03 August, 2015

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Big Four CA Firms - E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law

Big Four CA Firms - E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law

The Society of Indian Law Firms, a collective of India’s Premier Law Firms, has filed a complaint dated 18th June 2015 with the Bar Council of India claiming that the big four CA firms, E&Y, Deloitte, KPMG & PWC, are carrying on unauthorized practice of law and that this contravenes section 29 of the Advocates Act which provides that only Indian citizens who are enrolled with the State Bar Councils as advocates have the right to practice the profession of law in India.

The complaint relies on the law laid down by the Supreme Court in Madras Bar Association v Union of India where it was held that Chartered Accountants and Company Secretaries cannot be permitted to appear on behalf of a party before the National Tax Tribunal. The Court held that CAs and CSs would at best be specialists in understanding and explaining issues pertaining to accounts but are not eligible to practice law. A similar sentiment was expressed by the Madras High Court in A. K. Balaji vs. GOI. The Court expressed concern that many accountancy and management firms are employing law graduates and are rendering legal services contrary to the Act and are engaged in the unauthorised practice of law.

Support has also been drawn from the judgement of the Bombay High Court in Lawyers Collective vs. Bar Council where it was held that even “drafting documents, reviewing and providing comments on documents, conducting negotiations and advising clients on international standards and customary practice relating to the client’s transaction etc. was nothing but practising the profession of law in non litigious matters”.

The complaint has given specific instances of the alleged unauthorized practice of law by the said big four CA firms.

With specific reference to Ernst and Young, it is pointed out that E&Y has acquiesced to practicing the profession of law in the submissions made by it in a service-tax matter reported as Ernst and Young Ltd v CST [2012 (27) S.T.R 462 (Tri-Del)]. E&Y admitted that it is rendering, inter alia, “Litigation support: assistance in preparation and filing of replies to notices issued by department, attending hearings and various other litigation support services”.

The complaint also alleges that the induction of PDS Legal, a law firm, as a member / affiliate firm of E&Y Global Limited, means that “E&Y have in a surrogate manner engaged in the practice of law”. It is also claimed that “the advocates of PDS Legal attend the Partners meeting of E&Y network of firms and take part in the discussions with the members of the E&Y Network”. It is also alleged that the advocates of PDS Legal are involved in determining the business strategy to meet clients and cross-refer work to each other and that there is a “modus operandi between PDS Legal and E&Y to share remuneration etc”.

It is also alleged that PDS Legal uses the logo of E&Y and that PDS Legal and E&Y share office space, address etc.

Similar specific instances of alleged violation of the law by Deloitte, KPMG and PWC are also given in the complaint.

According to a report in the ET, the Bar Council of Delhi has issued notices to the said CA firms and directed them to respond to the allegations by 7th August 2015.

The ET also reported that each of the said CA firms has claimed that it is “committed to operate as per the highest professional standards” and that they have “not contravened any law including the Advocates Act 1961


Click Here to Read Entire Complaint

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