Delhi High Court Rules on NFRA's Powers over Chartered Accountants

The Delhi High Court upheld the powers of the National Financial Reporting Authority (NFRA) to investigate and penalize chartered accountants' misconduct, dismissing challenges from auditors. However, it quashed specific orders against them due to unfair procedures. The NFRA can initiate fresh proceedings independently.

The Delhi High Court has upheld the National Financial Reporting Authority's (NFRA) jurisdiction over probing and penalizing chartered accountants' misconduct. A bench comprising Justices Yashwant Varma and Dharmesh Sharma dismissed pleas from esteemed auditing bodies, including Deloitte Haskins and Sells LLP, challenging the NFRA's powers.

The court quashed the show-cause notices issued to the petitioners, citing procedural unfairness. However, it confirmed the validity of section 132 of the Companies Act and NFRA rules, dismissing concerns over retroactivity, vicarious liability, and arbitrary legal frameworks.

The NFRA retains the right to initiate new proceedings, ensuring the independence of its members from prior audit assessments. This ruling asserts the NFRA's role while emphasizing the need for fair and just procedures in disciplinary matters.

(With inputs from agencies.)