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Charting Legal Terrain Landmark Supreme Court Decision on Advocates' Liability in Consumer Cases
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:
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)
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- The legislative intent behind the Consumer Protection Act, 1986 (as re-enacted in 2019);
- Whether Legal Profession is sui generis to other professions? and
- Whether the services availed of an Advocate could be said to be the service under a “contract of personal service”, so as to exclude it from the definition of “Service” contained in Section 2(42) of the Act of 2019?
- Sui Generis among other professions:
- Whether services hired/availed of an Advocate could be said to be service under “a contract of personal service” to exclude it from the definition of service contained in Section 2(42) of Consumer Protection Act, 2019?
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)