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SUPREME COURT OF INDIA
Adarsh Kumar Goel, Uday Umesh Lalit, JJ.
B. Sunitha – Appellant
Versus
State of Telengana & Anr. – Respondents
Criminal Appeal No. 2068 of 2017 (Arising Out of Special Leave Petition (Crl.) No. 10700 of 2015)
Decided On : 05-12-2017
(2004) CrLJ 4436 – Cited with approval
(b) Advocates Act, 1961 – Section 35 r/w Rule 20 of Part VI, Chapter II, Section II of the Standard of Professional Conduct and Etiquette – Claiming fee based on a share in the subject matter – Professional misconduct, relation between a lawyer and his client being highly fiduciary in nature. (Para 15, 16)
(1955) 1 SCR 490; (1979) 1 SCC 308 – Relied upon
AIR 1954 Bom 478 – Cited with approval
(c) Negotiable Instruments Act, 1881 – Section 138 – Client issuing cheque to advocate – Not debarred from contesting the liability – In case of dispute, advocate has to prove the contract independently – Held, advocate’s claim based on percentage of subject matter in litigation cannot be the basis of a complaint under Section 138 of the Act – Such proceeding u/s 138 held abuse of process of law – Quashed. (Para 18, 19)
(d) Administration of justice – Standard and ethics of legal profession – Article 39A, Constitution of India – Lawyers’ fee – Need to prescribe floor and ceiling in fees – Need of a regulatory mechanism emphasised. (Para 25, 26, 30, 31)
(2009) 8 SCC 106; (1995) 3 SCC 619; 1993 Supp. (3) SCC 256; (2011) 6 SCC 86; (2000) 7 SCC 264; (2016) 8 SCC 335 – Relied upon
Facts of the case:
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.
The cheque of Rs. 3 lakh was dishonoured.
The respondent filed complaint u/s 138 NI Act.
The appellant was summoned by the Court against which she approached the High Court for quashing the same.
The High Court held that Advocates' Fee Rules are only for guidance and there was no bar to fee being claimed beyond what is fixed under the Rules and dismissed the quashing petition.
Finding of the Court:
Claiming fee based on a share in the subject matter is professional misconduct.
Result: Appeal disposed of.
Based on the provided legal document, the key points are as follows:
An advocate's claim for professional fees cannot be based solely on the issuance of a cheque; without independent proof of the amount being payable for legal services, such issuance does not constitute a cause of action under the relevant section of the law (!) .
Claiming advocate’s fees based on a share in the subject matter of litigation is considered professional misconduct, as the relationship between a lawyer and client is fiduciary in nature and such practices violate ethical standards (!) (!) .
The relationship between an advocate and a client is built on trust and confidence, and the advocate is responsible for proving the contract for fees independently if there is a dispute. The claim based on a percentage of the subject matter cannot serve as a valid basis for a complaint under the relevant law (!) (!) .
The legal profession is increasingly adopting a trade-like approach, moving away from service orientation, which raises concerns about the ethics and public policy implications of fee arrangements, especially those based on results or percentages (!) (!) .
The law emphasizes the need for a regulatory mechanism to fix minimum and maximum fee limits for advocates to ensure ethical practice and access to justice. Such regulation is crucial to uphold the standards of the profession and prevent exploitation (!) (!) (!) (!) .
The practice of demanding or accepting fees based on the outcome of litigation or as a share in the proceeds is against professional ethics and public policy, and such arrangements can be deemed as abuse of the fiduciary relationship (!) .
When disputes arise regarding advocate’s fees, the advocate must substantiate the claim independently, especially when the fee is linked to litigation results, as the issuance of a cheque alone does not presume a legally enforceable debt (!) (!) .
The regulation of legal fees and the ethical conduct of advocates are essential for maintaining the integrity of the legal profession and ensuring access to justice. The existing regulatory mechanisms need to be strengthened, and legislative reforms are recommended to address these issues effectively (!) (!) (!) (!) (!) (!) (!) .
The legal profession has a significant role in strengthening the justice system, which includes adhering to ethical standards, avoiding dilatory tactics, and promoting alternative dispute resolution methods to reduce case pendency and improve access to justice (!) (!) (!) (!) .
Overall, the case underscores the importance of maintaining ethical standards within the legal profession, regulating advocate fees, and ensuring that professional misconduct is addressed appropriately to uphold the rule of law and public confidence in the justice system.
JUDGMENT
Adarsh Kumar Goel, J.
This appeal has been preferred against the order dated 14th October, 2015 of the High Court of Judicature at Hyderabad in CRLP No.3526 of 2015, thereby, the High Court declined to quash the proceedings initiated against the appellant under Section 138 of the Negotiable Instruments Act, 1881('the Act').
2. 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 ('Contract Act'). Claim for fee based on percentage of the decretal amount was unethical. It was submitted that the appellant, as a client, being in fiduciary relationship, burden to prove that the fee was reasonable and had been voluntarily agreed to be paid was on the Advocate. The Advocate by using his professional position could not be allowed to exploit a client by taking signatures on a cheque and no presumption of enforceable debt arises, specially when no account maintained in regular course of business was furnished.
3. Reference may be briefly made to the facts on record. 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.
4. Complaint dated 11th December, 2014 was filed before the Court under Section 138 of the Act stating inter alia that the cheque which was issued in discharge of liability having been returned unpaid for want of funds, the appellant committed the offence for which she was liable to be punished. The appellant was summoned by the Court against which she approached the High Court stating that there was no legally 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. Her signatures were taken when she was under distress.
5. The petition was contested by the respondent by submitting that the appellant having agreed to pay the professional fee and having availed his professional services, she could not contest the claim for fee. It was submitted that the respondent had engaged services of other senior advocates and paid huge amount for their services at various courts including the Supreme Court.
6. The appellant, in support of her prayer for quashing, inter alia, argued before the High Court that the fee claimed by the respondent was against the A.P. Adovcates' Fee Rules, 2010 of Subordinate Courts. It was also submitted that the claim of the respondent was against ethics and public policy and hit by Section 23 of the Contract Act.
7. The High Court held that Advocates' Fee Rules are only for guidance and there was no bar to fee being claimed beyond what is fixed under the Rules. The claim of the respondent was that the amount included his fee for engaging an advocate in the High Court and the Supreme Court. Thus, the High Court dismissed the quashing petition.
8. We have heard learned counsel for the parties and perused the record.
9. The main contention raised on behalf of the appellant is that charging percentage of decretal amount by an adv
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