2002 (3) TMI 871 - HC - Companies Law

Court upholds ban on advocates practicing as company secretaries, citing need for exclusive opportunities and professional integrity.

TU. Khatri Versus Institute of Co. Secretaries of India

TU. Khatri Versus Institute of Co. Secretaries of India - [2003] 116 COMP. CAS. 621 (BOM.) Issues Involved:1. Legality of the decision by the Institute of Company Secretaries of India (ICSI) to prohibit advocates from practicing as company secretaries.2. Validity of the refusal to renew certificates of practice for company secretaries who are also advocates.3. Examination of relevant statutory provisions and regulations governing the practice of company secretaries and advocates.4. Consideration of constitutional challenges to the ICSI's decision.Issue-Wise Detailed Analysis:1. Legality of the ICSI's Decision:The principal question in these writ petitions is whether the decision dated April 24, 1990, by the Institute of Company Secretaries of India (ICSI) to prohibit advocates from practicing as company secretaries is legally valid. The ICSI argued that this decision was bona fide and aimed at ensuring the healthy growth and development of the profession of company secretaries. The Council of the Institute cited several reasons for this decision, including the transfer of certain powers from the High Court to the Company Law Board, the need to provide more opportunities for exclusive practice as company secretaries, and the increased responsibilities and work for company secretaries following amendments to the Companies Act, 1956.2. Validity of Refusal to Renew Certificates of Practice:The petitioners, who were both advocates and company secretaries, challenged the refusal of the ICSI to renew their certificates of practice. The ICSI's decision was based on the April 24, 1990, resolution and the petitioners' failure to comply with specific requirements, such as submitting a declaration in terms of ICSI Notification Number 2 dated August 11, 1989. The ICSI communicated to the petitioners that their certificates could not be renewed unless they surrendered or suspended their Sanad issued by the Bar Council.3. Examination of Relevant Statutory Provisions and Regulations:The judgment extensively analyzed the provisions of the Company Secretaries Act, 1980, and the Company Secretaries Regulations, 1982. Section 6 of the Act mandates that no member of the Institute shall be entitled to practice without a certificate of practice issued by the Council. Regulation 168 specifically prohibits company secretaries in practice from engaging in any other business or occupation unless permitted by the Council. The court noted that the ICSI is competent to regulate the profession of company secretaries and impose conditions to maintain high standards and proficiency.4. Consideration of Constitutional Challenges:The petitioners argued that the ICSI's decision violated their fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution. The court referred to the Supreme Court's decision in Dr. Haniraj L Chulani v. Bar Council of Maharashtra and Goa, which upheld the Bar Council's rule restricting the entry of persons already engaged in other professions. The court concluded that the ICSI's decision was reasonable and justified, as both the professions of company secretaries and advocates require whole-time devotion and high standards of proficiency. The restriction imposed by the ICSI was found to be in the interest of maintaining the professional integrity and efficiency of company secretaries.Conclusion:The court held that the ICSI's decision dated April 24, 1990, was neither arbitrary nor illegal. It was a reasonable measure to ensure the exclusive and professional practice of company secretaries. Consequently, the refusal to renew the certificates of practice for the petitioners, who were also advocates, was upheld. The writ petitions were dismissed, and the rule was discharged without any order as to costs.