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TMI Blog2002 (3) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 23, 1976, upon application made by Sri Khatri to the Institute and upon fulfilment of requisite conditions including the no-objection from the Bar Council of Maharashtra. Sri Khatri was issued a certificate of practice by the Institute in accordance with the Company Secretaries Act, 1980 (for short "the Act of 1980") and the Company Secretaries Regulations, 1982 (for short "the Regulations") for the period from October 31, 1986, to June 30, 1987. The certificate of practice issued to Sri Khatri was renewed for subsequent years up to the year 1989-90. The application made to the Institute by Sri Khatri for renewal of his certificate of practice for the period from 1990-91 was not accepted because on April 24, 1990, the Institute had taken a decision not to allow advocates to practice as company secretaries as well. It is this decision dated April 24, 1990, taken by the Institute which is under challenge. By letter dated September 27, 1990, Sri Khatri was informed that his certificate of practice has not been renewed as he is enrolled as an advocate on the rolls of the State Bar Council and that he has not submitted the requisite declaration/undertaking in terms of ICSI Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the decision that advocates should not be allowed to practice as company secretaries is bona fide with a view to ensure healthy growth, advancement and development of the profession of company secretaries. The said decision was taken in view of the changed circumstances after initial permission was granted by the Institute to advocates to practise simultaneously as company secretaries. According to the Council the said reasons are : ( a )Some of the powers which were previously with the High Court under the Companies Act, 1956, were transferred in pursuance of the Companies (Amendment) Act, 1988, to the Company Law Board where appearance by advocates was not necessary and even an ordinary member holding a certificate of practice as company secretary could appear ; ( b )To provide more opportunities to such members who wanted to practice as company secretaries exclusively the members who were practising as advocates should be excluded from obtaining certificate of practice as company secretaries like chartered accountants or cost accountants who had already been excluded earlier ; ( c )After the amendments incorporated in the Companies Act, 1956, vide the Companies (Amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means the Institute of Company Secretaries of India constituted under this Act and "prescribed" means prescribed by regulations made under this Act. Section 2(2) provides that a member of the Institute shall be deemed to be in practice when, individually or in partnership with one or more members of the Institute in practice or in partnership with members of such other recognised professions as may be prescribed, on consideration of remuneration ; ( a ) engages himself in the practice of the profession of company secretaries to, or in relation to, any company ; or ( b ) offers to perform or performs services in relation to the promotion, forming, incorporation, amalgamation, reconstruction, reorganisation or winding up of companies ; or ( c ) offers to perform or performs such services as may be prescribed by various categories as provided therein ; or ( d ) holds himself out to the public as a company secretary in practice ; or ( e ) renders professional services or assistance with respect to matters of principle or detail relating to the practice of the profession of company secretaries ; or ( f ) renders such other services as, in the opinion of the Council, are or may be rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alf by the Central Government in the Official Gazette ; and ( b )not more than four persons nominated by the Central Government." Section 15 provides for the functions of the Council which, inter alia, includes, granting or refusal of certificates of practice under this Act. Section 15 to the extent it is relevant reads thus : "15.(1) The duty of carrying out the provisions of this Act shall be vested in the Council. (2) In particular, and without prejudice to the generality of the foregoing power, the duties of the Council shall include ....... ( e ) the granting or refusal of certificates of practice under this Act ; ... ( h ) the removal of names from the register and restoration to the register of names which have been removed ; ( i ) the regulation and maintenance of the status and the standards of professional qualifications of members of the Institute." Section 39 empowers the Council of the Institute to make regulations for the purposes of carrying out the provisions of this Act by notification in the Gazette of India and all regulations made by the Council shall be subject to the condition of previous publication and to the approval of the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other business or occupation. Regulation 168 which is material and significantly relevant for the purchases of the controversy raised in these writ petitions makes a provision thus : "168. 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that by the Companies (Amendment) Act, 1988, with effect from June 15, 1988, secretary in whole-time practice came to be defined in section 2 of the Companies Act, 1956, by inserting clause (45A), according to which, "secretary in whole-time practice" means a secretary who shall be deemed to be in practice within the meaning of sub-section (2) of section 2 of the Companies Secretaries Act, 1980 and who is not in full time employment. Section 149 of the Companies Act places restrictions on commencement of business. Section 149(1)( d ) reads thus : "149. (1) Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commense any business or exercise any borrowing powers, unless ( a )shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription ; ( b )every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a duly verified declaration by one of the directors or the secretary or, where the company has not appointed a secretary, a secretary in whole-time practice in the prescribed form, that clause ( i ) or as the case may be, sub-section (2B) has been complied with ; and if the company commences any such business in contravention of this sub-section, every person who is responsible for the contravention shall, without prejudice to any other liability, be punishable with fine which may extend to five thousand rupees for every day during which the contravention continues." It would be seen from the aforesaid provision that where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers unless there has been filed with the Registrar a duly verified declaration by one of the directors or the secretary or where the company has not appointed a secretary, a secretary in whole-time practice in the prescribed form that clauses ( a ), ( b ) and ( c ) of sub-section (1) of section 149 have been complied with. It is further seen that a company having a share capital, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such company. This exercise before issuance of certificate by the secretary in whole-time practice is again time-consuming and needing full attention which cannot be done if the secretary in whole-time practice is permitted to indulge in any other profession or occupation. The importance of such certificate can be seen from the provisions of section 217 of the Companies Act. Non-compliance of which may lead to criminal prosecution and penalty. Besides the provisions contained in the Companies Act referred to by us hereinabove, there are certain acts which provide for certification of documents by a practising company secretary. It would be too much in fact if a secretary in whole-time practice as defined in section 2(45A) of the Companies Act is permitted to carry on any other profession or occupation. Permitting a secretary in whole-time practice to practise a profession other than company secretary shall be antithesis to the expression secretary in whole-time practice. In our considered view, therefore, the decision of the Council of Institute taken on April 24, 1990, that advocates shall not be allowed to practice as company secretaries is not only reasonable but also highly j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. As noted earlier, the impugned rule has been framed by the Maharashtra State Bar Council in the exercise of its rule-making power under section 24(1)( e ) read with section 28(2) of the Act. Section 24 deals with persons who may be admitted as advocates on a State roll. Sub-section (1) thereof provides that subject to the provisions of this Act, and the rules made there under, a person shall be qualified to be admitted as an advocate on a State roll, if he fulfils the conditions laid down in the section. Amongst other conditions are found conditions which the entrant has to fulfil as may be specified by the rules made by the State Bar Council under Chapter III dealing with 'Admission and Enrolment of Advocates'. Section 28 sub-section (2) similarly gives power to the State Bar Council to make rules for carrying out the purposes of the Act and in particular such rules may provide the conditions subject to which a person may be admitted as an advocate. Such rule-making power flows from section 28(2)( d ). Even though the aforesaid rule-making power is couched in wide terms the said power entrusted to the State Bar Council cannot be said to be unfettered or unhedged. The said rule- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission that Legislature cannot delegate essential legislative functions to its delegate. There cannot be any dispute about the settled legal position on this aspect. However, as discussed by us earlier, in the set up of the entire scheme of the Act and the rules framed by the Central Bar Council and in the light of the nature of the power entrusted to the elected body of advocates themselves it cannot be said that while regulating the entry to the legal profession the Bar Councils would find themselves without any yardstick or guideline and would be trading an unchartered sea and consequently the rules of enrolment framed by them would fall foul on the altar of permissible delegation of legislative power. It is, therefore, not possible to agree with the contention of the learned senior counsel for the appellant that the impugned rule suffers from the vice of excessive delegation of legislative power or by providing rule-making power to the State Bar Councils for regulating entries of new advocates seeking to join the profession the Legislature has effaced itself. The power conferred on the State Bar Councils to lay down further conditions for controlling the entries to the legal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt true that under article 19, sub-article (1)( g ) all citizens have a right to practise any profession, or to carry on any occupation, trade of business and any profession may include even plurality of professions. However, this is not an absolute right. It is subject to sub-article (6) of article 19 which lays down that noting in sub-clause ( g ) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public reasonable restrictions on the exercise of the right conferred by the said sub-clause. It cannot be gainsaid that litigants are also members of general public and if in their interest any rule imposes a restriction on the entry to the legal profession and if such restriction is found to be reasonable article 19(1)( g ) would not get stultified. It is true that the appellant as a citizen of India having obtained the qualification required for being enrolled as an advocate can legitimately aspire to be enrolled as an advocate but his aforesaid right is fettered by the impugned rule framed by the State Bar Council. We have to consider whether the said re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r after court hours and if he is also required to attend an emergency operation at that very time, it would be very difficult for him to choose whether to leave his clients and go to attend his patient in the operation theatre or to refuse to attend to his patients. If he selects the first alternative his clients would clamour, his preparation as advocate would suffer and naturally it would reflect upon his performance in the court next day. If on the other hand he chooses to cater to the needs of his clients and his legal work, his patients may suffer and may in given contingency even stand to lose their lives without the aid of his expert hand as a surgeon. Thus he would be torn between two conflicting loyalties, loyalty to his clients on the one hand and loyalty to his patients on the other. In a way he will instead of having the best of both the worlds, have worst of both the worlds. Such a person aspiring to have simultaneous enrolment both as a lawyer and as a medical practitioner will thus be lie 'trishanku' of yore who will neither be in heaven nor on earth. It is axiomatic that an advocate has to burn midnight oil for preparing his cases for being argued in the court next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve practitioner who wants to enter the legal profession." In the light of the challenge to the said rule framed by the Bar Council of Maharashtra and Goa restricting entry of persons already carrying on another profession on the touchstone of articles 14 and 21, the apex court in paras 20 and 21 observed thus (page 1719) : "So far as the challenge to the impugned rule on the touchstone of article 14, is concerned it cannot be said that the rule is unreasonable, arbitrary or capricious from any angle. On the same ground on which the rule is found not to have fallen on the anvil of article 19(1)( g ) as the impugned rule has to be treated as imposing a reasonable restriction on the said fundamental right it also, therefore, has to be held not to be arbitrary or unreasonable from any viewpoint. The rule carves out a well defined class of professionals carrying on other professions and denies to members of this well defined class entry to the legal profession so long as they insist on carrying on any other profession simultaneously with the legal profession. The said classification has a reasonable nexus to the object sought to be achieved, namely, the efficiency of advocates belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t vide Resolution No. 254 of 1989 it was resolved that no action need be taken against those advocates who have been granted permission to practise as company secretaries while practising as an advocate but they were to be informed about the resolution passed by the Bar Council on April 22, 1989. Though the said Resolution No. 254 of 1989 seems to have been passed taking into consideration the case of five persons viz., Sri Ashok K. Hinghe, Sri S.D. Limaye, Sri Ramesh Chandra, Sri Himanshu Pimpalkhude and Sri S.V. Patwardhan who were permitted to practise as company secretaries but as the petitioners were also similarly situated, the Bar Council informed them as well about Resolution No. 254 of 1989. Though in terms of Resolution No. 254 of 1989 in so far as the Bar Council of Maharashtra and Goa is concerned, the petitioners who were granted permission to practise as company secretaries while practising as advocates, no action needed to be taken, yet in view of the decision taken by the Institute on April 24, 1990, and the said decision being justified as already held by us, the petitioners cannot pursue the profession of company secretaries in practice simultaneously with practic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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