Are Advocates liable for ‘deficiency in service’ under the Consumer Protection Act?

Recently, the Hon’ble Supreme Court in a batch of civil appeals, one of them titled “Bar of Indian Lawyers v. DK Gandhi” 2024 SCC OnLine SC 928 examined a very crucial and important question of law that “whether proceedings alleging 'deficiency in service' against Advocates under the Consumer Protection Act, 1986 (‘Act’) would be maintainable”.

One Mr. DK Gandhi (‘respondent’) hired the services of an Advocate (‘appellant’) to file a complaint under the Negotiable Instruments Act (NI Act). During the said NI proceedings, the accused in the complaint agreed to pay the amount of INR 20,000 for a dishonored cheque and legal expenses of INR 5000 to the respondent. The said amounts were paid via DD/Pay Order to the appellant. However, the appellant refused to hand over the cheques/DD to the respondent and demanded INR 5,000 in cash, which was refused by the respondent. The appellant later returned the cheques/DD. However, he allegedly asked the accused to stop the payment of the cheque for INR 5,000.

Being aggrieved, the respondent filed a consumer complaint before the District Forum, New Delhi, against the appellant for seeking compensation and the cheque amount. The forum while rejecting the objection raised by the appellant that Advocates were not covered under the Act, decided the complaint in favour of the respondent.

The appellant, being aggrieved assailed the said order, filed an appeal which was allowed by the State Commission. The State Commission held that services provided by Advocates do not fall within the definition of ‘service’ defined under Section 2(1)(o) of the Act.

The respondent approached NCDRC, in revision, which reversed the judgment of the State Commission and inter alia held that the services provided by the Advocates fall within the ambit of ‘service’ as defined under the Act. The said judgment was challenged by the appellant, the Bar of Indian Lawyers, Bar Council of India (‘BCI’) and DHCBA.  Additionally, since the issues involved therein were sensitive, the Supreme Court appointed an amicus to assist the Court.

The appellant made the following submissions:

• The legal profession is a noble profession and not a business or a trade.

• Advocates have a unique feature of exercising their own judgment in the interests of the client. An error of judgment or mere negligence may not be a professional misconduct/ deficiency of service.

• The BCI and State Bar Councils already have vested powers to deal with complaints against Advocates.

• The Advocates Act, 1961, a special law, would prevail over the Act and would cover cases of professional misconduct which subsumes cases of negligence.

• Making the Advocates liable under the Act would open doors of unnecessary litigation and it would lead to filing of the vexatious claims.

Amicus Curiae, Mr. V Giri, Senior Advocate, segregated the Advocates into the following categories:

1. The Advocates who represent clients on the strength of ‘vakalatnama’ will not come within the purview of the Act.

2. The Advocates whose expertise and opinion are availed outside the court process, would be covered as ‘service provider’ under the Act.

(i)  Whether the legislature ever intended to include the professions or services rendered by the [rofessional within the purview of the Act as re-enacted in 2019?

The Hon’ble Court considering the objects of the Act and after observing the ratio laid down in Indian Medical Association v. VP Shantha, held that the purpose of the Act is to protect the interests of the consumers and concluded that Advocates cannot be treated as manufacturers or traders or a businessmen or service providers of the products.

The Court ruled that the legislature never intended to include professions or professionals within the purview of the Act.

(ii)    Whether the Legal Profession is sui generis?

The Bench, while relying inter alia upon R Muthukrishnan v. Registrar General, Madaras High Court, observed that the legal profession is unique, and as such cannot be compared with other professions. The Court held that the legal profession is unique as what Advocates do, affects the entire administration of justice.

(iii)      Whether services availed of an Advocate could be said to be a service under a contract ‘of personal service’?

The Bench, while observing that a considerable amount of direct control is exercised by a client, after signing the ‘vakalatnama’, over the manner in which an Advocate renders his services, opined that services of an Advocate are availed under a contract of ‘personal service’ and is thus excluded from the definition of ‘service.’

Apart from referring to the BCI rules and the Advocates Act, the Court while referring to consumer laws of Malaysia, Québec, the USA and the EU directives, held that lawyers being regulated professionals cannot be disrobed of their immunity by their inclusion under consumer laws.

The Bench while setting aside the order passed by the NCDRC, held that the legal profession is unique and that ‘practising’ Advocates being their clients’ agents, are duty-bound to seek instructions from them and should not transgress the authority conferred upon them. The Court proceeded to rule:

a) The legislature never intended to include the professions or the services rendered by professionals under the Act.

b) The legal profession is sui generis.

c) Services availed of an Advocate is a service under a contract ‘of personal service’ and will not fall within the definition of service under the Act.

d)     Any complaint alleging deficiency in service against an Advocate would not be maintainable under the Act.

While the judgment is a welcome step for the litigators’ fraternity, one has to wait and watch how it is interpreted against the corporate lawyers who act outside the precincts of courts; as they have now been brought in the ambit of consumer laws.

About the authors: Ishwar Ahuja is a Principal Associate and Rahul Saxena is a Senior Associate at Saga Legal.

The views and opinions expressed in this Article are those of the author(s) alone. The contents of the aforesaid Article do not necessarily reflect the official position of Saga Legal. The readers are suggested to obtain specific opinions/ advise with respect to their individual case(s) from professional/experts and not to use this Article in place of expert legal advice.

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