New Delhi: The Supreme Court has quashed a notification issued by the Institute of Chartered Accountants of India (ICAI) imposing restrictions on its members on the use of the diploma or designation of `CFA' awarded by the Institute of Chartered Financial Analysts of India (ICFAI).

The notification issued on August 3, 1989 says that "if any member of ICAI, i.e. any Chartered Accountant, who obtained the qualification of Chartered Financial Analyst [awarded by ICFAI] on or after January 1, 1990, or has obtained the said qualification earlier did not surrender the same before the said date, [he/she] would be held guilty of professional misconduct under the provisions of the Chartered Accountants (CA) Act."

The ICFAI and others filed petitions in the Andhra Pradesh High Court challenging the notification. A single judge and a Division Bench dismissed them. The present appeal is directed against this judgment. ICFAI assailed the notification contending that it was violative of a person's fundamental right to practise any profession guaranteed under Article 19 (1) (g) of the Constitution.

Justifying the notification, ICAI said that Section 7 of the Act prohibited a Chartered Accountant from using any other description, whether in addition thereto, or in substitution thereof.

Allowing the appeal, a Bench of Justice S.B. Sinha and Justice Markandey Katju in two different but concurring judgments held that such a restriction was impermissible. It said "when a person is otherwise entitled to acquire any additional qualification, such qualification per se, in our opinion, cannot be termed to be a misconduct in its generic sense."

Justice Sinha said that what was not contemplated as misconduct under the CA Act could not be termed misconduct by reason of an administrative order. "A statutory authority must not only act within the four corners of the statute, it also must act fairly and reasonably," he said.

Justice Katju in his judgment said the ICFAI was awarding the qualification Chartered Financial Analyst (CFA) — an internationally acclaimed qualification in the field of financial management. The response to the CFA programme in India had been enormous.

He said "we find it strange that ICAI, renowned in its own field and with various statutory responsibilities, should go out of its way to stop its members, i.e. Chartered Accountants, from enhancing their knowledge, training and ability by acquiring a `CFA' qualification. Instead of appreciating such aspirations of Chartered Accountants who seek to widen their know-how and horizons, they are sought to be harassed and termed as being guilty of `professional misconduct.' Surely this cannot be regarded as reasonable."

"The impugned notification clearly and flagrantly violates the fundamental rights of the writ petitioners under Articles 14 (equality before law) and 19 (1) (g) (right to practise any profession) of the Constitution," the Bench said and quashed the notification and set aside the High Court order.

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