SILF - Publications / Articles

01/07/2013

Working Draft on Unauthorised Practice of Law

(Prepared by Hammurabi & Solomon)

QUERIES:
1. Definition of persons entitled to practice law.
2. Definition and scope of what constitutes practice of law.
3. In case someone practices law without due license, what is the remedy against such person.
4. In case such person is a chartered accountant, is their a bar under ICAI or similar norms against practicing 2 professions
5. In case such person is a company secretary, is their a bar under ICSI or similar norms against practicing 2 professions
6. In case such an entity is a foreign entity or a affiliate/branch/subsidiary etc of a foreign entity, can RBI be approached to stop them/cancel their licenses
7. For cases where CA firms have opened a law firm with the same name, what tests could be applied to verify whether it is the lawyers in the law firm practicing law or it is the CA firm actually practicing law with a different name.
 
RESPONSE:
A. Query No. 1: Definition of persons entitled to practice law.
The Advocates Act 1961, at sections 29-33 and section 55 reads as follows:
 
“29. Advocates to be the only recognised class of persons entitled to practise law.—Subject to the provisions of this Act and any rules made thereunder, there shall, as from the appointed day, be only one class of persons entitled to practice the profession of law, namely, advocates.” 
“30. Right of advocates to practise.—Subject to provisions of this Act, every advocate whose name is entered in the 1[State roll] shall be entitled as of right to practise throughout the territories to which this Act extends,—
(i) in all courts including the Supreme Court;
(ii) before any tribunal or person legally authorised to take evidence; and
(iii) before any other authority or person before whom such advocate is by
 
or under any law for the time being in force entitled to practise.”
 
“31. Special provision for attorneys.—[Omitted by the Advocates (Amendment) Act, 1976 (107 of 1976) w.e.f. 01.01.1977.]”
“32. Power of Court to permit appearances in particular cases.—
Notwithstanding anything contained in this Chapter, any court, authority, or person may permit any person, not enrolled as an advocate under this Act, to appear before it or him in any particular case.”
“33. Advocates alone entitled to practise.—Except as otherwise provided in this Act or in any other law for the time being in force, no
person shall, on or after the appointed day, be entitled to practise in any court or before any authority or person unless he is enrolled as an advocate under this Act.”
Further Section 55 of the Act provides that:
“55. Rights of certain existing legal practitioners not affected.—
Notwithstanding anything contained in this Act,—
(a) every pleader or vakil practising as such immediately before the date on which Chapter IV comes into force (hereinafter in this section referred to as the said date) by virtue of the provisions of the Legal Practitioners Act, 1879 (18 of 1879), the Bombay Pleaders Act, 1920 (17 of 1920), or any other law who does not elect to be, or is not qualified to be, enrolled as an advocate under this Act;
1 [omitted***]
2[(c) every mukhtar practising as such immediately before the said date by virtue of the provisions of the Legal Practitioners Act, 1879, or any other law, who does not elect to be, or is not qualified to be, enrolled as an advocate under this Act;
(d) every revenue agent practising as such immediately before the said date by virtue of the provisions of the Legal Practitioners Act, 1879 (18 of 1879), or any other law,] shall, notwithstanding the repeal by this Act of the relevant provisions of the Legal Practitioners Act, 1879 (18 of 1879), the Bombay Pleaders Act, 1920 (Bombay Act 17 of 1920), or other law, continue to enjoy the same right as respects practice in any court or revenue office or before any authority or person and be subject to the disciplinary jurisdiction of the same authority which he enjoyed or, as the case may be, to which he was subject immediately before the said date and accordingly the relevant provisions of the Acts or law aforesaid shall have effect in relation to such persons as if they had not been repealed.”
Further Rule 2 of the Bar Council of India Rules under Part VI, Chapter III –
conditions for right to Practice states as follows:
“An advocate shall not enter into partnership or any other arrangement for sharing remuneration with any person or legal practitioner who is not an advocate.”
 
Therefore, the Act and BCI Rules also recognizes other class of persons as well who can practise law namely – “Legal Practitioner”.
The definition of legal practitioner is provided under section 2(i) of the Act which says –
“Legal Practitioner means an advocate or vakil or any High Court, a pleader, mukhtar or revenue agent.”
However, apart from the above, the practise of law can be divided into two categories broadly –
1) Litigious work; and
2) Non-litigious work.
Practically speaking, there are certain class of legal professional who have obtained a bachelor’s degree of law from the recognized institutes across India but they do not wish to enroll themselves as advocate in the concerned state rolls as they do not intend to practice law before any of the courts, tribunals and persons as provided under Section 30 of the Act.
The Act, by virtue of enrollment as an advocate gives right to audience before the courts, tribunals and persons. Therefore, corollary to this is that if a person does not enroll, he waives his right of audience before the courts, tribunals and persons. However, it is correct that the Act does not expressly recognize such a class of persons and hence this anomalous situation has occurred wherein legality of not enrolled class of persons doing non-litigious work has arisen.
Further the Constitution of India provides every citizen a right to practice and carry their own choice of business and profession. There cannot be any unreasonable restriction on such freedom guaranteed under the Constitution until and unless that restriction is reasonable and addressed in the Advocates Act which governs ‘practice of law’ in India.
Therefore, it is apparent that there is lacuna in the existing Advocates Act and thus requires suitable amendment to address the anomaly.
 
B. Query No. 2: Definition and scope of what constitutes practice of law. 
Part IV of Bar Council of India Rules provides for rules of legal education and Rule 2 define practice of law as follows:
“Rule 2 (xx) ‘Practice of law’ means and includes-
(a) practising before the Court, Tribunal, Authority, Regulator, Administrative Body or Officer and any Quasi Judicial and Administrative Body;
(b) giving legal advice either individually or from a law firm either orally or in writing;
(c) giving legal advice to any government, international body or representing any international dispute resolution bodies including International Court of Justice; and
(d) engaged in Legal Drafting and participating in any Legal Proceedings; and
(e) representing in Arbitration Proceedings or any other ADR approved by law.”
Therefore, it is also clear from the above that apart from practicing before the courts, tribunals and persons, there are other aspects also which fall under the definition of the expression ‘practice of law’. Undoubtedly, the Advocates Act regulates and governs the ‘practice of law’ whether litigious or nonlitigious practice.
The Act under Section 33 provides that a person not enrolled as an advocate is not entitled to practice before court. However, the Act lacks clarity on the aspect that whether the non-litigious category of work (i.e. work that does not involve practice before court) could only be done by the advocates enrolled under the Act or it may be performed by those who have chosen not to enroll themselves or might have been surrendered their enrollment under the Act. Therefore, to arrive at the correct position of law, the interpretations of the court of law must be resorted and referred. It appears from the judicial interpretation that the law recognizes the other category of persons who are involved in the non-litigious work and are not enrolled as advocate under the Act but certainly subject to provisions of the Advocates Act, 1961.
 
Further, the Bombay High Court in the case of Lawyers Collective vs. BCI {2010 (2) Bom CR 753} laid down that:
“the persons practicing the profession of law whether in litigious matters or non litigious matters would be governed be governed by the 1961 Act and the Bar Councils framed there under, apart from the powers of the Court to take appropriate action against advocates who are found guilty of professional misconduct.”
Further the Bombay high Court held that:
“the expressions 'to practise the profession of law' in Section 29 of the 1961 Act is wide enough to cover the persons practising in litigious matters as well as persons practising in non litigious matters and, therefore, to practise in non litigious matters in India, the respondent Nos. 12 to 14 were bound to follow the provisions contained in the 1961 Act.”
 
In the case of Legal Practice Board v. Wilhelmus Van Der Zwaan reported in (2002) WASC 133, the Supreme Court of Western Australia,
has held thus: 
“The expression "administration of law" in Section 77 is to be read as meaning "the practice of law" or "the practice of the law". The practice of the law includes the giving of legal advice and counsel to others as to their rights and obligations under the law, and the preparation of legal instruments by which legal rights are either obtained, secured or given away, although such matters may not then, or ever, be the subject of proceedings in a court. If the giving of such advice and performance of such services affect important rights of a person under the law, and if the reasonable protection of the rights and property of those advised and served requires that the person giving such advise possess legal skill and a knowledge of the law greater than that possessed by the average citizen, then the giving of such advice and the performance of such services by one for another as a course of conduct, constitutes the practice of the law.
Where an instrument is to be shaped from a mass of facts and conditions, the legal effect of which must be carefully determined by a mind trained in the existing laws in order to ensure a specific result and to guard against others, more than the knowledge of the layman is required. A charge for such service brings it within the term "practice of the law".
 
C. Query No. 3: In case someone practices law without due license, what is the remedy against such person?
As stated herein above the practice of law entails, under the Rule 2(xx) of Part IV of Bar Council of India Rules, as follows:
(a) practising before the Court, Tribunal, Authority, Regulator, Administrative Body or Officer and any Quasi Judicial and Administrative
Body;
(b) giving legal advice either individually or from a law firm either orally or in writing;
(c) giving legal advice to any government, international body or representing any international dispute resolution bodies including International Court of Justice; and
(d) engaged in Legal Drafting and participating in any Legal Proceedings; and
(e) representing in Arbitration Proceedings or any other ADR approved by law.”
It appears from the above that non-litigious work is also covered under the definition in addition to litigious work which certainly involves practice before the courts of law. There is no ambiguity as far as the requirement to be enrolled as an advocate before appearing and/or practicing before the courts in litigious work, however, it may defer in cases of non-litigious work as the same does not require appearance and /or practice before any court of law and the requirement to be enrolled compulsorily as an advocate under the Act for such category of the work has not been expressly contemplated.
 
Further, the Advocates Act either provides for the penalty to the advocate for their misconduct under section 35 or for punishment to those who are illegally found to be practicing before any of the courts of law under section 45. However, the Act is silent on the aspect of punishing / those who are found to be practicing law apart from appearing/practicing before any of the courts of law. Thus, it may inferred that the persons who are practicing law without the license (i.e. enrollment as advocate) are not violating the provisions of the Act until and unless they are not appearing /practicing before the courts of law.
 
The relevant provisions of the Advocates Act are enumerated herein below:
Sec 29 of the Advocates Act 1961, reads as follows:
“Advocates to be the only recognized class of persons entitled to practice law- Subject to the provisions of this Act and any rules made thereunder, there shall, as from the appointed day, be only one class of persons entitled to practice law the profession of law, namely, advocates” 
Sec 33 of the Advocates Act 1961, reads as follows:
“Advocates alone entitled to practice- Except as otherwise provided in this Act or in any other law for the time being in force, no person shall, on or after the appointed day, be entitled to practice in any court or before any authority or person unless he is enrolled as an advocate under this Act.”
Sec. 35 of the Advocates Act 1961 deals with “Punishment for advocates for misconduct-………….”
Sec. 45 of the Advocates Act 1961, reads as follows:
“Penalty for persons illegally practicing in courts and before other authorities- Any person who practices in any court or before any authority or person, in or before whom he is not entitled to practice under the provisions of this Act, shall be punishable with imprisonment for a term which may extend to six months.”
 
However, the Bombay High Court in Lawyers Collective vs. BCI [2010 91120 Bom.L.R. 32] [(2010) 2 Comp LJ 108 (Bom)] has taken a view that the litigious as well as non-litigious matters are covered under the expression ‘to practice the profession of law’ used in section 29 of the Act.
 
Thus, the Court has interpreted that the persons persons doing nonlitigious work are also compulsorily required to enrolled as an advocate under the Act. The Court has held as follows:
“It has been held that the expression ‘ to practice the profession of law’ in Section 29 of the 1961 Act is wide enough to cover the persons practicing in the litigious matters as well as non litigious matters in India therefore Sec. 35 would apply to persons practicing in litigious matters as well as nonlitigious matters.”
 
In view of the aforesaid judgment of the Bombay high Court and interpretation rendered by the Court, every person practicing law, litigious
or non-litigious work, is mandatorily required to be enrolled himself as an advocate under the Act or otherwise he would be liable for the punishment under section 45 of the Act.
 
D. Query No. 4: If a person is not licensed under the Advocates Act and in case such person is a Chartered Accountant, is there a bar under ICAI or similar norms against practicing two professions?
 
A chartered accountant is barred from practicing two professions. Any person who is a chartered accountant and is engaged in any other business or occupation will be guilty of professional misconduct under the Chartered Accountants Act, 1949.
Part I of the First Schedule of the Chartered Accountants Act, 1949 deals with:
Professional misconduct in relation to chartered accountants in practice. Clause 11 of Part I states that:
“A chartered accountant in practice shall be deemed to be guilty of professional misconduct if he engages in any business or occupation other than the profession of chartered accountant unless permitted by the Council so to engage:
Provided that nothing contained herein shall disentitle a chartered accountant from being a director of a company (not being a managing
director or a whole time director) unless he or any of his partners is interested in such company as an auditor.”
Section 21-A of the Chartered Accountants Act, 1949 pertains to the Board of Discipline.
Clause 3 of Section 21-A states that:
“Where the Board of Discipline is of the opinion that a member is guilty of a professional or other misconduct mentioned in First Schedule, it shall afford to the member an opportunity of being heard before making any order against him and may there after take any one or more of the following actions, namely:-
a) reprimand the member;
b) remove the name of the member from the Register up to a period of three months;
c) impose such fine as it may think fit which may extend to Rs. One Lakh.”
 
E. Query No. 5: If a person is not licensed under the Advocates Act and in case such person is a company secretary, is there a bar under ICSI or similar norms against practicing 2 professions?
 
Regulation 168 of ICSI dated 24.04.1990: Company Secretaries in practice not to engage in any other business or occupation:
“(1) A Company Secretary in practice shall not engage in any business or occupation other than the profession of Company Secretary unless it is permitted by a general or specific resolution of the Council:
Provided that a Company Secretary in practice who at the commencement of the act was engaged in any business or occupation other than the profession of Company Secretary may continue to engage himself in such business or occupation for a period of six months from the commencement of these Regulations.
(2) Without prejudice to the discretion vested in the council in this behalf, a Company Secretary in practice may act as a Secretary, trustee, executor, administrator, arbitrator, receiver, appraiser, valuer, internal auditor, management auditor, management consultant or as a representative on financial matters including taxation and may take up an appointment that may be made by the Central or any State Government, court of Law, Labour Tribunals, or any other statutory authority.”
 
The validity of Regulation 168 of ICSI was challenged in the case of T. U. Khatri vs. ICS [(2002) 122 TAXMAN 532 Bom]. It has been held in this judgment that decision taken by the institute on 24.04.1990 does not suffer from legal infirmity.
Opinion: Company Secretaries in practice cannot engage themselves in any other profession simultaneously.
 
F. Query No. 6: If a person is not licensed under the Advocates Act and in case such person/an entity is a foreign entity or an affiliate/ branch/subsidiary etc of a foreign entity, can RBI be approached to stop them/cancel their licenses?
 
Regulations no. 3 of the Foreign Exchange Management (Establishment In India of Branch or office or other place of business) Regulations, 2000–
Provides for prohibition against establishing branch office in India. “No person resident outside India shall, without prior approval of the
Reserve bank, establish in India a branch or a liaison office or any other place of business by whatever name called…”
Further the regulation provides that the foreign entity can not undertake any other activities except what are specifically permitted by the Reserve Bank of India. Therefore if the foreign entity found to be practicing law without due license and permission of RBI, the license /permission of such entity will be cancelled.
 
Sec. 13 of the Foreign Exchange Management Act, 1999-
“Provides for penalties if any person contravenes any provision of this Act, rules, regulation notification or direction.”
Sec. 14 of the Foreign Exchange Management Act, 1999 deals with:
“Enforcement of the order of Adjudicating Authority appointed under Sec. 16.”
Appeal lies to Special Director (Sec.17) > Appellate Tribunal (Sec.19) > High Court (Sec. 35).
 
Sec. 36 of the Foreign Exchange Management Act, 1999 provides for: 
“Power of search and seizure of Directorate of Enforcement.”
In Lawyers Collective vs. BCI [2010 (112) Bom.L.R. 32] Hon’ble Bombay High Court has held that:
“RBI was not justified in granting permission to the Foreign Law Firms to open liaison offices in India U/s 29 of 1973 Act.”
The judgment has attained finality. Therefore, RBI can be approached to cancel the licenses which have been issued to the Foreign Law Firms to open liaison offices in India.
 

01/12/2012

Corruption, tax regime worry foreign investors eyeing India

Manoj Kumar (Managing Partner of Hammurabi & Solomon. He can be reached at manoj.kumar @hammurabisolomon.com)

Is India rapidly losing out to other emerging economies as a preferred destination for investments, primarily due to the increasing concern over lack of a comprehensive anti-corruption regime and increasing inconsistencies in the country’s tax regime?

To read more click here

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