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Debabrata Basu Vs. the Institute of Chartered Accountants and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberO.O.C.J. No. 817 of 1951
Judge
Reported inAIR1952Cal189,[1952]22CompCas138(Cal)
ActsChartered Accountants Act, 1949 - Section 30; ; Chartered Accountants Regulations - Regulation 34; ; Code of Civil Procedure (CPC) , 1908 - Section 20
AppellantDebabrata Basu
RespondentThe Institute of Chartered Accountants and anr.
Appellant AdvocateAtul Gupta and ; S.K. Das, Advs.
Respondent AdvocateG.K. Mitter, Adv.
Excerpt:
- .....by a statement giving particulars of the name, father's name, residence and age of the articled clerk.'regulation 37 provides for a register of articled clerks. regulation 39 deals with cancellation of articles. the material parts of form l (which is used when the articled clerk is of full age) are as follows:' * * * witness as follows that is to say:1. in consideration of the covenants by the articled clerk hereafter contained and of the premium of rs............. paid by the articled clerk (the receipt whereof the employer doth hereby acknowledge) the employer agrees to take the articled clerk as his articled clerk for the term of...... years from the.........day of............* * * *4. the employer covenants with the articled clerk as follows:(a) that he will by the best ways and.....
Judgment:

Mitter, J.

1. This case involves the interpretation of Section 30 of the Chartered Accountants Act, 1949, and the principal point for determination is whether the provision in Regulation 34 for refund of premium chargeable for the training of an articled clerk, purported to have been made in exercise of the powers given under Section 30, is ultra vires the said section.

2. The first defendant, the Institute of Chartered Accountants of India, was constituted under the said Act. The plaintiff is a Fellow of the Institute. The second defendant, Prasanta Kumar Dutt, claims to be an Articled Clerk. The suit is for, inter alia, a declaration that the Articles of Apprenticeship made between the plaintiff and the said Prasanta Kumar Dutt on April 1, 1950 are valid; a declaration that the refusal by the defendant Institute to register the said articles is wrongful and illegal; a declaration that the said articled clerk be regarded as having been registered in the books of the Institute as from April 1, 1950 and for an injunction restraining the defendant Institute from disallowing the said articled clerk to take part in the examinations prescribed under the Act or the plaintiff from taking or charging a premium from the said articled clerk.

3. In order to appreciate the facts which give rise to the plaintiff's cause of action and the point which falls to be determined, it is necessary to refer to some of the provisions of the Act. The preamble is in these terms:

'Whereas it is expedient to make provision for the regulation of the profession of accountants and for that purpose to establish an Institute of Chartered Accountants;

Section 3 provides for the incorporation of the Institute and is as follows:

'3 (1) All persons whose names are entered in the Register at the commencement of this Act and all persons who may hereafter have their names entered in the . Register under the provisions of this Act, so long as they continue to have their names borne on the said Register, are hereby constituted a body corporate by the name of the Institute of Chartered Accountants of India, and all such persons shall be known as members of the Institute.' (2) * * * *'

Under Section 5 the members of the Institute are divided into two classes designated respectively as Associates and Fellows. Section 9 provides for the constitution of a Council of the Institute for the management of the affairs of the Institute and for discharging the functions assigned to it under the Act. Section 15 prescribes the functions of the Council in these terms:

'15(1) The duty of carrying out the provisions of this Act shall be vested in the Council.

(2) In particular, and without prejudice to the generality of the foregoing power, the duties of the council shall include.

* * * *(2) (b) the regulation of the engagement and training of articled clerks; * * * * '

Section 30 of the Act which deals with the Council's power to make regulations is in the following terms;

'80(1) The Council may, by notification in the 'Gazette of India', make regulations for the purpose of carrying out the objects of this Act, and a copy of such regulations shall be sent to each member of the Institute.

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters:

* * * * (j) the training of articled clerks and the fixation of limits within which premia may be charged from such clerks and the cancellation of articles for misconduct or for any other sufficient cause;* * * *

Then follow several other matters with which, however, we are not concerned. Regulation 32 provides that only Fellows in practice shall be entitled to take articled clerks. Regulation 34 is in these terms:

'the Council may from time to time prescribe the maximum and minimum rates or premium that can be charged from an articled clerk. But any premium charged by the employer shall be refunded by him in full to the articled clerk in such instalments as the former may deem fit but not later than 14 days after the date of the completion of the articles subject to satisfactory service and good conduct of the articled clerk:Provided that if the articles are cancelled under regulation 39, the premium, if any, received by the employer shall be made over by the employer to the council for such use as it may deem fit.'

Regulation 36 provides for execution and registration of articles and is as follows:

The articles shall be executed in Form L or Form M according as the candidate for articled clerkship is of full age or is a minor, and shall be stamped. The articles together with the necessary documentary evidence showing that the conditions laid down in Regulation 35 are satisfied, shall be sent to the Secretary to the Council for registration so as to reach him within sixty days after the execution of the articles or their commencement whichever is earlier and shall be accompanied by a fee of Rs. 30/- and by a statement giving particulars of the name, father's name, residence and age of the articled clerk.'

Regulation 37 provides for a register of articled clerks. Regulation 39 deals with cancellation of articles. The material parts of Form L (which is used when the articled clerk is of full age) are as follows:

' * * * Witness as follows that is to say:

1. In consideration of the covenants by the Articled Clerk hereafter contained and of the premium of Rs............. paid by the Articled Clerk (the receipt whereof the employer doth hereby acknowledge) the Employer agrees to take the Articled Clerk as his Articled Clerk for the term of...... years from the.........day of............

* * * *4. The Employer covenants with the Articled Clerk as follows:

(a) That he will by the best ways and means in his power and to the utmost of his skill and knowledge instruct or cause to be instructed the Articled Clerk and afford him such reasonable opportunities and work as may be required to enable him to acquire the art, science and knowledge of accountancy.

(b) That his professional practice is suitable for the purpose of enabling him to carry out the obligations referred to in (a) above.

* * * *(d) That if the Employer shall die or cease to practise as an Accountant or cease to be a Fellow in practice or shall in any way become incapable of continuing the intended employment of the Articled Clerk during the said term he or his personal representative shall (except where the employer has charged no premium and is not survived by a partner) at the option of the Articled Clerk either return the premium or without any further expense to the Articled Clerk make the necessary arrangements for the completion of the residue of the term as Articled Clerk to some other.

* * * *(f) That he agrees to refund within the period stipulated under the Regulations the entire premium received from the Articled Clerk in such instalments as be might deem fit subject to satisfactory service and good conduct of the Articled Clerk.'

4. The plaintiff's case shortly is that he charged his articled clerk a premium of Rs. 2000/-and that although the relative Articles of Apprenticeship contained no covenant for the refund to the latter of the premium charged, they were in all other respects in conformity with Form 'L'. In forwarding the said Articles to the Secretary to the Council for registration, the plaintiff pointed out that he had omitted from the Articles clause 4(f) of Form 'L' on the ground that the said clause was 'ultra vires' the Chartered Accountants' Act. The defendant Institute refused to register the said deed of Articles on the ground that it did not contain the said clause. The plaintiff's case was that clause 4(f) of Form 'L' was 'ultra vires' subsection 2(j) of section 30. His case before me is that that part of Regulation 34 which provides for refund of premium is also 'ultra vires' section 30 of the Act. The defendant Institute refused to accede to the plaintiff's request on the ground that the said Articles of Apprenticeship offended against Regulations 34 and 36 and, consequently against Form 'L' as well. The plaintiff thereupon instituted the present suit.

5. The case for the defendant Institute is that its power under section 30 of the Act to make regulations for the purpose of carrying out the objects of the Act cannot be controlled by clause (j) of sub-section 2 of section 30. and that the regulations concerned are 'intra vires'' It is also its case that this Court has no jurisdiction to entertain the suit' inasmuch as no part of the plaintiff's alleged cause of action arose within the Ordinary Original Civil Jurisdiction of this Court.

6. With regard to the plaintiff's contention that Regulation 34 is 'ultra vires' section 30 of the Act, Mr. Atul Gupta has a gued that the Council's power under sub-section (1) of section 30 of the Act is not limited to the matters enumerated under sub-section (2) thereof but must nevertheless be so exercised as not to be in conflict with any of the duties or powers enumerated in clauses (a) to (t) of sub-section (2). Mr. G. K. Mitter on behalf of the defendant Institute has argued, on the authority of 'EMPEROR v. Sibnath Banerji' 72 Ind App 241 (PC), that the Council's power to make regulations for the purpose of carrying out the objects of the Act is conferred by sub-section (1) of Section 30, that the function of sub-section (2) thereof is merely an illustrative one and that the provision in Clause (j) of sub-section (2) is not restrictive of the Council's power under sub-section (1). Mr. Mitter has also drawn my attention to clause (b) of sub-section (2) of Section 15, whereby the duties of the Council include 'the regulation of the engagement and training of articled clerks.' Having regard to the language used, Mr. Mitter has argued, the Council's power to regulate the engagement and training of articled clerks cannot be controlled by the words used in clause (j) of sub-section (2) of section 30.

7. Under sub-section (2) the Council may make a regulation providing for, in terms of' clause (j),

'the training of articled clerks and the fixation of limits within which premia may be charged from such clerks and the cancellation of articles for misconduct or for any other sufficient cause.'

The plain meaning of the words used in clause (j) is that for the training of an articled clerk, a premium, within the limits fixed, may be charged. The words 'premia may be charged' show that the premium is chargeable for the training of an articled clerk. The word 'premium' means 'a fee for instruction in profession etc.' (See the Oxford English Dictionary). The words 'may be charged' are too simple to require any interpretation. The words in clause (j) cannot, therefore, be read to mean that a premium 'charged' must nevertheless be refunded. I shall presently deal with the Privy Council case relied upon by Mr. Mitter, but, in my view, the intention of the legislature could not have been to give the Council any power which should be in conflict with clause (j). Had the legislature intended that the premium should be refunded, it would have used appropriate words to that effect. In my view, in so far as the Regulation 34 purports to take away a Fellow's right to charge a premium in consideration of the training which he undertakes to give to the articled clerk, it is ultra vires Section 30 of the Act. Consequently, clause 4(f) of Form 'L' is also ultra vires the Section 30 of the Act. It is to be observed that clause (1) of Form 'L' contains the following recital:

'In consideration of the covenants by the Articled clerk hereafter contained and of the premium of Rs. paid by the Articled Clerk (the receipt whereof the employer doth hereby acknowledge) the Employer agrees to take the Articled Clerk as his Articled Clerk for a term of years from the day of'

The consideration for the agreement expressed in the above recital is rendered nugatory by the provision in clause 4(f) for refund of the premium. The reason for this absurdity is to be found in the fact that Form 'L' is the' standard form with the provision for- refund of premium added to it. (See also Rule 42, Appendix 2 Form D, Auditor's Certificates Rules, 1932).

8. In the case cited by Mr.' Mitter, their Lordships of the Judicial Committee hold that 'Talpade's case', (AIR (30) 1943 F C I), had been wrongly decided by the Federal Court and that Rule 26 of the Defence of India Rules was in conformity with the powers conferred by sub-section (1) of section 2 of the Defence of India Act. In 'Talpade's case' the Federal Court had held that Rule 26 of the Defence of India Rules was not within the powers conferred by sub-section (2) of section 2 of the Defence of India Act. Gwyer, C. J. who delivered the judgment of the Federal Court stated:

'The Legislature having set out in plain and unambiguous language in para (X) the scope of the rules which may be made providing for apprehension and detention in custody, it is not permissible to pray in aid the more general words in Section 2, sub-section 1, in order to justify a rule which so plainly goes beyond the limits of para (X); though if para (X) were not in the Act at all, perhaps different considerations might apply............ We are compelled therefore to hold that Rule 26 in its present form goes beyond the rule-making powers which the Legislature has thought fit to confer upon the Central Government and is for that reason invalid.'

Their Lordships of the Judicial Committee in holding that 'Talpade's case' had been wrongly decided gave the following reason:

'In the opinion of their Lordships, the function of Sub-section 2 is merely an illustrative one. the rule-making power is conferred by sub-section 1, and 'the rules' which are referred, to in the opening sentence of sub-section 2 are the rules which are authorised by, and made under, Sub-section 1; the provisions of sub-section 2 are not restrictive of sub-section 1, as, indeed, is expressly stated by the words, 'without prejudice to the generality of the powers conferred by Sub-section l'. There can be? no doubt - as the learned Judge himself appears to have thought - that the general language of Sub-section 1 amply justifies the terms of Rule 26, and avoids any of the criticisms which the learned Judge expressed in relation to sub-section 2.'

The words in sub-section (2) of Section 30 of the Chartered Accountants Act, 1949 make it abundantly clear that the enumeration which follows is without prejudice to the generality of the power under sub-section (1) of Section 30. It would, therefore, appear that the matters set out in clauses (a) to (t) of sub-section (2) of section 30 are not exhaustive. Sub-section (2) of Section 30 is as follows:

'In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters...............'

It is clear, therefore, that for the purpose of carrying out the objects of the Act the Council may make regulations providing for other matters relative to the engagement and training of articled clerks, though not expressly set out in Section 30 of the Act. The question which has arisen in this case is - Has the Council power to make any regulation which is in direct conflict with any of the matters set out in clauses (a) to (t) of sub-section (2) of section. 30?, In Talpade's case, in my view, there was no conflict between para (X) of sub-section (2) of Section 2 of the Defence of India Act, on the one side, and Rule 26 of the Defence of India Rules, on the other, and Gwyer, C.J. was not considering any such conflict. What the learned Chief Justice was considering was whether, in-spite of the clear language of sub-section (2) of Section 2, the extension of the powers for detention under Rule 26 was justified or permissible in view of the exhaustive scope of Para (X). In my view, Rule 26 of the Defence of India Rules conferred additional powers for detention; in other words; by Rule 26 the scope of Para (X) was extended. If Rule 26 merely provided for additional power for detention, it could not be said that it was not in conformity with the powers conferred by sub-section (1) of Section 2 of the Defence of India Act. In the-case before me, the regulation concerned is to direct conflict with clause (j) of sub-section (2) of Section 30, and, as I have said, it could not have been the intention of the Legislature that the right conferred under clause (j) should be nullified by the Council's power to make regulations for the engagement and training of articled clerks. 'Talpade's case', in my view, is distinguishable from the present case. It appears to me that the Council's duty under clause (b) of sub-section (2) of Section 15 to regulate the engagement and training of articled clerks is subject to a Fellow's right to charge a premium. Had the Legislature intended that the premium should be refunded, it would have, used appropriate words to that effect. In my view, in so far as Regulation 3 purports to take away a Fellow's right to charge a premium in consideration of the training which he undertakes to give to the articled clerk, it is ultra vires Section 30 of the Act. Consequently, clause 4(f) of Form 'L' is also ultra vires Section 30 of the Act.

9. The point as to jurisdiction can be disposed of shortly. The plaintiff's cause of action consits of the following facts: the execution of the Articles of Apprenticeship which admittedly took place in Calcutta; the despatch of the said Articles from Calcutta to Delhi with a request to have them registered; the refusal by the defendant Institute to register them, and the communication of such refusal to the plaintiff in Calcutta. No one can suggest therefore, that no part of the cause of action arose within jurisdiction. Leave under Clause 12 was duly obtained and I cannot see how this Court can be said to have no jurisdiction to try this suit. This point is, therefore, decided against the defendant Institute.

10. In the result, the plaintiff is entitled to a declaration that the Deed of Articles entered into between the plaintiff and the defendant Prasanta Kumar Dutt and dated April, 1950 is valid. The plaintiff is also entitled to declarations in terms of prayers (b) & (c) respectively as well as to an injunction restraining the defendant Institute from disallowing the plaintiff to charge a premium from defendant No. 2. The defendant Institute must pay the costs of this suit. This is an important case and I certify that this is a fit case for the employment of two Counsel.


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