LexNARESH CHANDRA AGRAWAL versus E INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND OTHERS
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* Author [2024] 2 S.C.R. 194 : 2024 INSC 94 Naresh Chandra Agrawal v. The Institute of Chartered Accountants of India and Others (Civil Appeal No. 4672 of 2012) 08 February 2024 [Pamidighantam Sri Narasimha and Aravind Kumar,* JJ.] Issue for Consideration Whether Rule 9(3)(b) of the Chartered Accountants’ (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 is inconsistent with and beyond the rule- making power of the Central Government. Headnotes Chartered Accountants’ (Amendment) Act, 2006 – Chartered Accountants’ (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 – Writ petition was filed with a prayer to declare Rule 9(3)(b) of the Rules, 2007 as invalid on the ground that the said rule was ultra vires section 21 A (4) of the Act – Challenge was repelled by the High Court: Held: The rule-making power has been conferred u/s. 29A, which is titled as ‘Power of the Central Government to make Rules’ – While sub-clause (1) of s. 29A sets out the general power of delegation, sub-clause (2) provides for enumerated heads – The power to make rules under the latter clause is without prejudice to the general power under the former clause – In exercise of the enabling power (s.29A(2)(c)) to make rules relating to procedure of investigation u/s. 21(4), the Rules 2007 have been made – Admittedly, Rule 9(3) goes beyond what is provided for u/s. 21A(4) in terms of the options available to the Board of Discipline in case it disagrees with the opinion of the Director (Discipline) – Other than the option of advising the director to further investigate, Rule 9(3) provides the additional option to the Board for proceeding to deal with the complaint by itself or referring it to the Disciplinary Committee, depending on whether the alleged misconduct falls under the First Schedule or the Second Schedule – Since the general delegation of power is without any specific guideline, it [2024] 2 S.C.R. 195 Naresh Chandra Agrawal v. The Institute of Chartered Accountants of India and Others may be necessary to understand the object of the Act vis-à-vis the chapter on Misconduct – This Chapter defines and prohibits professional misconduct, while aiming to uphold honesty, integrity, and professionalism in the practice of chartered accountancy – By addressing instances of misconduct, it establishes a framework for accountability, reinforcing the credibility of individual professionals and the reputation of the entire profession – To achieve these goals, the Act includes a disciplinary mechanism, ensuring a fair and transparent process for investigating and adjudicating alleged cases of misconduct – In this background, there is not the slightest hesitation to conclude that the impugned rule is completely in sync with the object and purpose of framing the Chapter on ‘Misconduct’ under the Act. [Paras 34, 35, 36] Administrative Law – Subordinate Legislation – Summarization of the legal principles that may be relevant in adjudicating cases where subordinate legislation are challenged on the ground of being ‘ultra vires’ the parent Act: Held: (a) The doctrine of ultra vires envisages that a Rule making body must function within the purview of the Rule making authority, conferred on it by the parent Act – As the body making Rules or Regulations has no inherent power of its own to make rules, but derives such power only from the statute, it must necessarily function within the purview of the statute – Delegated legislation should not travel beyond the purview of the parent Act; (b) Ultra vires may arise in several ways; there may be simple excess of power over what is conferred by the parent Act; delegated legislation may be inconsistent with the provisions of the parent Act; there may be non-compliance with the procedural requirement as laid down in the parent Act – It is the function of the courts to keep all authorities within the confines of the law by supplying the doctrine of ultra vires; (c) If a rule is challenged as being ultra vires, on the ground that it exceeds the power conferred by the parent Act, the Court must, firstly, determine and consider the source of power which is relatable to the rule – Secondly, it must determine the meaning of the subordinate legislation itself and finally, it must decide whether the subordinate legislation is consistent with and within the scope of the p
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