professional ethics and professional accounting system

Last Bencher’s Law Series

PROFESSIONAL ETHICS AND PROFESSIONAL ACCOUNTING SYSTEM

CONTEXT

TOPIC Page No.

I. DEVELOPMENT OF LEGAL PROFESSION IN INDIA 3

II. DEVELOPMENT OF LEGAL PROFESSION IN ENGLAND 3

III. EQUIPMENTS OF ADVOCATE : 4

IV. GENERAL CONDUCT OF A ADVOCATE AND ADVOCATE CONDUCT IN COURT

4

V. ELEMENTS OF ADVOCACY 4

VI. SEVEN LAMPS OF ADVOCACYVII. ADVOCACY IS NOT A CRAFT BUT A CALLING

5

VIII. SUGGESTIONS OF K.V.KRISHNASWAMY AIYER ON MEETING THE CLIENTS

6

IX. BAR COUNCILS 6

X. PRIVILEGES,RIGHTS AVAILABLE AND DISABILITIES OF THE ADVOCATE

8

XI. FEATURES OR OBJECTIVE OF PASSING ADVOCATE ACT : 9

XII. RIGHT TO PRACTICE IS A RIGHT BUT NOT A PRIVILEGE : 9

XIII. APPLICATION ONCE REFUSED NOT TO BE ENTERTAINED BY ANOTHER BAR COUNCIL EXCEPT IN CERTAIN CIRCUMSTANCES

9

Page | 2


Unit – I ADVOCATES ACT, 1961

I. DEVELOPMENT OF LEGAL PROFESSION IN INDIA

The term legal profession includes all those categories of persons who use technical, legal knowledge and skills in the course of performing there occupational role and duties.

Ancient India :

The profession of law has been recognized as a profession of high calling and the noblest order from the time of immortal.

1. In ancient India law was understood as a part of DARMA.2. In the two epics RAMAYANA and MAHABHARATHA contains the legal processes in ancient India.3. Vedas are the original source of law.4. Smurtis are the legal base.5. Kautilya’s Arthasastra and Chalukya’s separate law system remembers the ancient legal system in

India.

Medieval era :

1. There was less scope compare to the ancient days.2. Most of the issues settled outside the courts.3. Vakils, panchas are the major law deciders.

British regime :

1. British established the first British court at Bombay in 1672 by the governor general Aungier.2. For making their administration Strong, they established Supreme court at Calcutta in 1773 and

appointed many advocates.3. They passed many acts as follows :

Charter act 1762 Charter act 1774 Legal practitioner act 1846 Legal practitioner act 1853 Legal practitioner act 1863 Legal practitioner act 1879 Indian BAR Council act 1926.

After Independence :

1. The constitution of India came into existence on 25 jan 1950.2. All India bar committee was established in 1951.3. Advocate act was passed in 1961.4. And other various law reforms.

II. DEVELOPMENT OF LEGAL PROFESSION IN ENGLAND :

1. England is the origin of legal system.2. Legal system is as old as 1181.3. Bar councils ware fist established by British.4. The first bar council was established in 1895.5. In 1966 Sennett of INNs were created.6. The incorporated law society of U.K was established in 1837.7. The English legal professional has traditionally divided into barristers and solicitors.

Page | 3


III. EQUIPMENTS OF ADVOCATE :The general equipments of an advocates are :

1. Honesty, Integrity and character.2. Patience and perseverance.3. Legal learning.4. General education5. Memory

6. Study of law reports.7. Manners in court.8. Presentation of case.9. Independence and dignity.10. Use of legal phraseology.

IV. GENERAL CONDUCT OF A ADVOCATE AND ADVOCATE CONDUCT IN COURT :SL No.

General conduct of a advocate Advocate conduct in court

123456

Public Interest.Protection of fundamental rights and duties.Honor and Dignity.Friendly co-oparationFair dealings with clientsSprit off brotherly-hood

a) The advocate's independence or integrity; b) A person's freedom to instruct an advocate of his or her choice; c) The advocate's duty to act in the best interests of the client; d) The good repute of the advocate or of the advocates' profession; e) The advocate's proper standard of work; f) The advocate's duty to the Court.

V. ELEMENTS OF ADVOCACY

a) Accept brief in the CourtAn advocate is a person who argues in favour of his clients in courts of justice. An advocate is bound to accept any brief in the Courts or Tribunals or before any other authority in or before which he professes to practice at a fee consistent which his standing at the bar and the nature of the case.

b) Filing the caseIn civil cases a suit is required to be instituted by presenting a plaint to the court. The statement of a plaint regarding his claim is taken as a plaint

c) PleadingThe fundamental principles of pleading are four:

1) Every pleading must state fact and no law;2) It must state all the material facts;3) It must state only the facts on which the party pleading relies, and not the evidence; and 4) It must state facts concisely but with precision and certainty.

d) Examination-in-ChiefExamination-in-chief is the way in which advocates present almost all of the evidence through witnesses, whether as counsel for plaintiff or defendant. Examination of expert witnesses and the admission of expert opinions are also vital part of advocacy for which special skill is to be achieved according to the expert evidence.

e) Cross-examinationThe examination of a witness by the adverse party shall be called his cross examination. Witnesses shall be first examined-in-chief then cross-examined, later re-examined. The witness may be cross-examined to show his bias or prejudice, to show an interest in the outcome of the case.

f) Re-examinationThe examination of a witness subsequent to the cross-examination by the party who called him is called re-

Page | 4


examination.

g) ArgumentsIn arguing a case strongest points should be emphasised and the weak points should not be raised as far as possible. Arguments on each issue should be written out.

h) AppealsArguing of appeals in a Court of Law is also of considerable importance. In the judgment, the Judge will have some reasonable ground. A careful study of the case is required to find the points which were not noticed by the Court.

VI. SEVEN LAMPS OF ADVOCACYVII. ADVOCACY IS NOT A CRAFT BUT A CALLINGAdvocacy is an honourable profession. Advocates are part and parcel of Court. Their efforts solve the conflicts in the society. Advocates defend the rights and liabilities. They hold unique place in the society. Advocacy is not a craft but a calling; a profession wherein devotion to duty constitutes the hallmark.

Legal profession is regarded to be a noble one. A good advocate should possess some essential qualities and equipment. Judge Abbot parry in his book “The Seven Lamps of Advocacy” called these important characteristics of advocacy as “seven lamps of advocacy” and listed them as honesty, courage, industry, wit, eloquence, judgment and fellowship.

1) HonestyHonesty means the quality of straightforwardness; freedom from deceit, cheating or stealing and not telling lies. The best advocates of all generations have been devotees of honesty. Example for honest character is Abraham Lincoln, who founded his fame and success on what some called ‘preserve honesty’. The nobleness of legal profession lies in honesty itself.

2) CourageCourage is the quality that enables a person to control fear in the face of danger, pain, misfortune, etc.; an advocate must possess courage. He should face the pressures from outside with courage

3) IndustryAdvocacy is needed a life of industry. An advocate must study his brief in the same way that an actor studies his part. Success in advocacy is not arrived at by intuition but through industry. Industry is the quality of being hard-working; being always employed usefully.

4) WitWit means clever and humorous expression of ideas; liveliness of spirit. Wit flows from intelligence;

5) EloquenceThe success of an advocate depends upon his eloquence. Eloquence means fluent speaking and skilful use of language to persuade or to appeal to the feelings of others. Fluent speaking impresses the listener

6) JudgmentJudgment is an intellectual capacity, ‘the inspiration which enables a man to translate good sense into right action’. In judgment one has to estimate, consider and form an opinion about the issues with good sense and ability.

7) FellowshipFellowship means the membership in friendly association or companionship. Fellowship is exactly like great public schools, the boys of which have grown older, and have exchanged boyish for manly objects. Though the advocates are opponent parties before the bench but not enemies with each other.

(7+1) Tact K.V.Krishnaswamy Aiyer, in his book “Professional Conduct and Advocacy” adds one more lamp i.e. tact. Tact means handling people and situations skilfully and without causing offence. An advocate must be in a position to tackle and win his client, opponent party, opponent advocate in a smoother way.

Page | 5


VIII. SUGGESTIONS OF K.V.KRISHNASWAMY AIYER ON MEETING THE CLIENTS :

1. Prepare in advance for the meeting.2. Ware suitable cloths.3. Use of board room.4. Start on time.5. Greet clients by name.

6. Create an agenda.7. Offer beverages.8. Listen carefully to the clients.9. Give business card.10. Fallow up.

IX. BAR COUNCILSSec 3

Sec 4

Sec 6

Sec 7

STATE BAR COUNCILS

(1) There shall be a Bar Council for each of to be known as the Bar Council of that State;

(2) A State Bar Council shall consist of the following members,namely:—

(a) in the case of the State Bar Council of Delhi, the Additional Solicitor General of India ex officio in the case of the other State Bar Council ex officio; in the case of the State Bar Council of Punjab and Haryana, the Advocate-General of each of the State of Punjab and Haryana, ex-officio; and in the case of any other State Bar Council, the Advocate-General of the State, ex officio;

BAR COUNCIL OF INDIA.—

(1) There shall be a Bar Council for the territories to which this Act extends to be known as the Bar Council of India which shall consist of the following members, namely:—

(a) the Attorney-General of India, ex officio; (b) the Solicitor-General of India, ex officio; (c) one member elected by each State Bar Council from amongst its members.

(1A) No person shall be eligible for being elected as a member of the Bar Council of India unless he possesses the qualifications specified

(2) There shall be a Chairman and a Vice-Chairman of the Bar Council of India elected by the Council in such manner as may be prescribed.

Functions of Bar Councils.

(1) The functions of a State Bar Council shall be— (a) to admit persons as advocates on its roll; (b) to prepare and maintain such roll; (c) to entertain and determine cases of misconduct against advocates on its roll; (d) to safeguard the rights, privileges and interests of advocates on its roll; (dd) to promote the growth of Bar Associations for the purposes of effective implementation of the welfare schemes (e) to promote and support law reform; (ee) to conduct seminars and organize talks on legal topics by eminent jurists and publish journals and paper of legalinterest; (eee) to organise legal aid to the poor in the prescribed manner;] (f) to manage and invest the funds of the Bar Council; (g) to provide for the election of its members;

FUNCTIONS OF BAR COUNCIL OF INDIA.—

(1) The functions of the Bar Council of India shall be—

Page | 6


a) to lay down standards of professional conduct and etiquette for advocates; b) to lay down the procedure to be followed by its disciplinary committee and the

disciplinary committee of each State Bar Council; c) to safeguard the rights, privileges and interests of advocates; d) to promote and support law reform e) to exercise general supervision and control over State Bar Councils; f) to promote legal education and to lay down standards of such education in

consultation with the Universities in India imparting such education and the State Bar Councils;

POWERS OF BAR COUNCILS :

1. POWER TO MAKE RULES.— SEC 15. (1) A Bar Council may make rules to carry out the purposes of this Chapter.(2) In particular, and without prejudice to the generality of the foregoing power, such

rules may provide for : The election of members of the Bar Council. Electing the chairman and the vice-chairman. The filling of casual vacancies in the Bar Council Power and duties of chairman, vice-chairman and members. organisation of legal aid and advice to the poor. the summoning and holding of meetings of the Bar Council. the summoning and holding of meetings.

2. POWER TO MAINTAIN BOOKS AND AUDIT : Sec 15 sub sec- (l) the maintenance of books of accounts and other books by the Bar Council; (m) the appointment of auditors and the audit of the accounts of the Bar Council; (n) the management and investment of the funds of the Bar Council.

3. POWER TO APPOINT COMMITTEES : 8A. Constitution of Special Committee in the absence of election.

4. POWER TO GIVE DIRECTIONS :

Power to give direction to state committees Give directions to state bar councils.

5. POWER TO PUNISH THE ADVOCATE FOR MISCONDUCT : SEC 35 —

(1) Where on receipt of a complaint or otherwise a State Bar Council has reason to believe that any advocate on its roll has been guilty of professional or other misconduct, it shall refer the case for disposal to its disciplinary committee.

(1A) The State Bar Council may, either of its own motion or on application made to it by any person interested, withdraw a proceeding pending before its disciplinary committee and direct the inquiry to be made by any other disciplinary committee of that State Bar Council.

(2) The disciplinary committee of a State Bar Council shall fix a date for the hearing of the case and shall cause a notice thereof to be given to the advocate concerned and to the Advocate-General of the State.

(3) The disciplinary committee of a State Bar Council after giving the advocate concerned and the Advocate-General an opportunity of being heard, may make any of the following orders, namely:—

(a) dismiss the complaint or, where the proceedings were initiated at the instance of the State Bar Council, direct that the proceedings be filed;

Page | 7


(b) reprimand the advocate; (c) suspend the advocate from practice for such period as it may deem fit; (d) remove the name of the advocate from the State roll of advocates.

(4) Where an advocate is suspended from practice under clause (c) of sub-section (3), he shall, during the period of suspension, be debarred from practicing in any court or before any authority or person in India.

(5) Where any notice is issued to the Advocate-General undersub-section (2), the Advocate-General may appear before the disciplinary committee of the State Bar Council either in person or through any advocate appearing on his behalf.

X. PRIVILEGES,RIGHTS AVAILABLE AND DISABILITIES OF THE ADVOCATE

1. Privilege to claim audience : Sec 14 says “an advocate shall practice at---(a) High court(b) Supreme court (c) Any other tribunals legal authority.Sec 30 says “an advocate shall practice at---i) Throughout the territory of India.ii) Any tribunal including Supreme court.iii) Any other tribunals legal authority.

For the purpose of claiming the audience.

2. Privilege of exemption from arrest :According to the section 135 of CPC

a. Any civil procedure other then the contempt of court :i. While going to the court for hearing.ii. While attending the court.iii. While returning from the court.

3. Right to fee 4. Right to lien – once vakalath is filed no other can step inside the case.5. Privilege of public and political life.6. Right to have access to Judge- any time any day.7. Privilege of independence- not a servant to any one8. Words spoken in professional capacity are privileged.9. Privilege to honor the judgment in Bar Council10. Privilege of being offered judgeship and several other offices under the status.

As a district judge. Magistrate. Additional session judge Additional judge Session judge.

DISABILITIES OF ADVOCATES :1. Advertising oneself and soliciting the client.2. Restriction on taking up a brief.3. Restriction on other employment.4. Advocate must not divulge clients communication.5. Advocate cannot buy or contract any share of interest in a actionable claims- sec 136 of TP act.

Page | 8


XI. Features or objective of passing advocate act :

1. To know the procedure for admission and enrollment.2. To get the knowledge about Bar councils.3. To know the rights and privileges.4. To know the disabilities of advocate.5. Contempt of court and its remedies.6. To know the duties of advocate.7. To get knowledge about Professional ethics.8. To know Bar- Bench relation.9. To know Books of accounts to be maintained.10. To knowledge about Equipment, Lamps, elements of advocate.

XII. RIGHT TO PRACTICE IS A RIGHT BUT NOT A PRIVILEGE :

RIGHT TO PRACTICE Sec 29. Advocates to be the only recognised class of personsentitled to practise law.—

Subject to the provisions of this Act and any rules made there under, there shall, as from the appointed day, be only one class of persons entitled to practice the profession of law, namely, advocates.

Sec 30. Right of advocates to practice.—Subject to provisions of this Act, every advocate whose name is entered in the 1[State roll] shall be entitled as of right to practice throughout the territories to which this Act extends,—

o in all courts including the Supreme Court; o before any tribunal or person legally authorised to take evidence; and o before any other authority or person before whom such advocate is by or under any law for

the time being in force entitled to practise.

Sec 32. Power of Court to permit appearances in particular cases.—Notwithstanding anything contained in this Chapter, any court, authority, or person may permit any person, not enrolled as an advocate under this Act, to appear before it or him in any particular case.

Sec 33. Advocates alone entitled to practice.—Except as otherwise provided in this Act or in any other law for the time being in force, no person shall, on or after the appointed day, be entitled to practice in any court or before any authority

XIII. Application once refused not to be entertained by another Bar Council except in certain circumstances

Sec 27. Application once refused not to be entertained by another Bar Council except in certain circumstances.—Where State Bar Council has refused the application of any person for admission as an advocate on its roll, no other State Bar Council shall entertain an application for admission of such person as an advocate on its roll, except with the previous consent in writing of the State Bar Council which refused the application and of the Bar Council of India.

Page | 9


CONTEXT

TOPIC Page No.

I. DUTIES OF AN ADOVOCATE 11

II. Bar bench relation 12

III. DISCIPLINARY COMMITTEE 12

IV. SENIOR AND OTHER ADVOCATES 13

V. PERSONS WHO MAY BE ADMITTED AS ADVOCATES ON A STATE ROLL SEC 21 (1)

14

VI. DISQUALIFICATION FOR ENROLMENT 15

VII. RESTRICTION ON OTHER EMPLOYMENTS 15

VIII. RESTRICTION ON TAKING BRIEF 16

IX. FINANCE WITH CLIENTS 17

Page | 10


UNIT II

PROFESSIONAL ETHICS.

I. DUTIES OF AN ADVOCATE.

DUTIES TOWARDS STATE AND PUBLIC :

1. Duty to maintain the integrity of the Nation.2. Duty to fight for individual liberty and socio- economic justice.3. Duty to enshrine and uphold our Constitution.4. To protect law and fight against injustice.5. Public interest litigation.6. Help poor clients with less or no fee.7. Protect fundamental rights.8. Fight against corruption.

DUTIES TOWARDS COURT :

1. Duty to respect the court.2. Duty to attend the hearing.3. Duty to receive judgment.4. Duty to obey and respect the judge and the judgment of the court.5. Duty not to mislead the court.6. Duty not to malign the judge.7. Duty to assist the court.8. Duty to have good temper and protect the dignity of the court.

DUTIES TOWARDS THE CLIENT :

1. Duty to Know about his client.2. Obtain complete information about the case.3. Provide fair advice to solve the case.4. Loyal and faith full to his client.5. Duty not to represent conflicting interests of the client.6. Maintain confidentiality.7. Duty not to accept compensation or any other advantages from others.8. Duty to take fair fee.9. Duty to keep separate account for client’s money.10. Duty to return the brief of the client at the end of the case.

DUTIES TOWARDS THE OPPONENT :

1. Duty to give due respect opponent council.2. Being fair to opponent council and his clients.3. Duty not to interrupt in between the opponent argument.4. Duty not to mislead.5. Duty not to make negotiate with the opponent.6. Duty not to take away others client.

Page | 11


DUTIES TOWARDS PROFESSION :

1. To keep best tradition of the bar.2. Not to take profession in the spirit of competition or rivelry.3. Respect to the seniors.4. Kind to juniors5. Fallow seven lamps of advocacy.

DUTIES TOWARDS SELF :

1. Maintain self dignity.2. Seven lamps of advocacy.3. Be best to the profession.4. No to other employment.

II. BAR BEANCH RELATION

BAR : Association of the advocates.Bench : Group of judges.

1. Bar provides evidences, bench decides the cases.2. Advocate cannot influence the judges.3. Two wings of the court helps to maintain the role of administration of justice.4. Advocate should maintain respect and dignity towards judges.5. Judge should hear the argument of the advocate patiently and give judgment.

III. DISCIPLINARY COMMITTEE

A Bar Council shall constitute one or more disciplinary committees, Each of which shall consist of three persons of whom two shall be persons elected by the Council

from amongst its members and the other shall be a person co-opted by the Council from amongst advocates who possess the qualifications specified in the proviso

And the senior-most advocate amongst the members of a disciplinary committee shall be the Chairman thereof.

POWERS AND PROCEDURE FOLLOWED BY DISCIPLINARY COMMITTEE.

(1) Where on receipt of a complaint or otherwise the Bar Council of India shall refer the case for disposal to its disciplinary committee.

(2) Disposal of disciplinary proceedings.—The disciplinary committee of a State Bar Council shall dispose of the complaint received by it under section 35 expeditiously and in each case the proceedings shall be concluded within a period of one year from the date of the receipt of the complaint or the date of initiation.

(3) Appeal to the Bar Council of India.— Any person aggrieved by an order of the disciplinary committee of a State Bar Council made or the Advocate General of the State may, within sixty days of the date of the communication of the order to him, prefer an appeal to the Bar Council of India.

(4) Appeal to the Supreme Court.—Any person aggrieved by an order made by the disciplinary committee of the Bar Council of India may within sixty days of the date on which the order is communicated to him, prefer an appeal to the Supreme Court.

Page | 12


(5) Stay of order.— An appeal, made shall not operate as a stay of the order appealed against, but the disciplinary committee of the Bar Council of India, or the Supreme Court, as the case may be, may, from sufficient cause, direct the stay of such order on such terms and conditions as it may deem fit.

(6) Alteration in roll of Advocates.—Where an order is made under this Chapter reprimanding or suspending an advocate, a record of the punishment shall be entered against his name

(7) Powers of disciplinary committee.—

The disciplinary committee of a Bar Council shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely:— (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring discovery and production of any documents; (c) receiving evidence on affidavits; (d) requisitioning any public record or copies thereof from any court or office; (e) issuing commissions for the examination of witness or documents; (f) any other matter which may be prescribed: Provided that no such disciplinary committee shall have the right to require the attendance of— (a) any presiding officer of a Court except with the previous sanction of the High Court to which such court is subordinate; (b) any officer of a revenue court except with the previous sanction of the State Government.

(8) Review of orders by disciplinary committee.— The disciplinary committee of a Bar Council may of its own motion or otherwise review any order 1[within sixty days of the date of that order passed.

IV. SENIOR AND OTHER ADVOCATES

. SENIOR AND OTHER ADVOCATES.—

(1) There shall be two classes of advocates, namely, senior advocates and other advocates.

(2) An advocate may, with his consent, be designated as senior advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability standing at the Bar or special knowledge or experience in law he is deserving of such distinction.

(3) Senior advocates shall, in the matter of their practice, be subject to such restrictions as the Bar Council of India may, in the interest of the legal profession, prescribe.

(4) An advocate of the Supreme Court who was a senior advocate of that Court immediately before the appointed day shall, for the purposes of this section, be deemed to be a senior advocate:

RESTRICTION ON SENIORITY :

Rules under Sections 16(3) and 49(1)(g) of bar council Act. Senior Advocates shall, in the matter of their practice of the profession of law mentioned in Section

30 of the Act, be subject to the following restrictions:

(a) A Senior Advocate shall not file a vakalatnama or act in any Court, or Tribunal, or before any person or other authority mentioned in Section 30 of the Act.

(b) (i) A senior Advocate shall not appear without an Advocate on Record in the Supreme Court or without an Advocate in Part II of the State Roll in any court, or tribunal, or before any person or

Page | 13


other authorities mentioned in Section 30 of the Act.

(ii) Where a Senior Advocate has been engaged prior to the coming into force of the Rule in this Chapter, he shall not continue thereafter unless an Advocate in Part II of the State Roll is engaged along with him.

(c) He shall not accept instructions to draft pleading or affidavits, advice on evidence or to do any drafting work of an analogous kind in any Court or Tribunal, or before any person or other authority

(cc) A Senior Advocate shall, however, be free to make concessions or give undertakings in the course of arguments on behalf of his clients on instructions from the junior Advocate.

(d) He shall not accept directly from a client any brief or instructions to appear in any Court or Tribunal, of before any person or other authority in India.

(e) A Senior Advocate who had acted as an Advocate (Junior) in a case, shall not after he has been designated as a Senior Advocate advise on grounds of

V. PERSONS WHO MAY BE ADMITTED AS ADVOCATES ON A STATE ROLL SEC 21 (1)

24. PERSONS WHO MAY BE ADMITTED AS ADVOCATES ON A STATE ROLL.—

(1) Subject to the provisions of this Act, and the rules made there under, a person shall be qualified to be admitted as an advocate on a State roll, if he fulfills the following conditions, namely:—

(a) he is a citizen of India: Provided that subject to the other provisions contained in this Act, a national of any other country may be admitted as an advocate on a State roll, if citizens of India, duly qualified, are permitted to practise law in that other country;

(b) he has completed the age of twenty-one years;

(c) he has obtained a degree in law— (i) before the 12th day of March, 1967, from any University in the territory of India; or (ii) before the 15th August, 1947, from any University in any area which was comprised before that date within India as (iii) after the 12th day of March, 1967, after undergoing a three year course of study in law from any University in India which is recognized for the purposes of this Act by the Bar Council of India; or

(f) he fulfils such other conditions as may be specified in the rules made by the State Bar Council under this Chapter;

(g) he has paid, in respect of the enrolment, stamp duty, if any, chargeable under the Indian Stamp Act, 1899 (2 of 1899), and an enrolment fee payable to the State Bar Council of six hundred rupees and to the Bar Council of India, one hundred and fifty rupees by way of a bank draft drawn in favour of that Council

VI. DISQUALIFICATION FOR ENROLMENT

Page | 14


(1) No person shall be admitted as an advocate on a State roll— (a) if he is convicted of an offence involving moral turpitude; (b) if he is convicted of an offence under the provisions of the Untouchability (Offences) Act, 1955 (22 of 1955); (c) if he is dismissed or removed from employment or office under the State on any charge involving moral turpitude. (2) Nothing contained in sub-section (1) shall apply to a person who having been found guilty is dealt with under the provisions of the Probation of Offenders Act, 1958 (20 of 1958).

Power to remove names from roll.—

A State Bar Council may remove from the State roll the name of any advocate who is dead or from whom a request has been received to that effect.

VII. RESTRICTION ON OTHER EMPLOYMENTS

An advocate shall not personally engage in any business; but he may be a sleeping partner in a firm doing business provided that in the opinion of the appropriate State Bar Council, the nature of the business is not inconsistent with the dignity of the profession.

An advocate may be Director or Chairman of the Board of Directors of a Company with or without any ordinarily sitting fee, provided none of his duties are of an executive character. An advocate shall not be a Managing Director or a Secretary of any Company.

An advocate shall not be a full-time salaried employee of any person, government, firm, corporation or concern, so long as he continues to practise, and shall, on taking up any such employment, intimate the fact to the Bar Council on whose roll his name appears and shall thereupon cease to practise as an advocate so long as he continues in such employment.

An advocate who has inherited, or succeeded by survivorship to a family business may continue it, but may not personally participate in the management thereof. He may continue to hold a share with others in any business which has decended to him by survivorship or inheritance or by will, provided he does not personally participate in the management thereof.

An advocate may review Parliamentary Bills for a remuneration, edit legal text books at a salary, do press-vetting for newspapers, coach pupils for legal examination, set and examine question papers; and subject to the rules against advertising and full-time employment, engage in broadcasting, journalism, lecturing and teaching subjects, both legal and non-legal.

Nothing in these rules shall prevent an advocate from accepting after obtaining the consent of the State Bar Council, part-time employment provided that in the opinion of the State Bar Council, the nature of the employment does not conflict with his professional work and is not inconsistent with the dignity of the profession. This rule shall be subject to such directives if any as may be issued by the Bar Council India from time to time.

Page | 15


VIII. RESTRICTION ON TAKING BRIEF(1) An advocate may, at the outset of the brief and at reasonable times prior to the termination of the

same, require the client to make a payment or payments on account of fees, costs and disbursements to be incurred.

(2) An advocate's fee shall be reasonable and may be established either by the advocate himself or by agreement between the advocate and the client. The factors to be considered in determining the reasonableness of a fee (whether agreed or otherwise) include the following:

a. the time required, the novelty and difficulty of the issues involved, and the dedication requisite to perform the legal service properly;

b. the responsibility undertaken, with particular reference to the amount involved; c. the time limitations imposed by the client or the circumstances; d. the nature and length of the professional relationship with the client; e. the experience, reputation and ability of the advocate performing the services; f. in litigation matters, the fees recoverable from the other party; g. the likelihood that the acceptance of the particular brief will preclude the acceptance of other

briefs by the advocate.

(3) An advocate shall not, either directly or indirectly, enter into any agreement or stipulation qualities.

(4) An advocate shall not share or agree to share his of her professional fees with any person except: a. a practicing advocate; b. a retired partner or predecessor of the advocate or the dependents of Personal

representatives of a deceased partner or predecessor.

(5) An advocate shall not enter into any professional partnership or other professional arrangement, other than arrangements specifically allowed by aw, with any person other than an advocate.

(6) Advocates shall not by themselves or with any other person set up, operate, actively participate in or control any business, which offers any of the following services:

a. advocacy before any court, tribunal or inquiry; b. acting as executor; c. drafting any contract, including the memorandum and articles of association f companies; d. drafting any will; e. giving legal advice; f. drafting legal documents other than those comprised in the above paragraphs;

(7) g) any other activity reserved to advocates by law or usually performed by advocates.

(8) An advocate should normally render a bill of costs to a client within a reasonable time of concluding the matter to which the bill relates.

(9) An advocate's bill of costs should contain sufficient information to identify the matter to which it relates and when the services were rendered.

X. FINANCE WITH CLIENTS

(Rules under Section 15 (2) (l), (m) and (n) of the Act)

1. All SUM received on behalf of the Council shall be acknowledge by a receipt signed by the Secretary or any other person authorised by the Executive Committee. Amounts received shall be credited into the account of the Council in the Bank on the nest working day of the Bank.

2. The books of the account and registers shall be strongly bound and paged. On the 1st or title page, the number of pages of the book or the register shall be entered and the entry shall be signed by the Secretary. Corrections in the entries shall be made in red ink and attested by the Accountant. Erasures shall on no account be permitted.

Page | 16


3. Receipt forms shall be 4. Payments of Rs. 50/- and over shall ordinarily be by cheque.

4. Bills presented for payment shall be examined by the Accountant

5. Salary bills shall be in such form as the Executive Committee may direct.

6. A bill presented for payment three months after the money becomes due shall not be paid without the sanction of the Executive Committee.

7. The Executive Committee may fix the amount of a permanent advance to be made to the Secretary and the Accountant as the case may be.

8. The Accountant shall maintain an acquittance register in the following from/or in such other form as the auditor may direct :

————————————————————————————————————————————————————————————————————————————————————————————————————————————

Name Designation Pay Dearness Total Contri- Net Salary Allowance Salary bution payable etc. (add. towards (Col.5 Cols. provident minus 6) 3 and 4) fund————————————————————————————————————————————————————————————————————————————————————————————————————————————

1 2 3 4 5 6 7————————————————————————————————————————————————————————————————————————————————————————————————————————————

Instalment amount Amount of interest Total Signaturetowards provident payable on the with datefund loan taken principal loan amount outstanding————————————————————————————————————————————————————————————————————————————————————————————————————————————

8 9 10 11————————————————————————————————————————————————————————————————————————————————————————————————————————————

Page | 17


CONTEXT

TOPIC Page No.

I. DEFINITIONS 19

II. REMEDIES 19

III. PUNISHMENT FOR CONTEMPT OF LAW 20

IV. IMPORTANT CASE LAWS 22

V.

Page | 18


THE CONTEMPT OF COURTS ACT, 1971

sec

Unit III

2. DEFINITIONS.

(a) Contempt of court " means civil contempt or criminal contempt; (b) Civil contempt " means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court ; (c) Criminal contempt " means the publication (whether by words. spoken or written, or by signs, or by visible representations, or otherwise) of any matter or the doing of any other act whatsoever which- (i) Scandalizes or tends to scandalize, or lowers or tends to lower the authority of, any court ; or (ii) Prejudices, or interferes or tends to interfere with, the due course of any judicial proceeding; or

(iii) Pnterferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner ; (d) "High Court" means the High Court for a State or a Union territory, and includes the Court of the Judicial Commissioner in any Union territory.

REMEDIES FOR THE CONTEMPT OF COURT3.

4.

5.

6.

INNOCENT PUBLICATION AND DISTRIBUTION OF MATTER NOT CONTEMPT. (1) A person shall not be guilty of contempt of court on the ground that he has published (whether

by words spoken or written or by signs or by visible representations or otherwise)

a. any matter which interferes b. or tends to interfere with, c. or obstructs ord. tends to obstruct, the course of justicee. in connection with any civil or criminal proceeding pending at the time of publication.

.

FAIR AND ACCURATE REPORT OF JUDICIAL PROCEEDING NOT CONTEMPT.

Subject to the provisions contained in section 7, a person shall not be guilty of contempt of court for publishing a fair and accurate report of a judicial proceeding or any stage thereof.

FAIR CRITICISM OF JUDICIAL ACT NOT CONTEMPT.

A person shall not be guilty of contempt of court for publishing any fair comment on the merits of any case which has been heard and finally decided

COMPLAINT AGAINST PRESIDING OFFICERS OF SUBORDINATE COURTS IS NOT CONTEMPT.

A person shall not be guilty of contempt of court in respect of any statement made by him in good faith concerning the presiding officer of any subordinate court to- (a) Any other subordinate court, or (b) The High Court, to which it is subordinate.

Page | 19


7.

8.

PUBLICATION OF INFORMATION RELATING TO PROCEEDINGS IN CHAMBERS OR IN CAMERA NOT CONTEMPT EXCEPT IN CERTAIN CASES.

(1) A person shall not be guilty of contempt of court for publishing a fair and a accurate report of a judicial proceeding before any court sitting in chambers or in camera except in the following cases, that is to say,-

(a) Where the publication is contrary to the provisions of any enactment for the time being in force; (b) Where the court, on grounds of public policy or expressly prohibits the publication of all information relating to the Proceeding. (c) Where the court refuses for reasons connected with the security of the State (d) Where the information relates to a secret process, discovery or invention.

OTHER DEFENCES NOT AFFECTED

Act shall be construed as implying that any other defence which would have been a valid defence in any proceedings for contempt of court.

9. ACT NOT TO IMPLY ENLARGEMENT OF SCOPE OF CONTEMPT

Nothing contained in this Act shall be construed as implying that any disobedience, breach, publication or other act is punishable as contempt of court which would not be so punishable apart from this Act.

10. POWER OF HIGH COURT TO PUNISH CONTEMPTS OF SUBORDINATE COURTS

Every High Court shall have and exercise the same jurisdiction, powers and authority, in accordance with the same procedure and practice, in respect of contempts. Provided that no High Court shall take cognizance of a contempt alleged to have been committed in respect of a court subordinate to it where such contempt is an offence punishable under the Indian Penal Code.(45 of 1860)

12. PUNISHMENT FOR CONTEMPT OF COURT

(1) A contempt of court may be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both. :

Provided that the accused may be discharged or the punishment awarded may be remitted on apology being made to the satisfaction of the court.

(2) No court shall impose a sentence in excess of that specified in sub-section (1) for any contempt either in respect of itself or of a court subordinate to it.

(3) A person is found guilty of a civil contempt, the court, if it considers that a fine Will not meet the ends of justice and that a sentence of imprisonment is necessary shall, instead of sentencing him to simple imprisonment, direct that he be detained in a civil prison for such period not exceeding six months as it may think fit.

(4) Where guilty of contempt of is a company, every person who, at the time the contempt was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contempt and the punishment may be enforced, with the leave of the court, by the detention in civil prison of each such person:

Page | 20


14.

16.

17.

18.

19.

(5) Where the contempt of court has been committed by a company and it is proved that the contempt has been committed with any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contempt and the punishment may be enforced with the leave of the court, by the detention in civil prison of such director, manager, secretary or other officer.

PROCEDURE WHERE CONTEMPT IS IN THE FACE OF THE SUPREME COURT OR A HIGH COURT.

(1) When it is alleged, or appears to the Supreme Court or the High Court than its own view, that a person has been guilty of contempt committed in its presence or hearing, the Court may cause such person to be detained in custody, and, at any time before the rising of the Court, on the same day, or as early as possible thereafter, shall-

(a) cause him to be informed in writing of the contempt with which he is charged ;

(b) afford him an opportunity to make his defence to the charge;

(c) after taking such evidence as may be necessary or as may be offered by such person and after hearing him, proceed, either forthwith or after adjournment, to determine the matter of the charge ; and

(d) make such order for the punishment or discharge of such person as may be just.

CONTEMPT BY JUDGE, MAGISTRATE OR OTHER PERSON ACTING JUDICIALLY

(1) A judge, magistrate or other person acting judicially shall also be liable for contempt of his own court or of any other court in the same manner as any other individual is liable and the provisions of this Act (2) Nothing in this section shall apply to any observations or remarks made by a judge, magistrate or other person acting judicially, regarding a subordinate court in an appeal or revision pending before such judge, magistrate or other person against the order or judgment of the subordinate court.

PROCEDURE AFTER COGNIZANCE. (1) Notice of every proceeding under section 15 shall be served personally on the person charged. (2) The notice shall be accompanied, copy of the motion and also copies of the affidavits, proceedings commenced on a reference by a subordinate court,(3) The court may, if it is satisfied, that i person charged under section 15 is likely to abscond or keep out of the way to avoid service of the notice, order the attachment of his property of such value or amount as it may deem reasonable. (4) Every attachment under sub-section (3) shall be effected in the manner provided in the Code of Civil Procedure, 1908, (5 of 1908) for the attachment 5 of property in execution of a decree for payment of money. (5) Any person charged with contempt under section 15 may file an affidavit in support of his defense

HEARING OF CASES OF CRIMINAL CONTEMPT TO BE BY BENCHES.(1) Every case of criminal contempt under section 15 shall be heard and determined by a Bench of not less than two Judges. (2) Sub-section (1) shall not apply to the Court of a Judicial Commissioner.

APPEALS. (1) An appeal shall lie as of right from any order or decision of High Court in the exercise of its jurisdiction to punish for contempt- (a) Where the order or decision is that of a single Judge, to a Bench of not less than two Judges of the Court;

Page | 21


20.

2122.

(b) Where the order or decision is that of a Bench, to the Supreme Court: (2) Pending any appeal, the appellate court may order that- (a) The execution of the punishment or order appealed against be suspended; (b) If the appellant is in confinement, he be released on bail and (c) the appeal be heard notwithstanding that the appellant has not purged his contempt. (3) Where any person aggrieved by any order against which an appeal may be filed satisfies the High Court that he intends to prefer an appeal, the High Court may also exercise all or any of the powers conferred by sub-section (2). (4) An appeal under sub-section (1) shall be filed- (a) In the case of an appeal to a Bench of the High Court, within thirty days ; (b) In the case of an appeal to the Supreme Court, within sixty days, from the date of the order appealed against. LIMITATION FOR ACTIONS FOR CONTEMPT. After the expiry of a period of one year from the date on which the contempt is alleged to have been committed, no court shall initiate any proceedings for contempt, either on its own motion or otherwise, ACT NOT TO APPLY TO NYAYA PANCHYATS OR OTHER VILLAGE COURTS. ACT TO BE IN ADDITION TO AND NOT IN DEROGATION OF OTHER LAWS RELATING TO CONTEMPT.

CASE LAWS:

1) IN THE MATTER OF D, AN ADVOCATE AIR 1956 SC 102 : The advocate is the respondent in the case accused in a case under the Bombay prohibition

act. He was prosecuted by a presidency magistrate court at Bombay. The advocate was convicted with rigorous imprisonment of 1 year and the with the fine of Rs

201/- In the appeal of the respondent to the Bombay high court, the conviction was confirmed but the

sentence was reduced to 1000 /- only. Meanwhile the magistrate of Bombay presidency court where the original suit was failed a

complaint to the registrar of the Bombay high court that that the advocate behaved rude and in a contemptuous manner in the presidency court to up hold the trail and done everything to bring the administration of the justice into contempt.

The chief justice of the high court constituted a tribunal of 3 members of the bar council to enquire into the complaint.

In the enquire before the tribunal, the advocate prolonged the enquiry by frequent objections and etc.,

Finally he tendered his written apology to be forwarded to the high court to the tribunal. But the angry tribunal recommended the High court to take serious action against the misconduct of the advocate.

On the day of final hearing before the high court, the respondent offered the unconditional apology and prayed for “warning only” as punishment by the court.

However the court took a serious view of misconduct by the advocate and hence suspended him for 1 year and gives him a certificate of fitness for appeal to the Supreme Court.

The advocate failed a special leave petition in the Supreme court against the order of high court.

Page | 22


The supreme court dismissed the petition and confirmed the punishment given by high court is legal and valid.

2. P.J. RATNAM V. D.KANIKARAM, AIR 1964 SC 244 :

An advocate misappropriated the clients money and he was charged under the professional misconduct by the disciplinary committee of the bar council.

The disciplinary committee further proceeded against him in the high court under the section 10 of the bar council act.

The advocate challenged the proceedings in the supreme court and contended that high court have no right to do so.

Sec 10 (2) of the bar council act reads that “Upon the receipt by the compliant made it by any court or any bar council, or by any other person that any advocate has been guilty of misconduct, then the high court shall refer the case to the Bar council or the judge of district court or on its own motion can inquire”.

The supreme court held that the advocate was guilty of his misconduct and the high court was fully justified in the proceedings against the advocate under the sec 10 (2).

3. N.B. MIRZAN V.THE DECIPLINARY COMMITTEE OF BAR COUNCIL MAHARASTRA.

An advocate demanded a certain sum of money from his client saying that the amount has to be deposited in the court for his client’s legal case. But he had misappropriated the money and used by himself.

The clients failed a complaint against advocate before the bar council of the Maharastra. The disciplinary committee charged the advocate, conducted an inquiry and found the advocate

guilty. The disciplinary committee had suspended him from the practice for a specific period. The advocate preferred an appeal in the supreme court , the same was rejected and said the order

given by the disciplinary committee is valid and legal.

4. BAR COUNCIL OF MAHARASTRA V. M.V. DABHOLKAR AIR 1976 SC 242.

An advocate practicing in the presidency magistrate court Bombay. He used to stand in the entrance of the court and used to soliciting the clients though out the day

until he gets a case. His behavior at the entrance of the court was in a undignified manned and lowering the value of the

legal profession in the eye of public and he also engaged in the touting and corrupt practices. Complaint was filed against him in the bar council of maharastra and he found guilty. He was suspended for the period of three years as a punishment. He appealed to the bar council of India against the order passed by the state bar council. But the

Bar council of India uphold the order of state bar council. He further submitted the appeal to the Supreme Court on the grounds of hungry and survival. The

supreme court also dismissed the case saying that lowering the dignity of a profession is not the way of satisfying the hunger and confirmed the punishment of three year suspension.

Page | 23


5. V.C. RANGADURAI V. D. GOPALAN AND OTHERS AIR 1979 SC 201

An advocate received a money suite from brief his client who is 70 year old deaf man and his 67 years old wife for the suit that the money advanced by the client under two promissory notes were not repaid by the debtor.

The client handed over the case before the expiry of the limitation period to the advocate. They also paid the fee as fully demaded by an advocate.

The advocate failed to file the suite with in the limitation period and even after the considerable time.

When the client came to know the fact, they failed the suite before the disciplinary committee of the Tamilnadu state bar council.

The disciplinary committee failed a charge-sheet, inquiry and found guilty. He was suspended for the period of six years.

He failed an appeal to the bar council of India. But the Bar council of India upheld the order of state bar council.

Further failed an appeal in the Supreme Court. As it was serious misconduct on the part of advocate to cheat the aged people and punished his by suspending from the practice for the six years.

6. CHENDRASHEKAR SONI V. BAR COUNCIL OF RAJASTHAN AND OTHERS.

An advocate under took a assault case promising his client that he will get a medical certificate converting the grievous injuries as a simple injuries so that, his client can escape with the simple injuries.

He bribed the radiologist and got the certificate saying there is no facture to the skull and thus created the false evidence to save his client.

The case was failed before the bar council of Rajasthan. The disciplinary committee charged a charge-sheet, conducted an inquiry.

The advocate found guilty and he was suspended for three years from the practice as a punishment.

The appeal suited by him in the supreme court and the supreme court confirmed the order of Bar council, but reduced the punishment to one year as he is a junior practitioner without much experience.

7. IN RE AN ADVOCATE, AIR 1989 SC 245 A suit was filed to recovery of sum Rs. 30,098 in the additional city civil Judge, Bangalore.

The respondent 1, who is a senior advocate entrusted the same for his junior advocate to fail and look after the case.

After some time the suite was withdrawn saying the matter settled outside the court by the respondent 2 on the advice given by the respondent 1.

At the time of withdrawal the respondent was practicing on his own. Now the compliant filed a suit before the bar council and stating the following:

a. The suit was not settled at all.b. He has not received either any sum of suit filed or the refund of court fees.c. He paid a full legal fee to the advocate, the respondent one.d. He was not aware of withdrawal of his suite and settled outside the court.e. He did not informed the dates of hearing.

The bar council of Karnataka conduct an inquiry, found guilty, suspended him for 3 years . He went to the Bar council of India with an appeal. There the punishment was confirmed and upheld

the order passed by Bar council of Karnataka.

Page | 24


The further appeal made to supreme court of India. The Supreme court observed that,

a. The appellant was not given reasonable and fair chance and that he was not made aware of precise charge, he required to rebut.

b. The conclusion reached by the disciplinary committee in the said order shows that in recordings of finding out facts, the applicability of Doctrine of benefit of Doubt and need for establishing of the facts beyond reasonable doubts were not realized .

c. The name of the Applicant should not be mentioned in any of the Publication because was still under subjudice and it is to the common knowledge that the name should not be specified.

Therefore it remitted the case back to the disciplinary committee to hear the matter again freshly on the same evidence but with an open mind.

8. In Re Vinay Chandra Mishra , 1995 (Vol- I IBR 118)

Here an advocate was found guilty of Criminal Contempt and hence the criminal court sentenced the Advocate to an simple imprisonment of 6 Years and was suspended from practicing as an advocate for the period of three years.

In the appeal to the high court the punishment was suspended for simple imprisonment of four years.

In the further appeal to the supreme court of India, it held the following :a. Both the High court and the supreme court, in the exercise of the contempt jurisdiction, have

the authority to suspend or cancel the license of an advocate by removing his name from the bar, hence the Supreme court of India held the decision passed by the High Court .

b. Hence this particular case highlighted by passing of Land mark judgment by clearly mentioning that according to the Section 35 of the Advocates ac t the Supreme court is the appellate authority and according to the Section 38 of the same act it has powers to cancel or suspend the license of the advocate.

However it has concluded with that “it has an authority to suspend or cancel the license of an advocate to practice his profession”.

9. UNION OF INDIA V/S INDIAN BAR COUNCIL

However the case In Re Vinay Chandra Mishra , 1995 (Vol- I IBR 118) was over ruled in this case.

In this case supreme court held that1. It can neither create a jurisdiction nor create a punishment not otherwise permitted by law.2. Since the power to punish the advocate for professional misconduct by suspending the

license vest exclusively in the statutory body constituted under the advocate act.3. It is not permissible to the supreme court to take over the role of the bodies and other

organs of the state and perform their functions.4. To conclude, the jurisdiction vest with the Bar council to punish the advocate for

professional misconduct by canceling the license of practice.

10. EX-CAPT. HARISH UPPAL V. UNION OF INDIA AIR 2003 SC 739

Page | 25


Public interest litigation was filed challenging the right of a lawyer to go on strike or to give a call to

boycott the courts.

In deciding the case the supreme court observed the following :

1. Lawyers have no right to go on strike or give a call to boycott the court or not even a token

strike.

2. Courts not permit to strikes or boycott the courts.

3. No lawyer will cause any damage or harm, threat, coercion of any nature including that of

expulsion can be held out.

4. If a lawyer holding a vakalath of a client absents from attending the court due to strike call,

he is made responsible for the loss, damages occurred to his client.

5. It is a duty of all the court to go on with the matters with their boards even in the absence of

the lawyers.

6. The court under no obligations to adjourn the matter because of the lawyers on strike.

7. Only in the rarest of rare cases where the dignity, integrity, independence of the bar council

or the bench are at stake, the court may ignore the strike abstention from work for not more

than a day.

8. It is the court to decide whether or not the issue involves dignity, integrity, independence of

the bar council or the bench are at stake

9. Therefore the president of the Bar council, with the consultation with the chief justice shall

decide the issue involved.

Page | 26


CONTEXT

TOPIC Page No.

I. MEANING AND NEED OF ACCOUNTANCY 28

II. MEANING AND NEED OF BOOK KEEPING 28

III. JOURNAL 30

IV. LEDGER 31

V. CASH BOOKS 32

VI. FINAL ACCOUNTS 34

Unit -V

Page | 27


Accountancy :

Accounting is a process of identifying, recording, classifying, summarizing, analyzing the business

transaction and interpreting the result thereoff.

Need :

1. Serves as record.

2. To know the financial status.

3. To take decision.

4. To calculate the results.

5. To pay the taxes under the 145 of the income tax act 1961.

6. To know the dues and balances.

7. To gain excellent control over assets, expences, barrowings.

8. Recommended under the act.

Indian stamp act 1899

The registration act 1908

Court fee and suit valuation act.

Advocate fee rules.

Bookkeeping :

in the context of a business is simply the recording of financial transactions. Transactions include

purchases, sales, receipts and payments by an individual or organization.

Accounting process includes the bookkeeping function, but is just one part of the accounting

process.

There are some common methods of bookkeeping such as the single-entry bookkeeping system

and the double-entry bookkeeping system.

IMPORTANCE :

1. Limitation of human memory.

2. Owners and managers being different persons.

3. Preparation of financial statements.

4. Need for financial information.

5. Need of taxation authorities.

6. To know the assets and liabilities.

7. Helps to Planning and Decision making.

8. To improve the position of the business.

Elementary aspects of bookkeeping :

Page | 28

http://en.wikipedia.org/wiki/Double-entry_bookkeeping_system

http://en.wikipedia.org/wiki/Single-entry_bookkeeping_system


There are some common methods of bookkeeping such as

1. SINGLE-ENTRY BOOKKEEPING SYSTEM

2. DOUBLE-ENTRY BOOKKEEPING SYSTEM.

Meaning of Single Entry Book Keeping System :

Under single entry book keeping system, only one aspect of a transaction is recorded, so it

is known as incomplete system of recording transactions. Under it only records of cash

and personal accounts are maintained. In it, accounts relating to debtors , creditors and cash are

prepared. It ignores all impersonal account like salaries, wages, sales, purchases,etc. It maintains a

cash book and personal accounts but does not record nominal and real accounts. It is not a reliable

system but it is still used by small organizations to keep the records of transactions.

Features of Single Entry Book Keeping System :

1. It maintains only accounts relating to person but it ignores the real and nominal accounts.

2. It prepares the cash book but both personal and business cash transactions are recorded in the

same book.

3. It is suitable to small traders having lesser numbers having lesser number of transactions.

4. It lacks the specific rules of maintaining books of accounts as a result there is no uniformity in

accounts of

different firms.

5. Trial balance cannot be prepared under this system.

6. The profit or loss calculated under this system is only a guess.

Meaning of double entry book keeping system :

Double entry book keeping system is a modern and scientific system of recording the

financial transactions. It follows the principle that there are two aspects of each business

transaction. Both of these aspects i.e., one debit and another credit must be recorded in this

system of book keeping. The golden rule for it is that every debit must have a corresponding credit

of same amount.In other words, there are two parties in every transaction, one is giver and another

is receiver. Generally, the account of receiver is debited and the account of giver is credited.

Features of double entry book keeping system :

1. Double Effect- In it, every transaction has two fold effects i.e., debit and credit.

2.The double aspects of a transaction are recorded in opposite side of two different accounts.

3. Equal effect- The amount of debit and credit aspects must be equal in terms of monetary value.

The same amount of a transaction is shown in two books on opposite sides.

4. Classification of accounts- Under it, accounts are classified into three categories as personal

account, real account and nominal account.

5. Checking of Mathematical Accuracy- Since the amount is recorded on the debit and credit side of

two separated books, the total amount is always equal to the credit.

Page | 29

http://en.wikipedia.org/wiki/Double-entry_bookkeeping_system

http://en.wikipedia.org/wiki/Single-entry_bookkeeping_system


6.It helps to find the arithmetical accuracy of accounting records by preparing a trial balance.

Books to be maintained by advocates :

1. Journal entry :

Journal :

The word journal is derived from a French word ‘jour’ which means a daily, day book or log

book. In this book, transactions are recorded in a chronological order i.e. in order of dates,

as and when they take place.

Importance & Advantages of Journal

a. It provides a date wise record of all business transactions in a methodical order. So, there’s less chance to leave the transaction unentered.

b. The use of journal ensures the observation of Double Entry system in the recording of transactions.

c. The transactions recorded in the journals with details of the account debited and credited and the amount of each transaction.

d. From journal adequate explanation of each entry may be obtained as every entry in journal is supported by the narration relating to that transaction.

e. The use of journal simplifies ledger as details regarding the business transaction and are not required to be noted down in the ledger.

f. From legal point of view, journal is more reliable evidence of business transactions than the ledger.

Format Of Journal Entry System And Its Ingredients :

* Ledger Folio: This column is meant to record the reference of the main Book*

1) Date 2) Particulars Ledger

Folio

3) Dr. Amount

Rs.

4) Cr. Amount

Rs.

21.3.2006 Salary A/C Dr.

To Cash A/C 6)

JOURNALISING

(For salary is paid in Cash)

5) NARATION

1,000 1,000

Page | 30


2. Ledger :

a) ledger is a book of final entry.

b) posting in the ledger is made periodically.

c) The ledger information about a particular account is found at one place only.

d) Recording of transactions in the journal is called journalising and recording of

transactions in the ledger is called posting.

e) A journal entry shows both the aspects debit as well as credit but each entry in the ledger

shows only one aspect.

f) Journal constitutes basic record for ledger entries.

Karthik’s Capital A/c

Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

1998June 30

To Balance c/d 20,000 1998July 1

July 1

By Cash A/c

By Balance b/d

20,000

20,000 20,000

20,000

3. Cash book:

a. Cash Book is a sub-division of Journal.

b. Recording transactions pertaining to cash receipts and payments.

c. Firstly, all cash transactions are recorded in the Cash Book wherefrom they are

posted subsequently to the respective ledger accounts.

d. All cash receipts are recorded on the debit side and all cash payments are recorded

on the credit side.

e. All cash transactions are recorded chronologically in the Cash Book.

f. The Cash Book will always show a debit balance since payments cannot exceed the

receipts at any time.

g. Kinds of Cash Book

Page | 31


Depending upon the nature of business and the type of cash transactions, various

types of Cash books are used. They are:

a) Single Column Cash Book

b) Two Column Cash Book or Cash Book with cash and discount columns.

c) Three Columnar Cash Book or Cash Book with cash, bank and discount

columns.

d) ‘Bank’ Cash Book or Cash Book with bank and discount columns.

e) Petty Cash Book.

a) Single or Simple Column Cash Book :

This is the simplest form of Cash Book

Is used when payments and receipts are mostly in the form of cash and where usually

no cash discount is allowed or received.

. The ruling of Single Column Cash Book is as follows:

Single Column Cash Book

Dr. Cr.

Date Particulars R.No . L.F Rs. Date Particulars V.No. . L.F Rs.

b) Two Column Cash Book :

Or Cash Book with Cash and Discount Columns.

This type of Cash Book is used when cash transactions involving discount

allowed or received are affected.

The ruling of Single Column Cash Book is as follows:

Two Column Cash Book

Dr. Cr.

Date Particulars R.No . L.F

Discount allowed

Rs. Date Particulars V.No. . L.F

Discount received

Rs.

c) Three Columnar Cash Book:

Page | 32


Or Cash Book with Cash, Bank and Discount Columns.

Instead of maintaining the bank account in the ledger, it is found more

convenient if it is included in the Cash Book as Cash Column.

Three Column Cash Book

Dr. Cr.

Date Particular

R.No

.L

.FDiscount allowed

Cash

Rs.

BankRs.

Date

Particular

V.No.

. L.F

Discount received

Cash

Rs.

BankRs.

d) ‘Bank’ Cash Book :

Cash Book with Bank and Discount Columns.

Bank Column Cash Book

Dr. Cr.

Date

Particulars

R.No

. L.F

Discount allowed

Bank

Rs.

Date

Particulars

V.No.

. L.F

Discount received

Bank

Rs.

e) Petty Cash Book:

The word ‘petty’ has its origin from the French word ‘petit’ which means

small.

The petty cash book is used to record items like carriage, cartage,

entertainment expenses, office expenses, postage and telegrams,

stationery, etc.

The person who maintains this book is called the ‘petty cahsier’.

The petty cash book is used by many business concerns to save the much

valuable time.

To prevent over burdening of the main cash book.

4. Final accounts :

Page | 33


a. Trial balance :

Trial balance is a statement prepared with the balances or total of debits and credits

of all the accounts in the ledger to test the arithmetical accuracy of the ledger

accounts.

According to M.S. Gosav “Trail balance is a statement containing the balances of all

ledger accounts, as at any given date, arranged in the form of debit and credit

columns placed side by side and prepared with the object of checking the arithmetical

accuracy of ledger postings”.

Features :

i. A trail balance is prepared as on a specified date.

ii. It contains a list of all ledger account including cash account.

iii. It may be prepared with the balances or totals of Ledger accounts.

iv. Total of the debit and credit amount columns of the trail balance must tally.

v. It the debit and credit amounts are equal, we assume that ledger accounts are

arithmetically accurate.

vi. Tallying of trail balance is not a conclusive profit of accuracy of accounts

ST’s Books

Trail Balance as on……..

S.No. Name of Account L.F Debit

Total Amount

Rs.

Credit

Total Amount

Rs.

b. Trading account :

Trading refers buying and selling of goods. Trading A/c shows the result of buying

and selling of goods. This account is prepared to find out the difference between the

Selling prices and Cost price.

Page | 34


Trading Account for the year ending ………..

Dr Cr

Particulars Amount

Rs

Amount

Rs

Particulars Amount

Rs

Amount

Rs

To Opeining Stock

To Purchase

Less: Returns Outwards

To Wages

To Freight

To Carriage Inwards

To Clearing Charges

To Packing charges

To Dock dues

To Power

To Gross Proft (to be

transferred to P&L A/c)

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

By Sales

Less: Returns

Inwards

By Closing Stock

By Gross Loss (to

be transferred to

P&L A/c)

XXX

XXX

XXX

XXX

XXX

XXXX XXXX

Advantages of Trading Account

1. The result of Purchases and Sales can be clearly ascertained

2. Gross Profit ratio to Sales could also be easily ascertained. It helps to determine Price.

3. Gross Profit ratio to direct Expenses could also be easily ascertained. And so,

unnecessary expenses could be eliminated.

4. Comparison of trading account details with previous years details help to draw better

administrative policies.

c. Profit and loss account :

Page | 35


Trading account reveals Gross Profit or Gross Loss. Gross Profit is transferred to credit side

of Profit and Loss A/c. Gross Loss is transferred to debit side of the Profit Loss Account.

Thus Profit and Loss A/c is commenced. This Profit & Loss A/c reveals Net Profit or Net loss

at a given time of accounting year.

Profit & Loss Account for the year ended 31st March 2007

Particulars Amount Particulars Amount

To Trading A/c

(Gross Loss)

To Salaries

To Rent & Taxes

To Stationeries

To Postage expenses

To Insurance

To Repairs

To Trading expenses

To office expenses

To Interest

To Bank charges

To Establishment

expenses

To Sunder expenses

To Commission

To Discount

To Advertisement

To Carriage outwards

To Traveling

expenses

To Distribution

expenses

By Trading A/c

(Gross Profit)

By Commission

earned

By Rent received

By Interest received

By Discounts

received

By Net Loss

(Capital A/c)

Page | 36


To Bad debt provision

To Net Profit

(transferred to

Capital A/c)

d. Balance sheet :

1. It shows accurate financial position of a firm.

2. It is a gist of various transactions at a given period.

3. It clearly indicates, whether the firm has sufficient assents to repay its liabilities.

4. The accuracy of final accounts is verified by this statement

5. It shows the profit or Loss arrived through Profit & Loss A/c.

The Word ‘Balance Sheet’ is defined as “a Statement which sets out the Assets and Liabilities of a business firm and which serves to ascertain the financial position of the same on any particular date.”

Balance Sheet of ___________As on _____________

Page | 37


Liabilities Amount Amount Assets Amount Amount

Sundry Creditors

Bills Payable

Bank overdraft

Loans

Mortgage

Reserve Fund

Outstanding exp.

Capital

Add: Net Profit

(or)

Less : Net Loss

Less Drawings

Less: Income tax

Cash in hand

Cash at bank

Bills receivable

Sundry Debtors

Closing Stock

Furniture & Fittings

Investments

Plant & Machinery

Loose tools

Land & Buildings

Business premises

Horses & carts

Prepaid exp.

Patents & Trade

marks

Good will

Page | 38

professional ethics and professional accounting system

Documents

legal practitioner act

legal knowledge

legal processes

legal base

legal learning

legal phraseology

ancient legal system

term legal profession