2024 Supreme(SC) 102

SUPREME COURT OF INDIA
Pamidighantam Sri Narasimha, Aravind Kumar, JJ.
Naresh Chandra Agrawal – Appellants
Versus
The Institute Of Chartered Accountants of India And Others – Respondents
Civil Appeal No.4672 of 2012
Decided On : 08-02-2024

IMPORTANT POINTS
(1) Rule 9(3)(b) of Chartered Accountants’ (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 is not inconsistent with and not beyond rule-making power of Central Government.
(2) Delegated Legislation – Even if specific topics are not explicitly listed in statute, formulation of rules can be justified if it falls within general power conferred, provided it stays within overall scope of Act.
(3) Delegated legislation should not travel beyond purview of parent Act – It is function of courts to keep all authorities within confines of law by supplying doctrine of ultra vires.

Headnote:

(A) Interpretation of Statute – Delegated Legislation – Generally, delegation of power to formulate rules follows a standardized pattern within statutes – Judicial interpretation of such provisions underscores that specific enumeration is illustrative and should not be construed as limiting scope of general power – This approach allows for flexibility in rulemaking, enabling authorities to address unforeseen circumstances – Even if specific topics are not explicitly listed in statute, formulation of rules can be justified if it falls within general power conferred, provided it stays within overall scope of Act. (Para 24)

(B) Statute Law – Doctrine of Ultra Vires – Rule making body must function within purview of Rule making authority, conferred on it by parent Act – As body making Rules or Regulations has no inherent power of its own to make rules, but derives such power only from statute, it must necessarily function within purview of statute – Delegated legislation should not travel beyond purview of parent Act – It is function of courts to keep all authorities within confines of law by supplying doctrine of ultra vires – If a rule is challenged as being ultra vires, on the ground that it exceeds power conferred by parent Act, Court must, firstly, determine and consider source of power which is relatable to rule – It must determine meaning of subordinate legislation itself and finally, it must decide whether subordinate legislation is consistent with and within scope of power delegated – As per “generality vs. enumeration” principle, even if impugned rule does not fall within enumerated heads, that by itself will not determine if rule is ultra vires/intra vires – It must be further examined if impugned rule can be upheld by reference to scope of general power – Power delegated by an enactment does not enable authority, by rules/regulations, to extend scope or general operation of enactment but is strictly ancillary. (Para 32)

(C) Chartered Accountants Act, 1949 – Section 29A(1) – Chartered Accountants’ (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 – Rule 9(3)(b) – Vires of Rule 9(3)(b) – Scope of challenge raised in this petition is restricted to one ground in instant case that Rule exceeds limits of authority conferred by enabling Act – In exercise of enabling power (Section 29A(2)(c)) to make rules relating to procedure of investigation under Section 21(4), Rules 2007 have been made – Rule 9(3) goes beyond what is provided for under Section 21A(4) in terms of options available to Board of Discipline in case it disagrees with opinion of Director (Discipline) – Impugned rule is completely in sync with object and purpose of framing Chapter on ‘Misconduct’ under the Act. (Paras 22, 34, 37 and 38)

Facts of the case:

Question falls for consideration is “Whether Rule 9(3)(b) of Rules, 2007 is inconsistent with and beyond rule-making power of Central Government?”

Findings of Court:

The Section is silent as to what would happen in a situation where Director (Discipline) on further investigation concludes in accordance with his preliminary assessment. Therefore, even if we accept that Rule 9(3) cannot be saved under Section 29A(2)(c), as it directly relates to furthering purposes of the Act in ensuring that a genuine complaint of professional misconduct against member is not wrongly thrown out at the very threshold, it can be easily concluded that impugned Rule falls within scope of general delegation of power under Section 29A(1).

Result : Appeal dismissed.