Foreign Law Firms Prohibited from Setting Offices in India: Sanctity of the Advocates Act Upheld

Here’s a landmark judgement by the Apex Court on the foreign law firms setting offices in India and a weekly round-up of the major judgements from around the country and legal policy development, for Different Truths.

In a judgment with wide-ranging ramifications, the Supreme Court has rejected the plea of foreign law firms to set up offices in India or practice in Indian Courts. But it allowed them to act on a fly-in and fly-out basis, for giving legal advice on the foreign law on international legal issues, and that too not on a consistent basis. Earlier, the Madras High Court had held in A.K. Balaji v Government of India that foreign law firms could not practice law in India on a litigation or non-litigation side, unless they fulfill the requirement of the Advocates Act and the Bar Council of India (BCI) Rules. Agreeing with the same, the Apex Court here majorly dealt with five issues.

Firstly, whether the expression ‘practice the profession of law’ was inclusive of litigation practice or, the non-litigation practice also? By relying on Pravin Shah v Mohd Ali, the Supreme Court stated that it did include both, as ethics of the profession were not applicable not only when the lawyer has to appear before a court of law but also apply to practice outside the Court. Professional standards and ethics cannot be jettisoned in the name that one is doing ‘litigation’.

Secondly, whether such practice by foreign law firms or foreign lawyers is permissible without fulfilling the requirements of Advocates Act and the Bar Council of India Rules? The Court stressed on the requirements placed by the Advocates Act, which clearly states that only those enrolled with the Bar Council of India can appear before the Court. The restriction is equally applicable to citizens as well as foreigners. The Court categorically held that the Advocates Act and Bar Council Rules for the conduct of advocates apply to non-litigation work as well. An argument was raised, unsuccessfully, that the Act only applied to individuals and not to firms.

Thirdly, if the above question is answered in the negative, whether there is a bar for the said law firms or lawyers to visit India on ‘fly in and fly out’ basis for giving legal advice regarding the foreign law on diverse international legal issues? The Court reiterated the stand of the Bombay High Court that fly-in and fly-out can be allowed for foreign lawyers, as long as it is not to frequent to tantamount to practice. And the Court left the framing of rules for infrequent visits to the Bar Council. In fact, the Court categorically rejected the contention that a foreign lawyer is entitled to practice foreign law in India without subjecting himself to the regulatory mechanism of the Bar Council of India Rules.

Fourthly, did any bar exist on foreign law firms and lawyers from conducting arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration? The Court held that it was not possible to hold that there was no bar to foreign lawyers conducting arbitrations in India, but it would be governed by the rules of the institutions/parties or the rules of international commercial arbitration. Even in those cases, code of conduct mentioned in domestic law had to be followed. The Court then asked the Union of India and Bar Council of India to frame regulations in this regard, if considered necessary.

Lastly, the Court also dealt with the issue of BPOs and ruled that BPOs would not violate provisions of the Advocates Act, only if their activities do not amount to ‘practice of law’ as defined. They provide a range of customized and integrated services and functions to their customers and may not violate the provisions of the Advocates Act.

Thus, the Supreme Court mostly agreed with the decisions of the Madras High Court and Bombay High Court on the legality of foreign law firms operating in India, without complying with the Advocates Act and Bar Council Rules. This judgment assumes huge significance in the current scenario where there are talks about the Government allowing foreign direct investment in the legal sector, albeit mostly in non-litigation areas. It is argued that allowing foreign law firms in the Indian legal sector would also improve the much-derided efficiency of Indian lawyers and provide better services to the clients. The implications of the judgment on this issue would be quite significant, if the Government allows FDI in the legal profession. Be that as it may, the perils of the administration of justice in India will not be resolved by the entry of foreign law firms, rather they may get more skewed. The ills plaguing the Indian judiciary, in terms of huge pendency of cases, an insufficient number of judges in the subordinate judiciary and in High Courts, inability of the poor and marginalised communities to access justice, etc. The Government should focus more on addressing these concerns, instead of focusing on FDI in the legal sector.[Bar Council of India v A.K. Balaji, Civil Appeal Nos.7875-7879 of 2015, date of judgment: 13.03.2018]

Weekly Round-Up of Major Decisions of the Courts in India and Legal Policy Development

Deadline for Mandatory Linkage of Aadhaar with Bank Accounts and Mobile Extended till Disposal of Aadhaar – The Supreme Court extended the deadline for mandatory linkage of Aadhaar number with bank accounts and mobile numbers till the disposal of petitions challenging the Constitutional validity of Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. But the Court clarified that the extension is not applicable to benefits, services, and subsidies under the Act. The Court also extended the deadline to cover passports issued under ‘Tatkal’ system. [Justice Puttaswamy v Union of India, Writ Petition (Civil) No. 494/2012, date of order: 13.03.2018]
Judgment in Judge Loya’s Death Case Reserved – The Supreme Court has reserved its judgment in the petitions seeking an independent probe into Judge Loya’s death in November 2014.In his concluding submissions, Mukul Rohtagi, appearing for the State of Maharashtra, tried to discard the Petitioners’ concerns about foul play in Judge Loya’s death and said that all procedures were duly followed. A discreet inquiry was conducted by an officer of the rank of DCP who spoke to the four judges who were alleged with Judge Loya at the time of his death. He then accused the Petitioners of doing all these not to uphold the rule of law, but to target one person, i.e., Amit Shah. Ms. Indira Jaising then submitted that if the Court was ruling only on the point of the necessity of an independent probe, then the other issues be sent back to Bombay High Court. [Tehseen Poonawala & Ors. vs. Union of India & Ors., Writ Petition (Civil) No. 19 of 2018, date of order: 16.03.2018]
Demonstrations that Create Nuisance Cannot be Protected under Article 19(1)(c) – While hearing a petition by the President of the Gorkha Mukti Morcha, Bimal Gurung requesting transfer of FIRs launched against him and other members of the outfit to an independent investigation agency, the Supreme Court ruled on the scope of Article 19(1)(a), which guarantees the freedom of speech and expression to citizens. The Court held that “right of public speech is one form of expression which is also a part of freedom of speech and expression. Demonstrations are also a mode of expression of the rights guaranteed under Article 19(1)(a). Demonstrations whether political, religious or social or other demonstrations which create public, disturbances or operate as nuisances, or create or manifestly threaten some tangible public or private mischief, are not covered by protection under Article 19(1).” [Bimal Gurung v Union of India, Writ Petition (Criminal) No. 182 of 2017, date of judgment: 16.02.2018]
All Third-Party Interventions in Ayodhya Case Dismissed – The Supreme Court dismissed all third-party intervention applications in the Ramjanmabhumi- Babri Masjid land dispute case and directed the registry not to entertain any intervention applications in the matter, as they did not merit any consideration. In the light of this, the Court also ordered the revival of Subramaniam Swamy’s writ petition, which he had withdrawn with the leave of the court to file an application for intervention. The Court further allowed Rajeev Dhawan, appearing for one of the main parties, to make submissions whether the judgment in Dr. M. Ismail Faruqui vs. Union of India (1994), requires reconsideration, and if it does, then the Court will pass appropriate orders for placing the matter before the five-judge bench. [ Siddiq v Mahant Suresh, Civil Appeal Nos.10866-10867/2010, date of order: 14.03.2018]
Amended Section 36 of the Arbitration and Conciliation Act to Apply to Appeals Filed before the Date of the Amendment– The Supreme Court, in a much-needed relief, has clarified the scope of Section 36, after the enactment of the Arbitration Amendment Act, 2015. As per the amended Section 36, an automatic stay is no longer available against an arbitral award and the party challenging the award has to apply for the same. The Court held that it is clear that latter part of Section 26 is prospective in nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to Court proceedings, which have commenced on or after the Amendment Act came into force, while the former makes the Act applicable to applications under Section 34 pending before the amendment act came into force. The Court pointed out that there was no substantive right vested in the judgment debtor, which could be taken away by such an interpretation. [BCCI v Kochi Cricket, Civil Appeal No. 2879-2880 of 2018, date of judgment: 15.03.2018]
Protection to Karti Extended until March 26 – The Supreme Court has transferred all the pending matters in the INX media case to itself. The Court took this decision, in light of the conflicting decisions of the various High Courts regarding the interpretation of powers of the ED to arrest an accused. The Supreme Court then granted relief to Karti Chidambaram by extending his protection from the arrest till March 26, 2018, the protection which was granted by the Delhi High Court in a petition.[Directorate of Enforcement v Karti Chidambaram, Special Leave Petition (criminal) Diary No(s).9360/2018, date of order: 15.03.2018]
Gujarat Court to not Proceed with Jay Shah Defamation Case until April 12 –The Supreme Court directed the Additional Chief Metropolitan Magistrate not to proceed with the criminal defamation proceedings against The Wire filed by Jay Shah, until the next hearing on April 12.The Court also issued a notice in the SLP filed by The Wire Journalist Rohini Singh against the judgment of the Gujarat High Court refusing to quash the defamation proceedings. While the bench criticised the liberty that online news portals take, The Wire pleaded that the article was just a straightforward narration of facts, which can be proved through evidence. [Rohini Singh v State of Gujarat, Special Leave to Appeal (Crl.) No(s).1836/2018, date of order: 15.03.2018]
Legal Heirs can be evicted for Ill-Treatment of Parents – The Delhi High Court held that a maintenance tribunal under the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 can order the eviction of the heirs to the property, if they ill-treat their parents. In this case, the 68 year old father owned a property in Old Delhi and two floors were occupied by his sons. The three sons were paying a meagre 20,000 towards the maintenance of the parents, even though their mother needed extra medical attention. The maintenance tribunal ordered the sons to vacate the third floor and pay more money to the parents. The Delhi High Court, while upholding the order, stated that the statute is aimed at the welfare of senior citizens and parents and therefore the tribunal would have such power. [Shadab Khairi v State, Letters Patent Appeal No. 783/2017 date of judgment: 22.02.2018]

Other Legal Developments:

Parliamentary Report Recommends Increasing the Strength of Women Judges to 50% – The Parliamentary Standing Committee on Personnel, Public Grievances and Law and Justice in its report has recommended that reservation be introduced for women in Law Universities and the sub-ordinate judiciary. Highlighting the cases of Tamil Nadu, Telangana, etc., where reservations have been introduced in the sub-ordinate judiciary, it states that the overall representation of women in the judiciary is a cause of concern. It also points towards the even worse representation in the higher judiciary and how only 6 women judges have been appointed to the Supreme Court since independence. The Committee, accordingly, suggests that the Bench of Higher Judiciary should be reflective of the composition of the society and so suitable measures should be taken to include more and more women Judges in both Higher and Subordinate judiciary.