S.V.G. Ratna Gupta vs State of Andhra Pradesh

Subhashan Reddy, J.—In these two Criminal revision Cases, the prime question for consideration is as to whether the office of the Chartered Accountant, be it of an individual or a firm, is a commercial establishment within the meaning of Section 2 (5) of the A.P. Shops and Establishments Act.

The Criminal prosecution was launched against the Petitioner in S.T.C. Nos. 94 and 95 of 1991 on the file of the Court of Additional Judicial Magistrate of First Class, Kadiri for the violations of the provisions of A.P. Shops and Establishments Act (hereinafter referred to as "the Act") and the rules made thereunder. The Petitioner who was running a Chartered Accountant firm was appointed for the professional work of billing by the A.P. State Electricity Board and for that purpose, was to use the premises of the said Board Office. The accusation against the Petitioner in S.T.C. No. 94 of 1991 is that he failed (a) to send an application for renewal of the registration certification for the year 1990; (b) to maintain or produce the register of wages on demand; and (c) to maintain or produce the register of leave at the time of inspection. The accusation in S.T.C. No. 95 of 1991 is that the Petitioner has failed to (a) issue letter of appointment in form ''S'' to the employees; and (b) produce the visit book on demand to note the remarks at the time of inspection. The Court of Magistrate has rendered separate judgments on 8th July, 1991 upholding the contention of the prosecution regarding the applicability of the Act and finding the Petitioner guilty of the charges levelled against him of the violations of the Act and the Rules, sentenced him to pay fine amounts of Rs. 30/- and 10/- in S.T.C. No. 94 of 1991 and Rs. 20/- and Rs. 20/- in S.T.C. No. 95 of 1991.

The Petitioner is the same in both the Revision petitions. Appearing for the Petitioner, Mr. T. Bali Reddy, the learned Counsel, submits that the office of the Chartered Accountant run by the Petitioner does not fall within the definition of ''Commercial Establishment'' u/s 2 (5) of the Act and as such, the said Act is inapplicable to the Petitioner and that the prosecution launched against the Petitioner is unsustainable and the convictions recorded and sentences of fine imposed by the Court of Magistrate are liable to be set aside.

The learned Additional Public Prosecutor contends that the office of the Chartered Accountant is a ''Commercial Establishment'' within the ambit of the statutory provision referred to above.

The word ''commercial establishment'' is defined under the Act as an establishment which carries on any trade, business, profession or any work in connection with or incidental or ancillary to any such trade, business or profession, or which is a clerical department of a factory or an industrial undertaking, or which is a commercial or trading or banking or insurance establishment and include an establishment under the management and control of a co-operative socierty, an establishment of a factory or an industrial undertaking, which falls outside the scope of Factories Act, 1948 and such other establishments as the Government may, by notification, declare to be commercial establishment for the purposes of this Act. No doubt, the word ''profession'' is employed in the definition clause of commercial establishment, but it has to be considered as to whether the said word ''profession'' embraces even the Chartered Accountant. Similar questions regarding the susceptibility of the lawyers, and doctors to the said definition and applicability of the Act not only of this State, but also the analogous provisions contained in similar Acts of Kerala and Karnataka and other States fell for consideration earlier.

in Dr. Devendra M. Surti Vs. The State of Gujarat, interpreting a similar provision of Bombay Shops and Establishments Act, 1948 it was held by the Supreme Court that private dispensary of a doctor is not a commercial establishment within the meaning of the said Act and that the provisions of the said Act do not apply to a doctor''s dispensary. Holding so, the convictions recorded and sentences imposed against the doctor were set aside. The Supreme Court held that the correct test of finding whether a professional activity is a commercial establishment is whether the activity is systematically and habitually undertaken for production or distribution of goods or for rendering material services to the community or any part of the community with the help of employees in the manner of a trade or business in such an undertaking. The Supreme Court further held that a professional activity is carried on by an individual by his personal skill and intelligence and that there is fundamental distinction between a professional activity and an activity of a commercial character and unless the profession carried on by a person also partakes of the character of a commercial nature, he cannot fall within the ambit of commercial establishment. Held, the Supreme Court further, that a person following a liberal profession like that of a doctor does not carry on his profession in any intelligible sense with the active co-operation "of his employees and the principal, if not the sole, capital which he brings into his profession is his special or peculiar intellectual and educational equipment and that as such, the professional establishment of a doctor cannot be termed as a commercial establishment.

When a doctor of this State was prosecuted for the violations of the Act (A.P. Shops and Establishments Act), following the Supreme Court decision, Seetharam Reddy J., by his judgment dated 10-10-1985 rendered in Crl.M.P. No. 1641 of 1985, held that dispensary of a private medical practitioner does not fall within the meaning of ''commercial establishsment'' u/s 2 (5) of the Act and quashed the criminal prosecution of a doctor who was practising at Vijayawada.

On another occasion in V. Sasidharan Vs. Peter and Karunakar and Others, considering the applicability of Kerala Shops and Commercial Establishments" Act, 1960 to the office of a Lawyer, be it an individual or a firm, the Supreme Court held that whatever the popular conception or mis-conception regarding the role of to-day''s lawyers and alleged narrowing of the gap between the profession on one hand and a trade or business on the other, it is trite that, traditionally, lawyers do not carry on a trade or business nor do they render services to "customers" so as to bring them within the meaning of "commercial establishment". The Supreme Court further held: "For these reasons, we are of the opinion that the office of a lawyer or of a firm of lawyers is not a ''commercial establishment'' within the meaning of the Act. This conclusion is strengthened by the other provisions of the Act. Chapter 1 -A of the Act provides for registration of establishment, Chapter-II for hours of work, Chapter-Ill for holidays and leave, Chapter-IV for wages, Chapter-V for employment of children and women and Chapter-VI for health and safety measures. Section 6 of the Act provides that no employee in any establishment shall be required or allowed to work for more than eight hours on any day or for more than 48 hours in any week. Section 8 requires that, the period of work of an employee in an establishment for each day shall be so fixed that no period shall exceed four hours and that no such person shall work for more than four hours before he has had an interval for rest of at least one hour. u/s 10, no establishment shall, on any day, be opened earlier than and closed later than such hours as may be fixed by the Government, provided that any customer who is being served or is at the hour fixed for its closing may be served during a quarter of an hour immediately following such hour. These and other cognate provisions of the act show that a lawyer''s office cannot possibly be comprehended within the meaning of the expression commercial establishment'' as defined in Section 2(4) of the Act. We are quite solicitous about the welfare of those who work in the lawyers'' office. But there are many other ways in which their welfare can be ensured. If the current trends are any indication and if old memories fall not, the earnings of lawyers'' clerks cannot, in reality, bear reasonable comparison with the earnings of employees of commercial establishments, properly so called. They undoubtedly, work hard but they do not go without their reward. They come early in the morning and go late at night, but that is implicit in the very nature of the duties which they are required to perform and the time they spend is not a profitless pastime."

After consideration of the prdfessions like medicine and law as to whether a Doctor''s office or a lawyer''s office are ''commercial establishments, it was the turn of chartered accountants. The said isue also came up for consideration by the Karnataka High Court in Phillipos and Co. Vs. State, . Justice Navadgi dealt with the issue very comprehensively considering various provisions of Chartered Accountant''s Act, 1949 and the regulations made there under, as also the further amendments thereto and the provisions of Karnataka Shops and Establishments Act, 1961. The learned Judge held that the Chartered Accountant carries on a learned profession and that it is his special qualification, professional equipment and knowledge that are placed at the disposals of his clients and that the nature of the work of a Chartered Accountant in practice, the character of the work he can do as a Chartered Accountant with the restrictions and the obligation to conform to the norms of professional conduct would show that the performance of his functions and duties is analogous to the functions and duties of a lawyer and that the requirements of learning, skill and integrity for. the carrying on of a profession would make it clear that the Office of a Chartered Accountant or of a firm of Chartered Accountants cannot be regarded as premises where services are rendered to customers. Relying upon the judgment rendered in V. Sasidharan v. Peter and Karunakar (2) supra, the learned Judge held that there is no distinction in the functions of a lawyer and a Chartered Accountant in so far as the professional activities are concerned and that what is held in favour of a lawyer in'' the above Supreme Court judgment is also squarely applicable to the office of a. Chatered Accountant or a firm of Chartered Accountants. Holding so, and by invoking the inherent powers of Section 482 Cr. P.C., the prosecution launched against the firm of Chartered Accountants was quashed.

I am in respectful agreement with the judgment rendered by Justice Navadgi in Phillipos and Co. v. State (3) supra. The word ''profession'' employed under Sub-section (5) of Section 2 of the Act cannot be taken literally and in a general way including the profession, such as, medicine, legal or Chartered Accountancy. Since these are the professions run by the individual or the colletive intellect and skill of respective professionals, there is no element of rendering material services either to the customers or to the community at large with the helf of employees. These professionals, no doubt, carry on profession, but not with profit motive and are regulated by Code of Conduct, be it under Medical Council Act (for doctors), ''Bar Council Act or Advocates Act (for Advocates) or Chartered Accountants Act (for Chartered Accountants). The said professionals may earn livelihood out of their professional work, but the same cannot be equated as working for any profit or gain with the aid of employee. Concisely speaking, pursuit of professional duties of a doctor, a lawyer or a Chartered Accountant cannot be equated as doing a profession in real sense for profit or gain with the aid of employees. The Doctors, Lawyers or Chartered Accountants, even if they employ certain staff, do not partake the character of ''commercial establishment. In the instant cases, the Court of Magistrate has grossly erred that the Office of the Chartered Accountant is a commercial establishment within the meaning of Section 2(5) of the Act. Even sitting in the premises of a branch office of A.P. Electricity Board for the purpose of billing does not make any difference.

In view of what is stated supra, I hold that the office of a Chartered Accountant run by the Petitioner wherever it is, either in his office premises or at any premises where he carries on such work, do not attract the provisions of A.P. Shops and Establishments Act and as such, the prosecution launched against him is unsustainable. Accordingly, I set aside the judgments rendered by the Court of Additional Judicial Magistrate of First Class, Kadiri in S.T.C. Nos. 94 and 95 of 1991 and the convictions recorded and sentences of fine imposed thereunder. The fine amounts, if already paid by the Petitioner, shall be refunded to him in both the cases.

Crl.R. Cs. are allowed accordingly.