The Hindu Business Line : No restrictions on practice by CAs: HC

PROFESSIONALS like chartered accountants and lawyers have their own historical and traditional unwritten rules and regulations, the Madras High Court has said, and held that the court could not be oblivious to this.

Artificial devices such as placing restrictions on their functioning cannot be accepted in this professional occupation, the First Bench comprising Chief Justice Mr Markanday Katju and Mr Justice D. Murugesan, ruled while dismissing a writ appeal filed by the Institute of Chartered Accountants of India, New Delhi, challenging an order dated July 13, 1998 of a single judge holding that the two notifications issued by the Government of India were illegal.

The petitioner, Mr K. Bhagavatheeswaran, Chennai, had contended that the two notifications dated May 25, 1987 and January 13, 1989 issued by the Government of India had placed restrictions on his right to practise as a chartered accountant. These violated his fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution, besides being arbitrary and unreasonable.

The Institute had submitted in its counter that the notifications would enable a large section of its members all over the country conduct tax audit assignments and thus cater to enlargement of the work of professional CAs as a result of introduction of compulsory tax audit in respect of assessees and professional persons. There was no unreasonable restriction imposed by the notifications.

The Bench referred to the contention of the Institute that mostly the restrictions on the volume of audits and fee which a chartered accountant could accept were justified as these restrictions would enable younger and less fortunate members to get professional work and thus earn their livelihood, and said that, in their opinion, this was a wholly unreasonable and untenable ground.

The Bench said it was a matter of free contact between the client and the chartered accountant/lawyer. Artificial devices such as the kind of impugned notifications could not be accepted in this professional occupation. The single judge had said that the Court could not be oblivious to the historical and traditional unwritten rules and regulations. "We agree with the view taken by the single judge," the Bench said.

The two notifications were arbitrary and in violation of Articles 14 and 19(1)(g) of the Constitution, the Bench held. They were illegal as they affected the fundamental right of the petitioner to carry on his profession.

Professions such as law and chartered accountancy can not be compared to business enterprises as they had historical conventions and traditions.

Hence, rulings of the Supreme Court or other courts could not be applied mechanically without properly understanding the context in which those rulings had been delivered. The Bench dismissed the appeal.

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