Chandran, learned senior counsel, contends that the Impugned proposal of carving out and shortlisting the Chartered Accountants in the light of the details and documents cannot be held to be arbitrary, attracting Articles Uand 19(1)(g) of the Constitution of India, nor it could be contended that the Institute and C & AG proposed to act with ungulded powers in rejecting the applications for want of such details and documents. .

25.12. According to Mr. N. R. Chandran, learned senior counsel, the contention that the requirement of details and documents violates the right of privacy protected under Article 21 of the Constitution of India is misconceived and the decisions in Neera Mathur v. Life Insurance Corporation of India, reported in : (1992)ILLJ322SC and Rajagopal v. State of Tamil Nadu reported in : AIR1995SC264 , relied upon on behalf of the petitioners in this regard are inappropriate and do not fit to the facts and circumstances of the case.

25.13. Placing reliance on the decisions in S. Narayan v. Union of India. : AIR1976SC1986 and Krishnan Kakkanath v. Govt. of Kerala. : AIR1997SC128 , Mr. N.R. Chandran, learned senior counsel, contends that the Impugned decision of the statutory and constitutional authorities, viz., the Institute and C & AG respectively, being based on the recommendations of the expert committee, cannot be challenged by the petitioners by way of judicial review. Again, placing reliance on the decisions in (i) Shyambabu Verma v. Union of India, reported in : (1994)ILLJ815SC (ii) Tata Iron & Steel Co. Ltd. v. Union of India reported in : AIR1996SC2462 , (iii) Farida Shaukath v. Unit Trust of India reported in : 1999(2)CTC736 , (iv) Punjab Communications Ltd. v. Union of India reported in : [1999]2SCR1033 and (v) Chandravadanam E. v. State of Tamil Nadu reported in 1999 (2) SCC 127, Mr. N.R. Chandran, learned senior counsel contends that the requirement of the impugned details and the documents are based on the policy decisions of the statutory and constitutional authorities, born out of necessity and relevancy, cannot be challenged under judicial review as the same satisfies the Wednesbury principles of rationality.

25.14. Relying on the decision in Krishnan Kakkanath v. Govt. of Kerala reported in : AIR1997SC128 , Mr. N.R. Chandran, learned senior counsel, contends that when there are substantial reasons for requiring these details and documents in the larger interest, as a matter of public policy, the same cannot be said to be violative of Articles 14 and 19(1)(g) of the Constitution of India.

25.15. Mr. N.R. Chandran. learned senior counsel, placing reliance on the decision in Madan Lal v. State of J & K reported in : [1995]1SCR908 , contends that in the absence of any allegation of bias and mala fide against the expert body, this Court cannot scrutinise the decision of the expert body merely on imaginary and hypothetical grounds and this Court cannot sit on appeal over such decision of the expert body.

26. Mr. T. Srinivasamoorthy. learned counsel for the respondents in W.P. Nos. 12630 and 12631 of 1999, adopting the arguments of Mr. N. R. Chandran, learned senior counsel, contends these details and documents are required to assess the capability and suitability of the members and to test not only the qualification but also to ensure that they are not disqualified in other aspects; there is no compulsion for the petitioners to seek empanelment under any provision of the Act; nor the petitioners have any right for allotment of audit work on the basis of empanelment; and in any event, quoting the averment in the counter-affidavit furnished by C & AG, learned counsel states that if the information furnished by the firms are found to be incorrect, C & AG would give a show cause notice to the Chartered Accountants before refusing to empanel them.

27. In reply, Mr. Arvind P. Datar, learned counsel for the petitioners, contends that the particulars and documents that are required under the impugned application forms for the purpose of empanelment is outside the scope and object of the Act and the Regulations, and therefore, the same is ultra vires the Act and Regulations as well as violative of Articles 14, 19(1)(g) and 21 of the Constitution of India, and as such, the petitioners can very well challenge the same by way of a Writ of Declaration. Even assuming that the petitioners have prayed for an improper relief of a Writ of Declaration, this Court, exercising its extraordinary jurisdiction under Article 226 of the Constitution of India, can entertain the writ petitions, mould the relief sought for by the petitioners and grant appropriate relief as deemed fit and neeessary under the facts and circumstances of the case. Mr. Datar further contends that assuming many of the members of the petitioner societies apply for empanelment as per the impugned application form, the petitioners can still maintain the above writ petitions as it is well settled in law that there is no waiver of fundamental rights.

27.1. Mr. Arvind P. Datar strongly disputes the case of the respondents that the details and documents are required for assessing the professional competency and potentiality of the Chartered Accountants; the reasons explained in the counter-affidavit cannot be substituted to substantiate the decision of the respondents as there is no material before the Court to satisfy that these details and documents are reasonable and related to professional experties; since the respondents could disqualify the members for empanelment for want of information and documents required under the application, the petitioners would not be considered for appointment of auditors in the Nationalised Bank/Regional Rural Bank as well as Public Sector Undertakings and therefore, their right conferred under the Articles is certainly infringed, attracting Article 19(1)(g) of the Constitution of India; such right protected under Article 19(1)(g) could be infringed for want of such details and documents unless they are proved to be reasonable and relevant within the meaning of Article 19(6) and hence, the onus lies on the respondents to place substantial materials before this Court to prove that the required details and documents are reasonable and relevant, as protected under Article 19(6). Mr. Datar, therefore, contends that the phrase 'reasonable restriction' in Article 19(6) implies an intelligent care and deliberation, i.e., the choice of a course which reason dictates as held by the Apex Court in Chintaman Rao v. State of M.P.. : [1950]1SCR759 and further relying upon the decision in R.M. Seshadri v. Disl. Magistrate, Tanjore, : [1955]1SCR686 , contends that any condition which is more in the nature of an imposition than a restriction, is held to be abnoxious and unreasonable and cannot be considered as reasonable restriction within the meaning of Article 19(6) of the Constitution of India. Relying on the above ratio, Mr. Datar contends that the particulars and the documents required by the respondents are in no way relevant for assessing the professional competency, as they are very personal, and therefore, rendering the members disqualified for want of such details and documents which are irrelevant to assess the professional competency amounts to imposition but not a reasonable restriction.

27.2. Mr. Datar distinguished the decision in Krishnan Kakkanth v. Govt. of Kerala reported in : AIR1997SC128 and contends that the petitioners are entitled to challenge the policy decision of the respondents, it the decision of the respondents requiring the petitioners to furnish the details and documents has no nexus for the object to be achieved and the same is arbitrary, capricious and unreasonable, and therefore, violates Articles 14. 19(1)(g) and 21.

27.3. Mr. Arvind Datar further replies that the details and documents required are attracted by Wednesbury principles of irrationality and perversity. Hence, it is contended that the decisions relied upon by the respondents, viz., S. Narayan v. Union of India. : AIR1976SC1986 ; Shyam Babu Vermav. Union of India, : (1994)ILLJ815SC ; Tata Iron and Steel Co. Ltd. v. Union of India, : AIR1996SC2462 ; Farida Shaukath v. Unit Trust of India, : 1999(2)CTC736 . Chanravadanam E. v. State of Tamil Nadu. : (1999)IIMLJ306 and Punjab Communications Ltd. v. Union of India. : [1999]2SCR1033 are not applicable to the facts and circumstances of the instant case; since the refusal to consider the members for empanelment for want of details and information ultimately deprives the right of the petitioners to be appointed as auditors in the National Bank/ Regional Rural Banks by RBI and Public Sector Undertakings by C and AG, attracting Article 19(1)(g) of the Constitution of India, the onus lies on the respondents to prove that the details and documents required in the impugned application form are relevant and reasonable; and in the absence of any material supporting such policy decisions, the same are held to be perverse and suffers from want of nexus and attracts Articles 14, 19(1)(g) and 21 of the Constitution of India.

27.4. Mr. Datar also contends that the respondents, being statutory/constitutional authorities, are expected to act transparently, fairly and openly, as they are bound by public accountability. Placing reliance on the decision in Mohinder Singh Gill v. Chief Election Commissioner, reported in : [1978]2SCR272 and Commissioner of Police v. Gordhandas, reported in : [1952]1SCR135 , contends that in the absence of reasons transparent on the notification the Institute or C and AG are not entitled to supplement fresh reasons by filing a counter-affidavit substantiating their action. Therefore, they should' have disclosed materials and reasons for requiring these details and documents; or otherwise, such requirements are held to be perverse, capricious and arbitrary, attracting Article 14 of the Constitution of India.

27.5. Mr. Datar further contends that the respondents are not entitled to seek 'fishing' information relating to personal and private affairs of the individual partner with regard to their indebtedness and credit cards, as they are unrelated to professional competency and potentiality. In this regard, he places reliance on the decision reported in : [1994]207ITR1077(Bom) ; (D.B.S. Financial Services v. Smt. M. George). He also contends that the refusal to consider the applications which do not contain the correct information, even without furnishing reasonable opportunity to them is unfair, unreasonable and violative of the principles of natural justice.

28. I have given a careful consideration to the submissions of both sides.

29. The following issues arise for my consideration in the above writ petitions:

(i) whether the above writ petitions are maintainable in law? and

(ii) whether the details and documents required in the impugned applications violate Articles 14. 19(1)(g) and 21 of the Constitution of India as well as the principles of natural justice?

30.1. Point No. (i) Whether the above writ petitions are maintainable in law?

In W.P. Nos. 12479 and 12480 of 1999, the petitioner seeks a Writ of Declaration, challenging the decision of an expert body, namely, the Professional Development Committee, as approved by the Council of the Institute, requiring the details and documents under the impugned application for the empanelment of the Chartered Accountants. Similar decision of the C and AG, a Constitutional Authority, has been challenged by the petitioner in W.P. Nos. 12630 and 12631 of 1999. The petitioners allege that the details and documents required in the impugned application in the above writ petitions are arbitrary, perverse and violative of Articles 14, 19(1)(g) and 21 of the Constitution of India, and also violative of the principles of natural justice and ultra vires the provisions of the Chartered Accountants Act and Chapter X of the Regulations framed thereunder. Argued Mr. N.R. Chandran, learned senior counsel, placing reliance on the decision in Prabodh Verma v. State of U. P., reported in : [1985]1SCR216 , that a Writ of Declaration can be prayed only where constitutional validity of the decision of a State or the Authority is raised, but not otherwise.

30.2. In Prabodh Verma v. State of U. P., reported in : [1985]1SCR216 , the petitioners sought for a Writ of Certiorari to declare an Act or an Ordinance as unconstitutional and void, but the Apex Court held that where the petitioners contend that an Act or an Ordinance is unconstilutional orvoid, the appropriate relief for them is to seek only a Writ of Declaration and not a Writ of Certiorari which can be granted only againsl the inferior Courts or Tribunals or authorities to transmit the records of the proceedings pending before them for scrutiny of the same by the High Court or the Supreme Court, if necessary, and for quashing the same. Inviting my attention to the observation of the Apex Court that in such case the High Court ought not to have proceeded to hear and dispose of the writ petition without insisting upon the petitioner to amend the prayer in the writ petition, Mr. N. R. Chandran, learned senior counsel, contends that the petitioners, having challenged the policy decision of the expert committee which has culminated in the impugned application form required by the Institute and the C and AG in exercise of their statutory powers, ought to have sought for a Writ of Certiorari instead of a Writ of Declaration, as constitutional validity of the impugned application form does not arise, and therefore, argues that the above writ petitions are liable to be dismissed for improper relief sought for.

30.3. There is no dispute on the issue that the recommendations of the Professional Development Committee, an expert body, for a comprehensive application form seeking the impugned details and documents, had been approved by the statutory authority, viz., the Institute in W.P. Nos. 12479 and 12480 of 1999 and a similar decision had also been taken by the constitutional authority viz., C and AG in W.P. Nos. 12630 and 12631 of 1999, is the subject matter in all these writ petitions. It may be noted that the said policy decision of the statutory/constitutional authorities is challenged not only on the ground that the same is unreasonable, unfair, arbitrary, capricious, violative of Articles 14. 19(1)(g) and 21 of the Constitution of India and also violative of the principles of natural justice, but also as ultra vires the provisions of the Act and Chapter X of the Regulations, as pointed out by Mr. Arvind P. Dalar, learned counsel for the petitioners. Therefore, taking into consideration the substantial grounds raised in the above petitions, it may not be proper for this Court to dismiss the above writ petitions merely because they have prayed for an improper relief. Hence, in order to meet the ends of justice, instead of refusing to hear the aggrieved party purely on a technical and narrow procedural ground, the petitioners are required to be heard on merits, as the powers conferred on the Court under Article 226 of the Constitution of India are wide and flexible to mould the relief sought for, as held in Charanjitlal v. Union of India, : [1950]1SCR869 ; B.R. Kamabhadriah v. Secretary, F and A Dept. Andhra Pradesh. : (1981)IILLJ263SC ; M. V. Elisabeth v. Harwan Investments arid Trading (P.) Ltd., : [1992]1SCR1003 ; Ashok v. State of Karnataka, : (1992)ILLJ87SC ; Slate of Rajasthan v. Hindusthan Sugar Mills, : AIR1988SC1621 and Dwarakanath v. I.-T. Officer, : [1965]57ITR349(SC) and such a power of judicial review can elastically be exercised to render 'Justice' wherever injustice is complained of; and therefore, the exercise of judicial review need not be restricted for want of proper relief. Hence, in my considered opinion, these writ petitioners deserve to be heard on merits irrespective of the cob-webs of technicalities; otherwise, the petitioners would be let down to a bottomless pit.

30.4. Similarly, where the petitioners complain that their fundamental rights are infringed, it is well settled in law that there cannot be any waiver for breach of the fundamental rights, as held in Basheswar Nath v. Income-tax Commissioner, reported. In : [1959]35ITR190(SC) . Therefore, refusing to hear the petitioners merely on a technical ground that some of the petitioners have already applied in a prescribed form, would render the powers of judicial review of this Court conferred under Article 226 of the Constitution of India to suffer from judicial shackle.

30.5. Point No. (i) is answered accordingly.

31. Point No. (ii); Whether the impugned details and documents required in the impugned application violate Articles 14, 19(1)(g) and 21 of the Constitution of India as well as the principles of natural justice?

Section 226 of the Companies Act contemplates that a person shall not be qualified for appointment as auditor of a company unless he is a Chartered Accountant within the meaning of Chartered Accountants Act and is not disqualified for such appointment as prescribed therein. Therefore, apart from the 'Register' maintained by the Institute as per Section 19(1) of the Act and the 'List' prepared as per Section 19(3) of the Act, the Institute is also required to prepare a panel of Chartered Accountants as per the requirement contemplated under Section 226 of the Companies Act for appointment of auditors in the Nationalised Banks and Regional Rural Banks by the RBI. Similarly, the C and AG is required to prepare a panel for appointed auditors, in the Public Sector Undertakings. Necessarily, the details and documents required by the Institute and C and AG need not be the same as required for the purpose of maintaining the Register as per Section 19(1) and for preparing the List as per Section 19(3) of the Act.

32. It appears that certain discrepancies were brought to the notice of the Institute by the RBI as well as to the C and AG in furnishing information for empanelment of auditors. It is also felt by the Institute as well as the C and AG that the information furnished by the auditors in the existing system are insufficient for preparing the panel as per the requirement in law or give way for growth of bogus firms, depriving the legitimate rights of the qualified auditors. These alleged malpractice include (a) showing members as partners who are not in fact associated with the functioning of the firm; (b) showing branch office/head office at places where they are not actually functioning; (c) inclusion of members who are in full time employment as partners without disclosing the fact of their employment; (d) showing the members as in charge of the branch office without fulfilling the prescribed conditions and (e) showing the members as partners who are also engaged in other occupations without disclosing the fact about the engagement. Unmistakably, these malpractices are considered as detrimental not only to the public image of the profession of Chartered Accountants but also to the very interest of the society at large.

33. The Professional Development Committee, in order to check the mushroom growth of bogus audit firms; to arrest malpractice in furnishing false, incorrect and misleading particulars by the audit firms and to prepare a panel of genuine and bona fide firms to protect the interests of the financial institutions in a larger interest of the society, recommended to seek the Impugned details and documents, in a composite application form from the members of the Institute who apply for empanelment, which are relevant for the appointment of auditors in nationalised banks and regional rural banks by the RBI. After the approval of the Council, the Institute invited the impugned details and documents in a prescribed format from the members of the Institute for empanelment of Chartered Accountants for the appointment of auditors of the banks, notifying that the applications which do not contain the impugned details and documents would not be considered for empanelment.

34. These details and the documents required under the impugned application as well as in the Annexures, G, II, I. J. K. L. M. N and O are related to the income and networth of the firms as well as the individual partners; the constitution of the firm; the name of their bankers; credit limit and bank account number; latest balance sheel; standing of the firms with the details of empanelment with RBI and C & AG; length of empanelment; past assignment; maximum size of project handled and value of the project and infrastructure, manpower with list of senior executives and other professionals like cost accountants, lawyers, engineers, etc. These particulars are required to prepare a tool-proof panel of auditors supported with authenticated information from the applicants themselves, which would enable the instil the to check the malpractice at the threshold and also to hold the erring members with accountability, and therefore, there is no reason to feel either aggrieved or prejudiced by such measures which are purely intended to ensure credibility to the empanelment mechanism and to enhance the image of the profession in the eye of public. Further, as rightly pointed out by Mr. N.R. Chandran, learned senior counsel, the details of indebtedness including the out standings in respect of credit cards which exceeds Rs. 1,000/- of the Public Sector Banks/Regional Rural Banks, as required in Annexure G and the details of directorship in Public Sector Banks/Regional Rural Banks, as required in Anuexure II, are required to ensure that the applicants are in no way disqualified under Section 226 of the Companies Act. Similarly, particulars, as required in Anncxures I, K. L. M, N, & O with the details of partners who have signed the audit report are required to assess the quantum of work they had undertaken, professional competency and their association with Public Sector Banks/Regional Rural Banks so that the conflict of interest between the banks and the applicants could be avoided. The particulars of professionals employed in the firm, as required in Anncxuie J. arc relevant lo assess the professional potentiality. I am satisfied that these details arc neither intended to favour any multi national firm nor to interfere with the personal right of the individual member, much less the privacy, but they are intended to assess the qualification, experience. competency, as well as to ensure that they are not disqualified in any manner as per Section 226 of the Companies Act. Similarly, I am satisfied that the documents to be attached with the application, viz., the partnership deed, the balance sheet, profit and loss account, latest income tax returns and assessment order of the firms as well as individual partners, arc necessary to cross verify the details that are relevant for the purpose of appointment of the auditors to the public sector undertakings and the banks and that the production of income tax returns and the assessment orders of the firm as well as individual partners would enable the institute to (a) short list the applications by avoiding multiple applications and (b) to avoid the members who arc actually not practising, so that the practising members would get job: thus, in overall, the members who are actually practising would he benelited and the work would be distributed equally and impartially. Consequently, the concentration of work with few members who arc partners in different firms would be avoided in order to facilitate equal distribution of work to more members, according to their professional competency. No doubt, the income tax returns and the assessment orders, per sc, would enable the Institute to verify and to eliminate the dummy and non-practising partners and to enlist the genuine and bona fide members in the panel, by cross checking the information and the supporting documents of the firms as well as individual partners. I am also unable to appreciate the contention of Mr. Arvind P. Datar that the requirement of such information relating to income tax returns and the assessment orders of the firms and the individual partners cannot be caused to be disclosed except as ordered under Section 18 of the Income Tax Act. Section 18 of the Income Tax Act enables the authorities mentioned therein to furnish or cause to be furnished such information received or obtained by any income tax authorities that are necessary to perform his or its functions under the law mentioned therein as per clause (1) of Section 138 and further authorises the Central Government to direct by appropriate notification in the official gazette that no information or document shall be furnished or produced by a public servant in respect of such matters relating to such class of assessces or except such authorities as may be specified in the order notwithstanding anything contained under Section 138(1) or any other law for the lime being in force as per Section 138(2) of the Act Section 138 thus enables the authorities mentioned therein or the Central Government to pass appropriate order in the matter of disclosure of the particulars of the asscssees notwithstanding anything contained in any law in force. Therefore in the absence of any notification by the Central Government under Section 138(2) of the Income Tax Act the Institute and C & AG are not barred to seek disclosure of information relating to the assessees when such information is relevant and necessary to suit other statutory requirements for empanelment of Chartered Accountants for appointment of auditors in the Nationalised Banks and Public Sector Undertakings as per Section 226 of the Companies Act and to achieve the object of the Chartered Accountants Act viz. to regulate the profession of Chartered Accountants and hence such disclosure would not in any way run counter to Section 138 of the Income Tax Act as rightly pointed out by Mr.N.K. Chandran. To contend such details would prejudice the personal rights and privacy in my considered opinion is unsustainable in law as the income tax returns and the assessment orders are public documents as held in Somanna v. Subba Rao reported in AIR 1958 AP 200 and therefore the production of the same could not be said to prejudice anyone.

35. I am therefore satisfied that there are sufficient and tangible reasons to justify the requirement of the impugned details and documents. The professional development committee and the Council of the Institute are competent to take appropriate decision requiring all relevant particulars for preparing a multi purpose empanelment and such efforts could not be termed either as irrelevant or unwise attempt: nor would amount to framing of new regulation, requiring it to be notified in the Official Gaxette as per Section 30(1); nor to be approved by the Central Government as per Section 30(3); nor to be laid before each House of Parliament as per Section 30B of the Aet; and therefore, the requirement of the impugned details and documents are not in violation of Sections 30(1), 30(3) and 30B of the Act.

36. As I am satisfied that the requirement of impugned details and documents has strong nexus with the object to be achieved under the Act and rendering the members disqualified for want of impugned details and documents, the same could not be said to be unreasonable, arbitrary and perverse, attracting Articles 14. 19(1)(g) and 21 of the Constitution of India. Further, as observed in detail, the notification of the Institute as well as C & AG themselves apparently disclose the reasons for seeking the impugned details and documents. Nine discrepancies that were noticed while processing the application submitted by the members of the firms and seventeen points that are to be taken note of by the applicants while filling up the applications for empanelment are expressly stated in the notification. Therefore, I do not find any merit in the contention of Mr. Arvind Datar that the impugned notifications do not reflect any reason and that the respondents had failed to place materials to satisfy this Court for requiring the impugned details and documents. Hence, I do not find any force in the argument of Mr. Arvind P. Datar, relying on the decisions in Mohinder Singh Gill v. Chief Election Commissioner reported in : [1978]2SCR272 and Commissioner of Police v. Gordhandas reported in : [1952]1SCR135 , that the respondents are trying to supplement fresh reasons by filing counter to substantiate their action.

37. The ratio laid down by the Apex Court in Dutta Associates Pvt. Ltd. case : (1997)1SCC53 , that the decision making process should be transparent, fair and open and that the authorities have public accountability to maintain the fairness in their action without giving room for abuse of powers for extraneous reasons are not in any way attracted in the instant case .

38. I am also not impressed with the submission of Mr. Arvind P. Datar, placing reliance on DBS Financial Service case : [1994]207ITR1077(Bom) that the respondents seek 'fishing information' relating to personal and private affairs. Even though the impugned details and documents are related to personal and private affairs, it cannot be disputed that these details and documents reflect the indebtedness of the members, which is directly relevant to ensure that they are not in any way disqualified under Section 226 of the Companies Act. Hence, I do not agree that the impugned details and documents relating to the personal income and credit cards of the petitioners offend the right to life and liberty of the petitioners, attracting Article 21 of the Constitution of India, and therefore, the reliance placed on Necra Mathur case : (1992)ILLJ322SC and Rajagopal case : AIR1995SC264 is of no avail.

39. Various decisions cited by Mr. Arvind Datar viz., Laxmi Khandsari case : [1981]3SCR92 , Municipal Corporation case : [1986]2SCR700 and Bar Council case : [1995]1SCR304 un-mistakably support the proposition that, where there is a clear violation of Article 19(1)(g), the Slate has to justify, by acceptable evidence, inevilable consequences or sufficient materials that the restrictions, whether partial or incomplete, is in the public interest, and contains the quality of reasonableness: when the exercise of fundamental right is prohibited, the burden of proving that a total ban on the exercise of the right alone may ensure the maintenance of the interest of general public, lies heavily upon the State; but the question as what are the reasonable restrictions would naturally depend on the natural circumstances of the ease, character of the statute, object which 11 seeks to serve, and the existence of the circumstances. Therefore, to decide on violation of Article 19(1)(g) in terms of any reasonable resthelion, 'keeping the public interest - as a parameter' should be the cardinal principle; but, not the mere inconvenience of the individuals as complained.

40. The principles laid down in Papanasam Labour Union v. Madura Coals Ltd., : AIR1995SC2200 that the rcslriction sought to be imposed on the fundamental rights guaranteed under Article 19 of the Constitution must not be arbitrary or of an excessive nature so as to go beyond the requirement of felt need of the society and object sought to be achieved; and that there must be a direct and proximate nexus or a reasonable connection between the restriction imposed and the object sought to be achieved; cannot have universal application in all cases, as the question of reasonableness vary from ease to case. The reason that weighed for requiring the impugned details and documents in the instant case, does not, in any way, derogate the well-found principles laid down in the case referred to above.

41. As rightly contended by Mr. N.R.Chandran, learned senior counsel, the mere disciplinary powers available under the Act, cannot, in any way, disable the Institute to seek the impugned details and documents from the members who desire to apply for empanelment, in order to avoid any malpractice at the threshold, and to achieve the object of the Act and to satisfy the requirement of the statutory authorities. Since the Institute itself requires the members to furnish the details relating to the names of companies audited by the members and their networth and turnover, furnishing of such details would not amount to a professional misconduct; but a member shall be deemed to be guilty of professional misconduct only if be does not supply the information called for. Further, reservation of right to use the information received from the members for any purpose in the interest of profession in addition to submitting the same to the appropriate authorities also cannot be complained as arbitrary, unreasonable, mala lide and violative of Article 14 of the Constitution of India. From the notification, 1 find that the Institute does not undertake any responsibility with regard to the allotment of audit or other assignment to any of the applicants, and therefore, as explained by Mr. N.R.Chandran, learned senior counsel, the empanelment will not confer any right for appointment of auditors. in other words, the members who apply for empanelment have no right for appointment as auditors automatically, by virtue of such empanelment. Therefore, the refusal to consider the petitioners who have not furnished the required details and documents, will not, in anyway, violate Article 19(1)(g) of the Constitution oflndia. Consequently, there is no necessity for the respondents to satisfy that these required details and documents amounts to reasonable restriction within the meaning of Article 19(6) of the Constitution of India. Hence, I am unable to appreciate the arguments of Mr. Datar. basing on the ration laid down in (i) M/s. Laxmi Khandsari v. State of U.P., : [1981]3SCR92 , (ii) Municipal Corpn.. Ahmedabad v. Jan Mohammed, : [1986]2SCR700 and (iii) Indian Council of Legal Aid & Advice v. Bar Council of India. : [1995]1SCR304 , that the onus lies on the rcspondent-Institute/C & AC. to place the materials before the Court to prove that the impugned details and documents required are reasonable, relevant and necessary for the multi purpose empanelment. In any event, there are substantial, relevant and tangible reasons to justify the requirement of these details and documents for preparing the multi purpose empanelment. Further, as rightly contended by Mr. N.R.Chandran, learned senior counsel, if Article 19(1)(g) is not attracted, there is no obligation for the respondents to produce the materials to satisfy that the impugned details and documents are reasonable and relevant

42. As 1 am satisfied with the corporeal reasons for the requirement of the impugned details and documents, the ratio, laid down in Chiniaman Rao case : [1950]1SCR759 as well as in Seshadri case : [1955]1SCR686 that 'reasonable restriction' required within the meaning of Article 19(G) should be based on intelligent rare what the reason dictates and Hint any condition, which is more of nature of imposition than a restriction is held to be of abnoxious, cannot be considered as reasonable within the meaning of Article 19(6), do not come in aid of the petitioners.

43. In Haniraj Chulani v. Bar Council of Maharashtra & Goa, : AIR1996SC1708 , the Apex Court has held that the rule restricting the entry of persons already carrying on other professions for the enrolment as Advocate neither could fall foul on the alter of Article 14 & 19(1)(g) read with Article 19(6). nor could be said that unguided and uncharatered powers are handed over on a platter to the Bar Council for regulating entry to the legal profession. Applying the above ratio to the instant case, the impugned proposal of carving out and shortlisting the Chartered Accountants in the light of the details and documents to be furnished with the impunged application form, cannot be complained as arbitrary and unreasonable, attracting Article 14 and 19(1)(g) of the Constitution of India, as such details and documents are required to prepare a multi-purpose empanelment of auditors germane to high and exacting the standards of auditing and to maintain the status and standard of professional qualification of the members of the Institute. Therefore, refusing to consider the applications for want of such relevant details and documents, in my considered opinion will not amount to conferring unguided and unchartered powers with the Institute or C & AG. On the other hand, taking note of the reasonableness, relevancy and necessity of these details and documents into consideration, it could be safely concluded that the same is found to be well sustainable in law, not attracting Article 14 and 19(1)(g) of the Constitution of India, and once such conclusion is reached, the absolute requirement of Article 21 would be out of way, and the petitioners, therefore, cannot be said to have been deprived of their rights to livelihood by not being empanelled for want of such details and documents, and therefore, the requirements under the impugned application cannot be faulted on the touchstone of Article 21 of the Constitution of India.

44. I am also unable to appreciate the arguments of Mr. Datar basing on the decision in Indian Council of Legal Aid & Advice v. Bar Council of India reported in : [1995]1SCR304 that the requirement of impugned details and documents affects the right of the petitioners to practice, attracting Articles 145 and 19(1)(g) of the Constitution of India. In the said Bar Council's case, the Apex Court considered the rule barring persons who have completed 45 years of age, from enrolment as Advocate and held the same us ultra vires Articles 14 and 19(1)(g) of the Constitution of India, finding that there is no reliable, statistical or other material placed on record in support of the inference that ex-Government or quasi-judicial Government servants or the like Indulged in undesirable activity, after entering the profession, and held that the said rule is unreasonable and arbitrary, as the choice of the age of 45 years is made, keeping only a certain group in mind, excluding the vast majority of other persons who are in service of the Government or quasi judicial Government or similar institutions at any point of time, and therefore, violates principles of equality enshrined in Article 14 of the Constitution of India. But, in the instant case, the Institute and C and AG have come out with sufficient and convincing reasons for the requirement of the above details and documents and all the members of the Institute arc permitted to apply for empanelmenl uniformly, by furnishing all the relevant details and documents required in the impunged application. Therefore, I do not see that the Institute & C & AG have arbitrarily and unreasonably insisted upon these details and documents, offending Article 14 of the Constitution of India, and hence, the reliance placed on the ratio laid down in Indian Council of Legal Aid & Advice v. Bar Council of India reported in : [1995]1SCR304 , is inappropriate.

45. In S. Narayan v. Union of India, : AIR1976SC1986 , the Apex Court has held that the subscriber, under the Telegraph Act, is not entitled to maintain the writ petition challenging the increase in telephone tariff rates recommended by the tariff enquiry committee which was subsequently placed before the House in the shape of budget proposal. The Apex Court observed that, the Parliament, having gone into all the budget proposals and sanctioned the same, such tariff'ratio had become the legislative policy as well as the legislative process, and therefore, the Court has no jurisdiction under Article 226 of the Constitution of India to go Into the reasonableness of such rates, which are decided as policy matters in fiscal planning, which cannot be subjected to any judicial determination. Applying the ratio laid down in the above decision to the facts and fir cumstances of the instant case. I am satisfied that the impugned application form, having been recommended ordinarily by an expert body and subsequently approved by the Council as required by the statutory and constitutional authorities, viz.. Institute and C and AG as the matter of policy decision, cannot be questioned by the petitioners by way of judicial review under Article 226 of the Constitution of India, and the Court, therefore, would not interfere with the decision of the body of experts in the absence of any unreasonableness. The requirement of reasonableness in the action of the authorities is one of the most active criteria but not a mere empty formality and the same would mean not what the authorities like but what they ought, by ascertaining and following the course which reason directs, which could be conveniently explained as a test of 'Wednesbury's principles of reasonableness'. In other words, mere discretion of the authorities to take appropriate decision on a particular subject and exercise of such discretion itself would not be sufficient, if such discretion is exercised not satisfying the principle of reasonableness. The discret ion, which do not stand to the test of reasonableness, would thwart and run counter to the object of conferring such discretion on the authorities. Any policy decision derived as a result of such defective exercise of discretion for want of reasonableness, is not entitled to the protection of the Court. If the decision of requiring the impugned details and documents is tested by the Wednesbury principles of rationality, I am satisfied that there are sufficient and strong reasons for requiring such details and documents in order to satisfy the requirement of statutory/constitutional authorities, viz,. RBI and C & AG. The impugned policy decision which stand to the test of reasonableness, cannot, therefore, be challenged under Article 226 of the Constitution of India, by way of judicial review, as held in (i) Tata Iron and Steel Co. Ltd. V. Union of India reported in : AIR1996SC2462 . (ii) 1999 CTC 371. (iii) Punjab Communication Ltd. case reported in : [1999]2SCR1033 and(iv) : (1999)IIMLJ306 . That apart, I am of the firm opinion that the mere inconvenience would not amount to a legal prejudice and such inconvenience cannot be a ground to allege violation of Articles 14, 19(1)(g) and 21 of the Constitution of India.

46. In Krishnan Kakkanth v. Govt. of Kerala reported in : AIR1997SC128 . the Apex Court has upheld the decision of the Government that the subsidy can be paid only to the approved dealers, and such decision, being a policy decision, cannot be challenged by way of a Judicial review on the ground of violation of Article 14 of the Constitution. Applying the above ratio, I have no option except to hold that if the petitioners want to be empanelled, they have to furnish the details and documents in accordance with the terms and conditions of the application, inasmuch as the same are reasonable, relevant, and therefore, required in the public interest to assess the professional competency and potentiality, as explained above. The reasonableness of such requirement has to be determined in an objective manner by a standpoint from the interest of the general public and not by a standpoint from the interest of individuals upon which the requirements were contemplated on abstract and imaginary inconvenience.

47. The allegation that the petitioners would be prejudiced by furnishing the details and documents required in the impugned application form is nothing but imaginary, surmise and hypothetical, but not based on reasons, and such a grievance cannot be gone into under Article 226 of the Constitution of India unless the petitioners are legally prejudiced and this Court, rather, cannot act as a Court of appeal on such issues as per the ratio laid down in Madan Lal v. State of J. & K. reported in : [1995]1SCR908 .

48. As discussed in detail, the policy decision taken by the Institute and the C & AG, in conformity with the respective provisions of the Act as well as the Companies Act, for substantial and tangible reasons referred to above, to avoid the discrepancies in preparing the panel of auditors as per the statutory requirements of RBI and C and AG and to prepare a fool proof panel of Chartered Accountants for the appointment of auditors in the Nationalised Banks and Regional Rural Banks as well as in public sector undertakings, in my considered opinion, cannot be complained of that the said authorities, viz.. RBI & C and AG have acted in the manner not conferred on them. Therefore, the arguments of Mr. Arvind Datar, placing reliance on the decision in State of U.P. v. Singhara Singh reported in : [1964]4SCR485 . following the decision in Taylor v. Taylor. (1976) 1 Ch D 426 that, where the power is given to do certain thing in a certain way, the thing must be done in that way or not at all and other methods of performance are necessarily forbidden, does not fit into the facts of the instant case. Since the Impugned decision of the Institute and C and AG is intended to avoid malpractice by the bogus firms, to weed out the mushroom growth of bogus firms and to cull out the authenticate and correct information from Chartered Accountants taking note of the discretions that were experienced by the Institute and C and AG during the previous years, I am unable to appreciate the contention of Mr. Datar that the impugned requirement of details and documents are attracted by Heydon's rule, as the Institute and C and AG have not explained the mischief in the existing system, Similarly the argument of Mr. Datar, placing reliance on the decision in State of U.P. v. Kishori Lal reported in : [1980]2SCR724 . that the requirement of the details and documents by the Institute and C and AG has no authority of law, cannot be accepted, as the source of authority for such decision is distinctly traceable under the provisions of the Act read with Sections 226 and 619 of the Companies Act.

49. In my well considered opinion, auditing the Nationalised Banks/Regional Rural Banks and the Public Sector Undertakings is a matter of statutory necessity. It has a direct bearing on the financial and economic management of the country. As the allotment of such audit by RBI and C and AG, thus, have a driving force in the country's fiscal operation, the preparation of panel of the Chartered Accountants for such allotment has become an integral part of the statutory obligation of the concerned authorities. Discharging the vital role of empanelment of Chartered Accountants by the Institute and C and AG. therefore, cannot be complained of lacking statutory source of authority. Where the statutory and constitutional authorities, in exercise of their powers, are of the expert opinion that the existing system from stigma and lacks required strength to fully integrate with the statutory demands, and therefore, the existing framework needs complete renovation to suit the statutory requirements, the efforts of the Institute and the C and AG to develop and strengthen the institutional facilities and infrastructure, in order to provide a 'Zero Defect' panel of auditors as per the statutory requirements cannot be said to be devoid of nexus. If particular system is found to be defective, by experience, no arbitrariness, much less perversity, could be attributed in removing such defects and finding a solution for giving equal opportunity to all similarly placed Chartered Accountants. Our intelligentsia should not be either misunderstood or underestimated, as many Indians have proved equally good or excelled whenever and wherever they are given equal opportunity. The defects observed, by experience, in the existing system, if warranted to be rectified, by an expert body, as saner thought will always throw more light even on the same subject, the consequential policy decision intending to remove disparity among the similarly placed Chartered Accountants in order to provide adequate and equal opportunity to all qualified Chartered Accountants, cannot be quoted as arbitrary or perverse, attracting Articles 14, 19(1)(g) and 21 of the Constitution of India. Failure to take such efforts by the Institute and the C and AG alone would paralyse the progress in the system and cause stagnation in the financial and economic management of the country, which, in turn, affect the standard of living and quality of life from all corners. I am, therefore, satisfied that there is a need to search for a remedial measure to rectify the defects in the existing system, which, even if causes any inconvenience or hassles to some individuals, including the petitioners, the same will not, in any way, amount, to violation of fundamental rights conferred under Articles 14, 19(1)(g) and 21 of the Constitution of India.

50. Whether the details and documents required under the impugned application violate the principles of natural justice, and if so, to what extent , remains to be answered, if the 'principles, of reasonableness' is held to be the most active, conspicuous and substantial ground to challenge the action of the authorities on the substantive side, the violation of the principles of natural Justice is equally a dynamic weapon to attract the action of the authorities on the procedural side. Of course, no one can complain on violation of principles of natural justice in the matter of legislative or policy making powers of the State or the Authorities. Therefore, the petitioners are not entitled to complain for want of any opportunity, much less reasonable opportunity . against the impugned policy decision of the Institute and C and AG. Argued Mr. N.R. Chandran, learned senior counsel, that the petitioners are not entitled for an opportunity before refusing to empanel them for want of details and documents as such rejection is only ministerial in nature. Of course, the ministerial act can be performed in a given set of facts and in a prescribed manner, in obedience of the mandate of law, without having regard to his own judgment on the propriety of the act of being done, and therefore, the ministerial duty is simply an administrative duty, which could be exercised without any discretion. In other words, the discretionary act is distinguishable to that of a ministerial act as the discretionary act requires to be exercised, not as a matter of routine, but should stand to the test of reasonableness in the Wednesbury sense and in compliance of the principles of natural justice. Even though Mr. N.R. Chandran, learned senior counsel, rightly contends that there is no compulsion for the petitioners to apply for empanelment, nor the empanelment, by itself, will confer any right for allotment of audit, it cannot be concluded that the petitioners are not aggrieved in any way, by not being empanelled outrightly, as the right of allotment of audit flows from empanelment. Thus, in my considered opinion, the principles of natural Justice come in aid of the petitioners, where their right to be considered for allotment, by not being on the panel, is at stake, and therefore, the petitioners are entitled to be ensured with a reasonable opportunity by the Institute and C and AG before the petitioners are refused to be empanelled. The principles of natural justice are violated, to while the Institute and C and AG take a policy decision requiring the particulars under the impugned application form, but when refusing them for empanelment for want of all or any of the particulars, as required under the impugned application form, as such refusal, ultimately, offends the right of Chartered Accountants to be considered for allotment of audit, guaranteed under Article 19(1)(g) of the Constitution of India. Hence, the compliance of the principles of natural justice in the matter of empanelment cannot be lightly disregarded, as the empanelment, even if it does not confer any right for allotment, still confers a right for being considered for allotment by being on the panel, and the same is definitely protected within the meaning of Article 19(1)(g) of the Constitution of India, as held in Mohammed Shujat Ali v. Union of India, : (1976)IILLJ115SC . Therefore, such right to be considered for allotment of audit by being on the panel, as guaranteed under Article 19(1)(g) of the Constitution of India, necessarily mandates the Institute and C and AG to provide an opportunity to the petitioners if the information furnished by them are found to be incorrect, before refusing to empanel them as rightly weighed by the C and AG'. Denial of such opportunity to the petitioners by the Institute before refusing them for empanelment for want of details and documents required in the impugned application, in my opinion, violates the principles of natural justice.

51. On the totality of the facts and circumstances of the case and for the reasons discussed above. I do not find any reasons to grant the relief as prayed for or to grant any other relief. However, I am obliged to direct the Institute and C and AG to give opportunity to the petitioners before refusing to empanel the petitioners if the information furnished by them are found to be incorrect, and the Institute, as well as the C and AG arc therefore, directed to reschedule the time to enable the Chartered Accountants who desire to seek empanelment, to submit their applications, and to finalise the empanelment in the light of the directions stated above.

The writ petition are dismissed with the above directions. Consequently, the connected W.M.Ps. are also dismissed. No costs.

Subject	Civil
Court	Chennai High Court
Decided On	Oct-01-1999
Case Number	W.P. Nos. 12479, 12480, 12630 and 12631 of 1999
Judge	P.D. Dinakaran, J.
Reported in	AIR2000Mad92
Acts	Constitution of India - Articles 14, 19(1), 19(6) and 226; Chartered Accountants Act, 1949 - Sections 19, 30(1), 30(3), 30A and 30B; Chartered Accountants Regulations, 1988 - Regulation 186; Banking Regulation Act, 1949 - Sections 30 and 31; Companies Act, 1956 - Sections 226 and 619; Income-tax Act - Sections 138
Appellant	Society of Auditors and Etc.
Respondent	Comptroller and Auditor General of India and ors.
Appellant Advocate	Arvind P. Datar, Adv.
Respondent Advocate	N.R. Chandran, Sr. Adv. for ;Sampathkumar and Associates, ;R. Srinivasamoorthy, Adv. assisted by ;S. Ravikumar, Adv. and ;V.R. Rajsekaran, ACGSC
Disposition	Petition dismissed
Cases Referred	Mohammed Shujat Ali v. Union of India

Society of Auditors and Etc. Vs. Comptroller and Auditor General of India and ors. - Court Judgment