After nearly two decades, the Institute of Chartered Financial Analysts of India (ICFAI) has won the `chartered' row against the ICAI (Institute of Chartered Accountants of India).
In a decision dated May 16, the apex court ruled in favour of the Hyderabad-based ICFAI, by setting aside an earlier verdict of the Andhra Pradesh High Court, which had allowed the ICAI to prohibit its members from using the description `Chartered Financial Analyst' or its abbreviation, CFA.
The dispute goes back to the late 1980s when the ICAI, the premier accounting body headquartered in New Delhi, initiated action under the Monopolies and Restrictive Trade Practices (MRTP) Act against the ICFAI, after having obtained the opinion of the Additional Solicitor General of India in this regard.
He had apparently opined that the designation `Chartered Financial Analyst' would seem to be similar to the designation `Chartered Accountant', "especially when the letters CFA are added to the name, which is very close to the letters FCA conferred by the ICAI."
In 1989, the ICAI issued a notification stating that CAs would be guilty of professional misconduct if they obtained the qualification of the CFA on or after January 1,1990; or if, "having obtained the said qualification earlier" they "did not surrender the same before the said date".
At the Supreme Court, Mr K.K. Venugopal argued for the ICFAI, saying that the notification was violative of a person's fundamental right guaranteed under Article 19(1)(g) of the Constitution of India. He also contended that the power to issue such a notification, being hedged with excessive delegation, was ultra vires Article 14 of the Constitution.
Court's Stand
Article 14 is on equality before law and Article 19 (1) (g) assures that all citizens shall have the right to practise any profession, or to carry on any occupation, trade or business.
Presenting the ICAI's stand at the court, Mr S. Ganesh said that the close resemblance between CFA and FCA can mislead the lay public and also convey "the entirely erroneous impression that a FCA with a CFA is superior to a mere `FCA'," directly resulting in "the dilution and debasement of the value of the membership of the ICAI".
The court reasoned that when a person is otherwise entitled to acquire any additional qualification, such qualification per se could not be termed to be misconduct in its generic sense. In the case of persons in the profession, "it would be too much to contend that even an acquisition of an additional qualification" would come within the purview of professional misconduct, said Justice S.B. Sinha of the apex court. Such a broad meaning defies all norms, he added.
Accordingly, the court quashed the ICAI notification (dated August 3, 1989) as it violates Articles 14 and 19(1)(g) of the Constitution.
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