Author: Komal Bhati,2nd year student at ICFAI Law School Hyderabad.
Citation: (2018) 1 SCC 638
Date of Judgement: December 04, 2017
Bench: Adarsh Kumar Goel, Uday Umesh Lalit
Original copy: View
Issues in question:
- Whether the lawyer can ask for a percentage of the compensation received by the client as his fee?
- Whether professional ethics require the regulation of the exploitation of the fee in the regard of fee?
Background of the case:
- In another case, the appellant’s husband died in a motor accident on 30th July 1998. Through the respondent as the advocate, she filed a claim for the same before the Motor Accident Claims Tribunal (MACT). The judgement came in their favour and compensation was awarded. The respondent was then paid an amount of Rs 10 Lakhs by the appellant towards the fee through various dates.
- The respondent then forced the appellant to sign a cheque of Rs 3 lakhs on October 25th,2014. The appellant informed the respondent that she does not have sufficient funds in her account to pay the particular amount of fee. Nevertheless, the respondent proceeded. On 2nd November 2014, the appellant received an email from the respondent claiming his fees to be 16% of the amount received by the appellant as compensation.
- The respondent then filed a complaint before the Hyderabad High Court under Section 138 of The Negotiable Instrument act, 1881. The case was bought for the appellant’s cheque being dishonoured which she gave to the respondent towards his fees. The appellant should be punished for the offence she committed.
- On being summoned, the appellant stated that the respondent’s fee is extortionate and unlawful. The claim is violative of the Advocate Fee Rules and Ethics as the advocate cannot demand the fee based on the percentage of the compensation awarded in the case. And the appellant was forced by the respondent to sign the cheque.
- Opposing the petition, the respondent stated that the appellant had agreed to pay his fee. The respondent has provided her with his services and she cannot deny paying the fee for the same. Also, a huge amount was paid to other senior advocates whose services were engaged at various courts.
- It was then argued by the appellant that the claimed fee by the respondent was unlawful according to the A.P. Advocates’ Fee Rules, 2010. Claiming the fee from the decretal amount is not valid according to Sec 23 of the Contract act as it is opposed to professional ethics and public policy. Hence, neither there is a question of any discharge of liability on the part of the appellant nor is there any fact that proves any legal debt towards the respondent. The fiduciary relationship of the advocate and the client was exploited by the respondent referring to how the appellant was made to sign the cheque.
- To support the claim the appellant produced various judgements such as R.D. Saxena v. Balram Prasad Sharma and V.C. Rangadurai v. D. Gopalan.
- Respondent then took the defence of statutory presumption being in his favour owing to the fact that the appellant’s cheque was dishonoured. And neither the appellant made any ground to quash the claim nor there is any legal restriction in regard to claiming the fee for his services.
- The court considered the following cases while giving the judgement :
- It was held in the case of C. Manohar versus B.R. Poornima that without any proof that the check was issued towards the fee, there cannot arise a claim under Section 138 of the Negotiable Instruments Act, 1881.
- In KL Gauba it was held that asking the fee from the decretal amount undermines the status of the legal profession as interest arises on the part of a lawyer in the subject matter.
- In VC Rangadurai vs D. Gopalan the nature of the relation of a lawyer with his client was observed to be highly fiduciary.
- In the present case, it was held by the court that the Respondent’s application deserves to be quashed as it is grave professional misconduct and against public policy.
- The court rejected respondent no 2’s prayer to withdraw the complaint stating that one has to face the consequences of the serious professional misconduct committed therein.
- The court talked about the importance of the legal profession and also pointed out that the exorbitant fees violate the right of the poor to get justice. The legal profession should develop a public sector and make its services available to the needy. The judicial system should work in accordance with Article 39A. Hence, it was parliament’s duty to prescribe fee determining services rendered in the legal profession.
- Thus, the court directed the authorities to take a look into the matter and introduce the required legislative changes and make the legal services accessible by putting a cap on lawyer’s fees.
- This case throws light on the professional ethics practised by the lawyers and its consequences on the administration of justice if not followed duly. Lawyers are considered as equal partners in delivering justice and their misconduct can hinder the process to great extent.
- Under the ‘Standards of Professional Conduct and Etiquette’, an advocate should not claim his fee based on the results of the case or agree to share the proceeds. Such agreements are also unlawful under Section 23 of the Contract Act as it is against professional ethics and public policy. These provisions aim to safeguard those seeking justice against the abuse of lawyers by using their professional position.
- This case isn’t just about the lawyer’s professional misconduct by asking for the fees based on the decretal amount but also shows how with time the legal profession has become a business rather than a service. The lawyers also use excuses such as if the desired amount of fee isn’t paid, they may lose the case putting the client in a difficult position and managing to extract the particular amount.