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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

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

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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 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

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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

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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  Court1,   R.D.  Saxena  versus

Balram  Prasad  Sharma2,  V.C.  Rangadurai  versus  D.

Gopalan3

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

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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 2nd 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 unilateral4 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. Poornima5.

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

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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  Gauba6 held  that  fees

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

6  AIR 1954 Bom 478

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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 Court7,  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. Gopalan8, 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

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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 profession9.

In  Tahil  Ram  Issardas  Sadarangani  versus  Ramchand

Issardas Sadarangani10 , 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

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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 Court12.

24. In  its  131st Report  dated  31st 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

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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 justice13. 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 below14.   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  fee15.   Maintenance  of  irreducible  minimum

standards of the profession is a must for ensuring accountability of

the legal profession16. 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 role17.   

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 fees18.

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  bodies19.  They  could  contribute  to

reduce  the  litigation  instead  of  perpetuating  disputes  by

counseling the parties and could contribute to reduce the delay in

proceedings20.  Alternative modes of resolution of disputes should

be  explored  and  one  such  may  be  pre-trial  conciliation

proceedings21.  Reducing the number of witnesses to be examined

by  deleting  the  irrelevant  witnesses  reducing  the  length  of

cross-examination  by  avoiding  unnecessary  questions22 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 131st 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 decisions23.  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 266th Report dated

23rd 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

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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  public24.   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 justice25.   The Law Commission also noted the contemptuous

conduct of some members of the legal profession26.

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 recommended27.

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; 5TH DECEMBER, 2017.