Itilr. Avvaqari Krishna Rao v. National Financial Reporting Authority

Petition under Article 226 ot the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to pass an order or orders' direction or writ more particularly one in the nature of Writ of Certiorarl calling for records and to declare that the action of the RespondentinissuingshowCauseNoticedatedosloTl2o23bearingreference no. NF-1 101 1l17t2o1g by consequently setting aside the same as the same are arbitrary, illegal, without jurisdiction ' lA NO: 2 oF 2023 Petition under Section 15'1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition' the High Court may be pleased to stay all further proceedings with regard to Show Cause Notice dated 0510712023 bearing reference no. NF-1 1O11l17t2O1S issued by Respondent' IA NO:3OF 2O23 Between: National Financial Reportinq Authority, Government.of lndia 7th-8th Floor, Hindustan Times House rB_zo r<as?r_r?ti" G;,id;i'tvi;;s, N"* Delhi - 110 001, lndia. Represented bY Secretary. ...PETITIONER/RESPONDE NT AND 4 Mr. .lVlukund _Vijayrao^ -Joshi, S/o .Late_Vijay shioram Joshi, Aged about 67 years, Resident of Ftat No 303, Shrikrishna .Reli<iency, plou,ro-+, r."r.rl.i i5irrils)nl"ti"* Gaddivanaram -9gloly_ Kaman, shivanga riieatei Mrii no-ro'"bir".r"fiiiljirr, Hyderabad - 500060 (T.S.) .RESPON DENT/PETITIONER Petition under section 1s1 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to vacate the interim order passed in l.A. No. 2 of 2023 in W p No. 1971 7 of 2023 order dated 26.07.2023 and dismiss the Writ petition. Counsel for the Petitioner: SRI D. PRAKASH REDDY & SRI P. VIKRAM, SENIOR COUNSELS FOR M/s. CHANDHALA DEV| S. K. Counsel for the Respondent: SRt V. SURADHTSH, REpRESENTING SRI T. SRUJAN KUMAR REDDY, S.C. FOR NFRA SRI ZOHEB HUSSAIN WRIT PETITI ON NO:20 212 0F 2023 Betwe I[7s P. rVrurali and co., chartered Accountants, -FRN.0022575 Having office at 6_3_ 6sst2t3. r Froor. Somaiiouda, Hvderab;d ii;i;;6;;;jlili, -;00 obi". n.ip[Sl,.,"t o Qy its authorised re preselntativel'partnei " \ ' vrui i,er rql ...PETITIONER nal Financial Reporting A turba Gandhi Ma rg, New D uthority, 7th-8th Floor, Hindustan Times House 1B_20 elhi - 1'10 001, tndia. Represented bt-S;A;i.'" -" ...RESPONDENT Petition under Articre 226 of the constitution of India praying that in the stances stated in the affidavit filed therewith, the High Court may be ed to pass an order or orders, direction or writ more particurarry one in the Prohibition directing the Respondent t3 not proceed in t:rance of letter dated 15.06.2023 and letter bearing Ref No. coM00o48 V3/1. dated 20.07.2023 issued to the petitioner, as the same and consequently set aside of Writ of .ary, illegal and wholly without jurisdiction, efters dated 15.06.2023 and 20.07.2023 5 IA NO: 10F 2023 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition' the High Court may be pleased to stay all further proceedings with regard to letter dated 15'06 2023 and letter rearing Ref No. NCAS/COMOO04BV3/1 dated 2007'2023 issued by the Respondent to the Petitioner' IA NO: 20F 2023 Between: National Financial Reporting Authority, 7th,-8th Floor' Hindustan Times House 1B-20 i[;iij;b; d;;a-hr iM;;6, N;; D;ir,i- ii o ooi , rndia irepresented bv secretary' PETITIONER/RESPONDE NT AND lV/s P. Itilurali and Co., Chartered Accountants' FRN-0072575 Havh-g office at 6-3- asst2t3.l Floor, Somaiigrd;:iii;;;;i'ii"ii"g'"ij lndia - soo o82 Represented Oy ltJ autnorized repreientative/Pa rtner . "RESPONDENT/PETITIONER Petition under Section 151 CPC p'aying that in the circumstances stated intheaffidavitfiledinsupportofthepetition'theHighCourtmaybepleasedto vacate the interim order passed in l.A No 1 of 2023 in W'P' No 20212 of 2023 order dated 18.O8 -2023 and dismiss the Writ Petition' Counsel for the Petitioner: SRI D. PRAKASH REDDY & SRI P. VIKRAM, SENIOR COUNSELS FOR SRI MALIPEDDI ABHINAY REDDY Counsel for the Respondent: SRI V' SURADHISH' REPRESENTTNG Sii i- snu"reu KUMAR REDDY' s'c' FoR NFRA SRI ZOHEB HUSSAIN WRIT PETI TION NO:20458 oF 2023 Between: PCN & Associates, Chartered Accountants' M No : 2O3605 Havinq office at Plot No' .N Heiohts,,, Ground rroor, E"offiIiJ',ir'vl]"ri uiii, cvoerabad, Hyd-erabad - 500 081 ' RepreJented by its Partner' ..pETrroNER AND 6 National Financial Reporting Authority, 7th-Bth Floor, Hindustan Times House i g-20 Kasturba candhi lvlarg, New Delhi - 'l 10 001, lndia. Represented by Seeretary. ...RESPONDENTS Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to pass an order or orders, direction or writ more particularly one in the nature of writ of Prohibition directing the Respondent to not proceed in furtherance of the letter dated '15.06.2023 and letter bearing Ref No. NcAS/coM0O048v312 dated 20.07.2023 issued to the petitioner, as the same are arbitrary, illegal and wholly without jurisdiction (to the extent concerning Financial Years (F.Ys) 2017-18 and 20',l8-'19), and consequenfly set aside the said letters dated 'l 5.06.2023 and 20.O7.2023. lA NO: 'l OF 2023 Petition under section 'l s1 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to stay all further proceedings with regard to letter dated 1s.06.2023 and letter bearing Ref No NCAS/COMOOO48V3I2 dated 20.07.2023 issued by the Respondent to the Petitioner, to the extent concerning Financial years (F.ys) 2017-18 and 2018-19. lA NO: 2 OF 2023 Between: National Financial Reporting Authority, 7th-gth Floor, Hindustan Times House 1g-20 Kasturba Gandhi Marj, t',tevioetrri - r 1b ooi, tnoLl Representeo oy Secretary. - PETITIONERYRESPONDENT AND .i9l\ $ 4.rqo"lrtes, Ctrartered Accountants, M No.: 203605 Having office at ptot No. N Heights",.Ground Ftoor, Software Layoui Unit, CvoeriOio, nvd%,.ub;; _'sodb'ar. Represented by its Partner. RESPONDE NT/PETITIONER 7 petition under section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be pleased to vacate the interim order passed in l'A No 1 of 2023 in W'P No' 2d45a ot 2023 order dated 01.08.2023 and dismiss the Writ Petition' """3[11:["*i"*T!"'1"#rry & sRr P' yr$lyr,:ENroR couN'ELS FoR Snix' xeenrlvARDHAN REDDY Counsel for the Respondent: SRI V' SURAOIll:ll-&^.rr r*eEr pF'RE=ENTING sn, zoiiE""iiu;sAil'i; 5ir'rron couusEL REPRESENTTNG snr r. iirulnr'riuuren REDDY' s'c' FoR NFRA WRIT PETITIO NNO:2 9510 0 F 2023 Between: Uk' # Yf ''$H,'H' Lil;'-E;?5,' o';".'g Hyderabad - 500034 (l s') Ramachandra Reddy, Aged about 49 years' .:ii'iH"E#;' i-o# Nd 2, Banjara Hirrs' ...PETITIONER AND H3x::"1Jtr?.";3i#r?'Jjlg^tY,l:ru1'l*''I's:*f i,; 3i'i'ft?l;'[""'i3'31*1[3i Secretary .,.RESPONDENTS PetitionunderArticle226oflheConstitutionoflndiaprayingthatinthe circumstances stated in the affidavit filed therewith' the High Court may be pleased to pass an order or orders' direction or writ more particularly one in the nature of Writ of Certiorari calling for records and to declare that the action of the Respondent in issuing Show Cause Notice dated 04j0 '2023 bearing reference no. NF-23/26l 2022 by consequently setting aside the same as the same are arbitrary, illegal, without iurisdiction' lA NO: I OF 2023 petition under section 15.r cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be pleased to dispense with the filing of certified copy of the Show Cause Notice dated O 4.1 O .2023 bea ri ng ref e rence no' NF -23 I 26 I 2022 - lA NO: 2 oF 2023 8 Petition under Section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may bL preased to stay all further proceedings with regard to show cause Notice dated 04.10.2023 bearing reference no. NF-2312612022 issued by Respondent. lA NO: 4 OF 2023 Between: National Financial Reoorting. Authority, Office at 7th - Brh Floor, Hindustan Times lSH:rH,ro Kasturbd cantrri rr,iiig,''N"-*"6Ern:'-'rro oor, ;,iri;.'iiip",ii1lnt.t"by AND ...PETITIONER/RESPONDENT Sfj#;il:'t#glii1,Xif ,,n^r,*,,offi ff 'e#;:i""X,J,f"n"t,L%,ji j,,,,i?,i3 ...RESPONDENT/PETITIONER Petition under section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be preased to vacate the interim order passed in rA.No. 2 0f 2023 in w.p.No. 2g510 of 2023 order dated 19-10-2023 and dismiss the writ petition. Counsel for the petitioner: SRI D. PRAKASH R-EDDY & SRI P. VIKRAM, SENIOR COUNSELS FOR SRI DEEPTI ANAND VERITUTI Counsel forthe Respondent: SRI V. SURADHISH & SRI ZOH-EB HUSSAIN, SENIOR COUNSEL REPRESENTING SRI T. SRUJAN KUMAR REDDY, S.C. FOR NFRA__-' Between: WRIT PETITION NO: 5089 oF 2024 V.G.Tarak Accountants, Nath (M.No.23302). pa(ner, M/s..V.S.Rao and Co., Chartered 6-3-609-1 36, Anan<i Naga r Coi".v, xnr'Iriirira, iiloeraoao _ 500 oo4. AND ...PETITIONER 9 u3xfl ils,",..i:ilffi ['T","".t'3?,AJJ'8J1[#1,3,'xo''*' Hindustan Times House' ...RESPONDENT PetitionunderArticle226oftheConstitutionoflndiaprayingthatinthe circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue any order or direction more particularly one in the nature of Writ of Prohibition directing the Respondent not to proceed in furtherance of the letter dated8.,l.2024inreferencefileno.NF-23/32t2O22issuedtothepetitionerbeing arbitrary, illegal and wholly without iurisdiction to the extent concerning the financial years 2013-14 to 2016-17 issued under section 132(4) of the Companies Act, 2013' and consequently set aside the said letter dated B'1 2024' IA NO: 10 F 2024 petition under Section 1sl cpc praying that in the circumstances stated in the affidavit fired in support of the petition, the High court may be pleased to grant stay of all further proceedings in furtherance of the letter dated 8'1 '2024 in reference file no.NF-23/3 2t2O22 issued by the Respondent to the petitioner to the extent concerning financial years 2013-14 lo'2017-18 pending disposal of writ petition. " " "'3[1T tf"*ff['r'*l "d; o o" & s Rr-l'-Y'rTL* s E N ro R c o u N s E Ls F o R Snirrreaer.rrt sAwANARAYANA Counsel for the Respondent: SRI V' SURA-DHISH-& snr z6ii;;iiir'dsrrr'r' sENloR couNSEL REPRESENTING sru rli'iuler'r rurvrnn REDDY' s'c' FoR NFRA Counsel for: SRI VIVEK GURNANI Counsel for: SRI PRANJAL TRIPATHi The Court made the following: COMMON ORDER 2 THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY WRIT PETITION Nos.35488 2022 19717 2o23 2o2L2 2023 20458 2o23 29s1() 2O23 and 5O89 2o.24 COMMON ORDER: The issues involved in these writ petitions are intrinsically interconnected and therefore, they are taken up and heard together and are being disposed of by this common order. 2 a .nqture of Writ of Certtorai calling for ,"*rd, ;";i; W.P.No.35488 of 2022 is hled seeking following reliel '...ro pass an order or orders, direction or wit more parttculorlg one tt ;eclqre ttutt the 1.:i?\ -rf the Respondent in isiiing Stmt Ciuse-- uotice dated 03 08.2()22. _beaing reference no. NF_17011/ 1Z/2019 bg consequentL| setting aside the same as t_he sc.me or. oiittiirg, ilLegal, uithout jurisdictton ond pass such furlh.er retiefs rt.^ tru; i;:;;i; Corn a."^ fit and^proper consideing the nature and circumstances of the present case..." ^oy W. P. No. 197 17 of 2023 is filed seeking following relief: "...to pc.ss <tn order or ord.ers,. directton or writ more parttcularlg one in the .nqture of wit of certiorai cahing fo-e"ord." and'tJ ciicrare that the 1"!g! -9f the Respondent tn isiitng Snow Ciise'-"Notice dated. reference no.NF-t iot t/ rz/20rs b!/ consequentts ?t-!,!^rt^r!,,?:,ri.ns setung asrde the same a_s the same are arbitrary, iuegat, tuithoit i:::1:,::::_o a."^ JtL qne proper constdering the nature and circumstances of the -present co.se.. " los?,such fu.rlher retiefs qs *ts uoioie iou,t ^og 4 W.P.No.2O2 t2 of 2023 is hled seeking following reliel ord.ers, d.irection or t it more partiantartg one in i;.jr_!::, ": .?:7", ^": "f Wnt of Prohibitton directing tLrc Respon,.ent to not proceed. ::..::r:: tn lurtherance of the letter dated 15.O6.2023 and letter bearing Ref No. NCAS/ COM0Oq48V3/ 1 dated 20.02.2023 isszed to ti p"ti,.on r, o" tn same ore arbitrary, illegal and tuhollg utthout jurbdiction; and consequerttlg set dside the said letters d.(1ted 20.o7.202s..." '15.06.2O23 1 3

5. W.P.No.2O458 of 2023 is filed seeking following relief: "...to pass an ord.er or orders, direction or wit more particularlg orue in the nature of Wit of Prohibttion directing the Respondent to not proceed in furtheranrce of the letter dated 15.06.2023 and letter beaing ReJ No' NCAS/ COMO0048V3/ 2 dated 20.07.2023 issued to the Petitioner' as the same are arbitrdry, illegal and uhrtltg rttithout juisdiction (to the ertent concerning Financial Years (F.Ys) 2017-18 and 2018-19); and set o.side tle so:td letTers dated '1506'2023 and "onr.qu.itty 20.07.2023..." 6 W.P.No.295lO of 2023 is filed seeking following relief: "...to pa.ss an ord.er or orders, direction or utit more partia arlg one ii the nature of Writ of Certiorai calting for record s and to declare that the action of the Respondent in issuing Shottt Couse Notice dated 04.10.2023 bearing reference no'NF-23/ 26/ 2022 bg consequentlg setting oside the same as the same ore arbitrory ' illegal, uithout jurisdiction....' 7 W.P.No.5O89 of 2024 is hled seeking following relief: "...1t is praged that the Hon'ble Court mag be pleased to issue any orde, o, i.r"ition more partic larlg one in the nature of writ of Prohibition the.letter doted directing the Respondent not to pioceed. in furtherance -oJ 8.1.20;4 in refirence fi.Le no.NF-23/ 32/ 2O22 issued to the petitioner being arbttrary, illegal and lLhollA wttl@ut juisdiction -to the ertent .onirning tni trnaiiat gears 2013-14 to 201617 issued under section l-Silcl ofin iomponies-Act, 2013, and consequentlg set oside the said letter dated 8. 1. 202 4..'

8. Writ Petition No.29510 of 2023 is taken up as a Ieading case to decide the lis in this batch of cases g. It is stated that the petitioner is Chartered Accountant and fellow member of Institute of chartered Accountants of India (for short "ICAI") and also partner of M/ s'M'M Reddy & Company' CharteredAccountantsvideNo'FRNolo3Tls.Itisfurtherstated that the petitioner is practicing since 2003 and he has got good reputation. The respondent-National Financial Reporting Authority 4 (for short "NFRA"), which is a statutory regulatory body constituted by the Government of India under Section 132(1) of Companies Act, 2013 conferred with powers to recommend and formulate accounting and auditing standards, monitor and enforce the compliance thereof, oversee the quality of service of professional accountants, suggest measures required for improvement in the quality of service and perform such other allied functions. lt is stated that the respondent while exercising the power as regulatory authority has issued impugned show cause notice dated Og.11.2O22 to the petitioner directing him to submit audit files for Statutory Audit of M/ s. Concord Drugs Limited for the F.inancial years 20 15_ 16 and 20 16_ 17. It is further stated that soon after receipt of said notice, the petitioner has provided all the documents relating to the said Financial Years vide letters dated 23.11.2022, 05.0i.2023 and 17 .Ol .2023. The grievance of the petitioner is that even after receipt of the said letters, the respondent has issued impugned show cause notice dated 04.tO.2023 calling for explanation from him. Challenging Lhe same, W.p.No.29S 1O of 2023 is fited.

10. The respondent Executive Director of NFRA filed counter aflrdavit inter alio stating that NFRA is a Sratutory Authoritv established under Section 132 of Companies Act, 2013 and it was brought into force w.e.f_ 01.10.201g. It is further stated that the i \ 5 object of constitution of authority is to maintain the required discipline and accountability among the Chartered Accountant professionals. It is stated that under chartered Acco,ntants Act, 1949 (for short "C.A.Act"), the authority to manage the affairs of the ICAI was with the Council of institute constituted under Section 3 of C.A.Act. But when the said system of self-regulation i.e, management and regulation of Chartered Accountants did not operate in a satisfactory manner, the Parliamentary Standing Committee on Finance (2O 10) considered the Companies Bili, 2OOg and recommended for creation of a supervisory mechanism of auditing. The Parliamentary Standing Committee on Finance (2O 12) considered the Companies Bill, 2011 and. reaffirmed the need for an independent regulator for accounting and auditing. As per the recommendations of the Parliamentary Standing Committees, Clause 132 was inserted in the Companies 8i11, 2O 1 I . The Bill was later passed by the Parliament and consequently, the Companies Act, 2013 was enacted. However, since Section 132 was not notihed, the NFRA could not come into existence for several years. It is stated in February, 2016, the Companies Law Committee was constituted by the Ministry of Corporate Affairs to make recommendations on the implementation of the provisions of the Act. More importantly, while doing so, the concerns of ICAI with respect to constitution of NFRA were rejected by the Committee. It is stated that subsequently, the 6 NFRA was constituted on O1.10.2O18 by Government of India under sub-section (1) of Section 132 of the Act. It is further stated that NFRA was brought into existence considering the importance and need for stringent regulations in order to maintain accounting and auditing standards, as emphasized by the Committee Reports and the observations of the Hon'ble Supreme Court. It is stated that pursuant to the directions of the Hon'ble Supreme Court in S.Sukum.a.r us. ICAI|, a Committee of Experts was constituted and said Committee submitted its report on 25. 10.2018 highlighting the fact that t.he accounting hrms should not be left to self-regulate themselves. It is alleged in the counter affidavit that the involvement of various Chartered Accountant companies in mismanaging the affairs caused the loss to the investors, banks and tax payers and the betterment of the ordinary citizens. In the counter afhdavit, various examples which lead to enormous destruction of wealth of causing significant loss to the banks, manipulation of balance sheets and destroying the conhdence of investors in the stock markets, have been furnished. It is also stated that various cases have been registered against some of the Chartered Accountant companies by the Central Bureau of Investigation and Enforcement Directorate. It is further stated that taking consideration of these factors, to reform the regulatory structure of the auditing profession, the NFRA has I (2018) 14 SCC 360 7 been entrusted with the duty to examine the antecedents' of the chartered accountant professionals/companies and the provision i e' Section 132 was inserted into Companies Act and Rules were amended by NFRA Rules, 20 18 and the same are not arbitrary' illegal and intra uires and ultimately prayed for dismissal of the writ petltlons ll.ConsideredthesubmissionsofMr.D.PrakashReddy,learned Senior Counsel and Mr. Vikram Pooseria, learned Senior Counsel appearing for the petitioners along with their Advocates on record and Mr. Zoheb Hussain, learned counsel, Mr' Vivek Gurnani' Iearned counsel, Mr. Pranjal Tripathi, learned counsel, Mr' V' Suradhish' learned counsel, Mr.T.Srujan Kumar Reddy, learned Standing Counsel for the respondent (NFRA) and perused the record'

12. Mr.D.Prakash Reddy, learned Senior Counsel and Mr' Vikram Pooserla, learned Senior Counsel appearing for the petitioners submitted that the Companies Act was enacted in 2013 and received Presidential assent on 29.O8.2O13 and the provisions of the Act were brought into force on different dates' It is further submitted that so far as date of enforcement of Section 132 of Companies Act' is concerned, it was brought into force only on 24'lO'2O18 which is a strong indication that it has no retrospective effect as it was not notilied tiit october, 2018. It is further submitted that there is a well- /, / 8 established presumption that statute operate prospectiveiy unless a clear intention to the contrary is expressed, which is absent in Seclion 132. For the above submissions, reliance was placed on Comtnissioner oJ Incotne Tax v. Vatika Tounshipz. It is contended rhat the notification bringing Section 132 into force from 24 .10.20 18 makes it evident that it is intended to apply only prospectively. No provision in the statute or in the NFRA Rules,201g authorizes retrospective application, or to examine the cases relating to the previous period before constitution ol. the NFRA. It is submitted that the Respondent,s plea for retrospective interpretation to cure past mischief is untenable, especially when the language of the statute is clear and unambiguous as held in B.premd.ndnd. t . Mohan Koikala.It is contended that a retrospective interpretation of Section 132 would raise serious constitutional concerns under Article 20(1) of the Constitution of India, particularly because the provision introduces a new regulatory framework rvith stringent penal consequences that affect the vested rights of auditors. It is further submitted that the impugned notices issued by NFRA relate to audit periods prior to its constitution and seek to exercise penal powers, which is impermissible in law as it is well established that penal provisions are to be enforced prospectively. Learned Senior , (201s) 1 scc 1 3 (2011) 4 SCC 266 I l / 9 Counsel further submitted that, in terms of the Standard on Quality Control (SQC 1), specifically Article 23, auditors are required to retain audit records for only seven years. Therefore, any attempt to seek audit hles beyond this statutory retention period is arbitrary, unreasonable, and without justification' In support of his submissions, learned Senior Counsel placed reliance on the decision of the Deihi High Court in N-sethuro:mal. a' ICAIa, recogtizing the 7-year retention limit' Finally, it is submitted that the power exercised by NFRA to publish Audit Quality Review (AQR) Reports without affording an opportunity of hearing to the auditors amounts to an excessive and unfettered exercise of power, which is manifestly arbitrary and violative of the principles of. natural justice' Therefore' prayed this Court to allow the writ petitions and restrain the NFRA from proceeding against the petitioners in respect of audits conducted prior to 2018.

13. The learned counsel appearing for the respondent-NFRA submitted that the word 'continue' in proviso to Section i 32(a)(a) i'e' ''Prouidedthatnootherinstituteorbodgshallinitiateorcontinueang proceedings in such matters of misconduct lohere tlrc National Finoncial Reporting Authoitg has initiated an inuestigation under the sectiorf , indicates -that NFRA is empowered with retrospective a Ju6ient date d 21.04.2c/22 passed in W.P.No.12251/2019 by the High Court of Delhi t0 jurisdiction. It is further submitted that the powers conferred [o NFRA under Section 732 are retrospective/ retroactive since NFRA was constituted as a remedial measure to cure mischief in the exlsting mechanism. It is also submitted that NFRA was brought into force to establish an independent mechanism io ensure compliance with auditing standards. For the above submissions, the learned Counsel placed much reliance on reports of parliament Standing Committee on Finance. It is further submitted that Section 132 does not affect any vested or substantive rights and therefore can have retrospective operation. It is also submitted that enibrcement of Section 132 is merely a procedural change and the same does not take away the rights which have been vested under the said It is further submitted that no right of the Petitioners is violated at the s|age of issuing notice and seeking documents and that they are not an ,aggrieved, person under law. Further, it is submitted that NFRA as a Regulating Authority is conferred with power not only initiating the penal action but also taking suitable disciplinary action or for recommending disciplinary action. Therefore, issuance of show cause notices would not dcbar the NFRA to conduct an enquiry and the present writ petitions are Iiled with misconception that the NFRA has not been conferred with power for issuance of notices for the previous iinancial years to unearth the misconduct on the part of the petitioners. ln support of provisions of the Act. 1l his submissions, the learned counsel relied upon the decision in Harish Kum.ar T.K v, NFRA1 and submitted that the NCLAT held that NFRA has retrospective jurisdiction for period prior to its formation or prior to coming into effect of Section 132 and the said findings have attained finatity by the dismissal of Civil Appeals by the Hon'ble Supreme Court vide orders dated 22.03.2024 and

17.05.2024. Further, on the principle of doctrine of merger, the learned counsel relied upon the decision in Pernod Ricard India @ Ltd. v. Commdssiozer oJ Custom-* and ultimately prayed to dismiss the writ petitions.

14. In reply, the learned Senior Counsels appearing for the petitioners submitted that the plain and literal interpretation of the term "continue" as used in the proviso to Section 132(a)(a) of the Companies Act, 2013, prohibits parallel proceedings by other bodies such as ICAI once the NFRA haS initiated an investigation. It is contended that the proviso is intended to prevent dual or overlapping proceedings and does not, by implication, confer retrospective jurisdiction on NFRA. It was further argued that in the absence of an express statutory provision indicating retrospective operation, such a construction is impermissible in law. The learned Senior Counsel further submitted .that Section 132 prescribes enhanced penal 5 Judgment dated O1.12.2O23 passed in CA(AT) No. 6al2023 by NCLAT 6 (2010) 8 SCC 313 t2 consequences for misconduct, including higher monetary,penalties and debarment periods, which significantly differ from those under the C.A AcL, 1949. Thus, the amended provision has a substantive impact and must be applied prospectively. Reliance is placed on Shrrh and co. o. State o;f Maharashtra & anotherT. For the maintainability of the writ petition, the iearned Senior Counsei relied upon the decisions in Union of India dnd. another u. Kunisettg Satganaraganas and Executiue Engineer v. Rannesh Kumar Singh and otherse. Placing reliance on the decision rn Experion Deaelopers Put Ltd. u. Himasnhu Dewan E Ors.lo, it is submitted that the Hon'ble Supreme Court had clarified the distinction between doctrine of merger, law of precedents and res judicata. It is further submitted that the principles laid down by the Fuli bench of the Hon'ble Supreme Court in Commissioner oJ Incotne Tax a. Vatika Township's case (supra) were not considered by the NCLAT and therefore, the decision of NCLAT is per incuriam. 1 5. The core issue called for to address in these cases is *uhether tle National Financial Reporting Authoitg (NFRA) constituted under Section 132(1) of the Companies Act, 2013, is empouered to