SC restrains RBI on approval to foreign law firms (Lead)

July 5th, 2012 - 5:43 am ICT by IANS  

New Delhi, July 4 (IANS) The Supreme Court Wednesday restrained the Reserve Bank of India (RBI) from granting permission under the foreign exchange provisions to overseas law firms for setting up offices in India.

An apex court bench of Justice R.M. Lodha and Justice Anil R. Dave said that the foreign law firms could not practise in Indian courts.

The court said “it is clarified that the Reserve Bank of India shall not grant any permission to the foreign law firms to open liaison offices in India under Section 29 of the Foreign Exchange Regulation Act, 1973″.

The expression “to practice the profession of law” under Section 29 of the Advocates Act, 1961 covered “the persons practicing litigious matters as well as non-litigious matters other than contemplated in para 63(ii) of the impugned order…”, the court said.

“Therefore, to practice in non-litigious matters in India the foreign law firms, by special leave petition (Civil) No(s).17150-17154/2012, whatever name called or described, shall be bound to follow the provisions contained in the Advocates Act, 1961,” the court said.

The court said this in the course of the hearing of a petition by the Bar Council of India challenging the Feb 21 order of the Madras High Court which said that there was no prohibition on foreign law firms and lawyers to visit India to tender legal advice to their clients on foreign laws or their own legal system and on diverse international legal issues.

Before stating this, the high court said that the “foreign law firms or foreign lawyers cannot practice the profession of law either on the litigation or non-litigation side, unless they fulfil the requirements of the Advocates Act, 1961 and the Bar Council of India rules”.

The bar council protested the high court’s observation that the business process outsourcing (BPO) engaged in wide range of activities did not come under the purview of the Advocates Act, 1961 or the Bar Council of India rules.

The high court said that “in the event of any complaint made against these BPO companies violating the provision of the (Advocates) Act, the Bar council of India may take appropriate action against such erring companies”.

Senior counsel M.N. Krishnamani, appearing for the bar council, told the court that the judgments by two high courts first by the Bombay High Court and then by the Madras High Court needed to be clarified.

The apex court, while acknowledging that there were grey areas in the Bombay High Court and the Madras High Court judgment, said: “We will clarify everything when we take up the matter.”

The Bombay High Court by its judgment of 1995 held that the RBI was not justified in granting permission to foreign law firms to open their liaison offices in India under Section 29 of FERA Act.

The high court held that the non-litigation practise (chamber practice) too came within the purview of the Advocates Act, 1961.

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