Section 132 Companies Act and NFRA Rules Valid, But Disciplinary Process Needs Separate Investigation and Decision-Making Bodies

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....HC upheld validity of Section 132 of Companies Act 2013 and NFRA Rules while addressing disciplinary proceedings against audit firms and partners. Court rejected challenges based on vicarious liability, finding that firms and partners share unified responsibility under Companies Act framework. Retroactive application challenge was dismissed as Section 132 merely modified enforcement mechanism without creating new liabilities. However, proceedings were invalidated due to procedural defects in NFRA's structure where same Executive Body both issued findings and initiated disciplinary action, violating principles of natural justice and creating reasonable likelihood of bias. Court emphasized need for separate divisions within NFRA to maintain procedural fairness and avoid predetermination in disciplinary matters.....