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TMI Blog2024 (2) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... ar and without prejudice to the generality of the foregoing power.' Judicial interpretation of such provisions underscores that the specific enumeration is illustrative and should not be construed as limiting the scope of the general power. This approach allows for flexibility in rulemaking, enabling the authorities to address unforeseen circumstances. A key principle emerges from this interpretation: even if specific topics are not explicitly listed in the statute, the formulation of rules can be justified if it falls within the general power conferred, provided it stays within the overall scope of the Act. In State of Jammu and Kashmir v Lakhwinder Kumar and Ors., [ 2015 (7) TMI 218 - SUPREME COURT ], this Court held that when a general power to make regulations is followed by a specific power to make regulations, the latter does not limit the former. This is the principle of 'generality vs enumeration': a residuary provision can always be given voice. In the instant case, the ultra vires challenge has been mounted on the ground that the impugned Rule exceeds the power conferred by the parent Act. On looking at the parent Act, the rule-making power has been conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no option except to direct the Director (Discipline) to further investigate the matter - even if it accepted for the sake of argument, that Rule 9(3) cannot be saved under Section 29A(2)(c), as it directly relates to furthering the purposes of the Act in ensuring that a genuine complaint of professional misconduct against the member is not wrongly thrown out at the very threshold, it can be easily concluded that the impugned Rule falls within the scope of the general delegation of power under Section 29A(1). Appeal dismissed. - Pamidighantam Sri Narasimha And Aravind Kumar , JJ. For the Appellant : Dr. Anurag Kr. Agarwal, Adv. Mr. Umesh Mishra, Adv. Mr. Sanjay Jain, AOR For the Respondent : Mr. Nikunj Dayal, Adv. Mr. Pramod Dayal, AOR Ms. Sushma Suri, AOR JUDGEMENT Aravind Kumar, J. 1. The facts in brief are set out herein below: The Bank of Rajasthan Limited, (hereinafter referred to as Complainant-bank ) had engaged the services of M/s Ramesh C. Agrawal Co. (hereinafter referred to interchangeably as the firm / service provider ) for the purpose of conducting audit work. The audit work was to be carried out in respect of Sahara India, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain additional documents were sought by the Director (Discipline) from the Complainant on 10.12.2010. 6. On consideration of the complaint, the written statement and the other matters on record, the Director (Discipline) arrived at a prima facie conclusion that the Appellant was not guilty of any professional or other misconduct within the meaning of clause (7), (8) and (9) of Part 1 of the Second Schedule of the Chartered Accountants (Amendment) Act, 2006. 7. On such opinion of the Director being placed before the Board of Discipline, Respondent No.1 informed the Appellant that the Board of Discipline had disagreed with the prima facie opinion of the Director (Discipline) and the Board had decided to refer the matter to the Disciplinary Committee for further action under Chapter V of the Chartered Accountants (Procedure of Investigation of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 (for short Rules, 2007 ). 8. The action of the Board in disagreeing with the prima facie opinion of the Director (Discipline) and referring the matter for further action before the Disciplinary Committee was impugned before the High Court of Delhi in W.P.(C) No.648 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinbelow: 21. Disciplinary Directorate. - (1) The Council shall, by notification, establish a Disciplinary Directorate headed by an officer of the Institute designated as Director (Discipline) and such other employees for making investigations in respect of any information or complaint received by it. (2) On receipt of any information or complaint along with the prescribed fee, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct. (3) Where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the First Schedule, he shall place the matter before the Board of Discipline and where the Director (Discipline) is of the opinion that a member is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules, he shall place the matter before the Disciplinary Committee. (4) In order to make investigations under the provisions of this Act, the Disciplinary Directorate shall follow such procedure as may be specified. (5) Where a complainant withdraws the complaint, the Director (Disciplin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen it considers necessary. (2) The Disciplinary Committee, while considering the cases placed before it shall follow such procedure as may be specified. (3) Where the Disciplinary Committee is of the opinion that a member is guilty of a professional or other misconduct mentioned in the Second Schedule or both the First Schedule and the Second Schedule, it shall afford to the member an opportunity of being heard before making any order against him and may thereafter take any one or more of the following actions, namely: -- (a) reprimand the member. (b) remove the name of the member from the Register permanently or for such period, as it thinks fit. (c) impose such fine as it may think fit, which may extend to rupees five lakhs. (4) The allowances payable to the members nominated by the Central Government shall be such as may be specified.] 29A. Power of Central Government to make rules : (1) The Central Government may, by notification, make rules to carry out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing powers, such rules may provide for all or any of the following ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the matter or advise the Director to further investigate the matter (3) Where the Director is of the prima facie opinion that the member or the firm is not guilty of any misconduct either under the First Schedule or the Second Schedule, he shall place the matter before the Board of Discipline, and the Board of Discipline, (a) if it agrees with such opinion of the Director, shall pass order, for closure. (b) if it disagrees with such opinion of the Director, then it may either proceed under chapter IV of these rules, if the matter pertains to the First Schedule, or refer the matter to the Committee to proceed under Chapter V of these rules, if the matter pertains to the Second Schedule or both the Schedules and may advise the Director to further investigate the matter. (4) The Director shall, after making further investigation as advised by the Board of Discipline under sub-rule (2) or (3) of this rule or by the Committee under sub-rule (2), shall further proceed under this rule. ( emphasis supplied ) 13. Section 21(1) empowers the Council to establish a Disciplinary Directorate for making investigations into the complaints received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is found in Section 21B (1) to (4). 17. Section 29A is titled Power of Central Government to make rules . Section 29A (1) enables the Central Government to make rules to carry out the provisions of this Act . Section 29A (2) sets out enumerated heads under which rules may be made. Rule 9(3), which is part of Rules, 2007 appears to have been made under Section 29A(2)(c). It is relevant to note that the power to make rules under sub-section (2) of Section 29A is without prejudice to the generality of the foregoing power provided for in Section 29A(1). 18. Having discussed the scheme of relevant provisions in the parent Act, we may now peruse the contents of Rule 9. 19. Rule 9 is titled Examination of Complaint . Sub-clause (1) provides for the procedure to be followed on receipt of complaint. The Director (Discipline) is required to form his prima facie opinion as to whether the member is guilty or not of the alleged misconduct. Sub-clause (2) sets out the procedure to be followed in the event where the Director (Discipline) reaches a prima facie opinion that the member is guilty of professional misconduct. What is of utmost significance for us is to see the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is made or exceeding the limits of authority conferred by the enabling Act. (e) Repugnancy to the laws of the land, that is, any enactment. (f) Manifest arbitrariness/unreasonableness (to an extent where the court might well say that the legislature never intended to give authority to make such rules) ( emphasis supplied ) 22. Of the six available grounds for challenging subordinate legislation, it is quite clear that the scope of the challenge raised in this petition is restricted to one ground in the instant case; that the Rule exceeds the limits of authority conferred by the enabling Act. Therefore, it becomes important to examine the scope of power available under the Act before we can adjudge whether the Rules exceed the limits of authority conferred by the enabling Act. 23. As we have noted earlier, the Rules, 2007, have been framed purportedly in exercise of the power conferred under Section 29A(2)(c) of the Act, which enables the Central Government to make rules regarding the procedure of investigation under sub-section (4) of Section 21 . However, the enumerated heads set out in Section 29A(2) cannot be read as exhaustive since the legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of this Court which have discussed the generality versus enumeration principle. 26. In State of Jammu and Kashmir v Lakhwinder Kumar and Ors., (2013) 6 SCC 333, this Court held that when a general power to make regulations is followed by a specific power to make regulations, the latter does not limit the former. This is the principle of 'generality vs enumeration': a residuary provision can always be given voice. 27. In Academy of Nutrition Improvement v. Union of India (2011) 8 SCC 274, this Court had interpreted a pari materia expression in particular and without the generality of the foregoing power, such Rules may provide for all or any of the following matters . This Court held as follows : where power is conferred to make subordinate legislation in general terms, the subsequent particularisation of the matters/topics has to be construed as merely illustrative and not limiting the scope of the general power. Consequently, even if the specific enumerated topics in section 23(1A) may not empower the Central Government to make the impugned rule (Rule 44-I), making of the Rule can be justified with reference to the general power conferred on the centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board thinks fit and the Board may, for the purposes of such supply, frame uniform tariff under Section 49(2). The Board was required to fix uniform tariff after taking into account certain enumerated factors. In this context, this Court, in Hindustan Zinc Ltd., held that the power of fixation of tariff in the Board ordinarily had to be done in the light of specified factors; however, such enumerated factors in Section 49(2) did not prevent the Board from fixing uniform tariff on factors other than those enumerated in Section 49(2), as long as they were relevant and in consonance with the Act. This Court then referred, with approval, to its judgment in Shri Sitaram Sugar Co. Ltd. vs Union of India (1990) 3 SCC 223, wherein it was held that the enumerated factors/topics in a provision did not mean that the authority cannot take any other matter into consideration which may be relevant; and the words in the enumerated provision are not a fetter; they are not words of limitation, but are words for general guidance. 31. In Afzal Ullah vs. The State of Uttar Pradesh reported in 1963 SCC Online SC 76, it was argued that the impugned bye-laws were invalid, because they were outside th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gated 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 noncompliance 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 langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Government to make Rules . While sub-clause (1) of Section 29A sets out the general power of delegation, sub-clause (2) provides for enumerated heads. As noted earlier, 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 (Section 29A(2)(c)) to make rules relating to procedure of investigation under Section 21(4), the Rules 2007 have been made. Admittedly, Rule 9(3) goes beyond what is provided for under Section 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. But as we have seen from principles discussed above, the scrutiny cannot stop at examining if the impugned rule is relatable to any specific enumerated head. We must go further and examine if it can be related to the gener ..... X X X X Extracts X X X X X X X X Extracts X X X X
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