K.K. Mathew, J.
1. Petitioners are chartered accountants. Their work consists of auditing limited companies and representing clients before the taxing authorities, and according to their estimate their work as auditors of the companies is just about ten per centum of the total volume of work handled by them. According to the petitioners, apart from their special or popular intellectual and educational equipment, they have no other capital investment. Petitioners have ' articled clerks ' who are persons undergoing training for being enrolled as chartered accountants. Their job is to audit the accounts of the clients at the instruction of the petitioners and under their personal supervision. In addition to the 'articled clerks,' petitioners employ some subordinate staff known as personal clerks. According to the petitioners their work is rather mechanical in character.
2. Some of these clerks put forward certain claims relating to their salary and allowances. Although some Increments were given they were not satisfied with the increments. They put forward some additional demands in November 1965. In order to test their capacity for works other than copying works the petitioners wanted them to sit for examination in three subjects, namely, commercial knowledge, accountancy, and auditing. They were not prepared for the same. Therefore, they were discharged after giving notices. Thereafter, on 18 November 1965 petitioners received a notice from respondent 2, who appears to have taken up the cause of the discharged clerks, to the effect that they are raising an industrial dispute before the Deputy Labour Commissioner, Calicut. A copy of the notice Is marked as Ex, P. 1. On receipt of Ex, P. 1 respondent 1 initiated conciliation proceeding under Section 12 of the Industrial Disputes Act read with Rules 10 and 11 of the Kerala Industrial Disputes Rules under Ex. P. 2. The prayer of the petitioners is that Ex. P. 2 has to be quashed on the ground that there is no scope for any conciliation proceeding as per Ex. P. 2.
3. The main submissions of the petitioners are that the petitioners are only carrying on a liberal profession, that the principal, If not the sole capital, which they have brought into their profession, is their special or peculiar educational equipment, and that they are not carrying on an industry within the meaning of Section 2(j) of the Industrial Disputes Act. The petitioners contend that proceedings under Section 12 of the Industrial Disputes Act can be commenced only if the labour officer finds that an industrial dispute exists and not otherwise. So the main question for consideration is whether the petitioners carry on an industry or whether they are merely following a liberal profession.
4. In the counter-affidavit filed by respondent 2 the allegations in the petitioners' affidavit are denied. According to respondent 2, about ninety per cent of the total work of the firm Is auditing and that oat of the total audit work of the firm ninety per cent is being done by the audit staff of the firm and It is not the special or peculiar intellectual or educational equipment of the petitioners but the talents and experience of the clerical staff that turn out the work of the company. It is further contended that the 'articled clerks' work as juniors under the audit clerks for the first one or two years and the work turned out by them is negligible, that they have only five days work in the week while audit clerks and typists have to work all the days of the week, that profit and loss accounts and balance sheets of the clients of the petitioners are also prepared by the audit clerks besides posting, vouching, checking of bank accounts, etc., that the dismissed clerks are audit clerks and that the conciliation officer has got jurisdiction to convene a conference to see whether the dispute could be amicably settled.
5. As already stated, the substantial question in this case is whether the petitioners are carrying on an industry or whether they are following a liberal profession. In order to decide this question it is necessary to understand the nature of the work carried on by chartered accountants. In Rabindranath Sen v. First Industrial Tribunal, West Bengal, and Ors. 1963--1 L.L.J. 567 it is observed at p. 572:. that though Section 2(j) used words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings. If all the words used are given their widest meaning, all services would come within the purview of the definition; even service rendered by a servant purely in a personal or domestic matter or even in a casual way would fall within the definition. It is not and cannot be suggested that in its wide sweep the word 'service' is intended to include service however rendered in whatsoever capacity and for whatsoever reason.
In dealing with the somewhat difficult question of drawing a line between under-takings which are industrial or are constituted on industrial basis and those which are not, the Supreme Court further observed in the abovementioned case State of Bombay and Ors. v. Hospital Mazdoor Sabha 1960--1 L.L. J. 261 at 258-269:.as a working principle, it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the community at large or part of such community with the help of employees is an undertaking. Such an activity generally involves the co-operation of the employer and employees, and its object is the satisfaction of material human needs. It must be organized or arranged in a manner in which trade or business is generally organized or arranged. It must not be casual nor must it be for oneself nor for pleasure. Thus the manner in which the activity in question is organized or arranged, the condition and the co-operation between the employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which S. 2(j) applies. * * *
The profession of chartered accountants is now governed by an Act known as the Chartered Accountants Act, 1949. Under Section 2(j)(b) of the Act ' chartered accountant' means ' a person who is a member of the institute.' Section 2(j) of the Act defines institute as the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949.
6. Under Section 2(2) of the Act:
A member of the institute shall be deemed to be in practice,' which individually or in partnership with chartered accountants in practice, he, in consideration of remuneration received or to be received ...(iii) renders professional services or assistance in or about matters of principles or details relating to accounting, procedure or the recording, presentation or certification of financial facts or data or...
Section 4 of the Act provides for entry of names of chartered accountants in a register and Section 6 of the Act provides that no member of the institute shall be entitled to practice unless he obtains a certificate of practice. Section 8 of the Act lays down the disabilities disqualifying a person from being entered in or his name being borne on the register--such disabilities include minority, mental unsoundness, insolvency, conviction or an offence Involving moral turpitude and professional or other misconduct. Section 15 of the Act empowers the council for entry in the register of the institute to prescribe qualifications for entry in the register ' and for examination of candidates for enrolment' and Section 20 empowers the council to remove names of chartered accountants for disabilities, particularly misconduct, including professional misconduct dealt with in Chap. V of, and Section 1 to, the Act.
At p. 579 it is stated:.it is the duty of an auditor to verify not merely the arithmetical accuracy of the balance sheet, but its substantial accuracy, to see that it includes the particulars required by the articles and by statute and contains a correct representation of the state of the company's affairs Halsbury's Laws of England, Vol. VI, Article 751, Simonds Edn.. Since under the scheme of auditing, the checking of the accounts is both an Important and an integral Article although the manner of checking may vary in degrees in Individual cases, the persons who do the checking of the accounts also contribute to the making of the report. A report which is not preceded by the checking of accounts is not worthy of the name of audit report. Therefore, if an auditor receives service from his employees in the matter of the checking of the accounts he does not merely receive service by way of subsidiary work which is purely of an incidental type, such as a solicitor receives from his stenographer, clerk or menial servants. It is within the scheme of the Chartered Accountants Act to have the examination of accounts done by him employees.
* * *I desire, however, to make one position clear. A chartered accountant doing audit work assisted by stenographer, personal clerks and menial servants, that is to say, doing the entire auditing work, from examination of accounts to the making of the report, all by himself but only with such subsidiary and incidental help as may be rendered by his stenographer, typists, personal clerks and servants may not be carrying out an Industry. But if a chartered accountant carries on auditing work in a magnified scale, with more clients than he can himself manage, and is perforce compelled to have a division of labour, his clerks doing the examination of accounts and he himself drawing up the audit report, on the result of such examination, it may not be said that this type of co-operation is not Industry.
7. In University of Delhi and Anr. v. Ram Nath and Ors. 1963--11 L.L.J. 335 the question arose whether Imparting of education by educational institutions like the University of Delhi and colleges run under it, is carrying on an industry within the meaning of Section 2(j). It was held that it would be unreasonable to hold that the work of teaching carried on by them is an industry as the creation of well-educated, healthy young generation imbued with a rational progressive outlook on life, which is the sole aim of education, cannot at all be compared or assimilated with what may be described as an industrial process.
8. In Vasudevan (S.) v. Mital 1963--11 L.L.J. 264 it is observed at p. 285:
It is contended by both the petitioners that they are workmen in an industry within the meaning of Section 2(j) of the Industrial Disputes Act, they are governed by the provisions of that Act, the Central Civil Services (Conduct) Rules have no application to their cases, and the departmental proceedings taken against them under Rule 4A or 4B for violating the rules are, therefore, liable to be quashed. Reliance Is placed on two decisions of their lordships of the Supreme Court In State of Bombay v. Hospital Mazdoor Sabha 1060--1 L.L.J. 251 and Corporation of the City of Nagpur v. its employees 1960--1 L.L.J. 523 and in particular on the observations of their lordships in p. 537 of the report where the workers in the tax department of the Nagpur Corporation have been held to be workmen in an industry. It is the argument of Sri Singhvi that the work carried on in the two departments, viz., the Indian Audit and Accounts Department and the Incometax Department to which these two petitioners belong, is not a legal function of the State; that work can as well be done by private agency if the Government chose to appoint such an agency the workers in these two departments are therefore workmen within the meaning of the Industrial Disputes Act. The question as to which activity can be termed as an industry within the meaning of the Act has been considered at length by another Division Bench of this Court of which one of us (Tambe, J.) was a party. Tulsiram v. Assistant Commissioner of Labour 1961--1 L.L.J. 711. On consideration of various decisions, including the aforesaid two decisions of their lordships of the Supreme Court, the rule deducible has been summarized as follows at p. 719 :The important test for deciding whether any business, trade, or a calling of an employer, service, employment, avocation or occupation of an employee constitutes an industry within the meaning of the Act is not only the character of the activities indicated by the works Included in the definition but their form and organization in relation to the employed labour force as an active and creative agent for achieving the fruits of the activity. It should be an activity which is predominantly carried on by employment of organized labour force for the production or distribution of goods or for rendering of material services to the community at large or a part of such community.
In each case, therefore, it has to be seen--
(1) whether the activity is predominantly carried on by employment of organized labour force, and
(2) whether such activity is carried on either
(a) for the production or distribution of goods, or
(b) for rendering material service to the community at large or to part of such community.
9. In N.R. Mukherjee v. A.H.S. Just : AIR1961Cal95 it was held that the question whether the business of a chartered accountant is an industry within the meaning of Section 2(j) is not an abstract question of law, which can be decided without a specific finding of the tribunal as to the manner in which the firm carries on its business and whether the activities of the firm are confined only to business of chartered accountant simpliciter and whether they extend to other Businesses, which are not connected with the business of chartered accountant. The question has to be decided after taking evidence on two questions, namely:
(a) whether the professional income of the firm was earned ' solely ' by the efforts of the partners of the firm, and
(b) whether the firm carries on other businesses besides the business of a chartered accountant.
At p. 97 of the report it is said:
The manner in which the firm carried on its business of a chartered accountant is also germane to the determination of the question whether the business is an industry within the meaning of Section 2(j) of the Industrial Disputes Act.
In National Union of Commercial Employees v. Industrial Tribunal 1962--1 L.L.J. 241 the question was whether a solicitor's firm is an industry, and in considering the question whether it is an, industry, the Supreme Court has formulated the following proposition:
The concept of industry postulates partnership between capital and labour or between the employer and his employees. It is under this partnership that the employer contributes his capital and the employees their labour and the joint contribution of capital and labour leads directly to the production which the industry has in view. In other words, the co-operation between capital and labour or between the employer and his employees which is treated as a working test in determining whether any activity amounts to an industry, is the co-operation which is directly involved in the production of goods or in the rendering of Service. It cannot be suggested that every form or aspect of human activity in which capital and labour co-operate or employer and employees assist each other is an industry. The distinguishing feature of an industry is that for the production of goods or for the rendering of service, co-operation between capital and labour or between the employer and his employees must be direct and must be essential ... a solicitor's firm carrying on the work of an attorney does not satisfy the test mentioned above and is not an ' industry ' within the meaning of Section 2(j). Superficially considered, the solicitor's firm is, no doubt organized as an industrial concern would be organized. There are different categories of servants employed by a firm, each category being assigned separate duties and functions.
But it must be remembered that the service rendered by a solicitor functioning either individually or working together with partners is service which is essentially individual. It depends upon the professional equipment, knowledge. and efficiency of the solicitor concerned. Subsidiary work which is purely of an incidental type and which is intended to assist the solicitor in doing his job has no direct relation to the professional service ultimately rendered by the solicitor. The work of the clerk who types correspondence or that of the accountant who keeps accounts has no direct or essential nexus or connexion with the advice which it is the duty of the solicitor to give to his client. There is, no doubt, a kind of co-operation between the solicitor and his employees, but that co-operation has no direct or Immediate relation to the professional service which the solicitor renders to his client. See the headnote.
10. The question whether there is an industrial dispute is a mixed question of law and fact. Most of the allegations in the affidavit In support of the petition are denied in the counter-affidavit. Until the questions of fact are settled, it is not possible to say whether the petitioners carry on an Industry or not. The manner in which the firm carries on the business is also germane to the determination of the question whether the business is an industry. The question to be decided is whether the professional income is earned solely by the efforts of the partners of the firm or whether the firm carries on other businesses besides the business of a chartered accountant. The conciliation officer has every right to decide whether prima facie an industrial dispute exists. It Js open to that officer to recommend the dispute to the Government for reference or not under Section 12 (4) of the Industrial Disputes Act. Prom the facts and circumstances emerging in this case, it would appear that the decision of respondent 1 to conciliate the dispute cannot be characterized as without jurisdiction.
11. I dismiss the petition. No costs.