Thursday 27 November 2014

Alarmed at falling standards, Bar Council of India notifies rules intended to improve standards of the legal profession

With  the express object of achieving "better and effective administrative and disciplinary control of local Bar Associations, State Bar Councils and the Bar Council of India over advocates entered on the Rolls of advocates being maintained by different State Bar Councils under section 22 of the Advocates Act and further in order to weed out advocates who have left practice", the Bar Council of India, in the exercise of powers conferred on it by section 49(1) (ag), 49 (ah) 49(i) of the Advocates Act, 1961 and by all other enabling and residuary powers vested in it, has notified, in the Gazette, the “Bar Council of India Certificate of Practice and Renewal Rules, 2014” on 29.10.2014. Except for Rule 7 which prescribes the minimum experience required for practice before High Courts and Supreme Court, all the other provisions of the Rules would come into effect from the date of publication of the notification.

The Statement of Objects and Reasons of the Rules refers to concerns expressed in a Joint meeting of the representatives of all State Bar Councils and Bar Council of India that the trend of Advocates switching over to other professions/services/business without any information to the State Bar Council has reached alarming proportions and that this trend is endangering the legal profession as a whole. Referring to this trend, it says, "It has also made a dent in its sanctity and standards. Names of such advocates continue to be included in the “Roll of advocates” being maintained by the State Bar Councils, notwithstanding the fact that they have left the legal profession or have since died. Though under section 19 of the Advocates Act, the State bar Councils are under legal obligation to send a copy of the Roll of advocates prepared by it under section 17 of the Act and subsequent alterations/additions thereto but practically no state bar Council has observed this mandatory provision of the Act up till now". The Bar Council of India has also candidly admitted that the All India Bar Examination introduced to improve the standard of legal profession has also failed to fully achieve its objective. 

Salient Features of the Rules

1. Commencement:

Except for Rule 7 of Chapter III which would come into force on such date as the Bar Council of India notifies in the Gazette of India, all the other provisions of the Rules take effect at once.

2. Certificate of Practice:

Rule 5 lays down that "An advocate shall not be entitled to practice law unless he holds a valid certificate of practice issued either under All India Bar Examination Rules or under these Rules"

3.  Registration in local Bar Association:
 
The Rules require an advocate, after having obtained a Certificate of Enrollment to get himself registered as a member of the Bar Association where he ordinarily practices law or intends to practice law. In case an advocate leaves one Bar Association and joins another by reason of change of place of practice or by reason of change of field of law, he/she shall have to intimate such change with all the relevant particulars to the State Bar Council, of which he is a member. The Rules also mandate that such fact of leaving as well as of joining should be independently intimated to the said Bar Council  within a period of one month. The Rules also lay down criteria for recognition of Bar Associations. 

4.  Minimum experience required for practice in High Courts and Supreme Court

For the purposes of Rule 7 and prescribing the minimum experience required to pratice in Courts of law, the Bar Council has classified the Courts of law into three tiers: District & Sessions Courts and courts subordinate to it, High Courts and Supreme Court. 
 
Rule 7 (not notified yet) by the Bar Council of India lays down that an advocate enrolled after the commencement of the Rules and after having obtained certificate/renewal of practice can  practice law only before such Courts of Law as are equivalent to Sessions Judge or District Judge and such other Courts in specific field/s of law that are exercising original jurisdiction in the matters covered by such fields of law and all other Courts which are subordinate to them.  

Only after completing two years of practice in such Courts/Tribunals equivalent to District/Sessions Court or Courts subordinate to them or Courts exercising original jurisdiction, can an advocate enrolled after the commencement of the Rules and after having obtained certificate/renewal of practice, "be entitled to practice law before a High Court and such other Courts in specific fields of law that are exercising appellate or revisional jurisdiction in the matters covered by such fields of law and all other Courts which are subordinate to them." Therefore, should Rule 7 be notified by the Bar Council of India, 2 years of experience in trial Courts/Tribunals would be a mandatory prerequisite for being eligible to practice in High Courts.  

Further more, the Rules lay down that an advocate enrolled on the roll of advocates after the enforcement of the Rules would be entitled to practice before the Supreme Court only after gaining 3 years of experience in the High Court. 

5. Application for grant of “Certificate of Practice" 

Rule 8 lays down the conditions to be fulfilled for grant of a Certificate of Practice. An advocate who has obtained graduate degree in law before the academic year 2010 enrolled on the “Roll of Advocates”, is required by the Rules to apply for issuance of “Certificate of Practice” from the State Bar Council in which he/she is enrolled as an advocate under this rule within a period of 6 months of the enforcement of these Rules/date of enrolment. An advocate who graduated in the academic year 2009-2010 and thereafter enrolled on the "Roll of Advocates" on or after 12th June, 2010 is required by the Rules to apply for issuance of Certificate of Practice under the All India Bar Examination Rules, 2010 from the respective State Bar Council in which he/she is enrolled. 

6. Validity of Certificate of Practice

Rule 9 lays down that Certificate of Practice issued under the Rules, and the renewal thereof, shall be valid only for a period of 5 years., and is therefore, liable to be renewed every 5 years by filing an application for renewal in advance within a period of 6 months before the validity period expires. Applications for grant/ renewal of “Certificate of Practice” of Advocates,would be scrutinised  by the Office of the Bar Council and placed along with personal file of applicant before the Administrative Committee for passing appropriate order, either allowing or dismissing the application. Such an application would be dismissed by the Committee if the applicant has left practice and it is found that he/she has no bona fide intent and interest in continuing in future also. Such an applicant would be treated as a non-practicing advocate under the Rules. Adverse orders would however not be passed without affording an opportunity of being heard to the applicant concerned.

7.  Consequence of failure to make application for grant of Certificate of practice/renewal

The Rules lay down that were an advocate fail to make an application for grant of Certificate of practice/renewal within the period prescribed, it would be presumed that such an advocate has left law practice and has no bona fide intent and interest in continuing in future also. The Office of the State Bar Council has been charged under these Rules with the obligation of preparing a list of such defaulting advocates who have failed to make an application for grant of Certificate of practice/renewal within the period prescribed, and to intimate such advocates of the fact of their inclusion in such a list. Applications for grant of Certificate of Practice/renewal received from such advocates whose names have been included in the 'List of defaulting Advocates' would have to be accompanied by late fee and thereafter processed.

8. Consequence of failure to respond to intimation issued by State Bar Council 

Failure to respond to the intimation sent by the State Bar Council of the inclusion in the 'List of defaulting Advocates', can entail the name of the advocate concerned to be included in the 'list of Non-Practicing Advocates'.  Non-practicing advocates are barred under the Rules from practicing law before any Court of law/Tribunal. 

9. Appeal and Revision
The Rules provide for the constitution of an Appellate Tribunal for each State Bar Council comprising three members headed by the member of the Bar Council of India from the State Bar Council concerned,  for consideration and disposal of appeals under the Rules. The Bar Council of India has been vested with revisional powers under the Rules.

The Rules notified by the Bar Council of India has evoked a  mixed response from members of the legal fraternity, and at least one writ petition challenging Rule 7 laying down minimum experience needed for practice in High Court and Supreme Court has already been filed (in the Madras High Court).
 
 

Attorney General advises Tax Department not to prefer an appeal from the verdict of Bombay High Court in Vodafone tax case

The Attorney General of India, Mukul Rohatgi has advised the Income Tax Department against preferring an appeal from the judgment of the Bombay High Court wherein it had ruled in favour of Vodafone Group Plc in the transfer pricing case relating to (alleged) undervaluation of share capital issued by Vodafone India Services Private Limited (Vodafone India) to its Mauritius parent. 

On August 21, 2008, Vodafone India had issued 2,89,224 equity shares of Rs 10 each at a premium of Rs 8,500 per share. However, the Income Tax Department revalued the shares at Rs 53,775 per share claiming that the company had underpriced its shares which led to an income of Rs. 45,000/- (roughly) apiece. It held that the differential in share price ought to be treated as Vodafone India's taxable income through an international transaction. Based on arm's length pricing adjustment (treating the transaction as if it was with an unrelated company) , the tax department held a total shortfall of Rs 1,308.91 crore to be a deemed loan given by Vodafone India to its holding company. Periodical interest income was also held chargeable to tax in the hands of Vodafone India. The Income Tax Department thus accused Vodafone India Services Private Ltd, a unit of the British group, of under-pricing shares in a rights issue to its parent company and demanded tax of about 3,200 crore rupees ($486 million) for two financial years leading up to March 2011.

Challenging the demand, the company had approached the Bombay High Court. However, the Bombay High Court had held in its judgment on October 10, 2014 that issue of shares does not give rise to any income and there can be no question of any transfer pricing adjustment. Transfer pricing is the value at which companies trade products, services or assets among units in different countries, a regular part of business for a multinational company. Rules require all cross-border transactions among group companies to be valued at ‘arm’s length’, or as if the transaction was with an unrelated company. A Bench comprising Chief Justice Mohit Shah and Justice M S Sanklecha had ruled thus: "Issue of shares at a premium by the petitioner to its non-resident holding company does not give rise to any income from an admitted international transaction." 

The verdict of the Bombay High Court was interpreted by experts as a shot in the arm of several other companies such as Nokia, IBM, Shell India, Cairn India and Leighton India contractors among others who are all enmeshed in a similar legal dispute with the Income Tax Department. 

The Income Tax Department was awaiting the advice of the Central Board of Direct Taxes (CBDT) and the Attorney General before taking a decision on preferring an appeal to the Supreme Court of India against the adverse ruling of the Bombay High Court. In thus giving his opinion, the Attorney General has concurred with the opinion of the Chairman of the CBDT against preferring an appeal from the Bombay High Court ruling.


not appeal a Bombay high court judgement which ruled last month in favour of the Indian unit of Vodafone Group Plc. in a Rs.3,200 crore tax dispute—

Read more at: http://www.livemint.com/Politics/5L6D8zMuWCl5op4W95U23H/AG-tells-govt-not-to-appeal-Vodafone-tax-dispute-ruling.html?utm_source=copy
not appeal a Bombay high court judgement which ruled last month in favour of the Indian unit of Vodafone Group Plc. in a Rs.3,200 crore tax dispute

Read more at: http://www.livemint.com/Politics/5L6D8zMuWCl5op4W95U23H/AG-tells-govt-not-to-appeal-Vodafone-tax-dispute-ruling.html?utm_source=copy
not appeal a Bombay high court judgement which ruled last month in favour of the Indian unit of Vodafone Group Plc. in a Rs.3,200 crore tax dispute

Read more at: http://www.livemint.com/Politics/5L6D8zMuWCl5op4W95U23H/AG-tells-govt-not-to-appeal-Vodafone-tax-dispute-ruling.html?utm_source=copy