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Petitioner: Institute of Chartered Accountants of Pakistan and Others VS Respondent: Federation Of Pakistan
Court Name: Sindh High Court Judge(s): Yousuf Ali Sayeed, Ahmed Ali M. Shaikh (C.J) Title:Institute of Chartered Accountants of Pakistan and Others vs Federation Of
Pakistan Case No.: C. P. No. D-4529 of 2015 Date of Judgment:2022-11-11 Reported As: 2022 SHC 502 Result: Petition Dismissed Judgment ORDER YOUSUF ALI SAYEED, J. Professing to be the custodians and gatekeepers to the profession of accountancy within Pakistan, the Petitioners have invoked the jurisdiction of this Court under Article 199 of the Constitution seeking to assail what they perceive to be an encroachment in their domain by the Respondent No.4. 2. The Petitioners Nos.1 and 2, namely the Institute of Chartered Accountants of Pakistan and Institute of Cost and Management Accountants of Pakistan (hereinafter referred to individually as "ICAP", "ICMAP" or "Institute" and collectively as the "Institutes"), regulate the education training and certification of persons aspiring to those particular qualifications and accreditations under the Chartered Accountants Ordinance 1961 and the Cost and Management Accountants Act 1966 (hereinafter referred to individually as the "Ordinance" and the "Act" and collectively as the "Subject Enactments"), whereas the Petitioner No.3, the Pakistan Institute of Public Finance Accountants ("PIPFA") was apparently established by the Petitioners Nos. 1 and 2 in concert with the Auditor General of Pakistan as a non-profit association for performing certain supporting functions, and is registered with the Securities and Exchange Commission of Pakistan ("SECP") under Section 42 of the erstwhile Companies Ordinance, 1984. 3. For its part, the Respondent No.4, the Institute of Certified Public Accountants of Pakistan ("ICPAP") is a society registered under the Societies Registration Act 1860 (the "SRA") in the year 1992, with one of its stated objects being "To advance the theory and practice of accountancy in its all aspects", and as per its own showing, imparts training in Accounting, Finance, Auditing, Management, Corporate and Tax Laws to students for securing the qualification of a certified
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public accountant ("CPA"), but with it being clarified that the same is different from the CPA Program offered by the American Institute of Certified Public Accountants ("AICPA"), and that ICPAP and AICPA are independent of each other, with no reciprocal arrangements. 4. The essence of the grievance espoused by the Petitioners gravitates around their assertion that they collectively regulate the profession of accountancy in Pakistan in terms of the Subject Enactments. Therefore no institution or person other than one registered with them can be allowed to operate as a parallel institute within the jurisdiction, however the Respondent No.4 is functioning so as to impart education and training in the field of accounting leading to the qualification of a CPA, without being accredited by any recognized institution or a professional body, whether in Pakistan or abroad, and without being regulated by any statute. On that premise it has essentially been prayed that the imparting of training and education in accountancy to students, executives, professionals or any other person by the Respondent No.4, leading to a CPA or any other foreign or local qualification in the field of accountancy, be declared to be unlawful and the Respondent No.4 be restrained from functioning in that manner, whilst the Respondents Nos.1 to 3, being the Federation of Pakistan, the SECP and the Registrar of Joint Stock Companies respectively, also be directed to stop the Respondent No.4 from so functioning as well cancel its registration under the SRA. 5. Comments were filed on behalf of the Respondents, with certain third parties also formally seeking to intervene while claiming that they were the Respondent No.4's UAE Chapter and some of its office bearers, hence their interests were liable to be affected by the outcome of the Petition. 6. Advancing his submissions, learned counsel for the Petitioners argued that the Respondent No.4 was acting in violation of Section 22(ii) of the Ordinance by granting certificates which indicated or purported to indicate the possession or attainment of an accountancy qualification in Pakistan, which was not recognized by the Petitioners and/or any foreign or local accountancy body duly recognized by the Petitioners. Furthermore, it was submitted that the Respondent No.4 was also acting in contravention of Section 22(iii) of the Ordinance by seeking to regulate the profession of chartered accountants by training and imparting education to students, working executives and professionals in the field of accountancy. It was contended that the Respondent No.4 was thus interfering with the mandate of the Petitioners and the Respondents No.1 to 3's failure to act so as to prevent the deprivation of that mandate amounted to a contravention of Articles 4 and 9 of the Constitution. In that vein, learned counsel invited attention to an advertisement published on behalf of the Respondent No.4 in the Daily Dawn Newspaper on 28.12.2008, informing the public about the CPA program and its benefits, while inter alia stating that "Direct Membership to CA, CMA, ACCA Conditions apply". It was contended that the Respondent No.4 was thus seeking to portray that its program and qualification was that of or at least akin to the program/certification of the Petitioners Nos. 1 and 2. Drawing a parallel with the profession of Law and medicine, it was argued that just as only those persons licensed as advocates and doctors by a Bar Council or the Pakistan Medical Commission could practice those professions, in the same way, only a person registered as a CA or CMA could practice accountancy. 7. Furthermore, it was averred that as the Respondent No.4 had no accreditation with the AICPA, it was not entitled to administer the CPA examination, yet was awarding certificates to students in Pakistan while leading them to believe that the certification was recognized internationally, thus seriously prejudicing students who could not enter into the audit profession on that basis. It was also argued that the Respondent No.4's operation as an unregulated body in the profession of accountancy was a contravention of Article 18 of the Constitution, and the Respondent No.4 being allowed to operate in an unregulated manner while the Petitioners remained bound by the Subject Enactments offended Article 25 and was also contrary to the public interest.
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8. Charting the course followed by the Petitioners prior to knocking the door of the Court, learned counsel pointed out that the Petitioner No.1 had approached the Registrar of Societies, Government of Sindh requesting it to strike off the name of the Respondent No.4 from the roll of members on the ground that it was providing training in accountancy in an unauthorized manner as an unrecognized and unregulated institution, but no response was forthcoming. Additionally, it was submitted that the Petitioner No.1 had served a Notice dated 15.11.2011 to the Respondent No.2 through counsel, highlighting that the Respondent No.4 was unrecognized and raising a concern that if it were allowed to provide training in accountancy, the profession would be adversely affected as required standards would not be maintained. As such, it was requested that legal action be taken. Thereafter the Petitioner No.1 also addressed letters dated 07.03.2007 and 10.04.2007 to the Respondent No.2, stating that the formation of the Respondent No.4 would be in violation of the 1961 Ordinance as the latter's stated objectives conflicted with that of the Petitioner No.1 and the existence of a parallel body would prove detrimental to the profession of accountancy, with it being said that the Respondent No.2 had therefore turned down the request of the Respondent No.4 for the grant of a license by stating that there was neither any need nor scope for setting up of another professional accountancy body. 9. It was pointed out that the Petitioner No.1 subsequently wrote a letter dated 18.02.2014 to the Respondent No.1, expressing the need for the profession of accountancy to be effectively regulated in Pakistan for its growth and protection, and identified the presence of the Respondent No.4 as a threat to the profession as it was dispensing the CPA course without any approval or regulation, as such was conveying a wrong impression that its qualification was similar or identical to the internationally recognized CPA. It is said that in response, the Respondent No.1 informed the Petitioner No.1 vide a letter dated 19.05.2014 that the matter had been referred to the Law and Justice Division, which in turn suggested in terms of its letter dated 28.04.2014 that the matter may be referred to the Higher Education Commission ("HEC"), with the Petitioner No.1 then advising the Respondent No.1 that the subject did not fall within the definition of an "Institution" as per Section 2(h) of the Higher Education Commissioner Ordinance, 2002, hence was beyond the ambit and purview of the HEC. 10. In the meantime, as the members of the Respondent No.4 had been granted audit and assurance rights in the United Arab Emirates (the "UAE"), the Petitioner No.1 also wrote a letter dated 21.02.2014 to the Minister for Economy, UAE with regard to the Respondent No.4 being an unregulated body, and when no response was forthcoming, also wrote a letter dated 30.04.2014 to the Chairman, Chamber of Commerce and Industry Building, UAE informing it that granting of such rights to members of the Respondent No.4 was a threat to the interests of the public. 11. It was said that in terms of a letter dated 21.11.2013 the Petitioner No.1 once again requested the Respondent No.2 to explore options for taking legal action against the Respondent No.4 as the operation of the Respondent No.4 was prejudicial to the field of accountancy and was jeopardizing the careers of innocent students by providing them with certificates with no or very limited acceptance in the practical terms, with it being sought that the shortcomings in the regulatory framework which allowed the operation of such bodies without any monitoring be removed. It was submitted that the matter was of public importance as the general public was liable to be deceived and prejudiced by the continued operations of the Respondent No.4. 12. Lastly, it was submitted that the Petitioners had locus standi to file and maintain the Petition in a regulatory capacity. 13. Conversely, learned counsel for the Respondent No.4 argued that said Respondent was not encroaching upon the domain of the Petitioners Nos. 1 and 2 in any manner whatsoever as it was not offering any certification that purported to be that of a CA or CMA under the Subject Enactments, and its members admittedly did not possess or purporting to hold either of those
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qualifications. Instead, the Respondent No.4 imparted education and training in accounts, finance, banking, computer sciences, managerial skills, management, audit, corporate and tax laws leading to qualification of a Certified Public Accountant whilst clarifying that it was not an international CPA and was not deceiving any students or its members or any segment of the society by providing them education and training as part of that program. It was argued that the domain, curriculum, and functioning of Respondent No.4 was entirely different from that of the Petitioners and the persons educated/trained by it constituted a class/category of accounting professional that fell outside the ambit of the Petitioners under their respective statues. It was submitted that the advertisement that had been published in the Daily dawn newspaper on 29.03.2013 had unfortunately been misinterpreted by the Petitioners as it had merely stated that exemptions were available for those applicants who possessed qualifications from international and national accounting institutions, B.Com, M.Com, MBA, ICMA, ICAP, ACCA, CIMA, HDA, HND, PIPFA Conditions apply), which was completely different from claiming that the Respondent No.4 was offering those certifications. 14. As previously mentioned, an Application under Order 1, Rule 10 CPC also came to be filed in the matter on behalf of the UAE Chapter/Wing of Respondent No.4 and some of the council members of that chapter, submitting that 537 accounting professionals who had obtained membership of the Respondent No.4 were currently working and providing accounting services in the UAE, as Ministerial Decree No.148 of 2012 issued by the Ministry of Economy, UAE allowed the members of the Respondent No.4 to establish and run audit firms in UAE region. It was contended that as the Petitioner had questioned the continued existence of the Respondent No.4, the interests of the chapter was liable to be affected, hence it ought to be joined as a party to the proceedings. 15. We have considered the arguments advanced at the bar in light of the Subject Enactments and the material placed on record. 16. Looking firstly to the Application under Order 1, Rule 10 CPC, it is apparent that the interveners do not enjoy any status independent of the Respondent No.1 and their fate is accordingly intertwined with that of said Respondent. Hence, no independent right of audience is warranted. 17. A profession is essentially an occupation carried on by a person on the strength and by virtue of his personal qualifications, with Scrutton L.J. having observed as a member of the Court of Appeal in the case of Currie v. Inland Revenue Commissioners, 1921-2 KB 332 that: "In my view it is impossible to lay down any strict legal definition of what is a profession, because persons carry on such infinite varieties of trades and businesses that it is a question of degree in nearly every case whether the form of business that a particular person carries on it, or is not, a profession. Accountancy is of every degree of skill or simplicity. I should certainly not assent to the proposition that as a matter of law every accountant carries on a profession or that every accountant does not. The fact that a person may have some knowledge of law does not, in my view, determine whether or not the particular business carried on by him is a profession. Take the case that I put during the argument, of a forwarding agent. From the nature of his business he has to know something about railway Acts, about the classes of risk that are ran in sending goods in a particular way, and under particular forms of contract. That may or may not be sufficient to make his business a profession. Other persons may require rather more knowledge of law, and it must be a question of degree in each case. Take the case before Rowlatt J. of a photographer: Cecil v. Inland Revenue Commissioners, (1) Art is a matter of degree, and to determine whether an artist is a professional man again depends, in my view, on the degree of artistic work that he is doing." He then went on to observe thus: "But I do desire to say this, as the Master of the Rolls has mentioned it, that I myself am disposed to attach some importance in findings as to whether a profession is exercised or not to the fact that the particular man is a member of an organised professional body with a recognised standard of
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ability enforced before he can enter it and a recognised standard of conduct enforced while he is practising it. I do not for a moment say it settles the matter, but if I were deciding a question of profession I should attach some importance to that particular feature." 18. However, all professions need not be statutorily regulated, for it is not the requirement of Article 18 of the Constitution or any other law that every professional activity be policed or that all professions for that matter be controlled in equal measure, with it being up to the legislature to decide if regulation is required in the public interest in a particular instance, and if so, to what extent. Where regulation is statutorily brought to bear, its essence is inevitably that specific requirements need to be met in order for a person to practise the particular profession, but the degree of regulation may vary, based on whether the relevant legislation imposes a system of certification or licensure. 19. Certification is a less intrusive and exhaustive form of regulation, and is essentially a stamp of approval given to an individual for meeting pre-determined requirements, which may entail their entry to a sanctioned register. It is often associated with the monopoly to use a specific title or professional designation and undertake the occupational functions restricted to holders of that title or designation, but does not prevent other persons engaging in other aspects of the particular occupation without using such title or enjoying the privileges that it may confer. This protects members of the public seeking particular professional services by signifying the qualifications and competence of the title/designation holders so that an informed decision may be made as to whether they are qualified to render the same. 20. By contrast, licensure is a more restrictive form of professional regulation, where the profession is restricted, and it is legally forbidden to practise the profession unless specific requirements are met. That system provides an occupational group with monopoly control over who can practice a profession, and restricts the profession to only those individuals who have met specific requirements and have been issued a license to practice. 21. That being said, the scope of the Subject Enactments falls to be considered and it merits consideration that Section 2(b) of the CAs Ordinance defines a "chartered accountant" as meaning a person who is a member of the "Institute", which term is in turn defined as per Section 2(d) to mean the ICAP, as constituted under that very statute. The CMAs Act provides similarly in terms of Sections 2(aa) and (f) thereof, with both statutes then going on to provide for the registration of eligible and qualified persons as associate or fellow members of the ICAP or ICMAP, as the case may be, conferring upon them the right to use the title of CA or CMA and practice as such within Pakistan subject to obtaining a certificate of practice from the Council, being the body created under both the Subject Enactments for managing the respective affairs of the Institutes. The functions of the respective Councils, as prescribed in terms of the Subject Enactments, are more or less analogous, encompassing the examination of candidates for enrolment, regulating the engagement and training of students, prescribing the qualifications for entry in the Register; recognition of foreign qualifications and training for purposes of enrolment; maintaining and publishing the register of persons qualified to practice as a CA or CMA, as the case may be, and granting or refusing certificates of practice under the Act or Ordinance, as applicable, as well as the removal or restoration of names from the Register; the regulation and maintenance of the status and standard of professional qualifications of the members of the Institute; as well as the exercise of such disciplinary powers over the members and servants of the Institute as may be prescribed. 22. Thus, as it stands, the Subject Enactments constitute a self-contained code for regulating the profession of accountancy to the extent of setting the professional standard and qualification for acquiring and holding the title of either a CA or CMA, with the persons registered in either capacity
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then being able to engage in the professional activities reserved for holders of those certifications under various other statutes. 23. Section 29 of the Ordinance stipulates that Any reference to a Chartered Accountant or a registered accountant or a certified or qualified auditor in any other law or in any document whatsoever shall be construed as a reference to a Chartered Accountant in practice within the meaning of this Ordinance , and in the same vein Sections 2(13) and 2(22) of the Companies Act 2017 defines a CA and CMA with reference to the meanings ascribed to those terms under the Act and Ordinance, with the various substantive provisions of that statute, such as Sections 17(3) , 70(1) (b), 237(1) & 249 , 245(5), 247 and 250 for example, going on to assign and confer various roles and responsibilities to persons holding those certifications, whether it be that of audit or otherwise. A similar scheme exists under the Banking Companies Ordinance, 1962 (Section 35), as well as the various fiscal statutes, such as the Income Tax Ordinance 2001 (Sections 108A, 130(4), 134A(2), 176(1) (c), 177(8) and 223(11), the Sales Tax Act, 1990 (Sections 32A and 47A), the Federal Excise Act 2005 (Sections 38 and 46(4), or the Sindh Sales Tax on Services Act, 2011 (Section 29). Even the Anti Money Laundering Act 2010 confers the status of a self-regulatory body on the ICAP and ICMAP as part of the regulatory framework under that statute. 24. When the Subject Enactments are juxtaposed with the statutes regulating other professions, such as the professions of engineering, medicine or law for example, it is manifest that the measure and degree of regulation applicable, at least as envisaged on paper in terms of the relevant statues in respect of those other professions, is considerably greater than that under the Subject Enactments. 25. For example, the relevant provisions of the Pakistan Engineering Council Act 1975, the Legal Practitioners and Bar Councils Act 1973, and the Pakistan Medical Commission Act 2020 state as follows: Pakistan Engineering Council Act, 1975 27. Penalties and procedure.-- (1) After such date as the Federal Government may, after consultation with the Council, by notification in the official Gazette, appoint in this behalf, whoever undertakes any professional engineering work shall, if his name is not for the time being borne on the Register, be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees, or with both, and, in the case of a continuing offence, with a further fine which may extend to two hundred rupees for every day after the first during which the offence continues. (2) After the date appointed as aforesaid, whoever employs for any professional engineering work any person whose name is not for the time being borne on the Register shall be punishable, on first conviction, with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both, and on a second or subsequent conviction, with imprisonment for a term which may extend to one year, or with fine which may extend to ten thousand rupees, or with both. (3) Whoever willfully procures or attempts to procure himself or itself to be registered under this Act as a registered engineer, professional engineer, consulting engineer, constructor or operator by making or producing or causing to be made or produced any false or fraudulent representation or declaration, either orally or in writing, and any person who assists him therein shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to five hundred rupees, or with both. (4) Whoever falsely pretends to be registered under this Act, or not being registered under this Act, uses with his name of title any words or letters representing that he is so registered, irrespective of whether any person is actually deceived by such pretence or representation or not, shall be
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punishable with imprisonment for a term which may extend to three months, or with fine which may extend to five hundred rupees, or with both. (5) No person undertaking any professional engineering work shall, unless he is registered under this Act, be entitled to recover before any court or other authority any sum of money for services rendered in such work. (5A) No person shall, unless registered as a registered engineer or professional engineer, hold any post in an engineering organization where he has to perform professional engineering work. (6) No court shall take cognizance of any offence punishable under this Act save on complaint made by, or under the authority of, the Council. (7) No court inferior to that of a Magistrate of the first class shall try any offence punishable under this Act. Legal Practitioners and Bar Councils Act, 1973 9. Functions of a Provincial Bar Council [and Islamabad Bar Council].--(1) Subject to the provisions of this Act and the rules made thereunder, the functions of a Provincial Bar Council [and Islamabad Bar Council] shall be-- (a) to admit persons as advocates on its roll; to hold examinations for purposes of admission; to prepare and maintain a roll of such advocates [of the…
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