| Headnote |
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 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 power delegated; (d) Delegated rule-making power in statutes generally follows a standardized pattern – A broad section grants authority with phrases like ‘to carry out the provisions’ or ‘to carry out the purposes’ – Another sub-section specifies areas for delegation, often using language like ‘without prejudice to the generality of the foregoing power’ – In determining if the impugned rule is intra vires/ultra vires the scope of delegated power, Courts have applied the ‘generality vs enumeration’ principle; (e) The “generality vs enumeration” principle lays down that, where a statute confers particular powers without prejudice to the generality of a general power already conferred, the particular powers are only illustrative of the general power, and do not in any way restrict the general power – In that sense, even if the impugned rule does not fall within the enumerated heads, that by itself will not determine if the rule is ultra vires/intra vires – It must be further examined if the impugned rule can be upheld by reference to the scope of the general power; (f) The delegated power to legislate by making rules ‘for carrying out the purposes of the Act’ is a general delegation, without laying down any guidelines as such – When such a power is given, it may be permissible to find out the object of the enactment and then see if the rules framed satisfy the Act of having been so framed as to fall within the scope of such general power confirmed; (g) However, it must be remembered that such power delegated by an enactment does not enable the authority, by rules/regulations, to extend the scope or general operation of the enactment but is strictly ancillary – It will authorize the provision of subsidiary means of carrying into effect what is enacted in the statute itself and will cover what is incidental to the execution of its specific provision – In that sense, the general power cannot be so exercised as to bring into existence substantive rights or obligations or disabilities not contemplated by the provisions of the Act itself; (h) If the rule making power is not expressed in such a usual general form but are specifically enumerated, then it shall have to be seen if the rules made are protected by the limits prescribed by the parent Act. [Para 32] |
