Supreme Court

B. Sunitha Vs. The State of Telengana and Ors.

MANU/SC/1527/2017

05.12.2017

Criminal

Advocate shall not stipulate for a fee contingent on results of litigation or agree to share the proceeds thereof

Instant appeal has been preferred against order of High Court thereby, High Court declined to quash the proceedings initiated against the Appellant under Section 138 of the Negotiable Instruments Act, 1881. The proceedings were initiated by the Respondent who is an advocate in whose favour the Appellant executed a cheque allegedly towards his fee. The same was dishonoured. The stand of the Appellant is that Section 138 of the Act is not attracted as there was no legally enforceable debt. The Appellant having already paid a sum of Rs. 10 lakhs towards fee, 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, 1872. Claim for fee based on percentage of the decretal amount was unethical.

The Appellant's husband died in a motor accident on 30th July, 1998. She along with her children and parents of the deceased filed a claim before the Motor Accident Claims Tribunal (MACT) through the Respondent as an advocate. The MACT awarded compensation. The Appellant paid a sum of Rs. 10 lakhs towards fee on various dates. However, the Respondent forced the Appellant to sign another cheque of 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 sent e-mail dated 2nd November, 2014 claiming his fee to be 16% of the amount received by the Appellant.

Madras High Court in C. Manohar v. B.R. Poornima held that, no presumption could arise merely by issuance of a cheque that amount stipulated in the cheque was payable towards fee. In absence of independent proof, issuance of cheque could not furnish cause of action under Section 138 of the Act in the context of an advocate or client. Under Section 139 N.I. Act, there is a presumption that, unless the contrary is proved, the holder of the cheque received the cheque for the discharge in whole or in part of any debt or other liability. But even in Section 139 N.I. Act, the legal presumption is created only for the cheque so received for the discharge in whole or in part of any debt or other liability. In the case on hand, the complainant being a practising advocate, has not proved the debt amount payable towards him by the Accused, who has engaged him as his lawyer to conduct the case. The finding of the trial Court that there is no debt or legally enforceable liability' does not suffer from any infirmity warranting interference.

Rule 20 of Part VI, Chapter II, Section II of the Standard of Professional Conduct and Etiquette provides that, an advocate shall not stipulate for a fee contingent on the results of litigation or agree to share the proceeds thereof. Thus, mere issuance of cheque by the client may not debar him from contesting the liability. If liability is disputed, the advocate has to independently prove the contract. Claim based on percentage of subject matter in litigation cannot be the basis of a complaint under Section 138 of the Act. 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 process of law and have to be quashed.

Respondent No.2 committed a serious professional misconduct, he 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. Thus, while proceedings against the Appellant will stand quashed, the issue of professional misconduct is left to be dealt with at the appropriate forum. Concerned authorities in 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. Appeal disposed off.

Tags : Advocate’s fee Contingency Litigation Misconduct

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