India, Feb. 17 -- The Supreme Court on Monday underscored the necessity of separating investigative and adjudicatory functions within the National Financial Reporting Authority (NFRA) to uphold regulatory impartiality, even as it admitted an appeal by NFRA against the Delhi high court's verdict that quashed show cause notices issued to auditing firms Deloitte Haskins & Sells LLP and SRBC & Co LLP in the IL&FS case.

A bench comprising Chief Justice of India Sanjiv Khanna and justice Sanjay Kumar issued notice on NFRA's appeal but declined to stay the high court's February 7 ruling. The bench also observed that NFRA should have separate divisions for investigating financial auditors and chartered accountants, and for adjudicating penalties...