Lawyers Appearing For Client In Courts Aren't 'Service Providers' As Per Consumer Protection Act, Says Amicus; Supreme Court Reserves Judgment

Gyanvi Khanna

29 Feb 2024 3:50 PM GMT

  • Lawyers Appearing For Client In Courts Arent Service Providers As Per Consumer Protection Act, Says Amicus; Supreme Court Reserves Judgment

    The Supreme Court on Thursday (February 29) reserved judgment on the issue whether advocates can be held liable under the Consumer Protection Act for deficiency of services. A Bench of Justices Bela Trivedi and Pankaj Mithal heard the matter. On the final day, Senior Advocate V Giri, the amicus curiae in the matter, addressed the bench.The issue, which is relevant for members of the...

    The Supreme Court on Thursday (February 29) reserved judgment on the issue whether advocates can be held liable under the Consumer Protection Act for deficiency of services.

    A Bench of Justices Bela Trivedi and Pankaj Mithal heard the matter. On the final day, Senior Advocate V Giri, the amicus curiae in the matter, addressed the bench.

    The issue, which is relevant for members of the Bar, emerged from a judgment delivered by the National Consumer Disputes Redressal Commission in 2007. The Commission had ruled that the services rendered by lawyers are covered under Section 2 (o) of the Consumer Protection Act. The said provision defines Service.

    It was held that a lawyer may not be responsible for the favorable outcome of a case as the result/outcome does not depend on only the lawyer's work. However, if there was a deficiency in rendering services promised, for which he receives consideration in the form of a fee, then the lawyers can proceed under the Consumer Protection Act.

    It is against this order that the appeal was filed before the Supreme Court. Earlier, in 2009, the Top Court had stayed the impugned judgment of the Commission.

    Lawyers appearing in courts immune from Consumer Protection Act; but lawyers providing other services can be brought under CPA : Amicus

    During the course of today's hearing, Giri assisted the Court by highlighting two important aspects. At the beginning of his arguments, the Senior Counsel highlighted that lawyers who are engaged to appear before the Courts of law or before different forums may have to be treated slightly differently from lawyers who are approached for their legal services like opinions, consultations, and drafting of agreements.

    He then moved on to the first leg of his arguments, which was based on the proposition that the client is the principal and the lawyer is an agent. Thus, what is done by the advocate binds the Client., the Counsel asserted. 

    To bolster this, Giri first gave the background on how an advocate can appear on the strength of vakalatnama that is executed in his favor. The Senior Counsel also referred to Order III, Rule 1 of the Code of Civil Procedure (CPC), which governs the vakalatnama requirement. When a lawyer is appointed and a vakalatnama is executed, an advocate appears, acts, and pleads on behalf of his client. Thus, an advocate acts on behalf of his client, the amicus submitted.

    At this stage, he also cited a case Byram Pestonji Gariwala vs Union Bank Of India And Ors., 1991 AIR 2234, that has, inter-alia, highlighted the counsel's role to enter into a compromise decree and how they act as a representative of his client. The concerned part of the cited judgment is as follows:

    There is no reason to assume that the legislature intended to curtail the implied authority of counsel, engaged in the thick of proceedings in court, to compromise agree on matters relating to the parties, even if such matters exceed the subject-matter of the suit. The relationship of counsel and his party or the recognised agent and his principal is a matter of contract; and with the freedom of contract generally, the legislature does not interfere except when war- ranted by public policy, and the legislative intent is expressly made manifest.”

    Moving forward, Giri also cited another case of Salil Dutta V/s. T.M. and M.C. Private Ltd., 1993 SCR (1) 794, to demonstrate that an advocate is the agent of his client.

    The advocate is the agent of the party. His acts and statements, made within the limits of authority given to him, are the acts and statements of the principal i.e. the party who engaged him.,” the Court had observed.

    In order to highlight that a lawyer is authorized to settle and compromise a claim, Himalayan Coop. Group Housing Society vs. Balwan Singh & Ors., Civil Appeal Nos 4363-4364 & others, was referred. In this case, it was also emphasized that the law of agency might not strictly apply to the client- lawyers relationship. Reasoning this, it was stated that lawyers are also fiduciaries; thus, their duties will sometimes be more demanding than those imposed on other agents.

    The authority-agency status affords the lawyers to act for the client on the subject matter of the retainer. One of the most basic principles of the lawyer-client relationships is that lawyers owe fiduciary duties to their clients. As part of those duties, lawyers assume all the traditional duties that agents owe their principals and, thus, have to respect the client's autonomy to make decisions at a minimum, as to the objectives of the representation. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client's instructions rather than substitute their judgment for that of the client. The law is now well settled that a lawyer must be specifically authorised to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise/ settlement.”

    In the same breath, the Court, in this judgment, also added:

    “To put it alternatively that a lawyer by virtue of retention, has the authority to choose the means for achieving the client's legal goal, while the client has the right to decide on what the goal will be. If the decision in question falls within those that clearly belong to the client, the lawyers conduct in failing to consult the client or in making the decision for the client, is more likely to constitute ineffective assistance of counsel.”

    After relying on a slew of relevant judgments, including the ones mentioned above, Giri submitted that when a lawyer appears before a Court on the strength of a vakalatnama, he/ she acts on behalf of the client. Thus, the acts of an advocate bind the client.

    Taking a cue from this, he said that whatever an advocate does or fails to do in a Court cannot be a case of case of a service provider and a service consumer.

    Essentially, the gist of Giri's argument was that once the lawyer, being the agent of his client, appears and acts on his behalf before the Court, then the same cannot be tantamount to a relationship between the service provider and service consumer. The excerpt of the court-room exchange can be read below:

    Justice Trivedi interrupted: By the Virtue of a vakalatnama, in a way, you are entering into a contract, except that you would not have been his representative or his agent. So, in that case you are still an agent?

    Giri answered this by explaining that between a lawyer and a client, there is a contract of agency; however, once a lawyer acts on his behalf before the Court, the distinction between service provider and consumer is completely lost.

    He further clarified that this is not to relieve the advocate of negligence but only to see if the services would fall under the Act.

    Justice Trivedi countered: Do you mean to say that all agents, now they are representing (principal would not fall under the Act)?

    Giri promptly answered the same in negative. In a matter of conduct of proceedings before the Court, he asserted.

    Point is when I act on his behalf, I do not render him a service. What I do is on his behalf. I am saying strictly within the four corners of the court and conduct of proceedings before the Court. I represent him before the Court and whatever I do is on his behalf and therefore lies the responsibility….But act on behalf, on the strength of a vakalatnama, for the purpose of the definition of the service under the Consumer Protection Act, I would respectfully submit, there is no question of my being a service provider and he being a service consumer.” Giri argued.

    At this stage, Justice asked about his stance in case a lawyer acts as an agent outside the Court. Giri categorically said, “Outside the Court, I am not entitled; outside the Court, I do not have this immunity.”

    To explain it better, he gave an example where supposedly a suit is over, but the lawyer still acts on his client's behalf. In such cases, the Senior Counsel said that a lawyer is not entitled to such immunity.

    Digging into this aspect, Justice Trivedi asked how to bifurcate the lawyers acting as agents inside and outside the Court.

    Replying to this, the Senior Counsel submitted that outside the Court, lawyers are hired and are not acting as agents. Further, they are not hired on the strength of the vakalatanama. Thus, he said that it would fall within the definition of service.

    Pursuant to this, Giri moved on to the second leg of his argument, which was the procedure adopted in dealing with a consumer complaint, which contemplates a summary procedure.

    To underscore the practical difficulties, Giri proposed that if a person if a lawyer files a suit for a specific performance and fails to take a proper plea. Thus, he acts negligently. While the main case goes in appeal, the case citing the lawyer's negligence goes to a different forum. So there could be parallel proceedings - the appeal from the suit and the complaint before the consumer forum.  

    Imperatively, the material in both cases shall be the same, and it would also include the impugned judgment.

    Please consider whether the Consumer forum will be in a position to give a finding on what has actually been filed by the Court of a competent jurisdiction after an adjudicatory process.

    Articulately distinguishing this case from the case of a medical professional, he said that in the latter's case, the negligence would be evident from a medical chart or something that has not been part of an adjudicatory process.

    Therefore, the material that has been placed before the Court of general jurisdiction for adjudication cannot be the material that alone would be relied on before the Consumer forum, the Counsel averred.

    In view of this, Giri pleaded that a summary procedure under the Act may not be an adequate remedy for a person to seek compensation for negligence.

    The Court also witnessed the remaining arguments of the petitioners today. This included submissions from the senior advocate Manoj Swarup, who represented Punjab and Haryana High Court Bar Association. Inter-alia, Swarup mentioned that lawyers ought to have complete freedom to perform their public duty.

    Underscoring the need for the bar to remain independent, the Senior Counsel also placed his reliance on R. Muthukrishnan vs The Registrar General Of The High Court., (2019) 16 SCC 407. In this case, the Court had clearly observed that the independence of the Bar and autonomy of the Bar Council has been ensured statutorily in order to preserve the very democracy and to ensure that the judiciary remains strong.

    "Where Bar has not performed the duty independently and has become a sycophant that ultimately results in the denigrating of the judicial system and judiciary itself. There cannot be existence of a strong judicial system without an independent Bar.," the Court had added. 

    Based on this, the counsel averred that an independent bar must mean that a lawyer must be able to speak fearlessly without any binding contract. 

    Lastly, as a part of his submission, he referred to the case of O.P.Sharma & Ors vs High Court Of Punjab & Haryana, 2011 AIR SCW 2980, to highlight the importance of freedom of expression in advocacy. Swarup read the following para from the judgment before adding the Consumer Protection Act is a curtailment to this right.

    "Advocacy touches and asserts the primary value of freedom of expression. It is a practical manifestation of the principle of freedom of speech. Freedom of expression in arguments encourages the development of judicial dignity, forensic skills of advocacy and enables protection of fraternity, equality and justice. It plays its part in helping to secure the protection or other fundamental human rights, freedom of expression, therefore, is one of the basic conditions for the progress of advocacy and for the development of every man including legal fraternity practising the profession of law."

    Senior advocate Vikas Singh submitted that just because the medical profession has been included under the Act through Indian Medical Association v VP Shantha's (1995) 6 SCC, 651, by the same logic, the legal profession cannot be included. He also asserted that Shanta's case should be reconsidered and doctors are being subjected to a lot of harassment. Pertinently, while submitting thus, Singh echoed the sentiment of Senior advocate Guru Krishnakumar, who appeared for the Bar Council of India. Yesterday, Krishnakumar highlighted some of the discrepancies in the mentioned case and requested the Bench to consider placing it before a three-judge bench for an overview.

    Before parting, the Court also heard Senior Advocate Ramakrishnan Viraraghavan, representing Bengaluru Bar Association. One of the pivotal arguments made by him was that if the definition of Service, as given under the Act, is an inclusive one, then even arbitration services would fall within that. Thus, every arbitrator whose award is set aside by the Court, could be sued for negligence.  

    Also read: 'Lawyers Function In An Environment Beyond Their Control' : SCAORA Urges Supreme Court To Not Apply Consumer Protection Act To Advocates

    Advocates Can't Be Brought Under Consumer Protection Act Just Because Doctors Are, Both Professions Different: Argument Before Supreme Court

    Lawyer Assisting A Sovereign Function, Can't Be Brought Under Consumer Protection Act : Argument Before Supreme Court

    Can Advocate Be Held Liable Under Consumer Protection Act? Supreme Court Starts Hearing


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