Nain, J.:— The petitioners are father and son. Together they constitute a partnership firm carrying on the business of insurance surveyors in Bombay. The respondents are the Municipal Corporation of Greater Bombay who are charged with the administration of the Bombay Shops and Establishments Act, 1948 (hereinafter referred to as the Shops Act), The petitioners have been called upon to register themselves under 3. 7 of the Shops Act as a commercial establishment. The present petition has been filed for a writ, direction or order prohibiting the respondents from enforcing the provisions of the shops act against them. The petitioners allege that they carry on a profession and do not fall under the definition of “commercial establishment” in S. 2(4) of the Shops Act and are therefore not liable to register themselves under S. 7 of the said Act.
2. The petitioners state that their firm which is known as Desai and Deshpande was established in 1956 by petitioner 1 and one J.R Desai. J.R, Desai is no longer a partner in the firm. Instead petitioner 2 who is the son of petitioner 1 and is a Science and Law Graduate is a partner with his father in the firm of Desai and Deshpande. The petitioners state that they have one typist and a peon and that the work of these employees has no direct or essential nexus with the professional work of the petitioners. They state that their professional work consists of conducting surveys to Sad out the extent and the cause of loss, damage or injury to goods in transport or to motor vehicles which have been insured against such risks. They state that this requires a high degree of personal skill, accuracy, observation, independence of judgment and integrity, and that their clients approach them, with entire confidence in their skill, intelligence and integrity.
3. It might be mentioned that up to 31 December, 1967, petitioners' firm was registered under the Shops Act. Thereafter, a Division Bench of this Court delivered its judgment in the case of N.E Merchant v. Bombay Municipal Corporation, [A.I.R 1968 Bom. 263] holding that the office of chartered accountant with articled clerks and a salaried ordinary clerk was not a commercial establishment so as to attract the provisions of the shops act. On 30 July, 1968 the petitioners wrote to the respondents stating that in view of the High Court judgment the Shops Act was not applicable to members of various professions and that they would not be registering themselves under the Shops Act. On 12 August, 1968, the respondents wrote to the petitioners that they were of the considered opinion that the provisions of the shops act were applicable to the petitioners and called upon them to register themselves and stated that failing this the respondents would take legal action against the petitioners. On 9 September, 1968, the present petition was filed.
4. One of the affidavits of the respondents in reply is of Kamruddin Mohammodbhoy, a beat officer under the Shops Act. He states that the business of insurance surveyors consists of surveying insured cars which have suffered damage and property insured against the risk of fire and goods lost or damaged in the course of transit by sea or otherwise. He states that insurance surveyors have to investigate the cause of the damage, to give a report as to the extent of the damage, the estimated value of the loss caused due to the damage, investigation as to the price of cars, spare parts, buildings and goods, to employ investigators, to go into the cause of the damage and to recover survay charges in each case. The respondents contend that the petitioners carry on business for gain and fall within the definition of a commercial establishment in S. 2(4) of the Shops Act. There is no dispute about the nature of the work done by an insurance surveyor. The only question to be determined is whether the petitioners fall within the definition of a “commercial establishment” under S. 2(4) of the Shops Act.
5. “Commercial establishment” is defined in S. 2(4) of the Shops Act as under:
“‘Commercial establishment’ means an establishment which carries on any business, trade or profession or any work in connexion with, or incidental or ancillary to, any business, trade or profession and includes a society registered under the Societies Registration Act, 1860, and a charitable or other trust, whether registered or not, which carries on whether for purposes of gain or not, any business, trade or profession or work in connexion with or incidental or ancillary thereto but does not include a factory, shop, residential hotel, restaurants eating house, theatre or other place of public amusement or entertainment”.
Section 2(8) defines an “establishment” as meaning inter alia a commercial establishment. Section 7 provides for the registration of such establishments. Section 52(a) prescribes the penalty for contravention of the provisions of the Shops Act. Section 4 provides that notwithstanding anything contained in the Shops Act the provisions of the said Act mentioned in Col. II of Sch. II shall not apply to the establishments mentioned against them in Col. II of the said schedule. The proviso to S. 4 provides that the State Government may, by notification published in the official gazette, add to, omit or alter any of the entries of the said schedule.
6. The definition of “commercial establishment” in S. 2(4) means an establishment which carries on any business, trade or profession or any work in connexion with or incidental or ancillary to any business, trade or profession whether for the purpose of gain or not. It would appear at first sight that an establishment which carries on a profession would be a commercial establishment which would have to register itself under S. 7, Schedule II to the Shops Act which contains the exemptions provided for by s. 4 of the shops act exempts in entries 1 to 5 establishments of Central Government, State Government, Local authorities, Bombay Port Trust and Railway Administration. The normal sovereign activities of the Governments and non-trading activities of the local bodies would not fall within, the definition of a “commercial establishment”. But the trading activities of the Governments and local bodies would fall within the definion. Exemption, therefore, makes it clear that even the trading activities are exempted. Item 66 in Sch. II exempts the High Court Law Library at Bombay and Nagpur. Items 18 and 22 exempt legal and incometax practitioners from the provisions of Ss. 13, 18(1) and 15 respectively of the Shops Act. A reference to the definition of a “commercial establishment” meaning an establishment which carries on a profession and the fact that partial exemption is given by items 18 and 22 in Sch. II of the Shops Act would indicate that the remaining provisions of the shops act would apply even to legal and incometax practitioners. In the case of B.P Hira v. C.M Pradhan, [A.I.R 1959 S.C 1226], it has been observed that there can be no doubt that S. 4 grants exemptions to certain establishments and that itself postulates that but for the exemption thus granted, the provisions of the shops act would have applied. The very fact that some of the provisions of the shops act are made inapplicable to the establishments and offices enumerated in the various items would indicate that the remaining sections not so specified would apply to them and if that is so, they must be and are establishments under S. 2(8) of the Shops Act. Without anything more, one would be inclined to come to the conclusion that even in the case of legal practitioners, their offices would fail within the definition of establishment and would require registration. It would, however, appear from some judgments of the Supreme Court and the Bombay High Court that the word “profession” in S. 2(4) of the Shops Act has been given a restricted meaning and has been construed not to include a liberal profession and has not been applied to members of the legal and medical professions and the profession of chartered accountant.
7. The word “profession” has not been defined. But the sense of the word has been brought out by Scrutton, L.J, in the case of Commissioners of Inland Revenue v. Maxse, [(1919) 1 K.B 647], He observes (page 657):
“… It seems to me as at present advised that a ‘profession’ in the present use of language involves the idea of an occupation requiting either purely intellectual skill, or of manual skill controlled, as in painting and sculpture, or surgery, by the intellectual skill of the operator, as distinguished from an occupation which is substantially the production or sale or arrangements for the production or sale of commodities. The line of demarcation may vary from time to time. The word ‘profession’ used to be confined to the three learned professions, the church, medicine and law. It has now, I think, a wider meaning”.
I might perhaps say that the three learned professions, viz. the ecclesiastical, the medical and the legal, may be called the traditional, liberal professions. Palekar, J., observed in the case of N.E Me; chant v. Bombay Municipal Corporation, [A.I.R 1968 Bom. 283] (vide supra) that these
“… The three learned professions … cannot be the only professions for all time. Times change. The sphere of human activity and endeavour is constantly expanding, giving rise to problems which require specialization and expertise. In the course of last two centuries, trade, commerce and industry have vastly developed bringing in their wake problems which have to be tackled by experts. The old crystallized learned professions of the church, medicine and law were by the very nature of their training unable Co solve the problems of the new developments in trade, commerce and industry, which, inter alia, threw up a team of experts in the shape of chartered accountants having specialized knowledge”.
There is no doubt that from time to time with industrial development and social change not only new vocations but also new professions will come into existence. But in order to be admitted to the select list of liberal professions, they will have to endeavour to satisfy the essential features of a liberal profession which I will discuss later.
8. In the case of Dr. Dr. Devendra M. Surti v. State Of Gujarat, [A.I.R 1969 S.C 63]. a doctor refused to register himself under the provisions of the Shops, Act. He was prosecuted under S. 52. He con ???ded that his private dispensary was not a commercial establishment. Reversing the judgment of the Gujarat High Court the Supreme Court held that the private dispensary of a doctor is not a commercial establishment within the meaning of the shops act and the provisions of the shops act do not apply to his dispensary. Therefore, his conviction for offence under S. 52(e) was illegal. The Supreme Court further observed that it is true that S. 2(4) of the Shops Act had used words of very wide import and grammatically it may include even a consulting room where a doctor examines his patients with the help of a solitary nurse or attendant. But, in the matter of construing the language of S. 2(4) of the Shops Act the principle of noscitur a sociis has to be adopted. The presence of the profit motive or the investment of capital tradition associated to the notion of trade and commerce cannot be given an undue importance in construing the definition of “commercial establishment” under S. 2(4) of the Act. The correct test of finding whether a professional activity falls within S. 2(4) of the Act is whether the activity is systematically and habitually undertaken for production or distribution of goods or for rendering material service to the community or any part of the community with the help of employees in the manner of a trade or business in such an undertaking. A professional activity must be an activity carried on by an individual by his personal skill and intelligence. There is a fundamental distinction, therefore, between a professional activity and activity of a commercial character unless the profession carried on by a person also partakes of the character of a commercial nature, he cannot fail within the ambit of S. 2(4) of the Shops Act. Thus where the professional activity is carried on in such a manner that the condition of the co-operation between the employer and the employee is necessary for its success and its object is to render material service to the community, then these can be regarded as some of the features which render the carrying on of a professional activity to fall within the ambit of S. 2(4). A person following a liberal profession like that of a doctor does not carry on his profession in any intelligible sense with the active co-operation of his employees. If not the sole, the principal capital which he brings into his profession is his special or peculiar intellectual and educational equipment. Hence the professional establishment of a doctor cannot come within the definition of S. 2(4) of the Shops Act, If will be noticed that in this case the activity of rendering material services to the community systematically and habitually with the help of employees in the manner of a trade or a business has been stated to be an undertaking which would fall within the definition of a “commercial establishment”. The judgment refers to the case of National Union of Commercial Employees v. M.R Meher, [A.I.R 1962 S.C 1080] where the question was whether the work of a solicitor was not an “industry” within the meaning of S. 2 (j) of the Industrial Disputes Act, 1947, and observes
“… Looking at this question in a broad and general way, it is not easy to conceive that a liberal profession like that of an attorney could have been intended by the Legislature to fall within the definition of “industry” under S. 2(j), The very concept of the liberal professions has its own special and distinctive features which do not readily permit the inclusion of the liberal professions into the four concers of industrial law. The essential basis of an industrial dispute is that it is a dispute arising between capital and labour in enterprises where capital and labour combine to produce commodities or to render service. This essential basis would be absent in the case of liberal professions, A person following a liberal profession does not carry on his profession in any intelligible sense with the active co-operation of his employees and the principal, if not the sole, capital which he brings into his profession is his special or peculiar intellectual and educational equipment. That is why on broad and general considerations which cannot be ignored, a liberal profession like that of an attorney must … be deemed to be outside the definition of “industry” under S. 2(j)”.
In the case of Dr. Surti, [A.I.R 1969 S.C 63] (vide supra), the Supreme Court applied a similar line of reasoning to the case of the dispensary of a medical man and came to the opinion that the dispensary did not fall within the purview of the Shops Act and his conviction of the offence under S. 52(e) of the paid Act was illegal. It will be seen from this case that the emphasis was on the legal and the medical professions being liberal professions — I might perhaps add traditionally liberal professions.
9. Whether a legal practitioner working in office and acting and appearing in Courts on behalf of his clients carries on activity of a commercial nature and whether his office is a “commercial establishment” came to be decided by a Division Bench of this Court sitting at Nagpur in the case of Sakharam v. City of Nagpur Corporation, [(1962) 65 Bom. LR. 627]. The High Court held that an advocate or a legal practitioner whether he works in his office or appears in Court cannot be said to be carrying on his profession in any of these places where the activity can be said to be of a commercial nature and, therefore, he is not liable to have his establishment registered under the Shops Act. It is not every establishment in the sense of premises or building where business, trade or profession is carried on that is intended to be governed by the Shops Act but only those premises though carrying on one or other of these kinds of activities which are of a commercial nature. A lawyer who carries on his profession cannot answer the definition of an “employer” in S. 2(7) of the Shops Act. It must be mentioned that the judgment of the Supreme Court in the case of B.P Hira v. C.M Pradhan, [A.I.R 1959 S.C 1226] (vide supra), was not cited before the Bench, On behalf of the Municipal Corporation reliance was placed on the entries in Sch. II of the Shops Act showing what the intention of the Legislature was and which establishments were intended to be included under the Act. The learned Judges took the view that an Advocate did not carry on any commerical activity and neither a notification under S. 4 nor the proviso to S. 4 can have the effect of enlarging the definition of a “commerical establishments” in S. 2(4) of the Shops Act. Here again it must be mentioned that the case related to the legal profession which is a traditionally liberal profession.
10. In the case of N.E Merchant v. Bombay Municipal Corporation, [A.I.R 1968 Bom. 283] (vide supra), another Division Bench of this Court consisting of Chitale and Palekar, JJ., were dealing with a case of chartered accountants in a criminal revision application. The two accused were qualified chartered accountants carrying on their business as such accountants and had an office where there were three articled clerks who were not salaried servants and one ordinary salaried clerk. The accused were prosecuted and convicted under s. 52(a) of the shops act for failure to register themselves. The Division Bench held that the establishment of the accused was not a commercial establishment within the meaning of S. 2(4) of the Shops Act and, therefore, the accused were not liable for the alleged contravention of S. 7 of the Act. In the judgment of Palekar, J., it is observed that the Chartered Accountants Act, 1949, has now statutorily recognized that the activities of a chartered accountant are not a mere business or trade but a profession and this is clear from the various provisions that have been made in that Act to lay down the standard of qualifications for a chartered accountant and standards of conduct when practising as a chartered accountant. The string???t restrictions that have been placed on him are only a measure of the integrity that should be displayed by the chartered accountant in the practice of his profession and all these matters help to consider whether the activity of the chartered accountant is a profession. One of the important elements to be considered when the question whether a man is exercising a profession is to see whether he is a member of an organized professional body with a recognized standard or ability, enforced before he can enter it and a recognized standard of conduct enforced while he is practising it. A chartered accountant is approached by his client for advice and guidance in his problems with regard to trade, business or industry, and it is expected that the chartered accountant, to the best of his ability, would be in a position to help him in his difficulties and not betray the confidence that is placed in him. This is one of the elements which should be sought when considering whether a particular person is practising a profession or is merely doing a business. A chartered accountant who has under him for training articled clerks has to form an independent judgment upon the personal intelligence and skill and in the formation of the judgment and advice the articled clerks have no place. Therefore, their co-operation with the chartered accountant in checking receipts and payments is not the sort of co-operation which will reduce what is essentially a profession to a commercial venture.
11. I have already referred to the observations of Palekar, J., that the three learned professions, viz., the ecclesiastical, the medical and the legal professions which are the traditional liberal professions, cannot be the only professions for all the time and that with the change of time and expansion, of spheres of human activity requiring specialization and expertise, more professions are bound to come up. But in order to qualify for being reckoned as liberal profession, a profession has to satisfy certain conditions, viz., that the activity carried on by it must not be an activity of a commercial nature as a trade or business. The main asset of the professional man which he brings into the practice of his profession must be intellectual skill or manual skill controlled by intellectual skill. Apart from the skill, there should be a degree of intelligence and integrity and above all the professional man should be a member of an organized profession for admission to which high academic or professional qualifications are required and the professional organization controls the admission to, the discipline in and removal from the profession on account of acts of indiscipline or misconduct. There must also be a code of professional ethics and in addition there must be a judicial remedy against exclusion from the profession on account of indiscipline or misconduct by the professional organization. Let us take the instance of the legal profession. There are well settled standards of conduct and etiquettes prescribed for the legal profession in India, England, United States and several other countries. An advocate is required to comport himself in a manner befitting his status as an officer of the Court, a privileged member of the community, and a gentleman. He owes a duty to the Court consistent with his independence, a duty to his client consistent with his duty to the Court and to the opponent and his advocate. The advocate also owes a duty to his opponent and his advocate. He also owes a duty to his profession and his colleagues who are its members. There are restrictions on his taking up other employment and a high professional rectitude is expected of him. The Bar Council of the Stale and the Bar Council of India are the professional organizations which control the admission to, the discipline in and punishment for misconduct in the profession. There is an appeal to the Supreme Court of India. Similarly, in the case of the medical profession, there are Medical Councils which control the admission to, the discipline in and punishment for misconduct in the profession. High academic or professional qualifications are prescribed for admission to the profession. It is due to the membership of these professional organizations and their control over its members that the public have come to repose great trust in the members of these professions. It is only these ingredients that can make a profession a liberal profession.
12. It has been argued on behalf of the petitioners that the profession of an insurance surveyor satisfies the conditions of a profession. It is argued that the insurance surveyor has to tale out a licence to practise and has to pay fees for such licence. Under S. 64 UM (1)(D) of the Insurance Act, 1938, unless a person has been practising as a surveyor prior to 26 October, 1968, he must hold a degree of a recognized university in a branch of engineering or must be a chartered accountant or hold a diploma in insurance granted or recognized by the Government, etc. Under Sub-sec. (5) of the said section, it is provided that no insurer shall pay to any person any fee or remuneration for survey, verifying or reporting on a claim of loss under a policy of insurance unless the surveyor is an approved surveyor. Under Sub-sec. (7) of the said section, the Controller of Insurance is empowered to cancel the licence of a surveyor if he is satisfied that he has been guilty of wilfully making a false statement knowing it to be false or of being knowingly a party to the settlement of a claim in a fraudulent manner. It will be noticed that the cancellation of licence is provided for reasons which would even otherwise be criminal offences. It is not that high standards of professional conduct and etiquette are prescribed for surveyors. Sub-section (1)(D) of S. 64 UM applies the provisions of S. 42(4) applicable to insurance agents also to surveyors. Section 42(4) of the Insurance Act provides that a surveyor would be disqualified if he is a minor, a person of unsound mind or has been convicted of criminal misappropriation, criminal breach of trust or cheating, or forgery or an abetment of or attempt to commit such offence or in the case of investigation in the winding up of a company it is found that the surveyor has been guilty of or has knowingly participated in or connived of any fraud, dishonesty or misrepresentation against an insurer or an insured. Section 110 H provides for an appeal from decisions of the Controller to the Government.
13. It would appear from the provisions of the Insurance Act, 1938, referred to herein above that while the profession of a surveyor is a recongnized profession, which requires a licence from a governmental authority it does not require the surveyor to be a member of any professional organization. It is not an organized profession. Without trying to belittle the importance of the surveyor in the life of the community, I may observe that there are other professions which may not be liberal professions which are recognized professions and require a licence to be able to practise. An apothecary and druggist requires a licence and so does a plumber. It is true that high academic qualifications are prescribed for registration as an insurance surveyor, but there is no professional organization which controls the admission to, the discipline in and the removal from the profession in cage of misconduct. There is also no code of professional conduct, ethics or etiquette. There is no prohibition against canvassing for work or against advertising. Several other attributes of a liberal profession are missing.
14. It was argued on behalf of the petitioners that in order to come within the definition of “commercial establishment”, a person must carry on business or trade such as buying or selling goods for profits. It is emphasized that there must be so element of risk or loss. The simple answer to this argument is that an estate broker, a finance broker or a share and stock broker does not buy or sell goods, shares or land, unless he trades on his own account and yet it cannot be said that his is not a profession that would make his establishment a commercial establishment within the meaning of S. 2(4) of the Shops Act. In fact the definition of a commercial establishment in S. 2(4) is sufficiently wide to cover professions which partake of the nature of a business or trade and which are not liberal professions either traditionally or have come into existence due to social and economic changes and growth of human endeavour and enterprise, 15. In the result, I am not satisfied that the profession of an insurance surveyor satisfies the conditions of a liberal profession to entitle it to exclusion from the definition of “commercial establishment” in S. 2(4) and the definition of an “establishment” in S. 2(8) of the Shops Act. The petitioners must therefore register themselves under S. 7 of the Shops Act. The petition fails and is dismissed with costs.
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