Indian Regulatory Framework for CA Foundation
The Indian Regulatory Framework: the Constitution, distribution of law-making powers, how laws are made, delegated legislation, precedent and the main regulators.
Business LawsPaper 211 MCQs2 lessons2 flashcards3 memory tricks
Practise Indian Regulatory Framework free
What you'll learn
- Constitution and law-making
Explain the sources of law and how a Bill becomes an Act. - Delegated legislation and regulators
Identify the main regulators and the role of rules made under Acts.
Concepts explained
Constitution and distribution of powers
The Constitution is India's supreme law. The Seventh Schedule divides law-making powers into the Union, State and Concurrent Lists.
What it means
- Union List: defence, foreign affairs, banking, currency.
- State List: police, public order, public health, agriculture.
- Concurrent List: contracts, bankruptcy, education, forests; Union law generally prevails on conflict (Article 254).
- Residuary powers with Parliament; Supreme Court decisions bind all courts (Article 141).
- Law on contracts
Answer: Concurrent List
- Supreme Court rules on a point of law
Answer: Binding on all courts in India
Related terms
- Judicial review: courts strike down unconstitutional laws
- Federalism: powers divided between Union and States
Exam tip: Banking and currency are Union subjects, which is why RBI is a central body.
How laws are made
A Bill becomes an Act when passed by both Houses and assented to by the President. Ordinances and delegated legislation supplement Acts.
What it means
- Ordinary Bills can start in either House; Money Bills only in the Lok Sabha (Article 109).
- President's assent (Article 111); then published in the Gazette.
- Ordinance (Article 123) when Parliament isn't in session; lapses six weeks after it reassembles.
- Delegated legislation: rules and regulations under an Act; must stay within the Act.
- Rajya Sabha disagrees
Answer: It can only recommend within 14 days; Lok Sabha decides
- Companies (Incorporation) Rules, 2014
Answer: Delegated legislation under the Companies Act
Related terms
- Joint sitting: resolves deadlock on ordinary bills (Article 108)
- Gazette notification: official publication of laws and rules
Exam tip: Money Bill: Lok Sabha only, Rajya Sabha 14 days, recommend only.
Regulators in India
Statutory regulators oversee specific sectors: RBI (banking), SEBI (securities), IRDAI (insurance), PFRDA (pensions), CCI (competition), MCA (companies), ICAI (CA profession).
What it means
- RBI: RBI Act, 1934; monetary policy, banks, payments.
- SEBI: SEBI Act, 1992; protects investors, regulates markets.
- IRDAI: insurance; PFRDA: pensions (NPS).
- CCI: Competition Act, 2002; ICAI: Chartered Accountants Act, 1949.
- Insurance company mis-sells policies
Answer: IRDAI
- Cement makers fix prices
Answer: CCI
Related terms
- SAT: Securities Appellate Tribunal: appeals against SEBI, IRDAI, PFRDA
- NCLT: company law tribunal
Exam tip: Match the product to the regulator: shares SEBI, deposits RBI, policies IRDAI, pensions PFRDA.
Memory tricks
Art. 123 ordinances; 109 money bills; 111 President's assent; 141 SC precedent; 246 distribution.
SEBI securities; RBI banking; IRDAI insurance; PFRDA pensions; CCI competition.
Seventh Schedule: Union, State and Concurrent Lists.
Try 3 CA Foundation-style questions
Q1. Under Article 141, the law declared by the Supreme Court is
- binding on all courts within India
- binding only on the parties
- advisory only
- binding only on High Courts in the same state
Show answer
Answer: (1) binding on all courts within India
Article 141 makes Supreme Court decisions binding on all courts in India: the doctrine of precedent.
Q2. Subjects on which both Parliament and State Legislatures can make laws are in the
- Union List
- Concurrent List
- State List
- Residuary List
Show answer
Answer: (2) Concurrent List
Both can legislate on the Concurrent List (e.g. contracts, bankruptcy, education); if laws conflict, the Union law generally prevails.
Q3. A Money Bill can be introduced only in
- the Lok Sabha
- the Rajya Sabha
- either House
- a joint sitting
Show answer
Answer: (1) the Lok Sabha
Article 109: a Money Bill can be introduced only in the Lok Sabha, on the President's recommendation; the Rajya Sabha can only make recommendations within 14 days.
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