Litigant Can't Resile From Orders Passed Based On Counsel's Submissions; Would Create 'Chaotic Situation': Delhi High Court
The Delhi High Court has held that a litigant cannot resile from an order passed on the basis of submissions made by its counsel, observing that permitting such a course would create a “chaotic situation”.
Justice Saurabh Banerjee made the observation while dismissing a petition filed by a company- Equitas Small Finance Bank Ltd., which challenged a Lok Adalat award disposing of a cheque-bounce complaint as compounded on the basis of a purported settlement.
The Bank had advanced a loan of Rs. 14.5 lakh to the private respondents. After the borrowers allegedly failed to repay the dues, the Bank presented a post-dated cheque, which was dishonoured. It subsequently instituted a complaint under Sections 138 and 142 of the Negotiable Instruments Act.
During the pendency of the complaint, the Bank's counsel informed the Magistrate on August 8, 2024 that the matter had been settled and that the Bank had received full and final payment towards the cheque amount. The matter was consequently referred to the National Lok Adalat.
Before the Lok Adalat on September 14, 2024, the Bank's counsel again stated that the matter had been settled and that the entire payment had been received to the Bank's satisfaction. The complaint was accordingly disposed of as compounded under Section 147 of the NI Act and the respondents were acquitted.
More than a year later, however, the Bank sought revival of the complaint. It claimed that there had actually been no settlement or payment and that the statements made by its former counsel were the result of confusion and a misunderstanding of the Bank's instructions.
The Bank further claimed that the counsel's statements had been made without authority and had never been ratified by it.
Rejecting this contention, Justice Banerjee noted that the statement regarding settlement was not made merely once. It was made by the Bank's counsel before the Magistrate on August 8, 2024 and reiterated before the Lok Adalat on September 14, 2024. On both occasions, a separate statement of counsel was recorded.
The Court observed that these statements had therefore “attained the imprimatur of two Courts.”
It also took note of the fact that the Bank raised the issue of lack of authority for the first time approximately 13 months later, when it moved for revival of the complaint. Despite attributing alleged misconduct to the counsel, the Bank continued to be represented by the same counsel and had not initiated any proceedings against him.
The Court further stressed that the counsel was the Bank's duly nominated advocate holding a valid vakalatnama.
“The said nominated counsel was an officer of the Court and not a mere mechanical agent of the petitioner,” the Court observed, adding that the Bank had not even sought clarification from its counsel regarding what had transpired before the two forums.
In this backdrop the High Court held that the Bank “cannot wriggle out” of what had transpired before the Magistrate and Lok Adalat, describing its subsequent contentions as appearing to be an “after-thought.”
“No litigant like the petitioner herein can be permitted to resile from order(s) passed on the strength of counsel's submissions,” it remarked.
The Court added that permitting litigants to adopt such a course would create a “chaotic situation” and observed that the Bank could not be permitted to have a “second bite at the cherry.”
The Court further held that the Bank's attempt to disown its counsel's statement on the ground of lack of instructions, authority or ratification was unsustainable and “strikes at the very foundation of the Advocate-Client Relationship and undermines the sanctity of the role played by a counsel in assisting the Court in adjudicatory process.”
Appearance: Mr. K.S. Mahadeva, Ms. Swati Bansal and Mr. R. Rangarajan, Advs. for Petitioner
Case title: Equitas Small Finance Bank Ltd. v. Mrs Nirmala Bai Shanthilal & Ors.
Case no.: W.P.(CRL) 2380/2026