1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 2068 OF 2017

(ARISING OUT OF SPECIAL LEAVE PETITION (CRL.) NO.10700 OF

2015)

B. SUNITHA …APPELLANT

VERSUS

THE STATE OF TELENGANA & ANR. ...RESPONDENTS

J U D G M E N T

ADARSH KUMAR GOEL, J.

1.This appeal has been preferred against the order dated

14

th

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

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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 30

th

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 25

th

October, 2014 despite her

3

stating that she was unable to pay more fee as she had no funds in

her account. The respondent sent e-mail dated 2

nd

November,

2014 claiming his fee to be 16% of the amount received by the

appellant.

4.Complaint dated 11

th

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

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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 advocate is hit by

Section 23 of the Contract Act being against professional ethics

and public policy, the cheque issued by the appellant could not be

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treated as being in discharge of any liability by the appellant. No

presumption arose in favour of the respondent that the cheque

represented legally enforceable debt. In any case, such

presumption stood rebutted by settled law that claim towards

Advocate’s fee based on percentage of result of litigation was

illegal. Signing of the cheque was by way of exploitation of

fiduciary relationship of Advocate and the client.

10.In support of his submission that charging of exorbitant fee

and calculating the sum with reference to the result of the

litigation was against public policy, reliance has been placed on

judgments of this Court in In the matter of Mr. G., a Senior

Advocate of the Supreme Court

1

, R.D. Saxena versus

Balram Prasad Sharma

2

, V.C. Rangadurai versus D.

Gopalan

3

11.Learned counsel for Respondent No.2-complainant supports

the impugned order. He submitted that the cheque of the

appellant having dishonored, statutory presumption was available

in his favour and no ground was made out for quashing. There was

no legal bar to the claim of the complainant towards his

1 (1955) 1 SCR 490 at 494

2 (2000) 7 SCC 264, para 41

3 (1979) 1 SCC 308

6

professional fees. Learned counsel for the complainant did not

dispute that a sum of Rs.10 lakhs has already been received

towards fee. There was no written agreement about the quantum

of fee nor any account was maintained. He also did not dispute

the e-mail dated 2

nd

November, 2014 wherein basis of the claim of

fee is 16% of the decretal amount received by the appellant.

12.The first question which needs consideration is whether fee

can be determined with reference to percentage of the decretal

amount. Second question is whether the determination of fee can

be unilateral

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and if the client disputes the quantum of fee whether

the burden to prove the contract of fee will be on the advocate or

the client. Third question is whether the professional ethics require

regulation of exploitation in the matter of fee.

13.One of the issues was dealt with by a single Bench Judgment

of the Madras High Court in C. Manohar versus B.R. Poornima

5

.

R. Banumathi, J (as her Lordship then was) 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

4 J.S. Vasu versus State of Punjab (1994) 1 SCC 184, para 20

5 (2004) Crl.L.J 443

7

of an advocate or client. The observations relevant in the context

are as follows :

“The case in hand is an example of the present day

trend of the legal profession. Legal profession is

essentially service oriental. Ancestor of today's

lawyers was no more than a spokesperson, who

rendered his services to the needy members of the

society, by putting forth their case before the

authorities. Their services were rendered without

regard to remuneration received or to be received.

With the growth of litigation, legal profession

became a full time occupation. The trend of the

legal profession has changed ... profession has

almost became a trade. There is no more service

orientation.

12. The relationship between the lawyer and the

client is one of trust and confidence. The client

engages a lawyer for personal reasons and is at

liberty to leave him for the same reasons.

Considering the relationship between the lawyer

and the client and the present day trend in the

profession, it has to be carefully seen whether the

complainant has proved that the amount due of Rs.

43.600/- is being payable towards him.

13. To attract the penal provisions under Section

138 N. I. Act, a cheque must have been drawn by

the accused on an account maintained by him with

a banker for payment of any amount of money to

another person from out of that account for the

discharge in whole or in part, of any debt or other

liability due. That means, the cheque must have

been issued in discharge of debt or other liability

wholly or in part. The cheque given for any other

reasons not for the satisfaction of any debt or other

liability, even if it is returned unpaid-, will not meet

with penal consequences.

14. Case of the complainant is that on behalf of the

accused, he has filed claim petitions in M. C. O. P.

Nos. 2339 of 1992 and 246 of 1993. Two civil cases

were also filed. There is nothing to show that the

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complainant/Advocate himself has paid the stamp

duty and bore the legal fees. The complainant has

not produced any agreement showing as to what

was the arrangement between him and the

accused, as to how much is the fee payable and

whether the accused agreed for payment of stamp

duty by her counsel itself. In the absence of any

agreement, Ex. P-1 cheque cannot be said to have

been issued for the purpose of discharge of any

substantial debt or liability. Urging the Court to

raise the presumption under Section 139 N. I. Act,

the learned counsel for the appellant has relied

upon M/s. Modi Cements Ltd. versus Kuchil Kumar

Nandi [(1998) 3 SCC 249] wherein the Supreme

Court has held that once the cheque is issued by

the drawer a presumption under Section 139 N. I.

Act must follow and merely because the drawer

issues a notice to the drawee (Payee) or to the

Bank for stoppage of the payment it will not

preclude an action under Section 138 of the Act by

the drawee (Payee) or the holder of a cheque in

due course. Of course, 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.”

14.The Bombay High Court in Re: KL Gauba

6

held that fees

conditional on the success of a case and which gives the lawyer

6 AIR 1954 Bom 478

9

an interest in the subject matter tends to undermine the status of

the profession. The same has always been condemned as

unworthy of the legal profession. If an advocate has interest in

success of litigation, he may tend to depart from ethics.

15.In in the matter of Mr. G.: A Senior Advocate of the

Supreme Court

7

, this Court held that the claim of an advocate

based on a share in the subject matter is a professional

misconduct.

16.In VC Rangadurai versus D. Gopalan

8

, it was observed that

relation between a lawyer and his client is highly fiduciary in

nature. The advocate is in the position of trust.

17.Rule 20 of Part VI, Chapter II, Section II of the Standard of

Professional Conduct and Etiquette reads as follows :

“An advocate shall not stipulate for a fee

contingent on the results of litigation or agree to

share the proceeds thereof.”

18.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

7 (1955) 1 SCR 490

8 (1979) 1 SCC 308, para 31

10

percentage of subject matter in litigation cannot be the basis of a

complaint under Section 138 of the Act.

19.In view of the above, 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 the process of law and have to be quashed.

20.We may note that after the hearing was concluded, learned

counsel for Respondent No.2 mentioned the matter to the effect

that Respondent No.2 wanted to withdraw the complaint. An

e-mail to this effect was also handed over to Court. The same has

been kept on the record. However, we did not permit this prayer.

Having committed a serious professional misconduct, the

respondent No.2 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.

21.Thus, while proceedings against the appellant will stand

quashed, the issue of professional misconduct is left to be dealt

with at the appropriate forum.

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22.However, apart from the present individual case, the general

issue, having been highlighted, may need further consideration by

this Court in the larger interest of the legal profession and the

system of administration of justice.

23.Undoubtedly, the legal profession is the major component of

the justice delivery system and has a significant role to play in

upholding the rule of law. Significance of the profession is on

account of its role in providing access to justice and assisting the

citizens in securing their fundamental and other rights. Can justice

be secured with the legal professionals failing to uphold the

professional ethics? This Court has even earlier expressed the

concern on the falling professional norms in the legal profession

9

.

In Tahil Ram Issardas Sadarangani versus Ramchand

Issardas Sadarangani

10

, this Court noted the trend of increasing

element of commercialization and decreasing element of service.

In VC Rangadurai (supra)

11

, this Court observed that confidence

of the public in the legal profession was integral to the confidence

of the public in the legal system. Commercialization to the extent

of exploiting the litigant and misbehavior to the extent of

9 R.K. Anand v. Delhi High Court (2009) 8 SCC 106, para 333 ; Sanjiv Datta, Deputy

Secretary, Ministry of Information and Broadcasting, In Re. (1995) 3 SCC 619, para 20.

10 1993 Supp. (3) SCC 256,

11 Paras 30 to 32

12

browbeating the Court, breach of professional duties to the court

and the litigant on the part of some members of the legal

profession, affecting the right of the litigants to speedy and

inexpensive justice, need to be checked. This has also been

observed earlier in the decisions of this Court

12

.

24. In its 131

st

Report dated 31

st

August, 1988, the Law

Commission of India, examined the role of the legal profession in

strengthening the system of administration of justice. The issue

considered included :

(i)the state of profession and its public

image;

(ii)profession’s attitude towards the

policy of social change intended

under the Constitution;

(iii)the functioning of the Bar Councils

and the question of disciplinary

jurisdiction;

(iv)the strike by lawyers, its implications

and fall out;

(v)the question of hobnobing between

the Bar and politicians, between the

Bar and the Judiciary;

(vi)regulation and standardization of fees

chargeable by the members of the

profession in relation to the

12 O.P. Sharma versus State of Punjab (2011) 6 SCC 86, paras 18 to 23; R.D. Saxena versus

Balram Prasad Sharma (2000) 7 SCC 264, paras 14,28,41,42

13

monopolistic character of the

profession.”

25.It was observed that recurring strikes by the bar had

contributed to the piling up of arrears jeopardizing the consumers

of justice and has thus led to weakening the system of

administration of justice

13

. While considering the mounting cost of

litigation, it was observed that fee charged by some senior

advocates are astronomical in character. The corporate sector is

willing to retain talent at a high cost. It develops into a culture

and it permeates down below

14

. Role of the legal profession in

strengthening the administration of justice must be in consonance

with the mandate of Article 39A to ensure equal opportunity for

access to justice. The legal profession must make its services

available to the needy by developing its public sector. It was

observed that like public hospitals for medical services, the public

sector should have a role in providing legal services for those who

cannot afford fee

15

. Maintenance of irreducible minimum

standards of the profession is a must for ensuring accountability of

the legal profession

16

. The methodology was required to be devised

13 Para 2.17

14 Paras 2.22, 2.24

15 Para 3.30

16 Paras 3.4, 3.8, 3.25

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as a part of social audit of the profession wherein consumers of

justice were required to be given role

17

.

26.Referring to the lawyers’ fee as barrier to access to justice, it

was observed that it was the duty of the Parliament to prescribe

fee for services rendered by members of the legal profession. First

step should be taken to prescribe floor and ceiling in fees

18

.

27.With regard to the role of the legal profession for strengthening

the administration of justice, it was observed that members of the

legal profession could have a decisive say in law making being

largest group in legislative bodies

19

. They could contribute to

reduce the litigation instead of perpetuating disputes by

counseling the parties and could contribute to reduce the delay in

proceedings

20

. Alternative modes of resolution of disputes should

be explored and one such may be pre-trial conciliation

proceedings

21

. Reducing the number of witnesses to be examined

by deleting the irrelevant witnesses reducing the length of

cross-examination by avoiding unnecessary questions

22

and

avoiding adjournments could help the administration of justice.

17 Para 3.31

18 Para 3.28

19 Para 3.6

20 Para 3.11, 3.13

21 Para 3.21

22 Para 3.17

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28.Though the 131

st

Report was submitted in the year 1988, no

effective law appears to have enacted to regularize the fee or for

providing the public sector services to utmost needy litigants

without any fee or at standardized fee. Mechanism to deal with

violation of professional ethics also does not appear to have been

strengthened. Success of administration of justice to a great

extent depends on successful regulation of legal profession in the

light of mandate under Article 39A for access to justice. Deficiency

in the working of the present regulatory mechanism has been

acknowledged by this Court in several decisions

23

. Mandate for the

Bench and the bar is to provide speedy and inexpensive justice to

the victim of justice and to protect their rights. The legal system

must continue to serve the victims of injustice.

29.In view of this mandate, this Court requested the Law

Commission to have a re-look at the regulatory mechanism and

expressed the hope that the Government of India will consider the

recommendation of the Law Commission. In its 266

th

Report dated

23

rd

March, 2017 submitted in the light of decision of this Court in

Mahipal Singh Rana (supra), it was noted that conduct of

members of the legal profession who do not follow ethics

23 Mahipal Singh Rana Advocate versus State of Uttar Pradesh (2016) 8 SCC 335, para 56

16

contributes to the pendency of cases. Element of public service

has to remain predominant. The Commission noted that there was

a huge loss of working days by call of unjustified strikes in

jurisdiction of various High Courts resulting in denial of justice to

the litigant in public

24

. Such dilatory tactics including seeking

adjournments on unjustified grounds affect the speedy disposal of

cases. The Commission also noted the instances of browbeating

the courts for getting favourable orders obstructing administration

of justice

25

. The Law Commission also noted the contemptuous

conduct of some members of the legal profession

26

.

30.The Law Commission thereafter considered the issue of review

of regulatory framework of the legal profession. Referring to the

developments in other countries it was observed that there was

dire necessity of reviewing regulatory mechanism not only in the

matter of discipline and misconduct but also in other areas. It was

suggested that constitution of the Bar Council required a change

for which an Amendment Bill was also recommended

27

.

31.We hope that the concerned authorities in the Government will

take cognizance of the issue of introducing requisite legislative

24 Para 6.3

25 Paras paras 8.7 to 8.12, 8.14 to 8.19

26 Chapter IX

27 Para 17.10

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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.

32.The appeal stands disposed of accordingly.

…………………………………..J.

[ADARSH KUMAR GOEL]

…………………………………..J.

[UDAY UMESH LALIT]

NEW DELHI;

5

TH

DECEMBER, 2017.