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Issues Involved
1. Validity of the notification dated 03.08.1989 issued by Respondent No. 1. 2. Interpretation of Section 7 and Section 24A of the Chartered Accountants Act, 1949. 3. Whether the notification violates Articles 14 and 19(1)(g) of the Constitution of India. 4. Whether acquiring the Chartered Financial Analyst (CFA) qualification by Chartered Accountants constitutes professional misconduct. Detailed Analysis 1. Validity of the Notification Dated 03.08.1989 The notification issued by Respondent No. 1 on 03.08.1989 stated that any Chartered Accountant who obtained the CFA qualification on or after 01.01.1990, or who did not surrender it before that date, would be guilty of professional misconduct under the Chartered Accountants Act, 1949. The Supreme Court found this notification to be arbitrary and unreasonable. It was held that the notification imposed excessive restrictions on Chartered Accountants, violating their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The notification was quashed. 2. Interpretation of Section 7 and Section 24A of the Chartered Accountants Act, 1949 Section 7 prohibits Chartered Accountants from using any other description in addition to or in substitution for their designation. However, the proviso allows Chartered Accountants to add other qualifications they possess. The Court interpreted this proviso to mean that qualifications other than those conferred by an Institute of Accountancy, subject to recognition by the Institute, are permissible. Section 24A prohibits awarding any degree or designation similar to that of a Chartered Accountant. The Court held that acquiring a qualification like CFA does not violate Section 7 or Section 24A, as these sections do not prohibit acquiring additional qualifications. 3. Violation of Articles 14 and 19(1)(g) of the Constitution of India The Court held that the notification dated 03.08.1989 violated Articles 14 and 19(1)(g) of the Constitution. Article 19(1)(g) guarantees the right to practice any profession, subject to reasonable restrictions under Article 19(6). The notification imposed unreasonable restrictions by preventing Chartered Accountants from acquiring the CFA qualification, which was not justified in the public interest. The notification was deemed excessive and arbitrary, thus violating the fundamental rights of Chartered Accountants. 4. Professional Misconduct and CFA Qualification The Court examined whether acquiring the CFA qualification by Chartered Accountants constitutes professional misconduct. It was held that acquiring additional qualifications cannot be termed as misconduct. Misconduct involves a breach of discipline or improper behavior, which does not include acquiring further education or qualifications. The Court emphasized that professional misconduct must be clearly defined and acquiring a CFA qualification does not fall within its ambit. Separate Judgment by Markandey Katju, J. Markandey Katju, J., concurred with the judgment and added that the financial services industry has evolved, necessitating specialized skills in financial analysis. The CFA qualification provides such skills and does not conflict with the functions of a Chartered Accountant. The notification was seen as an excessive restriction not justified by public interest, thereby violating Articles 14 and 19(1)(g). The appeal was allowed, and the notification was quashed. Conclusion The Supreme Court allowed the appeal, set aside the High Court's judgment, and quashed the notification dated 03.08.1989. The Court held that the notification was arbitrary, imposed unreasonable restrictions, and violated the fundamental rights of Chartered Accountants. Acquiring the CFA qualification does not constitute professional misconduct under the Chartered Accountants Act, 1949.
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