Navigating the Regulatory Landscape: ICAI and CCI at Loggerheads over CPE Program

[Shruti Srivastava is a fourth-year law student from National Law University and Judicial Academy, Assam]

Delegated legislation is a vital framework that allows specialized bodies like the Institute of Chartered Accountants of India (ICAI) to regulate their respective professions effectively. As a statutory body, the ICAI derives its regulatory authority from the Chartered Accountants Act 1949 (CA Act, 1949). This Act confers upon the ICAI the power to maintain professional standards, ethics, and competencies within the accounting and auditing profession. The legislation also allows the ICAI to issue guidelines, rules, and regulations that govern various aspects of the profession, including continuing professional education, code of ethics, audit practices, and disciplinary proceedings.

The Competition Commission of India (CCI), through an order dated 28 February 2014, directed the Director General to initiate an investigation into the Continuing Professional Education (CPE) Program administered by the ICAI. This decision resulted in a tussle between two regulatory bodies with legislative authority under delegated legislation. However, the Delhi High Court in Institute of Chartered Accountants of India v. Competition Commission of India declared the order issued by the CCI under section 26(1) of the Competition Act, 2002 invalid.

ICAI’s CPE Program: Balancing Professional Development and Competition

The petitioner, ICAI, had developed the CPE program, which imposed an obligation on its members to actively engage in educational activities about their profession to stay abreast of professional advancements and to enhance their skills. However, in 2013, the second respondent (Informant) filed a complaint under section 19(1) of the Competition Act, 2002 asserting that only the ICAI and its affiliates were authorized to conduct structured learning activities, thereby creating an exclusionary practice in the market. Therefore the ICAI’s conduct contravened section 4 of the Competition Act, 2002.

The ICAI asserted that it operates as a non-profit organization and that the design of the CPE falls within the ambit of its powers as specified by the CA Act, 1949. Consequently, it argued that the CCI lacks jurisdiction to intervene in the matter. The informant agreed that since the ICAI is affiliated with the International Federation of Accountants (IFAC), it is obligated to adhere to IFAC’s best practices, which include implementing a continuing professional development programme to ensure that its members regularly update their knowledge. However, the informant had a grievance with the policy that only the ICAI and its organs are allowed to conduct the CPE program’. He was of the view that “the ICAI is abusing its dominant position as a regulator to create a monopoly in the service of providing CPE seminars and therefore violating Sec. 4(1) of the Competition Act.” The informant wanted ICAI to outsource its function of running the CPE so that other market players could also participate in the market.

The CCI was of the view that though the ICAI carries out regulatory functions under the CA Act, 1949 some of its activities are also commercial or economic. Concerning these commercial and economic functions, ICAI can be regarded as an enterprise within section 2(h) of the Competition Act, 2002. Therefore, CCI concluded that there is “force in the allegations of the informant that the restrictions put in by ICAI in not allowing any other organization to conduct the CPE seminars for CPE credits created an entry barrier for other players in the relevant market.” 

Unraveling Jurisdictional Overlaps: Echoes of the Past

This is not the first instance in which a jurisdictional overlap has occurred; there have been a significant number of such cases. In Shri Neeraj Malhotra v. North Delhi Power Limited and Others, the electricity distribution company faced allegations of engaging in antitrust activities. According to the Electricity Act 2003, the regulation of electricity tariff was designated to be within the purview of the Delhi Electricity Regulatory Commission (DERC), while the investigation of anti-competitive practices fell under the jurisdiction of the CCI. Furthermore, section 60 of the Electricity Act conferred upon the DERC the authority to issue directives in instances where an abuse of dominant position within the electricity industry has transpired. The Electricity Act’s language resulted in a state of confusion and an absence of definitiveness.

In addition to this, the regulatory spat between the Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) brought to light the conflicting perspectives regarding the regulation of Unit Linked Insurance Plans (ULIPs). In this case, SEBI contended that ULIP, being a hybrid product involving investment components and insurance components, should fall within its regulatory ambit, whereas the IRDA maintained that SEBI lacks jurisdiction over ULIP and it also rejected the idea of dual regulation. Further conundrum involving SEBI and the Insolvency and Bankruptcy Code, 2016 (IBC) also highlighted the complex interplay between regarding the recovery of funds and the imposition of a moratorium. The conflict arose from SEBI’s authority to seize the assets of the corporate debtor and the moratorium provisions established by the IBC, which explicitly prohibit such actions during the moratorium period. This raised important questions about the hierarchy and the determination of which non-obstante provision should take precedence whether it is the SEBI Act or the IBC.

These clashes underscore the need for a comprehensive framework to define the roles and functions of cross-sector regulators like the CCI. There is a need to demarcate the functions and roles of these bodies clearly. Failure to establish clear boundaries and guidelines for such regulators could potentially result in future disputes like the SEBI-IRDA ULIP controversy. Thus, the Government needs to address this issue and ensure effective coordination and delineation of regulatory authority to prevent further complications and regulatory overlaps.

Navigating Legal Territory: High Court Recognizes ICAI’s CPE Program

The Delhi High Court emphasized the significance of recognizing the ICAI as a statutory body established under the CA Act, 1949. In this context, it asserted that the ICAI’s formulation of the CPE aimed at maintaining professional standards should not be deemed as an abuse of the dominant position. This conclusion aligns with the authority granted to the ICAI under section 30(k) of the CA Act, 1949, which empowers the institute, with prior approval and publication by the Central Government, to establish rules regulating and maintaining the professional qualifications of its members.

It can be further elucidated that decisions concerning regulatory powers fall within the purview of the regulatory body and are subject to review only following the provisions stipulated in the governing statute. The nature of regulatory powers does not warrant scrutiny or review by the CCI. It is important to acknowledge that the CCI exercises its powers under the Competition Act, which, as delineated in Section 62 of that legislation, is in addition and not in derogation of other statutes.

In Director of Income Tax (Exemptions) v. Institute of Chartered Accountants, the Delhi High Court held that the activities of the ICAI fall within the scope of charitable purposes as defined under section 2(15) of the Income Tax Act 1961. The primary objective of the ICAI is to regulate the profession of accountancy, and the activities involved in conducting educational programs cannot be classified as business or commercial activities in legal terms. A similar issue arose in Thupili Raveendra Babu v Bar Council of India, where it was determined that the Bar Council of India, as a statutory body defined under section 4 of the Advocates Act 1961, is not an enterprise under section 2(h) of the Competition Act, as it sets standards for legal education.

Based on these considerations, the High Court concluded that “ICAI is a statutory body and charged with taking the necessary powers to take decisions regarding the conduct of the CPE program for enrolling as a chartered accountant as well as for maintaining the standards of the profession; its decisions in this regard cannot be a subject matter of review by the CCI. Such decisions do not operate in any market of trade or commerce. Such decisions do not operate in any market of trade and commerce.”


The concept of delegated legislation strikes a delicate balance between granting autonomy to specialized bodies and safeguarding the public interest. While delegated legislation empowers bodies like the ICAI to regulate their profession, it is essential to ensure that their actions do not impede competition or violate the principles of fair play. Oversight bodies like the CCI play a critical role in monitoring these specialized bodies to ensure that their regulatory activities align with the overall objective of protecting the public interest.

When examining the boundaries of delegated legislation, it is crucial to consider the legislative intent behind granting regulatory powers to specialized bodies. Legislative intent defines the scope and limitations within which these bodies can operate. Any interference or allegations against such bodies should be evaluated against this legislative intent. The CCI does not have the authority to mandate a statutory body to outsource functions related to its statutory duties, even if those functions are considered economic activities. It would be incorrect to assume that simply because an activity falls under the definition of economic activity; it automatically necessitates the creation of an open market for that activity. Therefore, the CCI cannot enforce the outsourcing of activities by an organization or enterprise. The Court’s verdict in favor of the ICAI suggests that the CCI’s allegations overstepped the boundaries of delegated legislation. This reaffirms the significance of respecting the autonomy and regulatory authority granted to specialized bodies within the framework of delegated legislation.

Shruti Srivastava

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