Top CA Firms, E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law
The Society of Indian Law Firms, a collective of India's Premier Law Firms, has filed a complaint dated 18th June 2015 with the Bar Council of India claiming that the big four CA firms, E&Y, Deloitte, KPMG & PWC, are carrying on unauthorized practice of law and that this contravenes section 29 of the Advocates Act which provides that only Indian citizens who are enrolled
with the State Bar Councils as advocates have the right to practice the profession of law in India.
with the State Bar Councils as advocates have the right to practice the profession of law in India.The complaint relies on the law laid down by the Supreme Court in Madras Bar Association v Union of India where it was held that Chartered Accountants and Company Secretaries cannot be permitted to appear on behalf of a party before the National Tax Tribunal. The Court held that CAs and CSs would at best be specialists in understanding and explaining issues pertaining to accounts but are not eligible to practice law. A similar sentiment was expressed by the Madras High Court in A. K. Balaji vs. GOI. The Court expressed concern that many accountancy and management firms are employing law graduates and are rendering legal services contrary to the Act and are engaged in the unauthorised practice of law.
Tribunal. The Court held that CAs and CSs would at best be specialists in understanding and explaining issues pertaining to accounts but are not eligible to practice law. A similar sentiment was expressed by the Madras High Court in A. K. Balaji vs. GOI. The Court expressed concern that many accountancy and management firms are employing law graduates and are rendering legal services contrary to the Act and are engaged in the unauthorised practice of law.Support has also been drawn from the judgement of the Bombay High Court in Lawyers Collective vs. Bar Council where it was held that even "drafting documents, reviewing and providing comments on documents, conducting negotiations and advising clients on international standards and customary practice relating to the client's transaction etc. was nothing but practising the profession of law in non litigious matters".
The complaint has given specific instances of the alleged unauthorized practice of law by the said big four CA firms.
With specific reference to Ernst and Young, it is pointed out that E&Y has acquiesced to practicing the profession of law in the submissions made by it in a service-tax matter reported as Ernst and Young Ltd v CST [2012 (27) S.T.R 462 (Tri-Del)]. E&Y admitted that it is rendering, inter alia, "Litigation support: assistance in preparation and filing of replies to notices issued by department, attending hearings and various other litigation support services".
as Ernst and Young Ltd v CST [2012 (27) S.T.R 462 (Tri-Del)]. E&Y admitted that it is rendering, inter alia, "Litigation support: assistance in preparation and filing of replies to notices issued by department, attending hearings and various other litigation support services". The complaint also alleges that the induction of PDS Legal, a law firm, as a member / affiliate firm of E&Y Global Limited, means that "E&Y have in a surrogate manner engaged in the practice of law". It is also claimed that "the advocates of PDS Legal attend the Partners meeting of E&Y network of firms and take part in the discussions with the members of the E&Y Network". It is also alleged that the advocates of PDS Legal are involved in determining the business strategy to meet clients and cross-refer work to each other and that there is a "modus operandi between PDS Legal and E&Y to share remuneration etc".
It is also alleged that PDS Legal uses the logo of E&Y and that PDS Legal and E&Y share office space, address etc.
Similar specific instances of alleged violation of the law by Deloitte, KPMG and PWC are also given in the complaint.
According to a report in the ET, the Bar Council of Delhi has issued notices to the said CA firms and directed them to respond to the allegations by 7th August 2015.
The ET also reported that each of the said CA firms has claimed that it is "committed to operate as per the highest professional standards" and that they have "not contravened any law including the Advocates Act 1961".
Interprets Cos. Act. 2013; Director turning 70 yrs not to attract automatic "mid-stream" disqualification
HC dismisses Joint Managing Director's (plaintiff) suit praying for automatic cessation of directorship of Managing Director, u/s 196(3) of Companies Act 2013 ('2013 Act') as he turned 70 years old during his tenure; Interprets the provision as, "Section 196(3) does not operate to interrupt the appointment of any Director made prior to the coming into force of the 2013 Act.. and it also does not interrupt the appointment of a Managing Director appointed after 1st April 2014 where at the date of such appointment or re-appointment the Managing Director was below the age of 70 years but crossed that age during his tenure"; Observes that turning 70 would not operate as an immediate termination of a director's appointment, else that would mean dating the operation of 2013 Act back to the date of director's appointment, giving it a retrospectivity, which is not possible; Observes that though Sec 196(3) uses the word 'continues – "No company shall appoint or continue the employment of..", it should be read contextually, draws parallel from Sec 269 of 1956 Act (similar provision), observes that there was no 'discontinuance' of Managing Directorship at the age of 70 and the section applied only to his appointment (that includes his reappointment); States that "This tells us that the age of 70 was never an automatic mid-stream disqualification even under the 1956 Act. It only required a certain precautionary measure at the commencement of the term, i.e., at the time of appointment (or reappointment), i.e., a special resolution", which is provided by the proviso to Sec 193(3) in the 2013 Act; Further observes that the proviso only adds a further check, it demands a justification in the form of special resolution for appointment of a person over 70, states that, "It is hardly plausible to suggest that on turning 70 — surely an occasion for celebration and, barring the unfortunate, a physiological inevitability — a Managing Director, only for that reason, should find himself keeping the company of insolvents, fraudsters and the morally discombobulated"; Rejects plaintiff's contention that with the advent of 2013 Act, every Managing Director at age 70 must step off the bus, holds "There is nothing to suggest that the rationale behind this has in any way changed in the 2013 Act"; Relies on recent SC ruling in P. Suseela & Ors. v University Grants Commission & Ors:Bombay HC
The judgement was passed by Justice G.S.Patel.
The Plaintiffs were represented by Advocates Mylsamy, Abhijeet C. Mahadeokar & Manal Dhanani. Senior Advocate Navroz Seervai, alongwith Advocates Sneha Sheth, Aashni Dalal and Prembhari Thakkar argued on behalf of the defendants.
LSI Note:
Section 196 of Companies Act, 2013 relates to 'Appointment of MD, WTD or Manager'. Section 196(3) states that no company shall appoint / continue the employment of any person as MD, WTD or manager who: (a) is below the age of 21 years or has attained the age of 70 years. Provided that appointment of person who has attained the age of 70 years may be made by passing a special resolution in which case the explanatory statement annexed to the notice for such motion shall indicate the justification for appointing such person. (b) is an undischarged insolvent or has at any time been adjudged as an insolvent, (c) has at any time suspended payment to his creditors or makes, or has at any time made, a composition with them, (d) has at any time been convicted by a court of an offence and sentenced for a period of more than 6 months.
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