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The National Financial Regulating Authority (NFRA) has approached the Supreme Court challenging the Delhi High Court's recent decision to quash show-cause notices issued by the auditing standards watchdog against leading audit firms, including Deloitte Haskins & Sells LLP, SRBC & Co LLP and prominent Chartered Accountants (CA).
The Supreme Court Bench of Chief Justice of India (CJI) Sanjiv Khanna and Justice Sanjay Kumar briefly heard the matter today, when it admitted the appeal and issued notice, returnable by April 28.
In the February 7 ruling under challenge, the High Court had affirmed the NFRA's powers to proceed against auditors or audit firms for professional misconduct but criticised it for certain procedural violations detected in initiating disciplinary proceedings in certain cases.
In particular, the High Court had made it clear that the NFRA is expected to function in divisions, and that the division which conducts audit quality reviews cannot be the same division that initiates disciplinary proceedings against any auditor.
The High Court had, therefore, quashed several show cause notices (SCNs) and ensuing disciplinary proceedings initiated by the NFRA for violating this procedural standard.
The NFRA has now challenged the High Court's judgment in so far as it quashed SCNs issued by the NFRA.
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