:1: :1: :1: IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL CRIMINAL CRIMINAL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO. 1232 OF 1995. 1. M/s. A. F. Ferguson & Company, Chartered Accountants, A Partnership Firm registered under the Indian Partnership Act, 1932, Having its Head Office at Allahabad Bank Building, Bombay Samachar Marg, Bombay - 400 001. 2. Mr. Rangaswamy Subramaniam, Senior Partner, M/s. A. F. Ferguson A Company Having his Office at Allahabad Building, Bombay Samachar Marg, Bombay - 400 001. 3. Mr. Y. M. Kale, Partner, M/s. A. F. Ferguson & Company, having his office at Maker Towers, "E", Cuffe Parade, Bombay 400 005. 4. Mr. V. Swaminathan, Partner, M/s. A. F. Ferguson A Company Having his Office at Allahabad Building, Bombay Samachar Marg, Bombay - 400 001. 5. Mr. B. P. Shroff, Partner, M/s. A. F. Ferguson & Company, having his office at Maker Towers, "E", Cuffe Parade, Bombay 400 005. 6. Mr. K. M. Powvala, Partner, M/s. A. F. Ferguson A Company Having his Office at Allahabad Building, Bombay Samachar Marg, Bombay - 400 001. 7. Mr. F. M. Chinoy, Partner, M/s. A. F. Ferguson A Company Having his Office at Allahabad Building, Bombay Samachar Marg, Bombay - 400 001. versus. 1. The State of Maharashtra. :2: :2: :2: 2. Mr. R. K. Prabhu, Senior Inspector, Shops & Establishments, Municipal Corporation of Greater Bombay, having his office at "A" ward Municipal Corporation of Greater Bombay. ---- Shri. J. P. Cama, Senior Counsel with Shri. Ganesh S. Shetty i/b M/s. Crwford Bayloy & Company for the petitioners. Shri. A. A. Kumbhakoni, Associate Advocate General. Shri. D. S. Mhaispurkar, APP for the respondent no.1. Shri. R. T. Walawalkar i/b Ms. T. H. Puranik for the respondent no.2. CORAM: CORAM: CORAM: S.B.MHASE, & S.B.MHASE, & S.B.MHASE, & S.R.SATHE, S.R.SATHE, S.R.SATHE, JJ. JJ. JJ. DATE DATE DATE : May 5, 2006. : May 5, 2006. : May 5, 2006. Oral Oral Oral Judgment (Per S.B.Mhase,J.) Judgment (Per S.B.Mhase,J.) Judgment (Per S.B.Mhase,J.): 1. The petitioners have invoked the jurisdiction of this Court under Article 226 of the Constitution of India challenging the provisions of Section 2(4) of the Bombay Shops and Establishments Act, 1948 and the Bombay Shops and Establishments Amendment Act, 1977 in so far as they seek to include the establishments of "Accountants" within the definition of "commercial establishment" and thereby prayed for declaration that the provision is unconstitutional. The petitioner has also prayed for a writ of certiorari, or writ in the nature of :3: :3: :3: certiorari or order or direction calling for the records and proceedings of the Criminal Case No. 53/SEM/1995 registered before the Metropolitan Magistrate, Esplanade Court and after going into the legality, validity and propriety of the same to quash the criminal Case No. 53/SEM/95 registered against the petitioner Nos. 2 to 7. 2. Initially the petition was filed as against the respondent nos. 1 & 2. However, by order dated 18th October, 1996 passed in Criminal Application No. 1556 of 1996, the Audit Employees Union, (a Trade Union registered under the provisions of the Trade Unions Act, 1926) was added as a respondent No.3. But by order dated 11.12.2004, in view of the by consent minutes of order between the petitioner and respondent no.3, the name of respondent no.3 was deleted. The said minutes of order were accepted by this Court by order dated 11.12.2004. Thus, it is clear that the respondent no.3 Audit Employees’ Union is not a party to this proceeding, though at one stage it was joined as a party - respondent. 3. Petitioner no.1 is a partnership firm of the Chartered Accountants registered under the :4: :4: :4: Indian Partnership Act, 1932 having its head office at Allahabad Bank Building, Bombay Samachar Marg, Mumbai and other offices in Mumbai situated at Express Towers, Nariman Point and Makers Towers, Cuffe Parade, Colaba. The petitioner nos. 2 to 7 are the partners of the petitioner No.1 firm and each of them is a Chartered Accountant recognised by the Institute of Chartered Accountants of India. 4. The Criminal proceeding was instituted against the petitioners by 2nd respondent in the Court of the Metropolitan Magistrate, Esplanade bearing No. 53/SEM/95 for alleged contravension of the Bombay Shops and Establishments Act, 1948 to the following effect: (i) Failing to register under the Act as a ‘commercial establishment’, (ii) not maintaining a register of employment in the prescribed form, and (iii) Not maintaining the visit book for inspector to record his remarks. . This criminal case is filed as against :5: :5: :5: the petitioners in the following circumstances: . Petitioner firm was registered under the Bombay Shops & Establishments Act, 1948 upto the year 1966. In a decision of this Court in the case of N.E.Merchants v/s. Bombay Municipal Corporation reported in 1967 Mh.L.J. 1008, it was held that the office of the ‘Chartered Accountant’ was not a commercial establishment. Therefore, the Municipal Corporation of Greater Mumbai by letter dated 9th November 1967 informed the petitioner firm that the firm needs no longer to register itself under the said Act. The said letter is produced on record. However, in the year 1977 the Bombay Shops & Establishments Act, 1948 was amended by Amendment Act of 1977, being Maharashtra Act No. 64 of 1977. The definition of the "commercial establishment" was amended to include the establishments of Chartered accountants, tax consultants along with other professions. However, for the first time on 17th October 1994, the respondent No.2 Shri. R. G. Prabhu, Senior Inspector, A-Ward, Municipal Corporation, Greater Mumbai visited the petitioner’s firm - office at Allahabad Bank Building and inspected the record and books of the firm. Following the :6: :6: :6: said visit, the petitioner firm addressed a letter dated 9th November 1994 to the Municipal Corporation, Greater Mumbai explaining that the petitioner firm was/is not a commercial establishment as contemplated under the said Act and the provisions of the said Act ought not to be made applicable to the petitioner firm. However, the petitioner firm has not received any reply to the said letter dated 9.11.1994. But on 27.6.1995 the petitiner nos. 2 to 7 received summons from the Court of the Metropolitan Magistrate, Esplanade requiring the petitioners to appear before the Court on 3.7.1995. The summons was in respect of case No. 53/SEM/1995 registered on a complaint filed by the Senior Inspector, A-Ward, Municipal Corporation, Greater Mumbai under section 52/56 of the Bombay Shops & Establishments Act, 1948 for the contravention of the provisions of sections 7(1) & (4) of the said Act and rules 20(1), 20(3)(a)(5) of the Maharashtra Shops & Establishments Rules, 1961. Thus, being aggrieved by the inclusion of the profession of Accountants by Amending Act of 1977 within the definition of the commercial establishment and being further aggrieved by the summons that has been issued by the Special Metropolitan Magistrate, Esplanade Court against the :7: :7: :7: petitioner nos. 2 to 7 for alleged contravention of the provisions of the Bombay Shops & Establishments Act, 1948, the petitioners have approached to this Court seeking declaration that the said provision of the amending Act of 1977 is unconstitutional. 5. The rule was issued by this Court on 20.11.1995 and the interim relief was granted. Since the constitutional validity of the amending Act of 1977 is challenged, on 21.3.2005 notice was issued by this Court to the office of Advocate General. Thus, even though the State of Maharashtra was a party since beginning and further a special notice was issued by this Court to the Advocate General as stated above, no reply-affidavit has been filed by the respondent - State opposing the petition. It is further to be noted that the respondent no.2, the Inspector under the Bombay Shops & Establishments Act, 1948 of the Municipal Corporation, though was represented by a counsel for the corporation has also not filed any return. Thus, so far as the factual averments in the petition are concerned, the petition proceeded without any opposition and/or denial from the side of the respondents. This is more specifically placed on record in order to state that the :8: :8: :8: respondents have not placed on record the nature of the activities, as according to them which are/were carried on by the petitioners in the premises at Allahabad Bank Building where the Senior Inspector of the Municipal Corporation had visited so as to demonstrate that in fact the activities carried on by the petitioners are/were commercial activities. Thus, there was an opportunity to file a return explaining factually the activities which the petitioner were carring on in the said premises so as to show that the activities of petitioners are commercial activities. But the said opportunity was not availed by the respondents. 6. The petitioners have stated that the petitioner No.1 firm is a firm of Chartered Accountants and each of the partners of the said firm is a Chartered Accountant and the petitioners are not engaged in any business and/or trade and/or any activity which is commercial in nature and derogatory to the provisions of the Chartered Accountants Act, 1949. 7. According to the learned counsel for the petitioner the amendment of the definition of "commercial establishment" as contained in section :9: :9: :9: 2(4) of the Bombay Shops and Establishments Act, 1948 (No. 64 of 1977) enlarging the meaning of the word commercial establishment so as to include the establishments of Chartered Accountants and/or a firm of the Chartered Accountants is not justified since the Chartered Accountants and/or the firm of Chartered Accountants are regulated by the Chartered Accountants Act, 1949. It is submitted that the 1st petitioner- firm and the petitioner nos. 2 to 7 being engaged purely in professional activities is not a commercial venture and consequently cannot be considered as a commercial establishment to which the provisions of the Act of 1948 are applicable. It is urged that the class of Chartered Accountants and the firm of the Chartered Accountants did not par-take all the attributes of the business, commerce or trade which were necessary for bringing them within the definition of commercial establishment and in view of the avowed object of the Act, as originally framed, the inclusion of the Chartered Accountants in the definition was arbitrary, irrational, and was therefore voilative of Article 14 of the Constitution of India. In order to demonstrate that the petitioner is not carrying out a commercial activity and/or activities which can be termed as commercial activities, :10: :10: :10: learned counsel has taken us through the petition demonstrating the work which has been carried out by the petitioners in their firm. The petitioners have also relied upon: 1967 1967 1967 Mh.L.J. 1008 in the matter of Mh.L.J. 1008 in the matter of Mh.L.J. 1008 in the matter of N.E.Merchant N.E.Merchant N.E.Merchant v/s. The Bombay Municipal v/s. The Bombay Municipal v/s. The Bombay Municipal Corporation Corporation Corporation AIR-1969 AIR-1969 AIR-1969 SC 63 Dr. Devendra N. Surti SC 63 Dr. Devendra N. Surti SC 63 Dr. Devendra N. Surti v/s. v/s. v/s. The State of Gujarat The State of Gujarat The State of Gujarat. 1984 1984 1984 LIC 1587 (SC) V. Sasidharan v/s. LIC 1587 (SC) V. Sasidharan v/s. LIC 1587 (SC) V. Sasidharan v/s. M/s. M/s. M/s. Peter & Karunakar & others Peter & Karunakar & others Peter & Karunakar & others 1991 1991 1991 Lab.I.C. 427 (Karnataka High Court) Lab.I.C. 427 (Karnataka High Court) Lab.I.C. 427 (Karnataka High Court) Phillipose Phillipose Phillipose & Co., & Ors. v/s. the & Co., & Ors. v/s. the & Co., & Ors. v/s. the State. State. State. 1991 1991 1991 Lab.I.C. 1408 (Kerala High Court) Lab.I.C. 1408 (Kerala High Court) Lab.I.C. 1408 (Kerala High Court) P.P. P. K. Ramanathan v/s. The state of K. Ramanathan v/s. The state of K. Ramanathan v/s. The state of Kerala Kerala Kerala The The The unrepoted judgment of the Calcutta unrepoted judgment of the Calcutta unrepoted judgment of the Calcutta High High High Court in Suit No. 4615 of 1989 Court in Suit No. 4615 of 1989 Court in Suit No. 4615 of 1989 dated dated dated 29th June 1990 in the matter of 29th June 1990 in the matter of 29th June 1990 in the matter of :11: :11: :11: Arovinda Arovinda Arovinda Roychowdhary & Others v/s. The Roychowdhary & Others v/s. The Roychowdhary & Others v/s. The chief chief chief Inspector, Inspector, Inspector, Shops & Establishments Shops & Establishments Shops & Establishments & others. others. others. 2001 2001 2001 (1) L.L.N. 121 (A.P. High Court) (1) L.L.N. 121 (A.P. High Court) (1) L.L.N. 121 (A.P. High Court) inin in the the the matter of K. Gopalakrishnan v/s. Gopalakrishnan v/s. Gopalakrishnan v/s. Assistant Assistant Assistant Inspector of Labour (Assistant Inspector of Labour (Assistant Inspector of Labour (Assistant Labour Labour Labour Officer), Rayadurg Officer), Rayadurg Officer), Rayadurg 8. In order to demonstrate that the profession involves the idea of occupation requiring purely intellectual skill and/or manual skill controlled by intellectual skill of the operator as distinguished from an occupation which is substantially the production or sale or arrangement for the production or sale of the commodities; the learned counsel relied upon various pronoucements of different High Courts, as stated above. These cases have considered the professions like - legal profession, solicitors and Chartered Accountants. The learned counsel submitted that the profession of the Chartered Accountant is not a commercial venture so as to include it into the definition of the commercial establishment as has been done by the amending Act of 1977 (64 of 1977). The learned counsel very emphathetically relied upon the case of :12: :12: :12: 1986 1986 1986 Lab.I.C. Lab.I.C. Lab.I.C. 318 Narendra Keshichand Fuladi & Anr. 318 Narendra Keshichand Fuladi & Anr. 318 Narendra Keshichand Fuladi & Anr. v/s. v/s. v/s. The State of Maharashtra The State of Maharashtra The State of Maharashtra wherein the Division Bench of this Court has considered the validity of the amendment to section 2(4) of the Bombay Shops & Establishments Act, 1948 as amended by Amending Act 64 of 1977 in respect of the "legal practitioners" and has declared that the said definition to the extent of inclusion of profession of the legal practitioner is uncontitutional and struck down the same, as it herds together commercial establishment with the profession of the legal practitioner and hearding together legal profession with other professions and/or business, trade activities is irrational and arbitrary. The learned counsel further submitted that the profession of legal practitioner and that of Chartered Accountants in sofar as service, discipline and control is concerned is one and the same. He submitted that profession of Chartered Accountant is also wrongly, arbitrarily and irrationally herded together with business, trade, hotel, restaurant, etc., by the said amending Act and, therefore, it is necessary to declare said amending Act to be unconstitutional as was done in case of Narendra Fuladi referred to above, and therefore, have challenged the said amending Act. :13: :13: :13: 9. Learned Additional Advocate General appearing for the State submitted that the ratio of the judgment reported in 1967 Mh.L.J. 1008 in the 1967 Mh.L.J. 1008 in the 1967 Mh.L.J. 1008 in the matter matter matter of N.E.Merchant v/s. The Bombay Municipal of N.E.Merchant v/s. The Bombay Municipal of N.E.Merchant v/s. The Bombay Municipal Corporation Corporation Corporation cannot be read so as to mean that provisions of the Bombay Shops and Establishments Act, 1948 did not apply to any establishment of a Chartered Accountants in general. 10. Learned Associate Advocate General, Shri. A. A. Kumbhkoni invited our attention to the guarded words reflected in the said jugdment. "We should like to guard ourselves against saying that in no conceivable circumstances could the profession of a chartered accountant be organised on a commercial basis." . Thus, he submitted that the judgment itself contemplated every possibility that the profession of the Chartered Accountant can be conducted in an organised manner or on commercial basis. Therefore, there is no reason to read this judgment to mean that thereby it is laid down as a blank preposition of law that the said Act of 1948 :14: :14: :14: did not and could not apply to each and every establishment of the Chartered Accountants. He submitted that there was enough evidence which was sufficient to consider that the petitioners in that case not conducting the profession of the Chartered Accountant in a commercial manner. He submitted that on the other hand in the present matter the averments of the petitioner coupled with the civil application filed by the employees of the petitioner for intervention shows that prima facie the petitioner are conducting the commercial activities in the establishment. However, he submitted that after trial alone it will be possible to reach at a definite conclusion in that regard. 11. Relying upon AIR-1969 SC 63 Dr. Devendra AIR-1969 SC 63 Dr. Devendra AIR-1969 SC 63 Dr. Devendra N. N. N. Surti v/s. The State of Gujarat Surti v/s. The State of Gujarat Surti v/s. The State of Gujarat, he submitted that it was possible to have a professional establishment of Doctors, where activities carried on are of commercial character. In that case, again appreciating the nature of the activities carried out at the dispensary of the petitioner from that case it was held that the case of the petitioner therein did not fall within the purview of the concerned Act. He relied upon (2005) 9 SCC 605 to demonstrate that the hosptial conducted was held to :15: :15: :15: be an establishment within the meaning of the terms as defined in Bihar Shops & Establishmwents Act. The learned Additional Advocate General also relied upon AIR-1963 CAL 310 in the case of Rabindra Nath Sen to show that the profession of Chartered Accountant is distinguishable from that of the solicitors and to show that the Chartered Accountant can carry on his business in a commercial manner even while strictly complying with the provisions of the Chartered Accountants Act, 1949. He invited our attention to the decision of the Supreme Court in the case of Federation of Indian Chambers of Commerce reported in (1975) 3 SCC 64 and submitted that the Supreme Court has noted the similar view and therefore there is every room to conclude that at an establishment of a Chartered Accountant it is possible to conduct activities in an organised commercial manner." Thus, the emphasis of argument was that, that the cases upon which the learned counsel for the petitioner have relied upon have not led to a blanket proposition of law in respect of the professions that the professions can/could not be carried out as commercial establishment, and more specifically in respect of the profession of the Chartered Accountants and submitted that those cases have been decided on the facts of those cases. :16: :16: :16: 12. Learned Additional Advocate General further submitted that the case in respect of the Solicitors and lawyers cannot be compared with another profession, much less that of the doctors, Chartered Accountants and/or engineers. He submitted that AIR-1986 Lab.I.C 318 Narendra K. Fulladi v/s. State of Maharashtra being the case of the legal practitioners cannot be applied to the case of the Chartered Accountants, because there are no common properties or characteristics to be found in the establishment of Chartered Accountants and the establishments of legal practitioner. He submitted that establishment of Chartered Accountant certainly be conducted, even within the provisions of a Chartered Accountants Act, 1949 in an organised and commercial manner and that therefore such an establishment has always been included within the provisions of the said Act of 1948. The Maharashtra Act No. 64 of 1977 to that extent is only clarificatory in nature and emphasises the position that already existed even prior to the said amending Act. The same has to be read to mean that the provisons of the Act will apply to such of these establishments where the activities in issue are conducted in an organised and commercial manner. :17: :17: :17: Therefore, learned counsel submitted that the question, whether a particular establishment is a commercial establishment will have to be decided on the basis of the activities in issue being conducted in an organised and commercial manner or not, and will depend upon facts of each case and decision thereof will depend upon the evidence that may be led in such case. Without there being any evidence led to show as to the manner in which the activities in issue are conducted at a given establishment, as a general preposition of pure law, it cannot be said that each and every establishment of a Chartered Accountant is not a commercial establishment. It is further submitted that, therefore specific inclusion of such establishments in the definition of the term ‘commercial establishment’ by the Maharashtra Act No. 64 of 1977 does not amount to herding together these establishments, which was/is impermissible under Article 14 of the Constitution. He submitted that the said Act of 1948 is after all a social piece of legislation meant to protect the interests of the employees of these commercial establishments and therefore is required to be construed accordingly. The provisions of the Maharahstra Act No. 64 of 1977 are also required to be construed in that spirit. He also submitted that there is :18: :18: :18: presumption as to the constitutional validity of these provisions and it cannot be said that the petitioners have been able to discharge their burden in proving it to the contrary. He further submitted taking us through the various chapters of the Bombay Shops & Establishments Act, 1948 that Part-I consists of shops; Part-II consists of commercial establishments; Part-III consists of residential hotels; Part-IV consists of restaurants and eating houses; and Part-V consists of theaters and other places of public amusement or entertainment. Thus, he submitted that the scheme of the Act demonstrates that the said Act does not treat all the commercial establishments such as that of a Chartered Accountant and other establishments in an identical manner by herding them together. On the contrary, each type of establishment is treated separately. He invited our attention to some of the provisions of Schedule-II to the said Act of 1948, in particular, serial No. 18 and 22 of this Schedule which show that the establishments of Income Tax practitioners are exempted from operations of some of the provisions of the said Act of 1948. According to him the scheme of the said Act of 1948 shows that instead of having separate statutes for each type of such establishment, all these :19: :19: :19: establishments of various types and kinds are covered by only one statute, viz., the said Act of 1948, albeit treating them at some places similarly wherever found requisite and separately wherever necessary. It is submitted that on this ground it can not be said that there is herding of establishments in such a manner that the same is hit by Article 14 of the Constitution. It is constitutionally permissible to have such a classification, as held by the Supreme Court in 1985 (supp) SCC and (2004) II SCC 526 and thereby submitted that the legislation cannot be faulted and held unconstitutional for not having sub- classification or so to say micro - classification. Then learned Additonal Advocate General relied upon 1995 Mah.L.J. 420 and (2001) 1 SCC 57 and submitted that the activities of consultancy at the establishment have been held to attract the provisions of the said Act of 1948. Therefore, he stated that the said activities of petitioners are covered under the definition of the commercial establishment. 13. The Bombay Shops & Establishments Act, 1948 (Bombay Act No. LXXIX of 1948) has been passd to consolidate and amend the law relating to :20: :20: :20: conditions of work and employment in shops, commercial establishments, residential hotels, restaurants, eating houses, theaters, other places of public amusement or entertainment and other establishments. The