Indian Regulatory Framework

(c)(i) Reserve Bank of India

(1)It is India's Central Bank and regulatory body responsible for regulation of the Indian banking system.

(2)It is under the ownership of Ministry of Finance, Government of India.

(3)It is responsible for the control, issue and maintaining supply of the Indian rupee.

(4)It also manages the country's main payment systems and works to promote its economic development.

(5)Bharatiya Reserve Bank Note Mudran (BRBNM) is a specialized division of RBI through which it prints and mints Indian currency notes (INR) in two of its currency printing presses located in Nashik (Western India) and Dewas (Central India).

(6)RBI established the National Payments Corporation of India as one of its specialized divisions to regulate the payment and settlement systems in India.

(7)Deposit Insurance and Credit Guarantee Corporation was established by RBI as one of its specialized divisions for the purpose of providing insurance of deposits and guaranteeing of credit facilities to all Indian banks.

(ii)Insolvency and Bankruptcy Board of India

(a)It is the regulator for overseeing insolvency proceedings and entities like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP) and Information Utilities (IU) in India.

(b)It was established on 1 October, 2016 and given statutory powers through the Insolvency and Bankruptcy Code, which was passed by Lok Sabha on 5th May, 2016.

(c)It covers Individuals, Companies, Limited Liability, Partnerships and Partnership firms. The new code will speed up the resolution process for stressed assets in the country.

(d)It attempts to simplify the process of insolvency and bankruptcy proceedings.

(e)It handles the cases using two tribunals like NCLT (National Company Law Tribunal) and Debt Recovery Tribunal.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2026, 4(c) (New Scheme).

(c)(i) The Securities and Exchange Board of India (SEBI):

•It is the regulatory body

•for securities and commodity market in India

•under the ownership of Ministry of Finance within the

Government of India.

•It was established on 12 April, 1988 as an executive body and was

given statutory powers on 30 January, 1992 through the SEBI Act, 1992.

(ii)Reserve Bank of India (RBI):

•It is India's Central Bank and regulatory body responsible for

regulation of the Indian banking system.

•It is under the ownership of Ministry of Finance, Government of

India.

•It is responsible for the control, issue and maintaining supply of

the Indian rupee.

•It also manages the country's main payment systems and works

to promote its economic development.

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•Bharatiya Reserve Bank Note Mudran (BRBNM) is a specialised

division of RBI through which it prints and mints Indian currency notes (INR) in two of its currency printing presses located in Nashik (Western India) and Dewas (Central India).

•RBI established the National Payments Corporation of India as

one of its specialised division to regulate the payment and settlement systems in India.

•Deposit Insurance and Credit Guarantee Corporation was

established by RBI as one of its specialised division for the purpose of providing insurance of deposits and guaranteeing of credit facilities to all Indian banks.

(iii)Insolvency and Bankruptcy Board of India (IBBI)-

•It is the regulator for overseeing insolvency proceedings and

entities like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP) and Information Utilities (IU) in India.

•It was established on 1 October 2016 and given statutory powers

through the Insolvency and Bankruptcy Code, which was passed by Lok Sabha on 5th May 2016.

•It covers Individuals, Companies, Limited Liability, Partnerships

and Partnership firms. The new code will speed up the resolution process for stressed assets in the country.

•It attempts to simplify the process of insolvency and bankruptcy

proceedings.

•It handles the cases using two tribunals like NCLT (National

Company Law Tribunal) and Debt Recovery Tribunal.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, June 2024, 4(c) (New Scheme).

(c)(i) Common Law: A judicial precedent or a case law is common law. A judgment delivered by the Supreme Court will be binding upon the courts within the territory of India under Article 141 of the Indian Constitution. The doctrine of Stare Decisis is the principle supporting common law. It is a Latin phrase that means “to stand by that which is decided.” The doctrine of Stare Decisis reinforces the obligation of courts to follow the same principle or judgement established by previous decisions while ruling a case where the facts are similar or “on all four legs” with the earlier decision.

(ii)Principles of Natural Justice: Natural justice, often known as Jus Natural deals with certain fundamental principles of justice going beyond written law. Nemo judex in causa sua (Literally meaning No one should be made a judge in his own cause, and it’s a Rule against Prejudice), audi alteram partem (Literally meaning hear the other party or give the other party a fair hearing), and reasoned decision are the rules of Natural Justice. A judgement can override or alter a common law, but it cannot override or change the statute.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2026, 4(c) (New Scheme).

(c)What is Law?

Law is a set of obligations and duties imposed by the government for securing welfare and providing justice to society. India’s legal framework reflects the social, political, economic, and cultural aspects of our vast and diversified country.

Sources of Law

The main sources of law in India are:

(i)the Constitution,

(ii)the Statutes or Laws made by Parliament and State Assemblies,

(iii)Precedents or the Judicial Decisions of various Courts and in some cases, established Customs and Usages.

The elected representatives of the people to the Parliament and to the Legislative Assemblies of various States make laws in the Parliament or in the State Assemblies.

The Constitution of India, 1950 is the foremost law that deals with the framework within which our democratic system works, and our laws are made for the people, by the people.

The Constitution also provides for and protects certain Fundamental Rights of citizens.

It also lays down Fundamental duties as well as the powers and duties of Governments, both Central and State.

The laws in India are interconnected with each other forming a hybrid legal system.

The people who wrote the Constitution decided to divide the law-making power between the Central Government and the various State Governments. So, the Indian Constitution has three lists Viz., Central List, State List and Joint List.

A matter would become the subject matter for Central Law or a State Law depending on the List.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2025, 4(c) (New Scheme).

(c)The functions of judiciary system of India are:

In the hierarchy of courts, the Supreme Court is at the top, followed by the High Courts and District Courts. Decisions of a High Court are binding in the respective state but are only persuasive in other states. Decisions of the Supreme Court are binding on all High Courts under Article 141 of the Indian Constitution. In fact, a Supreme Court decision is the final word on the matter.

(i)Supreme Court: The Supreme Court is the apex body of the judiciary. It was established on 26th January, 1950. The Chief Justice of India is the highest authority appointed under Article 126. The principal bench

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of the Supreme Court consists of seven members including the Chief Justice of India. Presently, the number has increased to 34 including the Chief Justice of India due to the rise in the number of cases and workload. An individual can seek relief in the Supreme Court by filing a writ petition under Article 32.

(ii)High Court: The highest court of appeal in each state and union territory is the High Court. Article 214 of the Indian Constitution states that there must be a High Court in each state. The High Court has appellant, original jurisdiction, and Supervisory jurisdiction. However, Article 227 of the Indian Constitution limits a High Court’s supervisory power. In India, there are twenty-five High Courts, one for each state and union territory. Six states share a single High Court. An individual can seek remedies against violation of fundamental rights in High Court by filing a writ under Article 226.

(iii)District Court: Below the High Courts are the District Courts. The Courts of District Judge deal with Civil law matters i.e. contractual disputes and claims for damages etc., The Courts of Sessions deals with Criminal matters.

Under pecuniary jurisdiction, a civil judge can try suits valuing not more than Rupees two crore.

Jurisdiction means the power to control. Courts get territorial Jurisdiction based on the areas covered by them. Cases are decided based on the local limits within which the parties reside or the property under dispute is situated.

(iv)Metropolitan courts: Metropolitan courts are established in metropolitan cities in consultation with the High Court where the population is ten lakh or more. Chief Metropolitan Magistrate has powers as Chief Judicial Magistrate and Metropolitan Magistrate has powers as the Court of a Magistrate of the first class.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, January 2025, 4(c) (New Scheme).

(c)The laws in the Indian legal system could be broadly classified as follows:

Criminal Law

Criminal law is concerned with laws pertaining to violations of the rule of law or public wrongs and punishment of the same. Criminal Law is governed under the Indian Penal Code, 1860, and the Code of Criminal Procedure, 1973 (CrPC). The Indian Penal Code, 1860, defines the crime, its nature, and punishments whereas the Criminal Procedure Code, 1973, defines exhaustive procedure for executing the punishments of the crimes.

Murder, rape, theft, fraud, cheating and assault are some examples of criminal offences under the law.

Civil Law

Matters of disputes between individuals or organisations are dealt with under Civil Law. Civil courts enforce the violation of certain rights and obligations through the institution of a civil suit. Civil law primarily focuses on dispute resolution rather than punishment. The act of process and the administration of civil law are governed by the Code of Civil Procedure, 1908 (CPC). Civil law can be further classified into Law of Contract, Family Law, Property Law, and Law of Tort.

Some examples of civil offences are breach of contract, non-delivery of goods, non-payment of dues to lender or seller defamation, breach of contract, and disputes between landlord and tenant.

Common Law

A judicial precedent or a case law is common law. A judgment delivered by the Supreme Court will be binding upon the courts within the territory of India under Article 141 of the Indian Constitution. The doctrine of Stare Decisis is the principle supporting common law. It is a Latin phrase that means “to stand by that which is decided.” The doctrine of Stare Decisis reinforces the obligation of courts to follow the same principle or judgement established by previous decisions while ruling a case where the facts are similar or “on all four legs” with the earlier decision.

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Principles of Natural Justice

Natural justice, often known as Jus Natural deals with certain fundamental principles of justice going beyond written law. Nemo judex in causa sua (Literally meaning “No one should be made a judge in his own cause, and it’s a Rule against Prejudice), audi alteram partem (Literally meaning “hear the other party or give the other party a fair hearing), and reasoned decision are the rules of Natural Justice. A judgement can override or alter a common law, but it cannot override or change the statute.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, September 2024, 4(c) (New Scheme).

(c)The Ministry of Finance

•The Ministry of Finance (Vitta Mantralaya) is a Ministry within the

Government of India concerned with the economy of India, serving as the Treasury of India.

•In particular, it concerns itself with taxation, financial legislation,

financial institutions, capital markets, centre and state finances, and the Union Budget.

•One of the important functions of the Finance Ministry is the

presentation of the Union Budget. This annual event is eagerly awaited by professionals and the common man as it provides for the rates of taxes and budget allocations for the ensuing year.

The Ministry of Corporate Affairs

•The Ministry of Corporate Affairs is an Indian Government Ministry.

•It is primarily concerned with administration of the Companies Act

2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008, and the Insolvency and Bankruptcy Code, 2016.

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•It is responsible mainly for the regulation of Indian enterprises in the

industrial and services sector.

The Ministry of Law and Justice

•The Ministry of Law and Justice in the Government of India is a

Cabinet Ministry

•It deals with the

•management of the legal affairs, through the Department of Legal Affairs

•legislative activities through the Legislative Department

•administration of justice in India through the Department of Justice

•The Department of Legal Affairs is concerned with advising the

various Ministries of the Central Government while the Legislative Department is concerned with drafting of principal legislation for the Central Government.

Source⁠​‌​‌‌​‌​⁠: ICAI Suggested Answers, May 2025, 4(c) (New Scheme).