Advocates’ office can be operated from a residential place since it is not regarded as a commercial activity. However, this is subject to the space restrictions imposed by the local laws.
The legal profession is not a commercial activity. Instead, it is regarded as a professional activity, which is distinct from business, trade or commerce.

There are several judgments of the Supreme Court and High Courts which explain this distinction. Since the service of an advocate is based on specialized knowledge, skills and experience, which are very person-specific, it is treated as a ‘professional service’.

Delhi High Court Answers
In Sasidharan v Peter and Karunakar AIR 1984 SC 1700, the Supreme Court had held that a lawyer’s office is not a ‘commercial establishment’ which requires registration under the Shops and Establishments Act. The SC held that it does not require any strong argument to justify the conclusion that the office of a lawyer or a firm of lawyers is not a ‘shop’.

The Division Bench Jjudgment of Madhya Pradesh High Court in Shiv Narayan and another vs. M.P. Electricity Board and others AIR 1999 MP 246 held that classification of Advocate under the heading “Commercial” for payment of consumption of electricity energy at commercial rate is arbitrary and irrational and ultra vires of Article 14 of Constitution of India.

“…in a case of professional activity, an individual has to apply his professional skill as against commercial or business activity where the transaction is done with the active cooperation of employer and his employees for sale of certain goods or with the profit motive. In case of profession, one works for livelihood and not only for a profit motive”, observed the MP High Court, explaining the distinction between profession and commerce.

This was appealed before the Supreme Court. The Electricity Board relied on the judgment rendered in New Delhi Municipal Council vs. Sohan Lal Sachdev (dead) rep. By Mrs. Hirinder Sachdev (2002) 2 SCC 494 . That decision had held that a building used as a guest house is a commercial establishment, observing that if the use is not domestic, it is commercial

The Division Bench of Justices Arijit Pasayat and H K Sema expressed approval of the conclusions of the MP High Court in relation to applicability of domestic electricity tariff to advocates’ office.

Explainer
“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 an activity of a commercial character”, it observed.

However, the Division Bench expressed reservations about the observations in Hirinder Sachdev that all non-domestic activities are to be treated as commercial, and the matter was referred to a larger bench for consideration.

The larger bench of the Supreme Court in the decision made in Civil Appeal No.1065 of 2000, dated 27.10.2005 observed that the issue whether an advocate was running a commercial activity was not related to the decision in Hirinder Sachdev. It held Hirinder Sachdev to be a correct decision, as the distinction there was based on statutory definition. The larger bench also clarified that it did not go into the question as to whether or not an advocate can be said to be carrying on commercial activity.

So, the conclusions of MP HC that an advocate’s work is not a commercial activity can be taken as settled by the SC.

A Division Bench of the Rajasthan High Court, Jaipur Bench, held in J.V.V.N. Limited and others vs. Smt. Parinitoo Jain and another AIR 2009 Rajasthan 110 that an advocate running his office from his residence cannot be charged the additional tariff on commercial basis. However, if the office is run in an independent commercial place, then the advocate cannot be exempted from commercial tariff. A distinction has been made between the office in a residence and office in a commercial place. This was followed by the Madras High Court in K.Kanagasabai v The Superintending Engineer.

No property tax on advocates’ office as ‘business building’

The Delhi High Court held in B N Magon v South Delhi Municipal Corporation that a residential premise used by an advocate to run office will not become a ‘business building’ for the purposes of property tax. This was held by the Court after noticing that the Master Plan of Delhi 2021 permitted use of residential premises for professional activities of lawyers, doctors, chartered accountants, architects etc, on condition that professional space should not exceed 50% of the permissible FAR for the area.

In District Bar Association Panchkula v State of Haryana AIR 2015 P& H 13, the Punjab and Haryana Division Bench quashed the regulations of Haryana Urban Development Authority, which had prescribed a fees for using residential premises allotted by it for use as advocates’ office. The Authority had taken the stand it amounted to change of residential use to commercial. The HUDA regulation had permitted use of 25% of the built up area for such professional activities. However, the Authority charged a fees for giving permission for use of residential premises for professional use, which was quashed by the High Court.

“We put a query to learned senior counsel for HUDA that if a well known author makes a study which he utilizes for writing a book and that is his source of earning, can it be called a non – residential use? There is really no satisfactory answer to this because the activity of an individual profession of a lawyer is also based on a study of the books and papers for which he maintains the space. It is a noble profession and in that context it has been held not to be commerce or business”, the bench headed by Justice Sanjay Kishan Kaul observed.

Keeping in mind the nature of the legal profession of an individual lawyer, the use of a limited space as prescribed in the HUDA Regulations cannot change the character or the activity to commercial, added the Bench.

When the High Court of Kerala was petitioned to take action against allottees of the Kerala State Housing Board who were using their residential premises for commercial activities, it refused to pass orders against advocates’ offices, though directions were issued against several others who were using their space for commercial activities. The court held that an advocate carrying out his office in his residence provided under the scheme, cannot be termed as a commercial activity.

“…residence of the professional along with his office in an apartment cannot be termed as a commercial one”, the Court said.

Restrictions in local laws

Several local laws in relation to building occupancy impose a restriction on the space which can be used for professional activity in a residential premise. The Delhi Master Plan referred in the Magon B case permitted professional activity within 50% of the FAR of the residential space.

In case of HUDA Regulation, it was 25% of the built up space. The Kerala Municipal Building Rules state that small professional spaces for advocates, doctors, architects etc not exceeding 50 square meter floor area and used as part of the principal residential occupancy are included in the group of ‘residential buildings’. These regulations may vary based on local laws.

In the context of Delhi, the Supreme Court ordered in Delhi Pradesh Citizen Council v Union of India (2006) 6 SCC 305 that professional activities even by architects, chartered accountants, doctors and lawyers cannot not be carried on in excess of 50% permissible coverage in residential premises and by anyone who is not a resident in such premises.

In conclusion, advocates’ office can be operated from a residential place, since it is not regarded as a commercial activity. However, this is subject to the space restrictions imposed by the local laws.

Office of Co-operative Commissioner and Registrar, Co-operative Societies, State of Maharashtra, Pune New Central Building,

2nd Floor, Pune-1

Phone no. 20-26122846/47                                          Email-comm.housing20@gmail.com

Jaavak  Kramaank No. Home/ D-3/ Housing Sosa./ Grievance Redressal/ 14 SAA 1654

Date :- 04 May, 2023

Sir,

1.         Divisional Joint Registrar, Co-operative Societies, All 2. District Deputy Registrar, Co-operative Societies, All

3.         Joint Registrar, Co-operative Societies, CIDCO

4.         Deputy Registrar, Co-operative Societies, Mhada

5.         District Co-operative Housing Federation, All

Subject:       Regarding the complaint made by the members of the organization against the Executive Committee / Administrator in the Co-operative Housing Society in the State.

Reference:  This office circular no. Home/D-3/Housing Sosa./Grievance Redressal/10, dated 15/03/2010

Since many complaints of the members of the organization against the executive committee and the administrators in the state cooperative housing organization are being received at the Office of the Hon. The Deputy Commissioner had informed the Government in the reference letter dated 15/06/2019 that it is necessary to carry out effective measures for redressal of the complaints of the members of the Housing Society by conducting independent inquiry and appointing a study group for their effective implementation. Accordingly, the government appointed a study group under the chairmanship of Additional Registrar (Collection and Planning), Co-operative Societies, M.R. Pune vide letter dated 18/07/2009. The said study group submitted the said report on 27/11/2009 to the Government and Hon. It has been submitted to the office of the People’s Commissioner. Accordingly circular instructions were issued on 15/03/2010 for redressal of complaints received frequently and on a large scale at various levels. However, after this, many changes have taken place due to the changes brought about by the 97th Amendment to the Co-operative Act, the inclusion of a new section under Section 154 (b) relating to housing societies in the Co-operative Act. Taking that into consideration, the above mentioned circular instructions need to be substantially modified. Therefore, the previous circular is canceled and the following revised circular instructions are being issued.

PREFACE:-

1.         Regarding Absence of Members from Annual General Meeting, Non-participation in Elections- The functioning of Co-operative Housing Societies depends on the attendance of all the members in the meeting as well as in the election. Most of the members of the organization do not attend the monthly / annual meetings as well as elections and later complain about the decisions / resolutions of the meeting. As above, remedial measures should be planned to minimize the complaints received and it is hereby indicated that all the meetings/elections organized by the organization should be attended by the members. If the members who will not be present complain about the proceedings of the meeting, they should inform the court under section 91 and close the complaints

2.         Provision regarding security arrangement of members

In many co-operative housing societies, the original flat holders are not resident and they rent out the flats. The managing committee does not have the details of who lives in the said flats. Also, there is no detail about security guards, cleaning staff coming to the institution. It is necessary from the point of view of the members of the organization that the management committee should have this information.

In this regard, it is indicated that the management committee shall appoint persons residing in the institution, owner tenants, security guards, cleaning staff etc. Complete information along with photographs should be kept in the organization’s computer or if there is no computer in the register

3.         Regarding Minutes of Management Committee Meeting

The minutes of the managing committee of the organization are not written. Following the complaints received regarding wrong entries in the minutes, it is indicated that after the meeting of the Managing Committee, it is mandatory to write in the minutes of one month / next meeting.

4.         Anti-bullying mechanism

            Many complaints are frequently received from organizations and members regarding the functioning of cooperative housing societies at various levels. The said grievances are expected to be resolved at the local level within a short period of time. For that, the following should be done.

In that regard, it is suggested that the complainant should first file their complaint by applying to the organization. After receiving the complaint application, after discussion in the committee meeting, the committee will decide on such application by majority vote. The decision of the management meeting will be communicated to the members within 15 days. If not satisfied with the decision communicated by the committee, a complaint can be made to the advisory committee constituted by the general meeting of the organization.

The Advisory Committee of the Institute shall be as follows –

1.         Chairman elected by the General Assembly (other than Working Committee Chairman)

2.         A member elected by the General Assembly (other than a working committee member)

3.         A member of the Managing Committee

4.         Certified Auditors and Statutory Auditors of the Organization

5.         Federation representative

The Advisory Committee will resolve the complaint application within 45 days and inform the applicant with a majority decision. If the decision given is not accepted, the complainant may refer to Housing Societies Bye-law no. According to the nature of the complaint as per 174, a complaint can be made to the Registrar/ Cooperative Court/ Civil Court/ Municipal Corporation/ Local Authorities/ Police/ Federation.

If not satisfied with the decision given by the advisory committee of the institute, the complainant can file a complaint with the concerned registrar. The concerned registrar will be required to take action in this regard within 7 days and give a reply/decision within 30 days. However, if action is not taken within the prescribed period, the complainant can file a complaint with the District Deputy Registrar. They should give a decision after hearing the applicant within 45 days. If the district deputy registrar does not act in this way, a complaint can be filed with the divisional joint registrar. They should hold a hearing and give a decision within 60 days. Out of the above, if no action is taken by any of the offices, a complaint can be filed with the Cooperative Commissioner. They should give a proper decision within 60 days.

5.         Regarding Registration of Federation of Housing Societies at Ward Level

In Pune/Mumbai/Thane/Nashik district, action should be taken regarding registration of Federation of Housing Institutions separately on the lines of Area Local Management of Mumbai Municipal Corporation, ward and taluka wise.

6.         Regarding appointment of administrator

Due to various complaints against cooperative housing societies, the board of directors is dismissed and an administrator is appointed. However, it has been noticed that the members are making many complaints regarding the administrative work.

It is mentioned in this regard that if the registrars are convinced that it is necessary to appoint an administrator / authorized officer to the said institutions, they should appoint the person on the panel prepared by the divisional joint registrar office as the administrator / authorized officer while appointing the administrator / authorized officer. A 3-member administrative board should be appointed preferably. Out of which at least one member should be member of the organization and one member should be on the panel constituted by the office of the Divisional Joint Registrar, Co-operative Societies. Renewal of roll on the panel will be required before 31st March every year.

7.         Regarding audit

Audit of Housing Society is not done on time. The members do not get a copy of the audit report.. It is not found that objectionable matters are mentioned in the audit report, as these and many other types of complaints are received regarding the audit, the following points should be strictly followed while auditing housing societies. (a) The CA/Certified Auditor conducting the audit should be changed after a certain period of time.

An auditor cannot audit the same organization for more than three consecutive years. (b) Instructions have been issued as per the Government Decision dated 27/02/2018 regarding the matters to be checked in the audit so that disputes do not arise in the matter of audit. It mentions the barbie of what auditors should or should not do.

8.         Developing Computer Controls.

All the cooperative societies have been computerized and every society is keeping its information in computerized form, so it is convenient to update the information from time to time, so housing societies are also expected to keep their information in the computer.

9.         Appointment of manager to look after the working of housing societies

While dealing with many complaints of Housing Societies, it has been observed that many managing committee members / office bearers do not have sufficient knowledge about Co-operative Act and Bye-laws so the work is not carried out properly. Further action should be taken for that.

It is mandatory to appoint a manager who has full knowledge of Cooperative Act, Rules and Bye-laws. If the organization cannot afford a full-time manager financially, organizations should merge as per need. And the Federation should assist the organization in appointing a manager. The federation should form a panel of trained managers and appoint the manager from that panel.

(Anil Kawade)

Cooperative Commissioner and Registrar,

Cooperative Society, Maharashtra State, Pune.

Z:\OLD BEFORE 17500\02 GOVERNMENT CIRCULAR 980 OFFICE OF COOPERATIVE COMMISSIONER AND REGISTRAR COOPERATIVE SOCIETIES

ET page 7, 15 Sep’21