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Arun Kumar Mukhopadhyay and ors. Vs. the Institute of Chartered Accountants India and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtKolkata High Court
Decided On
Case NumberC.R. No. 1805 (W) of 1973
Judge
Reported inAIR1980Cal40
ActsChartered Accountants Regulations, 1949 - Regulation 32B; ;Constitution of India - Article 14
AppellantArun Kumar Mukhopadhyay and ors.
RespondentThe Institute of Chartered Accountants India and ors.
Appellant AdvocateA.P. Chatterjee, Adv.
Respondent AdvocateP.N. Chunder, Adv.
Cases Referred and Jalan Trading Co. v. Mill Mazdoor Sabha
Excerpt:
- .....present proceedings.4. the said impugned regulation 32-b reads as follows :--'32-b -- stipend to articled clerks. (1) every member engaging an articled clerk on or after 1st july 1973 shall pay to such clerk a minimum monthly stipend at the rates specified in sub-regulation (2) or in sub-regulation (3) hereof, as the case may be. (2) if the normal place of service of an articled clerk is situated in bombay, calcutta, delhi, new delhi, kanpur or madras- the following shall be the minimum rates of the stipend payable under sub-regulation (1) : (a) in respect of the first year of articled training ..... rs 60/- per month (b) in respect of the second year of articled training ..... rs. 100/- per month (c) in respect of the remaining period of articled training ... rs. 150/- per month .....
Judgment:
ORDER

Dipak Kumar Sen, J.

1. Arun Kumar Mukhopadhyay, Samarendra Nath Pathak and Indra Nath Das, the petitioners in these proceedings are Chartered Accountants bv profession and they carry on such profession under the name and style of Messrs B. N. Mukherjee & Co., Messrs. N Pathak & Co. and Messrs I. N. Das & Co. respectively. The petitioners are registered members of the Institute of Chartered Accountants incorporated under the Chartered Accountants Act, 1949 (hereinafter referred to as the said Institute)

2. under Section 9 of the Chartered Accountants Act, 1949 a council is constituted for discharging the functions as-signed to it under the said Act and also for the management of the affairs of the said Institute. Section 30 of the said Act confers to the Council the power of framing regulations under the Act subject to certain conditions as laid down in the said section.

3. Regulation 32-B of such Regulations framed by the Council in exerciseof statutory power is sought to be impugned in the present proceedings.

4. The said impugned Regulation 32-B reads as follows :--

'32-B -- Stipend to Articled Clerks.

(1) Every member engaging an articled clerk on or after 1st July 1973 shall pay to such clerk a minimum monthly stipend at the rates specified in Sub-regulation (2) or in Sub-regulation (3) hereof, as the case may be.

(2) If the normal place of service of an articled clerk is situated in Bombay, Calcutta, Delhi, New Delhi, Kanpur or Madras- the following shall be the minimum rates of the stipend payable under Sub-regulation (1) :

(a) In respect of the first year of articled training ..... Rs 60/- per month

(b) In respect of the second year of articled training ..... Rs. 100/- per month

(c) In respect of the remaining period of articled training ... Rs. 150/- per month

(3) If the normal place of service of an articled clerk is situated in a place other than the places specified in Sub-regulation (2) hereof, the minimum rates at which such employer shall pay stipend under Sub-regulation (1) hereof shall be computed at 50% of the respective rates for the various stages of articled training specified in Sub-regulation (2) hereof :

Provided that nothing contained in this regulation shall entitle an articled or audit clerk registered with effect from a date prior to 1st July 1973, to any stipend under Sub-regulation (2) or (3) hereof.

Explanation : For the purpose of determining the rate at which stipend is payable under Sub-regulation (2) or Sub-regulation (3) hereof, the period of articled training of the clerk under any previous employer or employers (not being any such period prior to the 1st July. 1973) shall also be taken into account.'

5. The thesis of the petitioners' challenge is, inter alia, that under Regulation 29 all members of the said Institute are entitled to engage and train articled clerks in the manner provided. Previously, Regulation 31 (1) provided that no articled clerk would be required to pay a premium exceeding Rs. 2,000/-. Subsequently, by a notification No. 1-CA (9)/1/66 dated the 28th March 1966, the previous Sub-regulation (1) was withdrawn and the following sub-regulation was substituted :--

'(1) No premium shall be charged or be payable in case of articled clerks entering into articled service on or after the 18th day of July 1964 : Provided however that an articled clerk who had entered into articled oraudit service before the 18th day of July 1964 may be required to pay a premium not exceeding Rs. 2,000/-.'

6. The impugned Regulation 32-B has been promulgated since.

7. The petitioners contend that articled clerks of Chartered Accountants are nothing but trainees or students and though formerly they were required to pay fees in the shape of premium for their tuition by the later amendment of the regulations they were not required to pay anything for entering into articled service. The present Regulation 32-B goes further and imposes an obligation on the Chartered Accountants to pay stipend to trainees admitted as articled clerks at specified scales.

8. The petitioners contend that this is extremely unreasonable. Prior to the introduction of Regulation 32-B, a Chartered Accountant in practice had a right to accept articled clerks from the third year of his practice without any obligation to pay any remuneration or stipend. In the third year of his practice a Chartered Accountant could accept one articled clerk, on the fifth year he could accept two; on the seventh year three; on the ninth year four and on the fifteenth year he could accept five such articled clerks.

9. It is further contended that by reason of the impugned Regulation 32-B a Chartered Accountant may be unable to accept any of the prescribed number of articled clerks irrespective of the number of years of his practice if he is financially unable to pay from his audit collections any of the prescribed number of articled clerks. The prestige and honour of a Chartered Accountant may be lowered in his profession and in society, if he is unable to accept articled clerks within the prescribed limit. It is also contended that provision for compulsory payment of any stipend to articled clerks is in any event unreasonable inasmuch as the articled clerks are nothing but trainees or students.

10. The petitioners submit that the said Regulation 32-B should be struck down on the following grounds :--

(a) The said Regulation is unreasonable inasmuch as it compels the teachers, namely, the Chartered Accountants to pay stipends to their students viz. the articled clerks.

(b) The Regulation imposes unreasonable burden and restriction on the Chartered Accountants and is prejudicial to their prestige and honour.

(c) The Regulation violates Article 14 of the Constitution inasmuch as it imposes the same liability to pay stipend at the same rates to articled clerks of all Chartered Accountants making no difference between them when, in fact, there exists a difference between small and big firms in the matter of financial ability to pay.

11. On the present application a rule nisi was issued on the 6th July, 1973, calling upon the respondents, namely, the Institute of Chartered Accountants of India, New Delhi; the Council of the Institute of Chartered Accountants of India, New Delhi; the Regional Council of the Institute of Chartered Accountants of India for the States of West Bengal, Orissa, Assam, Manipur and Tripura, Calcutta and the Union of India, to show cause why appropriate writs should not be issued directing them to rescind, recall, withdraw and to forbear from giving effect to the said impugned Regulation 32B, commanding them to refrain from enforcing or giving effect thereto and for setting aside or quashing the same.

12. This application has been opposed by the said Institute, the Council as also the Regional Council the respondents Nos. 1, 2 and 3 hereto. An affidavit of one P. S. Gopalakrishnan, the Secretary of the said Institute affirmed on the 21st January 1976, has been filed in opposition to the petition. It is, inter alia, stated in the said affidavit that the Regulations currently in force provide for the acceptance of articled clerks by Chartered Accountants, as follows :--

No. of articled clerks.

(a)On completion of three years continuous practice.

ONE(b)An associate or fellow who is a full time salaried employee or a partner of a Chartered Accountant or a firm of Chartered Accountants in practice having at least one partner entitled to train articled clerks.

ONE(c)A fellow member who has been in continuous practice for a period of not less than five years.

THREE(d)A fellow member who has been in continuous practice for a period of not less than seven years.

FOUR(e)A fellow member who has been in continuous practice for a period of not less than ten Years.

FIVE(f)A fellow member who has been in continuous practice for a period of not less than fifteen years.SIX

In addition, a member entitled to train articled clerks is eligible to train a person who has passed the degree examination of a recognised University securing not less than 60% of the total marks as an additional articled clerk.

13. It is stated further that though under the Chartered Accountants Act and the Regulations thereunder a member of the Institute is entitled to take an articled clerk but there is nothing in the Act or the Regulations thereunder which compels any member to do so. A practising Chartered Accountant, it is stated, has full freedom in the matter and it is left to him absolutely to accept at all or not to accept an articled clerk as trainee. It is further stated that the Council after mature consideration came to the conclusion that for healthy development and growth of the profession and encouragement of apprentices specially those who are not rich or are of moderate means some financial help should be provided to the students during the period of training. It is also stated that the service and the work rendered by an articled clerk during his training period is connected with and contribute directly to the professional work of a Chartered Accountant in practice for which he becomes entitled to his fees. If the work as was done by an articled clerk of a Chartered Accountant was performed by an ordinary employee a larger payment by way of salary or remuneration would be necessary. The scale of payment provided for articled clerks was reasonable and not excessive and was not an undue burden on the members and such provision had been introduced in the larger interest of the profession to attract and retain bright and deserving candidates.

14. At the hearing Mr. Arun Prokash Chatterjee, learned Advocate appearing on behalf of the petitioner, limited his submissions to that there was in fact difference between Chartered Accountants, namely, those who carried on their profession in a large scale in big firms and those who were doing so in small firms or as individuals. As all Chartered Accountants were being treated equally by the said regulation in respect of payment of stipend to articled clerks, Article 14 of the Constitution was infringed. In support of his contentions Mr. Chatterjee cited the following decisions :--

(1) Kunnathat Thathunni Moopil Nair v. State of Kerala reported in : [1961]3SCR77 . In this case the provisions of the Travancore-Cochin Land Tax Act, 1955, were challenged as unconstitutional, inter alia, on the ground that Sections 4 and 7 thereof offended Article 14 of the Constitution. Section 4 of the said Act provided for charge and levy of a tax in respect of all lands in the State of whatever description and held under whatever tenure at an uniform rate of tax called the basic tax. The Supreme Court held that the said provisions were violative of Article 14 of the Constitution and observed as follows :--

'The inequality is writ large on the Act and is inherent in the very provisions of the taxing section. There is no attempt at classification in the provisions of the Act. It is one of those cases where the lack of classification creates inequality. It is, therefore clearly hit by the prohibition to deny equality before the law contained in Article 14 of the Constitution. Furthermore, Section 7 of the Act, particularly the latter part, which vests the Government with the power wholly or partially to exempt any land from the provisions of the Act, is clearly discriminatory in its effect and, therefore, infringes Article 14 of the Constitution. The Act does not lay down any principle or policy for the guidance of the exercise of discretion by the Government in respect of the selection contemplated by Section 7.' (2) State of Kerala v. Haji K. Kutty Naha reported in : [1969]1SCR645 . In this case Section 4 of the Kerala Buildings Tax Act was sought to be impugned as being violative of Article 14 of the Constitution. The said section imposed a tax on every building, whose construction was completed on or after the 2nd March 1961, and had a floor area of 1000 sq. ft. or more at rates fixed in the Act. The Supreme Court held that the said section violated the equality clause of the Constitution and was ultra vires. The relevant observations of the Supreme Court are as follows :-- 'The charging section of the Kerala Buildings Tax Act (19 of 1961), viz. Section 4 read with Schedule to the Act is violative of the equality clause of the Constitution and as such ultra vires. In enacting the Kerala Buildings Tax Act no attempt at any rational classification is made by the Legislature. The Legislature has not taken into consideration in imposing tax the class to which a building belongs, the nature of construction, the purpose for which it is used, its situation, its capacity for profitable user and other relevant circumstances which have a bearing on matters of taxation. They have adopted merely the floor area of the building as the basis of tax irrespective of all other considerations. Where objects, persons or transactions essentially dissimilar are treated by the imposition of a uniform lax, discrimination may result, for, refusal to make a rational classification may itself in some cases operate as denial of equality.'

15. The learned Advocate appearing on behalf of the respondents contended to the contrary and cited an unreported judgment of the Madras High Court in Writ Petn. No. 4010 of 1973 entitled V. Pichaikutty v. The Council of Institute of Chartered Accountants of India. In the said proceedings the validity of the said Regulation 32-B, was also challenged and it was contended that the said regulation differentiated between Chartered Accountants who had their offices at Bombay, Calcutta, Delhi, New Delhi, Kanpur and Madras and those who had offices outside the said cities in the matter of payment of stipend to articled clerks and was thus discriminatory and violative of Article 14 of the Constitution. The High Court considered the impugned Regulation and held that inasmuch as there was disparity in the income of the members of the profession in different areas of the country and inasmuch as the differentiation in the said Regulation was made with reference to the places of service of the articled clerks and not with reference to the Chartered Accountants the classification implied in the said Regulation was on intelligible differentiation and had rational connection with objectives sought to be achieved thereby. It was held that the said Regulation was reasonable and intra vires Article 14.

16. The point agitated in the instant case namely that Chartered Accountants who did not have equal financial capacity were being treated as equals in the matter of payment of stipend to articled clerks was not mooted before the Madras High Court in the said case.

17. On a scrutiny of the impugned Regulation it appears that a classification is implied therein. A classification appears to have been made on the basis of region as noted by the Madras High Court. There is a further classification on the basis of number of years of practice put in by a Chartered Accountant on which the number of articled clerks be can accept is prescribed. The said classification appears to me to be reasonable. A different classification on the basis of the financial capacity of a Chartered Accountant in my view would not be as reasonable and, in any event, would not be in consonance with the dignity and reputation of the profession. As members of the Institute all Chartered Accountants are equal and have equal say in the matters of the Institute. If Chartered Accountants are classified or graded on the basis of their financial capacity for the object of payment of stipend to articled clerks, it would result in discrimination between the articled clerks. An articled clerk accepted by a Chartered Accountant who is financially well off will be in a position to receive a higher stipend than an articled clerk working with a Chartered Accountant with less financial capacity though in training or status they may be considered equal. Classification or grading of Chartered Accountants on the basis of their financial capacity may be otherwise considered to be unreasonable and discriminatory as in the profession all Chartered Accountants are deemed to be equal in qualification and status.

18. It is not any and every inequality which violates Article 14 of the Constitution. It is only when the classification is arbitrary or unreasonable and has no rational relation to the objects sought to be achieved, then it is hit by the directives of the said Article. Mere provisions resulting in inequality or equality by itself are not violative of the Article (See Charanjit Lal v. Union of India, reported in : [1950]1SCR869 , Sub-Divisional Magistrate, Delhi v. Ramkali reported in : 1968CriLJ82 , Ganga Ram v. Union of India reported in : [1970]3SCR481 ).

19. The decisions cited on behalf of the petitioners have in my view little application in the facts and circumstances of the instant case. Members of an Institution who are having the same qualification and carrying in the same profession cannot be in the same category as lands and/or buildings in an entire State, Such land and buildings are inherently different, can properly, reasonably and conveniently be classified and must necessarily be so classified if they are made the objects of any legislation.

20. An articled clerk of a Chartered Accountant is something more than a mere student or a trainee. It is not in dispute that an articled clerk renders effective help to a Chartered Accountant in his professional works for which the Chartered Accountant earns his fees. Compared with the prevailing rates of wages the scale of stipend prescribed for articled clerks under the impugned Regulation does not appear to be excessive or unreasonable. It may also be kept in view that a Chartered Accountant is not compelled or bound to accept any articled clerk. On the ground of possible in-stances of hardship in the cases at Chartered Accountants having less professional work the said Regulation cannot be struck down as discriminatory, (See Ram Sharan v. Dy. I. G. of Police, Ajmer reported in : (1965)ILLJ328SC , N. Vasundana v. State of Mysore reported in ( : AIR1971SC1439 and Jalan Trading Co. v. Mill Mazdoor Sabha reported in : (1966)IILLJ546SC ).

21. For the reasons above the contentions of the petitioners cannot be accepted and application fails. The Rule is discharged.

22. There will be no order as to costs.


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