A) ABSTRACT / HEADNOTE

The judgment addresses the exercise of the Supreme Court’s transfer jurisdiction under Article 139A(1) of the Constitution of India in the context of multiple writ petitions pending before different High Courts challenging the constitutional validity of Chapter VI of the Guidelines dated 08.08.2008 issued by the Institute of Chartered Accountants of India. The impugned guidelines impose a numerical ceiling on the number of tax audit assignments a Chartered Accountant may undertake in a financial year under Section 44AB of the Income-tax Act, 1961. The writ petitioners before various High Courts contended that the said restriction infringes their fundamental right to practise a profession under Article 19(1)(g) and results in arbitrary disciplinary action under the Chartered Accountants Act, 1949.

The petitioner Institute sought transfer of all such writ petitions to the Supreme Court to avoid conflicting decisions, multiplicity of proceedings, and legal uncertainty affecting a regulated profession of national importance. The respondents opposed the transfer, invoking the sanctity of Article 226 jurisdiction and arguing that Article 139A is an exceptional power to be exercised sparingly.

The Supreme Court, while not adjudicating upon the constitutional validity of the guidelines themselves, held that the controversy raises questions of general public importance, impacting not only Chartered Accountants but also citizens subject to compulsory tax audits. Emphasising the need for authoritative settlement of law and uniformity, the Court allowed the transfer petitions while protecting existing interim orders. The ruling clarifies the scope of transfer jurisdiction and balances institutional regulation with constitutional safeguards.

Keywords:
Article 139A, Transfer Petition, ICAI Guidelines, Professional Misconduct, Article 19(1)(g), Tax Audit Cap

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute originates from regulatory measures adopted by the Institute of Chartered Accountants of India, a statutory body constituted under the Chartered Accountants Act, 1949, entrusted with regulating the professional conduct of Chartered Accountants across India. The Council of the Institute issued Guidelines dated 08.08.2008, replacing earlier notifications, which prescribed a maximum limit on the number of tax audit assignments that a practising Chartered Accountant may accept in a financial year under Section 44AB of the Income-tax Act, 1961. Violation of these guidelines attracted disciplinary consequences under Section 22 read with Clause (1) of Part II of the Second Schedule to the 1949 Act.

Multiple Chartered Accountants across different States challenged the constitutional validity of Chapter VI of these guidelines before various High Courts, primarily on the ground that the numerical cap on audit assignments unreasonably restricts their right to practise their profession under Article 19(1)(g). Several High Courts granted interim protection against disciplinary proceedings, while conflicting judicial views had earlier emerged on similar regulatory caps.

Against this backdrop, the petitioner Institute invoked Article 139A(1) seeking transfer of all pending writ petitions to the Supreme Court for a comprehensive and final adjudication. The judgment thus situates itself at the intersection of professional self-regulation, constitutional freedoms, and judicial federalism, without entering into the substantive merits of the guidelines themselves.

D) FACTS OF THE CASE

The petitioner, Institute of Chartered Accountants of India, filed multiple transfer petitions seeking withdrawal of writ petitions pending before the Kerala, Madras, and Calcutta High Courts. The writ petitioners therein had challenged Chapter VI of Guidelines No. 1-CA(7)/02/2008 dated 08.08.2008, which restricts a practising Chartered Accountant from accepting more than 60 tax audit assignments per financial year under Section 44AB of the Income-tax Act, 1961.

The impugned guidelines were issued in exercise of powers under Clause (1) of Part II of the Second Schedule to the Chartered Accountants Act, 1949, rendering any violation a case of professional misconduct. The writ petitioners also assailed consequential disciplinary proceedings initiated by the Institute for alleged violations of the cap. In several cases, interim stays were granted by the High Courts.

The Institute contended that divergent High Court proceedings on identical constitutional issues would result in uncertainty, inconsistent rulings, and regulatory paralysis. It relied upon the public importance of compulsory tax audits, introduced through Section 44AB to curb tax evasion and fulfil Article 39(c) of the Constitution.

The respondents resisted transfer, arguing that Article 139A is an exception and should not be invoked merely for administrative convenience. They stressed the importance of High Court adjudication under Article 226 and sought continuation of interim orders if transfer were allowed.

E) LEGAL ISSUES RAISED

i. Whether the Supreme Court should exercise its power under Article 139A(1) to transfer multiple writ petitions pending before different High Courts involving identical constitutional questions?

ii. Whether multiplicity of proceedings and conflicting judicial opinions justify invocation of transfer jurisdiction?

iii. Whether interim orders passed by High Courts should continue upon transfer of writ petitions to the Supreme Court?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The counsels for the petitioner submitted that the challenge to Chapter VI of the Guidelines dated 08.08.2008 raises a pure question of law of general public importance affecting the entire Chartered Accountancy profession and tax administration across India.

ii. It was contended that inconsistent decisions by different High Courts would undermine regulatory uniformity and professional discipline under the Chartered Accountants Act, 1949.

iii. Reliance was placed on the need for finality and authoritative settlement by the Supreme Court to prevent legal uncertainty.

G) RESPONDENT’S ARGUMENTS

i. The counsels for the respondents submitted that Article 139A confers an exceptional power and should be exercised sparingly.

ii. It was argued that transfer would deprive writ petitioners of their constitutional remedy under Article 226.

iii. The respondents emphasised the need for High Court judgments reflecting local conditions and professional realities.

iv. Continuation of interim orders was specifically requested to prevent prejudice.

H) RELATED LEGAL PROVISIONS

i. Article 139A(1), Constitution of India
ii. Article 19(1)(g), Constitution of India
iii. Article 39(c), Constitution of India
iv. Section 44AB, Income-tax Act, 1961
v. Section 22, Chartered Accountants Act, 1949
vi. Clause (1), Part II, Second Schedule, Chartered Accountants Act, 1949

I) JUDGEMENT 

The Supreme Court allowed the transfer petitions, holding that the controversy surrounding the impugned guidelines and disciplinary proceedings affects both professionals and citizens subjected to compulsory audits. The Court recognised that conflicting High Court judgments had already emerged on similar issues in the past, justifying centralised adjudication.

The Bench held that the earlier dismissal of transfer petitions in 1991 did not bar present transfer, as the legal landscape had since evolved. It found that uniformity and clarity warranted exercise of jurisdiction under Article 139A(1).

At the same time, the Court accepted the respondents’ plea to protect existing interim orders, directing that all interim protections granted by High Courts shall continue until further orders. The ruling thus balanced judicial efficiency with fairness to litigants.

a) RATIO DECIDENDI

The ratio of the judgment lies in the principle that where identical constitutional questions of general public importance arise across multiple High Courts, and where inconsistent outcomes may destabilise statutory regulation, the Supreme Court may justifiably invoke Article 139A(1). The Court emphasised that professional regulation impacting national economic policy, such as compulsory tax audits under Section 44AB, warrants authoritative determination.

b) OBITER DICTA

The Court observed that compulsory tax audits serve a broader constitutional purpose of preventing wealth concentration under Article 39(c). While not central to the transfer decision, this observation underscores the socio-economic rationale behind regulatory caps.

c) GUIDELINES

i. Transfer jurisdiction under Article 139A may be exercised where uniformity of law is essential.
ii. Interim orders passed by High Courts should ordinarily continue post-transfer unless vacated.
iii. Earlier refusal to transfer does not create a perpetual bar.

I) CONCLUSION & COMMENTS

The judgment reinforces the Supreme Court’s constitutional role as a unifying authority in matters involving nationwide professional regulation. By allowing transfer while preserving interim protections, the Court demonstrated institutional sensitivity and procedural fairness. The ruling does not prejudge the validity of the ICAI guidelines but ensures that their legality will be examined through a single authoritative lens. It also affirms that regulatory bodies may seek judicial clarity where fragmented litigation threatens consistency and public confidence.

J) REFERENCES

a) Important Cases Referred

i. Institute of Chartered Accountants of India v. Southern Petrochemical Industries Corporation Ltd., (2007) 15 SCC 649

b) Important Statutes Referred

i. Constitution of India
ii. Chartered Accountants Act, 1949
iii. Income-tax Act, 1961