The bench said "the expression "fly in and fly out" will only cover a casual visit not amounting to "practice".
The Centre, represented by Additional Solicitor General Maninder Singh, had called upon the Bar Council to exercise its power under Section 49 (1)(e) of the Act of 1961 and frame the rules governing the practice of law in India by foreign lawyers and law firms.
It added that "in case of a dispute whether a foreign lawyer was limiting himself to "fly in and fly out" on casual basis for the objective of giving legal advice...or whether in substance he was doing practice which is prohibited, can be determined by the Bar Council of India".
The Supreme Court on Tuesday upheld the judgments of the Madras High Court in A.K.Balaji v.
The Bombay High Court had in 2009 challenged the RBI's decision to allow foreign law firms such as White & Case, Chadbourne & Parke, and Ashurst to set up liaison offices on Indian soil. "We want foreign lawyers to come so as to not deny the Indian advocates of the same privilege in other countries".
The apex court also held that foreign lawyers can appear in global commercial arbitration subject to relevant institutional framework and rules. "In any case, foreign firms looking to enter India, whenever permitted, will look at local alliances to hit the ground running".
"The apex court also modified the Madras High Court direction that the BPOs, which provide customised and integrated services, do not come within the purview of the laws regulating the legal profession here".
The court said: "If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration Act, foreign lawyers may not be debarred from conducting arbitration proceedings arising out of global commercial arbitration in view of Sections 32 and 33 of the Advocates Act".
Ashwini Kumar Upadhyay has filed a petition praying that legislators be debarred from practicing as Advocates (for the period during which they are Members of Parliament or State Assembly), in spirit of Part-VI of the Bar Council of India Rules.
Ajay Shaw, partner, DSK Legal, said: "This judgment will not have any bearing on Indian law firms at this stage".