Legislative changes to check violation of professional ethics by lawyers and fix Lawyer's fee

December 6, 2017

A Supreme Court bench of Justice Adarsh Kumar Goel and Justice Uday Umesh Lalit through a Judgment passed in an appeal filed in a 138 Negotiable Instruments Act complaint invited the attention of concerned authorities to the need for introducing legislative changes for an effective regulatory mechanism to check violation of professional ethics and to ensure access to legal services.

The appellant had issued a cheque to the advocate allegedly towards payment of fee. The said cheque was dishonoured. The stand of the appellant is that Section 138 of the Negotiable Instruments Act is not attracted as there was no legally enforceable debt. The appellant had already paid a fee of Rs. 10 lakhs. The cheque was taken from the appellant by way of abuse of position and the transaction was void under section 23 of the Indian Contract Act. The fee was claimed on percentage of decreed amount, which was unethical.

The appellant's husband died in a Motor Accident on 30th July, 1998. A claim was filed through the advocate. Compensation was awarded. The appellant paid fee of Rs. 10 lakhs to the advocate on various dates. However the respondent forced the appellant to sign a cheque for Rs. 3 lakh on 25th October 2014, despite her stating that she was unable to pay more fee as she had no funds in her account. The respondent advocate claimed 16% of the claim amount as his fee.

A complaint under section 138 was filed against the appellant. She was summoned by the court against which she approached the High Court stating that there was no enforceable debt as fee claimed was exorbitant and against law. The claim was in violation of Advocates Fee Rules and Ethics as fee could not be demanded on percentage of amount awarded as compensation to the appellant.

The High Court dismissed quashing petition by holding that Advocates' fee rules are only for guidance and there was no bar to fee beyond what fee being claimed what is fixed under the rules. The respondent claimed that the fee includes the fee for engaging advocates in High Court and Supreme Court.

The Supreme Court observed that "The main contention raised on behalf of the appellant is that charging percentage of decretal amount by an advocate is hit by Section 23 of the Contract Act being against professional ethics and public policy, the cheque issued by the appellant could not be treated as being in discharge of any liability by the appellant. No presumption arose in favour of the respondent that the cheque represented legally enforceable debt. In any case, such presumption stood rebutted by settled law that claim towards Advocate's fee based on percentage of result of litigation was illegal. Signing of the cheque was by way of exploitation of fiduciary relationship of Advocate and the client."

The Supreme Court dealt the following 3 questions

1. Whether fee can be determined with reference to percentage of the decretal amount

2. Whether the determination of fee can be unilateral and if the client disputes the quantum of fee whether the burden to prove the contract of fee will be on the advocate or the client.

3. Whether the professional ethics require regulation of exploitation in the matter of fee

The Bench held that "the claim of the respondent advocate being against public policy and being an act of professional misconduct, proceedings in the complaint filed by him have to be held to be abuse of the process of law and have to be quashed."

After the hearing was concluded, the respondent advocate tried to withdraw the complaint, but it was not allowed by the bench on the light of the fact that the respondent having committed a serious professional misconduct, the respondent could not be allowed to avoid the adverse consequences which he may suffer for his professional misconduct. The issue of professional misconduct may be dealt with at appropriate forum.

The court quashed proceedings against the appellant, but the issue of professional mis conduct left to be dealt with appropriate forum.

The bench referred the recommendations of law commission for review of regulatory framework of the legal profession. Suggestion was already made that constitution of Bar Council required a change for which an amend bill was also recommended.

The bench concluded the Judgment with a hope that the concerned authorities in the Government will take cognizance of the issue of introducing requisite legislative changes for an effective regulatory mechanism to check violation of professional ethics and also to ensure access to legal services which is major component of access to justice mandated under Article 39A of the Constitution.

Read the Order of Supreme Court dated 05.12.2017