Friday, December 18, 2009

Bombay High Court on the Entry of Foreign Law Firms


The Bombay High Court (Swatanter Kumar C.J. and J.P. Devdhar J.) has held that foreign law firms are not eligible to practice law in India even in a non-litigation context. Foreign law firms are also not entitled to open liaison offices in India. The case is Lawyers Collective v. Bar Council of India and Others, Writ Petition No. 1526/1995, judgment dated 16th December 2009 (per Devdhar J.). It can be downloaded here, along with a summary. The issue before the Court was as follows:

“… whether the permissions granted by the Reserve Bank of India to the respondent Nos.12 to 14 foreign law firms to establish their place of business in India (liaison office) under Section 29 of the Foreign Exchange Regulation Act, 1973 are legal and valid…”

On behalf of the petitioner, opposing the entry of foreign law firms, it was contended that to carry on the profession of law even in non-litigious matters, enrollment as advocates under the Advocates Act, 1961 was essential. Since the respondent foreign law firms were not so enrolled, the permission granted to them to open offices was bad in law. Further, it was argued that the 1961 Act constituted a complete code for regulating the practice of the profession of law in India. ‘Practice of the profession of law’ includes, on an ordinary meaning, practice in litigious as well as non-litigious matters. This is because the right to practice cannot be limited to the right to physical appearances before Courts and Tribunals. Reliance was placed on several foreign decisions; and also on the judgment of the Supreme Court of India in Harish Uppal v. Union of India, (2003) 2 SCC 45. There, the Supreme Court had observed, “The right of the advocate to practise envelopes a lot of acts to be performed by him in discharge of his professional duties. Apart from appearing in the courts he can be consulted by his clients, he can give his legal opinion whenever sought for, he can draft instruments, pleadings, affidavits or any other documents, he can participate in any conference involving legal discussions, he can work in any office or firm as a legal officer, he can appear for clients before an arbitrator or arbitrators etc… The right to practise, no doubt, is the genus of which the right to appear and conduct cases in the court may be a specie.” A similar view has been expressed in Pravin Shah v. K.A. Md. Ali, (2001) 8 SCC 650. Accordingly, it was contended that the right to practice must include non-litigious practice too.

In accepting these arguments, the Court construed Section 29 of the Advocates Act. That Section states, “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 practise the profession of law, namely, advocates…” The Respondents had argued that the words “practice the profession of law” in this Section must be read harmoniously with the other Section. I particular, Section 33 states, “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…” The Respondents’ argument was that Section 33 specifically states that no person is entitled to practice “in any Court or before any authority or person…” except in accordance with the other provisions. They argued that this essentially means that the restriction under Section 33 is only with respect to litigious matters; and the words “practice the profession of law” in Section 29 must be read in light of this specific meaning in Section 33.

The Court relied on the Statement of Objects and Reasons of the Act in order to reject the argument of the Respondents. The main object of the Act, according to the Statement of Objects and Reasons, is to establish an All India Bar Council and a common roll of advocates, such that advocates on the common roll have a right to practise in any part of the country and in any Court, including the Supreme Court. The Court held that the legislative intent was to deal with “practice in any part of the country” as well as with “practice in any Court”. “Practice in any part of the country” must therefore be held to cover non-litigious practice.

One other argument raised a very interesting point of constitutional law. Mr. Navroz Seervai on behalf of White & Case contended, relying on a decision of the Supreme Court in O.N. Mohindroo v. Bar Council, AIR 1968 SC 888, that the Advocates Act was enacted by the Parliament under Entries 77 and 78 of List I. These deal with matters pertaining to the constitution and organization of the Supreme Court and the High Court, and with persons entitled to practice before those Courts. Mr. Seervai argued, therefore, that the Advocates Act can only extend to litigious practice before the High Courts and the Supreme Court. For all other types of practice, there would have to be a law traceable to Entry 26 in List III (which deals with legal, medical and other professions). If this interpretation were not to be followed, then the words ‘legal profession’ in Entry 26 would be rendered meaningless. He argued that the Supreme Court decision in Mohindroo was categorical that the 1961 Act came under Entries 77 and 78 of List 1. Therefore, it was not possible to say that the Act fell within the ambit of Entry 26 of List III. Consequently, it must be interpreted as dealing only with litigious practice before the High Courts and the Supreme Courts.

The Court’s main reasoning on this point was, “It is true that the Apex Court in the above case has held that the 1961 Act is enacted by the Parliament in exercise of its powers under entry 77 and 78 in List I of the Seventh Schedule to the Constitution. However, the fact that entry 77 and 78 in List I refers to the persons practising before the Supreme Court and the High Courts, it cannot be said that the 1961 Act is restricted to the persons practising only before the Supreme Court and High Courts. Practising the profession of law involves a larger concept whereas, practising before the Courts is only a part of that concept. If the literal construction put forth by the respondents is accepted then, the Parliament under entry 77 & 78 in List I of the Seventh Schedule to make legislation only in respect of the advocates practising before the Supreme Court / High Courts and the Parliament cannot legislate under that entry in respect of advocates practising before the District Courts / Magistrate’s Courts / other Courts / Tribunals / authorities…” While this is true, it does not negate the argument on its own. Hence, this reasoning may not be entirely complete. Effectively the Court appears to have said that ‘If the argument is accepted, then the Act will have to be confined to litigious practice before the High Courts and the Supreme Court. But the Act is not confined to litigious practice before the High Courts and the Supreme Court; hence the argument must be rejected.

The argument raised might be understood as being to the effect that (1) the Supreme Court has expressly held that the 1961 Act was under Entries 77 and 78 of List I; and (2) consequently, as a matter of interpretation, it must be interpreted as being within the scope of those entries and none else. In order to counter this, the Court could have held either that (1) the Supreme Court’s decision does not mean that the law cannot be also traced to any other entries – “ragbag” legislation traceable to more than one entry is permitted; and/or (2) in any case, even with the extended meaning of “practice”, the Act would in pith and substance be under Entries 77 and 78.

A subsequent post will discuss the reasoning further.

2 comments:

vijay said...

The judgement appears to be defective.Its effect is that it forbids all those non advocates practicing laws before IT, Sales Tax, Arbitrations etc.
Although there is an attempt to differentiate the earlier ruling of the SC refered therein, the reasoning is devoid of logic.Lets hope that its challanged in SC.

K said...

The judgment is hasty at best; consider the following:

(a) The Reserve Bank (RBI) consent is specifically under FEMA and deals only with exchange control. It would take a brave man indeed to vouchsafe that such a consent for setting up a correspondence office amounts to allowing it to practice law (or any other business for that matter). Similar consents are routinely awarded to aviation companies, telecom companies and oil companies without in any way being construed as bypassing the sector specific regulators.

One can perhaps agree that the form of 'correspondence' business admitted by the Respondents is not permitted - but that is distinct from a FEMA consent for setting up such a relay office - and RBI cannot be faulted. After all the whole purpose of the FEMA consents is to save businesses from taking consents sequentially (Bar Council--RBI---etc.) and encourage simultaneous clearances to save time and keep various authorities off each others' turf.

(b) A more glaring error is the manner in which the court overlooked the mandate of the Advocates insofar as it relates to regulation of the practice of non-indian law. The Act was brought into being specifically to regulate the practice of law in India. Howsoever expansive a definition of 'practice of law' is taken - it cannot be said to include providing advice on a question of law other than that of India - such 'law' is not law within the India and is dealt with as such under the Evidence Act.

To argue that the practice of law does not include non-litigation is foolish given both common sense and the judicial precedents ; but to hold that practise of EU law (for instance)is also regulated by the Advocates Act, more so. Unlike many other countries the practise of foreign law is not regulated at all in India and in the absence of any such regulation, trying to bring it under the ambit of the Advocates Act is a bridge too far.

In summary, many of the arguments raised by the respondents were weak and not well thaought of, but it was perhaps hasty on the part of the Bombay High Court in going overboard to find a reason to shut down White & Case.