Delhi District Court
The Institute Of Chartered vs The National Institute Of on 25 April, 2018
IN THE COURT OF PRAVEEN KUMAR: ADDITIONAL
DISTRICT JUDGE05 :NEW DELHI DISTRICT, PATIALA
HOUSE COURTS, NEW DELHI.
Civil Suit No.57987/16
In the matter of : (Ten Years Old Case)
The Institute of Chartered
Accountants of India,
A Body Constituted under the
Chartered Accountants Act, 1949
Having its Office at
Indraprastha Marg,
New Delhi110002
Through its Secretary,
Dr. Ashok Haldia ..................Plaintiff
Versus
1. The National Institute of
Certified Public Accountants,
52, Nagarjuna Hills,
Punjagutta,
Hyderabad500082
And also at
The National Institute of Certified
Public Accountants,
"ICFAI Centre"
812B, 8th Floor,
Indraprakash Building
21, Barakhamba Road,
New Delhi110001
2. The Society of Certified Public
Accountants (SCPA)
52, Nagarjuna Hills,
Hyderabad500082 ..................Defendants
CS No.57987/16
Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants
(N.I.C.P.A) and Ors. Page No.
JUDGMENT:
1. This is a suit for permanent injunction filed by the plaintiffInstitute for restraining the defendants, their agents, representatives, employees, assigns, successors, etc., from soliciting registration from students, issuing forms, holding classes, imparting training, conducting examinations and/or bestowing any designation of an accountant including the designation of Certified Public Accountant (in short 'CPA'). 2.1 The case of the plaintiff, in brief, is that it is a body corporate, incorporated under the provisions of The Chartered Accountants Act, 1949 (hereinafter referred to as 'the Act') to regulate the profession of Chartered Accountants in India. The defendant no.1National Institute of Certified Public Accountants (in short 'NICPA') claims to be a constituent of the defendant no.2Society of Certified Public Accountant (in short 'SCPA'), a Society incorporated under the Andhra Pradesh (Talangna area) Public Societies Act, 1350F. Defendant no.2SCPA claims to be an affiliate Organization of the institute of Chartered Financial Analysts of India (in short 'ICFAI') and is said to be governed by the Regulation of ICFAI relating to affiliate organization. Defendant no.1 has opened centres to provide information of the CPA Programme and the applications for admission into the CPA Programme are also submitted at these Centres. There is strong and abiding relationship between the defendant nos. no.1 and 2. Defendant no.1 is responsible for organising the training aspects CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. of the CPA programme including study and examinations whereas defendant no.2SCPA is responsible for over all growth and development of the CPA profession. It is averred that persons after completing the prescribed course are eligible for the membership of CPA. It is averred that the defendants are carrying on their activities all over India including Delhi through these Centres. 2.2 It is further the case of the plaintiff that in order to give effect to various provisions of the Act, the plaintiff has framed the Chartered Accountants Regulations, 1988. As per Section 24A of the Act, no person other than the plaintiffInstitute can award any degree, diploma or certificate or bestow any designation, which purports to indicate position or attainment of any qualification or competence similar to that of a member of the plaintiffInstitute. However, such restriction is not applicable in case of any University established by law or to any other body affiliated to the Institute. The plaintiff also actively pursues development of advanced techniques of accountancy and establishment of standards in auditing and accounting practices and certain auditing/accounting standards set by the plaintiff are statutory in nature. It is averred that certain statutory functions can only be performed by members of the plaintiffInstitute. They are given the designation of Associate Member of the Institute of Chartered Accountants (in short 'ACA') and Fellow member of the Institute of Chartered Accountants (in short 'FCA') depending upon the continuous practice. A person, who has passed the CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. examination is given the designation of ACA and an ACA who has completed five years continuous practice is known as FCA. The plaintiff conducts a course for enrolling qualified persons as its members. The course conducted by the plaintiff is in two parts viz. practical training as well as theory. Students registered with the plaintiff have to undergo practical training as an Article clerk or Audit Clerk with other practicing and eligible members of the plaintiff. The said training can also be substituted in the last year of training by industrial training in any industry which is approved by the plaintiff. In addition to the approved practical training programme, the plaintiff conducts examinations in various subjects. Only those persons who complete their practical training and pass the examination conducted by the plaintiff are eligible for becoming members of the plaintiff and are entitled to hold a Certificate of Practice issued by the plaintiff. 2.3 It is further the case of the plaintiff that the defendant no.1 claims that its objective is to develop a new cadre of accounting professionals through a comprehensive and contemporary body of knowledge and a rigorous education and certification program titled the 'Certified Public Accountants' Program. The defendant offers the designation of 'CPA' and the designation of 'CPA' given by the defendant denotes that a person holding such designation is a qualified person in the field of accountancy. It is averred that the designation being offered by the defendant no.1 clearly shows that the topics covered in the two CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. courses are similar. A perusal of the literature issued by the defendant no.1 clearly shows that a person with the qualification 'CPA' is certified and authorized to practice accountancy. 2.4 It is further the case of the plaintiff that the activities of the defendants are contrary to Section 24A of the Act as the same are aimed to bestow upon the students a designation indicating competence and qualification of a Public Accountant and that the defendant no.1 is not entitled to carry on the aforesaid activities. It is averred that the plaintiff came across with the aforesaid literature issued by the defendants in September, 2001. The cause of action further arose in November, 2011 when the plaintiffInstitute came to know about the classes being conducted and training being imparted by the defendant no.1 in various cities of India including New Delhi. On these allegations, the plaintiff has sought injunction as stated hereinabove.
3. Written statement purportedly has been filed by the defendant nos.1 and 2. However, the same has been signed on behalf of the defendant no.2 alone. The defendants have averred that the plaintiff has no right to claim injunction. It is averred that defendant no.2 is an affiliate organization of ICFAI University. ICFAI University is providing the courseMS Accounting. The defendant no.2 was setup by ICFAI. The defendant no.1 is a constituent of defendant no.2. It is averred that after filing of the present suit, ICFAI has established ICFAI under Chattisgarh Niji Kshetra Vishwavidyalaya (Sthapana aur Viniyam) Adhiniyam, CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. 2002 (in short 'Chhatisgarh Act'). It is averred that the designation conferred by the defendant no.1 is not similar to the designation offered by the plaintiff. The defendants are not purporting to indicate the position or attainment of any qualification or competence similar to that of a member of the plaintiff. The defendants are not resorting to any activity which may attract Section 24A of the Act. It is averred that the plaintiffs are not entitled to any relief and, thus, the suit of the plaintiff be dismissed with costs.
4. The plaintiff filed replication controverting the averments made in the written statement and reiterating the averments of the plaint.
5. From the pleadings of the parties, following issues are framed:
(i) Whether the plaintiff is entitled to a decree of permanent injunction restraining the defendants, its agents, representatives, employees, etc., from soliciting registration from students, issuing forms, holding classes, imparting training, conducting examinations and/or bestowing any designation of an accountant including the designation of Certified Public Accountant? OPP.
(ii) Whether the present suit is not maintainable in view of the provisions of 15(1) and 24A of the Chartered Accountants Act, 1949, if so, its effect? OPD.
(iii) Whether the suit is not maintainable in view of CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. preliminary objection no.F of the written statement of defendants? OPD.
(iv) Relief.
6. The plaintiff has filed the affidavit of Dr. P.T. Giridharan (PW1) in evidence and he was cross examined by the counsel for the defendants. The defendants have filed the affidavit of Shri M. Banerjee, Law Officer of ICF in defence evidence. He was cross examined by counsel for the plaintiff.
7. I have heard Sh. Rakesh Aggarwal, ld. Counsel for the plaintiff and Ld. Counsel for the defendant. Ld. Counsel for the plaintiff has contended that the plaintiff is a creation of the Chartered Accountants Act, 1949, an Act of Parliament. Section 24A(ii) of the said Act provides that no person shall award any degree, diploma or certificate or bestow any designation which indicates or purports to indicate the position of attainment of any qualification or competence similar to that of a member of a plaintiffinstitute. According to him, plaintiff is entitled to injunction as prayed for in the suit.
8. On the other hand, ld. Counsel for the defendants has contended that the defendant's programmes are established under the Chhatisgarh Act. Thus, the defendant no.1 is entitled to run its programme. Secondly, he has contended that the designation conferred by the defendant no.1 is not similar to the designations offered by the plaintiff. In support of his contentions, he has relied upon judgment - Institute of Chartered Financial Analysts of India CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. Vs. Council of the Institute of Chartered Accounts of India, (2007) 12 SCC 2010.
9. I have gone through the file. PW1 has deposed on the lines of averments made in the plaint and has proved the following documents:
(i) Ex.PW1/1 Advertisement issued by the defendant no.1 in 28th November, 2002 issue of Hindustan Times.
(ii) Ex.PW1/2 - Comparative chart indicating basic features of the plaintiff and the defendant no.1.
(iii) Ex.PW1/3 - Comparative chart showing the subjects covered in courses of the plaintiff and the defendant no.1.
(iv) Ex.PW1/4 - Comparative chart showing the syllabus of the plaintiff and the defendant no.1.
(v) Ex.PW1/5 - Copy of literature issued by the
defendant no.1.
10. In his crossexamination, correctness of the above mentioned charts is not disputed in any manner. Except giving a suggestion that contents of CPA programme are different, nothing was suggested to PW1 as to what are the differences. On the contrary, PW1 has categorically deposed that difference between CA and CPA is only of nomenclature as in India CA is recognised for statutory audits.
11. DW1 - Shri M. Banerjee in his affidavit in evidence has deposed that he was/is working as law Officer in ICFAI. He has proved his authorisation letter as Ex.DW1/1, Gazette CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. Notification dated 11.10.2002 as Ex.DW1/2, Copy of relevant portion of Gazette dated 11.10.2002 as Ex.DW1/3, copy of First Statute of the ICFAI University, Raipur as Ex.DW1/4, copies of advertisement made in newspaper inviting applications from Chartered Accountants and Certified Public Accountants as Ex.DW1/5, copy of the prospectus of the year 2003 as Ex.DW1/6. In his affidavit, he has deposed that by virtue of establishment of ICFAI University all the programmes offered by the ICFAI and its affiliates were transferred to ICFAI University. The defendant no.2 is an affiliate organisation of ICFAI University and it does not bestow any designation to attract Section 24A of the Act. He has further deposed that there is no similarity in the designations CPA on one hand and ACA and FCA awarded by plaintiff on the other.
12. In his crossexamination, he has deposed that ICFAI has been operating in India since 1984. He has deposed that defendant no.2 is a constituent of ICFAI and was established in 2001. He has deposed that till March, 2003 the prospectus or other literature of ICFAI did not refer to ICFAI University or Chhatisgarh Act. He has further deposed that the notification establishing the university under Chhatisgarh Act was quashed by the Supreme Court of India in 2005. In his further cross examination, he has deposed that he never worked with any of the defendants and that he has no personal knowledge about them. He has deposed that defendant no.2 was running information centres CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No. since 2002. As per DW1, the defendant no.2 was affiliated with ICFAI University. However, he had admitted that no document showing affiliation in the year 2002 exists. He has deposed that documents showing affiliation in the year 2003 exists but has not been placed on record. He has further deposed that the defendants have no presence in India after 28.03.2003.
13. My issuewise findings are as under: Issue Nos.1 and 2
14. Since these issues are interlinked, they are being decided together. The onus of these issues is on the plaintiff.
15. The plaintiff is a creation of the Chartered Accountants Act, 1949, an Act of Parliament. Section 3 of the Act provides that it shall sue by its name. The contention to the contrary raised by the defendant is not sustainable. Section 24A(ii) of the Act provides that no person shall award any degree, diploma or certificate or bestow any designation which indicates or purports to indicate the position of attainment of any qualification or competence similar to that of a member of the plaintiff. Section 24A(3) of the Act carves out an exception in as much as nothing in Section 24A of the Act shall apply to any university established by law or any body affiliated to the plaintiffInstitute. The present suit was filed on 26.03.2003. Admittedly, the defendants were not affiliated with the plaintiff nor were a University established by law. As such, the defendant can't claim benefit of Section 24A(3) of the Act. The plaintiff has CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No.10 proved on record three comparative charts indicating basic features of the plaintiffInstitute and the Defendant no.1. PW1 has proved the comparative chart showing the subjects covered in courses and syllabus of the plaintiff and the defendant no.1 as Ex.PW1/2 to Ex.PW1/4 respectively. The defendants have not disputed the correctness of the said charts. Except giving a bald suggestion that the programmes of the plaintiff and the defendants are different, nothing has been pointed out as to what are the differences. Thus, in view of Section 24A(ii), the defendants are not entitled to bestow any designation which is indicative or purports to indicate position or attainment of any qualification or competence similar to that of a member of the plaintiffInstitute.
16. The suit and the application under Order 39 Rules 1 and 2 read with Section 151 CPC were listed before the High Court of Delhi (where the suit was earlier pending). On 28.03.2003 the High Court of Delhi was pleased to grant ad interim injunction order restraining the defendants from bestowing the designation of CPA which involves identical functions of the Chartered Accountants. The defendants with a view to circumvent the said order claim to have shifted the abovesaid programmes to a University established under the Chhatisgarh Act. This fact itself demonstrates that the defendants were aware that they were not authorized to carry out the activities resulting in awarding of designation CPA. Needless to mention that such University could operate in the State of Chhatisgarh only while the defendants were CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No.11 operating throughout India. Thus, the stand taken by the defendants was nothing but a camouflage and is of no consequence. Further, though a notification with regard to establishment of the said University is dated 11.10.2002, no reference thereto was made in the literature of the defendants till 31.03.2003. Even for the subsequent period, in this regard, no material has been placed on record. Notification dated 11.10.2002 was quashed by the Apex Court on 19.02.2005. The judgment relied upon by Ld. Counsel for the defendant is not applicable to the facts of the present case. Thus, the plaintiff has proved that the plaintiffInstitute is entitled to the reliefs claimed in the suit. Hence, these issues are decided in favour of the plaintiff and against the defendants.
Issue No.3
17. The onus to prove this issue is on defendants. The defendants have failed to discharge the said onus and to substantiate their objection regarding nonmaintainability of the suit. Hence, this issue is decided against the defendants and in favour of the plaintiff.
Relief
18. As I have decided all the issues in favour of the plaintiff and against the defendants, the plaintiff is entitled to the relief of injunction against the defendants. Hence, the suit of the plaintiff is decreed with costs. The defendant no.1, its agents, representatives, employees, assigns, successors, etc., from CS No.57987/16 Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No.12 soliciting registration from students, issuing forms, holding classes, imparting training, conducting examinations and/or bestowing any designation of an accountant including the designation of Certified Public Accountant. Decree sheet be drawn accordingly. File be consigned to Record Room after due compliance.
Dictated and announced in (PRAVEEN KUMAR)
open court today i.e. on 25.04.2018 Additional District Judge05,
NDD, Patiala House Courts,
New Delhi. (R)
CS No.57987/16
Institute of Chartered Accountant Vs. The National Institute of Certified Public Accountants (N.I.C.P.A) and Ors. Page No.13