Introduction:

The Consumer Protection Act, 2019 (“Act of 2019”), is a pivotal legislation aimed at safeguarding consumer rights against unfair trade practices and substandard goods or services. Recently, debates have surfaced regarding the inclusion of professional services, particularly those provided by Advocates, within the ambit of the Act of 2019.

On May 14, 2024, a bench comprising of the Hon’ble Mrs. Justice Bela Trivedi and Hon’ble Mr. Justice Pankaj Mithal of the Hon’ble Supreme Court of India, settled this debate definitively in the case of Bar of Indian Lawyers, represented by its President Jasbir Singh Malik Versus D.K. Gandhi Ps National Institute of Communicable Diseases and Anr.[1] This landmark ruling overturned a pivotal 2007 judgment by the National Consumer Disputes Redressal Commission, which had categorized “services” provided by Advocates under the ambit of the Consumer Protection Act, 1986 (“Act of 1986”).

In its verdict, the Hon’ble Supreme Court delved into the legislative intent behind the Act of 2019 and examined the unique characteristics of the legal profession in comparison to others, and assessed whether legal services fall under the definition of "services" under the Act of 2019.

Factual Matrix:

The Respondent engaged the services of an Advocate to initiate a Complaint before the Hon’ble Metropolitan Magistrate, Tis Hazari Court, Delhi against one Mr. Sharma (the accused) for a dishonored cheque totaling INR 20,000/- (Indian Rupees Twenty Thousand only).

Subsequently, during the aforesaid proceedings, the accused purportedly agreed to pay the aforesaid sum of INR 20,000/- and INR 5000/- (Indian Rupees Five Thousand Only) towards expenses, and consequently, handed over a Demand Draft / Pay Order for INR 20,000/- and a cheque for INR 5,000/- to the Advocate. Allegations surfaced that the Advocate, despite receiving these payments, failed to deliver the Demand Draft / Pay Order and Cheque to the Respondent, instead demanded a sum of INR 5000/- towards his professional fees.

Concurrently, the Advocate initiated civil action against the Respondent to recover such professional fee amounting to INR 5,000/-. In the course of these proceedings, the Advocate presented the Demand Draft / Pay Order for INR 20,000/- and the Cheque for INR 5,000/- received from the accused; however, the accused instructed his bank to stop payment of the aforesaid cheque at the behest of the Respondent’s Advocate.

At this juncture, the dispute was brought before the District Consumer Disputes Redressal Forum, where the Respondent sought compensation totaling INR 5,000/- along with INR 10,000/- for mental anguish. The Advocate raised a preliminary objection that the Complaint is not maintainable since the services of lawyers/advocates did not fall within the ambit of "service" defined under section 2(1)(o) of the Act of 1986, but the objection was dismissed, and the ruling favored the Respondent. The Advocate then appealed to the State Commission, which ruled in favour of the Advocate. However, the National Commission subsequently ruled in favor of the Respondent.

Consequently, the present Appeal was lodged by Bar of Indian Lawyers, Delhi High Court Bar Association, Bar Council of India, and by the Appellant M. Mathias.

Issues:

The issues were broadly categorized into three parts:

Analysis:

1.Legislative intent behind the Consumer Protection Act, 1986 (as re-enacted in 2019):

The objects and reasons behind both the Act of 1986 and Act of 2019 do not include Professions or the Services provided by Professionals such as Advocates, Doctors, etc. within the Act's scope.

Additionally, it is a settled law that the purpose of the Act is to safeguard consumers against traders, manufacturers, and unethical business practices. It is also settled that professionals cannot be categorized as "businessmen" or "traders," and clients or patients cannot be considered consumers in the traditional sense. Therefore, Hon’ble Bench suggested a reassessment of the ruling in the case of Indian Medical Association v. VP Shanta[2], which held medical professionals accountable under the Consumer Protection Act and the matter is now referred to a larger bench.

The first issue revolves around the exclusion of professionals from the Act of 2019. Regardless of whether this holds true, it's evident that the legal profession possesses distinct attributes setting it apart from others.

Firstly, the historical trajectory of advocacy reveals a tradition devoid of monetary motivation. It is noteworthy to emphasize a prevailing belief that the gown worn by an English (junior) barrister traditionally featured a fold at the back, purportedly where fees were discreetly kept. This custom persists in modern legal attire as well as a testament to its origins. Under this system, the barrister was deliberately shielded from direct sight of the fees, symbolizing the noble nature of their compensation[3].

Secondly, Advocates are bound by stringent ethical codes and professional standards enforced by regulatory bodies such as the Bar Council of India and State Bar Councils. The Advocates Act, 1961, lays down mechanisms for addressing instances of professional misconduct, with disciplinary bodies empowered to adjudicate complaints against advocates. Given the existence of specialized legislation governing the legal profession, it can be said that legal services fall under a distinct category and may not be subject to the provisions of the Act of 2019.

Thirdly, once an Advocate submits a vakalatnama, they assume duty to the court, client, opponent, and colleagues, in no particular order[4], but with the court being of paramount importance. This was also highlighted by Senior Counsel Mr. Hooda who compared the advocate-client relationship to that of a patient and doctor, stating that “while a patient can request a doctor not to prescribe a specific medicine, similarly, a client cannot instruct a lawyer to refrain from citing a particular judgment”. Highlighting this contrast, Senior Advocate Mr. Hooda further contended that, the dynamic is such that if a patient refuses a prescribed medicine, the doctor must respect that choice. On the contrary, the client cannot dictate which judgments to cite or omit. This distinction underscores the unique nature of advocacy and the public policy considerations therein. Additionally, Mr. Hooda argued that unlike medical professionals, advocates are prohibited from soliciting their services, illustrating another distinction between the two professions.

Section 2(42) of the Act of 2019 retains the same definition of the word “service” as Section 2(o) of the Act of 1986, and there hasn’t been a significant change in the understanding and scope of "services" within the legal framework of consumer protection in India.

Section 2(o) of the Act of 1986 defines "services" as service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

To understand whether Advocates come under the definition of services, it must be understood that Advocates can be broadly classified into two categories based on their engagement and nature of work – (1) Advocates engaged by their clients to represent them before any court or tribunal or any other forum on the strength of a vakalatnama and (2) Advocates engaged by clients to provide their professional expertise such as legal opinion, drafting legal notice, conducting title search, or drafting agreements. It is made clear by the Hon’ble Bench that the first category would not come under the purview of Consumer Protection Act however, the second category would come under the purview of Consumer Protection Act and any shortcomings rendered by such advocates would be covered under the Act of 2019.

With regard to the first category, a considerable amount of direct control is with the client. Advocates are generally perceived to be their clients’ agents and owe fiduciary duties to their clients. Advocates have to respect the clients’ autonomy to make decisions at a minimum as to the objectives of the representation. The advocates are not entitled to make concessions or give any undertaking to the court without express instructions from the client. It is the solemn duty of the advocates not to transgress the authority conferred on him by his client.

An advocate is bound to seek instructions from his client or his authorised agent before taking any action or making any statement or concession which may directly or remotely affect the legal rights of the client. An advocate represents the client before the court and conducts proceedings on behalf of the client. He is the only link between the court and the client. And therefore, the responsibility is onerous. He is expected to follow the instructions of his client rather than substituting his client. Thus, a considerable amount of control is exercised by the client over the manner in which the advocate renders services during the course of employment.

Taking into account all these attributes, the Hon’ble Bench opined that services hired or availed of an advocate would be that of contract of personal service and would therefore stand excluded from the definition of service contained in Section 2(42) of the Act of 2019.

Conclusion:

In conclusion, it is indeed true that Advocates cannot evade accountability for negligently handling cases. However, such instances fall under civil action and are not within the purview of Consumer Protection. The Hon’ble Bench has explicitly stated that Advocates can be sued through civil action for negligence, but they are not covered by the Act of 2019. Justice Mittal, in a separate judgment, has emphasized that similar models are followed in various countries, where professionals are not covered by Consumer Protection Laws. Considering the rationale, inclusion of Advocates within the ambit of Consumer Protection Law would only lead to an influx of cases, essentially necessitating retrials.

Furthermore, the Hon’ble Bench has acknowledged the inherent uncertainty in law, emphasizing that each case may necessitate a tailored approach. In the absence of a universal standard of care, Advocates are empowered to select a course of action that best aligns with the needs of their clients.

Authors: Mr. Mustafa Kachwala, Partner, Mr. Shantam Mandhyan, Senior Associate and Ms. Shristi Shetty, Associate

Footnotes

[1] Civil Appeal No(s).2646/2009)

[2] (1995) 6 SCC 651

[3] Book of Legal Anecdotes (1989) p.255

[4] Rules on standards of professional - (Chapter II, Part VI of the BCI Rules) - Chapter – II Standards of Professional Conduct and Etiquette (Rules under Section 49 (1) (c) of the Act read with the Proviso thereto)