TaxTMI 
TaxTMI 
2023 (6) TMI 139
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....igation into the matter relating to the Continuing Professional Education (CPE) program being conducted by ICAI. ICAI, as a part of its functions, has framed the CPE program, which requires its members to continue to keep themselves abreast of professional developments and skills by participating in educational activities related to the profession on a continuous basis. 2. ICAI has, with a view to maintain the standards of the professional services rendered by its members, identified CPE as an area of focus. In the year 2003, ICAI issued a Statement on Continuing Professional Education, which prescribes the norms for undergoing CPE activities. The CPE program of ICAI requires its members to devote specified hours for CPE learning activities. The learning activities are classified into structured and unstructured activities. ICAI has also prescribed the minimum number of CPE credit hours including structured CPE credit hours that are required to be earned by its members, classified on the basis of their age (whether below or above 60 years) and on the basis of whether they hold a Certificate of Practice (CoP). At the material time, a member of ICAI below the age of 60 years holding....
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....and it cannot review ICAI's decisions taken in exercise of its statutory powers. Information under Section 19(1)(a) of the Competition Act 8. Before proceeding further, it would be relevant to examine the information as provided by the Informant. He had submitted that ICAI is a member of the International Federation of Accountants (IFAC) and is obliged to follow the IFAC best practices as per its constitution. Members of the IFAC are required to ensure that their members update their knowledge on a continuing basis by conducting a continuing professional development program. The objective being that all professional accountants continue to develop and maintain their competence in the field of their profession. It is stated that the IFAC member bodies are required to ensure that each professional accountant completes at least one hundred and twenty hours (or equivalent learning units) of relevant professional development activities in a rolling three year period. Out of the same, at least sixty hours should be verifiable. In addition, a professional accountant is also required to complete at least twenty hours of relevant professional development activities in each year. The Infor....
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....ensurate with the activities organized by ICAI or its organs. It is not alleged that charging fees amounts to abuse of ICIA's dominant position. 13. The Informant alleges that one of the reasons ICAI Council has steadfastly refused accreditation to any independent organization for conducting seminars is to further the self interest of its elected members (including the Council, Regional Councils and Branches). He claims that the elected members of ICAI act as Conference Directors and Co-ordinators and "this allows them to hog the limelight and is a vehicle for their self-promotion and a ladder for electoral success, since elections to ICAI Council/Regional Councils/Branches are held every 3 years." 14. The Informant alleges as follows: "1. ICAI is in violation of Section 4(2)(a)(i), i.e. by directly imposing 'unfair' and 'discriminatory' condition in sale of CPE Service by insisting that its over 2 lakh CA members attend only seminars organised by ICAI to attain structured CPE Credits. 2. ICAI is in violation of Section 4(2)(b)(i), i.e. by limiting and confining the provision of service of CPE Seminars to itself, as also restricting CPE semianars access by not allowing any ot....
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.... not allowing any other organization to conduct the CPE seminars for CPE credits created an entry barrier for other players in the relevant market." It observed that there were hundreds of seminars and conferences organized every month across India by reputed organizations like the CCI, FICCI, ASSOCHAM, NASSCOM etc. However, these conferences were not recognized by ICAI for the purpose of granting CPE credits to its participants. According to CCI, this, prima facie, amounted to imposing an unreasonable restraint, as the members of ICAI are left with no option but to compulsorily attend seminars organized by ICAI and its organs. CCI further observed that the action of ICAI, restricting the function of organizing CPE seminars conferences to itself and its organs, is an "arbitrary exercise of its powers" and thus contravened Section 4 of the Act. In view of the above, CCI has directed the DG to conduct an investigation into the matter and complete the same within a period of sixty days from the receipt of the orders. CCI also directed the DG to investigate the role, if any, of persons who were in-charge of and were responsible "to the companies for the conduct of the businesses of suc....
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....CAI being considered as an enterprise. 21. Lastly, he contended that the CA Act is a complete code and it was enacted to constitute an autonomous association of accountants to maintain the standards of professional competence and to regulate the profession of chartered accountants. He submitted that since ICAI was performing its functions under the four corners of the CA Act, the same could not be interfered with by the CCI in exercise of its functions. 22. Mr Haksar, learned counsel appearing for ICAI, referred to the decision of CCI in Thupili Raveendra Babu v Bar Council of India (BCI) & Ors.: 2021 SCC Online CCI 1 in support of his contention that ICAI was conducting the CPE program in exercise of its statutory function and was not an "enterprise" in respect of that activity. 23. Mr Gaggar, learned counsel appearing on behalf of the CCI and Mr Hossain, learned counsel appearing on behalf of the Informant, countered the aforesaid submissions made by Mr Haksar. They submitted that the present petition was not maintainable because an order under Section 26(1) of the Competition Act was merely an administrative / interdepartmental direction. They relied on the decision of the Su....
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....ossain relied on the decision of the Court of Justice of the European Union (Second Chamber) in Ordem Dos Tecnicos Oficiais De Contas v. Autoridade Da Concorrencia in Case C-1/12, whereby the Court held that a regulation, which puts into place a system of compulsory training for chartered accountants, in order to guarantee the quality of services offered by them such as training credit regulation adopted by professional association such as Ordem Dos Tecnicos Oficiais De Contas (Order of Chartered Accountants) constitutes a restriction on competition, which is prohibited by Article 101 of the Treaty on Functioning of European Union (TFEU). Reasons and conclusion 27. At the outset, it is necessary to examine the constitution and the functions of ICAI. 28. ICAI is a statutory body established under the CA Act, which was enacted in 1949. Prior to its enactment, the Government of India had framed Auditors Certificates Rules in the year 1932. This was in exercise of its powers conferred under Section 144 of the Indian Companies Act, 1913 and the profession of accountancy in India was regulated by those rules. The Indian Accountancy Board, as constituted, advised the Government in all ....
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....o member of ICAI is entitled to practice the profession of accountancy unless he/she has obtained a Certificate of Practice (CoP) from ICAI. Also, no person can use the designation of Chartered Accountant unless he is entitled to practice the profession of accountancy. 30. Section 9 of the CA Act provides for constitution of the Council. The Council includes members who are elected and also persons who are nominated by the Government of India. ICAI functions under the overarching control and supervision of the Council. Section 15 of the CA Act sets out the functions of the Council and is reproduced below: "15.- Functions of Council. - (1) The Institute shall function under the overall control, guidance and supervision of the Council and the duty of carrying out the provisions of this Act shall be vested in the Council. (2) In particular, and without prejudice to the generality of the foregoing powers, the duties of the Council shall include: (a) to approve academic courses and their contents ; (b) the examination of candidates for enrolment and the prescribing of fees therefore. (c) the regulation of the engagement and training of the articled and audit assistants; (d)....
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....n or competence as a Chartered Accountant. Section 24A of the CA Act provides for imposing penalty on any other person or entity using the name of the Council or awarding degrees of Chartered Accountancy. It expressly provides that except as otherwise provided under the CA Act, no person shall award any degree, diploma or certificate or bestow any designation, which indicates or purports to indicate the position or attainment of any qualification or competence similar to that of a member of the Institute. Section 24A(1)(ii) of the CA Act is set out below: "24A. Penalty for using name of the Council, awarding degrees of chartered accountancy, etc.- (1) Save as otherwise provided in this Act, no person shall- (i) xxxx xxxx xxxx xxxx (ii) award any degree, diploma or certificate or bestow any designation which indicates or purports to indicate the position or attainment of any qualification or competence similar to that of a member of the Institute: or (iii) xxxx xxxx xxxx xxxx" 33. Section 30 of the CA Act empowers the Council to make regulations for the purposes of carrying out the objects of the CA Act. Section 30 of the CA Act is set out below:- "30. Power to make regul....
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....r may be prescribed under this Act." 34. The CPE program of ICAI is at the heart of the controversy involved in the present petition. As stated herein before, in the year 2003, ICAI issued a statement on CPE (hereafter 'the Statement'), which was amended from time to time. The opening paragraphs of the Statement indicated that the CPE has been identified by ICAI as a major area of focus for its members. This has been done with the view to enable its members to maintain the requisite professional competence and to ensure high quality and standards of the professional services that they render. 35. It is at once clear that the Statement was issued by ICAI (Council) in discharge of its functions under Section 15(2)(j) of the CA Act - "the regulation and maintenance of the status and standard of professional qualifications of members of the Institute" 36. Paragraph 2.5 of the Statement defines CPE POUs, which are responsible for organizing CPE programs. The said paragraph is set out below: "2.5 CPE Programme Organising Unit (POU): POUs are responsible for organising CPE programmes or CPE learning activities and include the Council; Committee(s) of the Council; Regional Councils; B....
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....d and unstructured learning activities as given in the CPE Advisory on Structured CPE Learning Activities and Unstructured CPE Learning Activities respectively. 10.3 To approve the grant of CPE credit hours to eligible programmes and such other learning activities as may be decided upon by the Directorate. 10.4 To approve the formation of CPE Chapters/ CPE Study Groups 10.5 To provide guidance to the CPE Study Circles in the formation of Study Circles or any other administrative problem. 10.6 To review and monitor the programmes conducted by various POUs [refer para 13 of this statement] 10.7 To allocate and assign responsibilities to various persons and/ or organisations, as the case may be, for the development of CPE background material. 10.8 To refer to the Council, the cases of non-compliance with the Statement. 10.9 To undertake such activities as in its opinion, are conducive to the development of learning programmes, enhancement of quality and frequency of learning activities, increasing the opportunities for members to avail of CPE learning programmes, and such other actions which may be considered relevant or supportive to any or all of these. 10.10 To fram....
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....e CPE Portal within 72 hours of organising the programme. 12.6 To follow the directions, guidelines and Advisories issued by the Council and by the CPED from time to time." 42. Annexure B to the Statement sets out the CPE credit hour requirements, which are required to be achieved by the members of ICAI. As per the said requirements (which are applicable with effect from 01.01.2020) all members of ICAI, holding a CoP (Certificate of practice), are required to complete at least one hundred and twenty CPE credit hours in a rolling period of three years, which includes twenty CPE credits hours of structured learning in each calendar year. The remaining sixty CPE credit hours (one hundred and twenty CPE credit hours less the minimum twenty CPE credit hours in each calendar year) can be completed either through structured or unstructured learning as per the member's choice. All members who are aged less than sixty years and are not holding the CoP are required to complete at least sixty CPE credits hours of either structured or unstructured learning, as per their choice, in a rolling period of three years. This includes at least fifteen CPE credit hours in each calendar year. All mem....
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....rnment, which is engaged in any of the activities that are not relatable to sovereign functions, would fall within the definition of the term "enterprise". 45. The term 'person' is defined under Clause (l) of Section 2 of the Competition Act. The said definition is an inclusive definition and it includes an association of persons or a body of individuals whether incorporated or not. It also includes a local authority, a cooperative society and a body incorporated by or under laws of a country outside India. In terms of Sub-clause (x) of Clause (l) of Section 2 of the Competition Act, every artificial juridical person not falling within any of the other Sub-clauses of Clause (l) would also be included in the definition of the term "person". Thus, clearly ICAI is a person under Clause (l) of Section 2 of the Competition Act. 46. The term "service" is defined under Clause (u) of Section 2 of the Competition Act and it means service of any description, which is made available to potential users and it specifically includes services, which are in connection with "education". Thus, the services, which are rendered in the field of education by ICAI would also clearly fall within the sco....
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....constitutes an abuse of dominant position as contemplated under Section 4 of the Competition Act. The Informant prays that the CCI declare ICAI's CPE program as an abuse of dominant position. He further prays that ICAI be directed to revise its program to allow members to obtain CPE credits by attending seminars of their choice and interests, which may be organized by other associations or bodies. 50. The CCI has proceeded on the basis that ICAI carries out both regulatory functions as well as other economic activities like conducting professional courses including the CPE program and publication of books relating to the profession of accountancy. The CCI had observed in the impugned order that these economic activities of ICAI could be differentiated from the regulatory activities of regulating the CA profession and in view of these non-regulatory activities, ICAI falls within the definition of an enterprise under the CCI Act. The CCI concluded that the relevant market for the purposes of the inquiry be the "organizing recognised CPE Seminars/Workshops/Conferences in India". Since ICAI through its study circles is a sole provider for organizing CPE seminars for CPE credits requir....
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....ced above, the Informant has in unambiguous terms articulated his grievance in the information filed by him. He alleges that "the ICAI is abusing its dominant position as a 'Regulator' to create a monopoly in the service of providing CPE seminars, clearly violating Section 4(1) of the Competition Act". The grievance of the Informant, thus, is with regard to the decision of ICAI in making it mandatory for its members to undertake a structured learning program by attending the CPE seminars organized by ICAI and POUs, which according to the Informant and the CCI, are an extended arm of ICAI. The Informant claims that ICAI is in violation of Section 4(2)(a)(i) of the Competition Act, by directly imposing an unfair and discriminatory condition in provision of the CPE services by insisting that its members attend seminars organized by ICAI to attain the CPE credits. He also alleges that ICAI has violated Section 4(2)(b)(i) of the Competition Act, by limiting and confining the provision of services of the CPE seminars to itself and by not allowing any other organization to conduct the CPE seminars. In addition, he claims that ICAI is in violation of Section 4(2)(c) of the Competition Act,....
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....n course of its functions, also make decisions which involve trade and commerce. As an illustration, the concerned body may purchase equipment and consumables or avail services of professionals. There is no cavil that any decision in this regard may, if it falls foul of the provisions of the Competition Act, be examined by the CCI. 56. At this stage, it is also relevant to refer to the definition of a statutory authority as defined in Clause (w) of Section 2 of the Competition Act. Clause (w) of Section 2 of the Competition Act is set out below: "2(w) "statutory authority" means any authority, board, corporation, council, institute, university or any other body corporate, established by or under any Central, State or Provincial Act for the purposes of regulating production or supply of goods or provision of any services or markets therefor or any matter connected therewith or incidental thereto;" 57. ICAI clearly falls within the definition of a statutory authority within the meaning of Clause (w) of Section 2 of the Competition Act. 58. If one examines the provisions of Section 15 of the CA Act, it is clear that in terms of Clause (j) of Sub-section (2) of Section 15 of the C....
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....e with its guidelines. If the Informant's contention is accepted, ICAI is obliged to do that, as not doing so is anti-competitive. This Court is unable to accept the aforesaid contention. ICAI being 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. 62. It is relevant to state that there are several statutory corporations and bodies, which are constituted under legislative enactments and are charged with specific functions. Some of them may also involve providing of services. If those economic activities are not a part of its regulatory functions, the same would obviously be subject to scrutiny by the CCI. However, a decision in exercise of regulatory powers, is required to be taken by the regulator and its discretion to do so can only be fettered by the provisions of the statute, which clothes the regulato....
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....tion Act, which in terms of Section 62 of the Competition Act, is in addition and not in derogation of other statutes. 65. In view of the above, the decision of ICAI to frame the CPE Program for maintenance of professional standards cannot be considered as abuse of its dominant position. 66. It is important to note that the CCI's power is for regulating of markets; it does not extend to addressing any grievance regarding arbitrary action by any statutory authority. In the present case, the CCI has proceeded on the basis that there is a relevant market "for organising recognised CP Seminars/Workshops/ Conferences". Clearly, the said view is erroneous. There is no market for organising CPE seminars, workshop or conferences. As noticed above, ICAI is charged with the function of maintaining professional standards and it conducts the educational program for structured CPE Credits, in-house or through its organs. Thus, in essence, the Informant seeks that the said function be outsourced. Such outsourcing would create a market as the other entities would be entitled to participate as market players in that market. 67. This Court is unable to accept that the jurisdiction of the CCI ext....
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....red to be regulated by the CCI as a market regulator. The said assumption lies at the centre of the controversy in this case. This Court is unable to accept that all decisions made by authorities, which have any relation to economic activities, are liable to be subject matter of investigation by the CCI on the ground that they are prima facie arbitrary notwithstanding that the same are not relevant to any market which involves entities engaged in trade or commerce. The CCI has wide powers under the Competition Act but this Court is unable to accept that the said powers extend to reviewing all decisions made by statutory bodies or a foreign government, which are not relatable to a sovereign function of the Government. The scope of examination must be confined to only those areas of economic activities, which have a bearing on the market that engages entities involved in trade and commerce. 72. The learned counsel for the CCI had relied heavily on the decision in the case of Ordem dos Técnicos Oficiais de Contas v. Autoridade da Concorrência of the Court of the Justice of the European Union. In that case, the Quality Control Regulation (Regulamento do Controlo de Qualid....