SCHOOL OF LEGAL STUDIES

(2018-19)

PROFESSIONAL ETHICS AND PROFESSIONAL ACCOUNTING SYSTEM

(LF 512)

“RECENT SUPREME COURT RULINGS RELATING TO PROFESSIONAL

ETHICS”

SUBMITTED TO: SUBMITTED BY:

Ms. Shrawani Shagun Mansi Arora

Assistant Professor, B.A.LL.B. V Year

School of Legal Studies, ROLL NO. 513

Mody University 140484

B SUNITHA VS. THE STATE OF TELANGANA1

Brief History

1. In July, 1998, B. Sunitha’s (hereinafter referred to as the ‘Appellant’) husband died in

a motor accident. A claim before the Motor Accident Claims Tribunal (hereinafter
referred to as the ‘MACT’) was filed wherein one of the Respondents in the present
case was the advocate for the Appellant. Compensation was also given in the said
case.

2. The Respondent charged a fee of INR 10 Lakhs (USD 15590 approx.). Later on, the
Appellant was forced to sign another cheque worth INR 3 Lakhs (USD 4677 approx.)
on October 25, 2014, despite her informing that she has no funds in the account.

3. On November 2, 2014, the Appellant received an e-mail from the Respondent wherein
it was claimed that the fees of the Respondent was 16% of the amount received by the
Appellant.

4. On December 11, 2014, a complaint was filed before the Hyderabad High Court
under Section 138 of the Negotiable Instruments Act, 1881, 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.

5. The High Court summoned the Appellant to which she stated that there was no legally
enforceable debt and the fee was an unreasonable amount and against the law. It was
contended that the claim violated the Advocates Fee Rules and Ethics as fee could not
be demanded on percentage of amount awarded as compensation to the Appellant.

6. The Respondent opposed this contention by stating that the professional fee was
agreed upon by the Appellant and now having availed his professional services, she
could not contest the claim for fee. It was further contended that Senior Advocates
were engaged in the case by the Respondent and paid huge amount for their services.

7. It was further argued by the Appellant that the fee claimed was against Andhra
Pradesh Advocates’ Fee Rules, 2010 of Subordinate Courts, ethics and public policy
and hit by Section 23 of the Contract Act.

1
(2018) 1 SCC 638

2
 8. The High Court dismissed the quashing petition. It was stated by the High Court that
Advocates’ Fee Rules are only for guidance and there was no bar to fee being claimed
beyond what is fixed under the Rules. 

Issue Raised

1. Whether fee can be determined with reference to percentage of the decretal amount?

2. Whether the determination of fee can be unilateral 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?

3. Whether the professional ethics require regulation of exploitation in the matter of fee?

Appellant’s Arguments

1. It was contended that the charging percentage of decretal amount by an advocate is hit
by Section 23 of the Contract Act, being against professional ethics and public policy.
Thus, the cheque issued by the Appellant could not be treated as being in discharge of
any liability by the Appellant.

2. It was also contended that it is a settled law that any fees claim made by the advocate
based on the percentage of the amount received as a result of litigation is illegal.

3. The Appellant claimed that the signing of the cheque was an exploitation of the
fiduciary relationship of the Advocate and the client.

4. Judgements such as In the matter of Mr. G., a Senior Advocate of the Supreme
Court2,  R.D. Saxena versus Balram Prasad Sharma3,  V.C. Rangadurai versus D.
Gopalan  4 were produced to support the claim. 

Respondent’s Argument

1. The Respondent No. 2 supported the order of the High Court of Judicature at
Hyderabad.

2
(1955) 1 SCR 490 at 494
3
(2000) 7 SCC 264
4
(1979) 1 SCC 308

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 2. It was contended that there was no legal bar to claim professional fee by the
Respondent. Further, it was stated that since the cheque was dishonored, the statutory
presumption was in the favor of Respondent.

3. It was claimed that the Appellant made out no ground for quashing the petition. 

Court’s Findings

1. While discussing about Professional Misconduct and whether the fees could be
charged as a part of the decretal amount, the Court took into consideration certain
judgements -

a) Re: KL Gauba5, wherein it was held that the fees conditional on the success of
a case and which gives the lawyer 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 the success
of the litigation, he may tend to depart from ethics.

b) In the matter of Mr. G.: A Senior Advocate of the Supreme Court 6, it was held
that the claim of an advocate based on a share in the subject matter is a
professional misconduct.

c) In VC Rangadurai versus D. Gopalan7, it was observed that relation between a

lawyer and his client is highly fiduciary in nature. The advocate is in the
position of trust.

d) Thus, the Court was of the view that the application of the Respondent
deserves to be quashed as it was against the public policy and a grave
professional misconduct.

2. Further, it was stated by the Court that Respondent no. 2 prayed to withdraw the
complaint to which it was replied that ‘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’.

5
1954 CriLJ 1531
6
1954 (2) BLJR 477, (1954) 56 BOMLR 1220, 1955 1 SCR 490
7
1979 AIR 281, 1979 SCR (1)1054

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 3. Talking about the importance of the legal profession the Court stated that
‘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.’  The Court was of the view
that it is the fundamental right of the poor to get justice and the exorbitant amount
charged as fees by the Advocates is serious violation of this right.

4. Further, the observations made in the 131st Report of the Law Commission, 1988,
were brought to light. These were:

a) 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.

b) 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.

c) 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.

5. Also, it was highlighted that ‘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.’

6. Focusing on the sleeping nature of the system, the Court pointed out that though the
131st Law Commission Report was submitted in the year 1988, still no step is taken
in the last 29 years.

BAR COUNCIL OF ANDHRA PRADESH v. K. SATYANARAYANA8

8
AIR 2003 SC 176

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 BENCH: J. V.N. KHARE and J. A. BHAN

 
FACTS OF THE CASE

(1.) The Bar Council of Andhra Pradesh has filed this appeal against the order of the
Disciplinary Committee of the Bar Council of India dated 28 th March, 1999 by
which the Bar Council of India has set aside the order passed by the State Bar
Council removing the name of the Kurapati Satyanarayana from the roll of the
State Bar Council as he was found guilty of grave professional misconduct in
discharge of his duties.
(2.) Initially, O.S. No 1624 of 1991 was filed by the Shri. Gutta Nagabhushanam on
the file of the Additional District Munsif Magistrate. The said suit was decreed
and the Execution Petition No. 112 of 1995 was instituted for realization of the
decretal amount. Mr. K. Satyanarayana was engaged as counsel by Shri. G.
Nagabhushanam in the execution proceedings.
(3.) K. Satyanarayana received a total sum of Rs. 14600/- on various dates in the
execution proceedings but he did not make the payment of same to Shri. G.
Nagabhushanam. Hence, on 18th October, 1996 Shri. G. Nagabhushanam filed a
complaint with the Additional District Munsif, who then transferred the matter to
the Bar Council of Andhra Pradesh.
(4.) The complaint filed and important documents were forwarded to the state Bar
Council and Mr. K. Satyanarayana chose not to file a counter. Hence the matter
went to its Disciplinary Committee which after examining the witnesses produced
came to the conclusion that Mr. K. Satyanarayana received the total sum of Rs.
14600/- belonging to Shri. G. Nagabhushanam and retained the same with him.
Hence, the disciplinary committee of the State Bar Council concluded that the
advocate had retained the money with him and was thus guilty of
“professional misconduct.” He was directed to return the money to the
complainant9.
(5.) K. Satyanarayana asserted that he had informed Shri. G. Nagabhushanam through
a post card about the receipt of the decretal amount and that on 24 th April, 1996 he
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 AIR 2003 SC 176

6
 paid Rs. 11000/- to Shri. G. Nagabhushanam. However, these were not accepted
by the Disciplinary Committee as Mr. K. Satyanarayana failed to produce any
evidence proving the payment of the sum of Rs. 11000/-10
(6.) K. Satyanarayana then filed an appeal before the Disciplinary Committee of
the Bar Council of India. The Disciplinary Committee of the BCI agreed with the
finding of fact recorded by the State Bar Council that Mr. K. Satyanarayana failed
to pay the amount of Rs. 14600/- received by him on the behalf of Shri. G.
Nagabhushanam in the execution proceedings but came to the conclusion that Mr.
K. Satyanarayana did not commit any professional misconduct though there might
have been some negligence on his part11.
(7.) The Disciplinary Committee of BCI observed that the conduct of the appellant
shows that Mr. K. Satyanarayana never refused to return the money the same and
also he had made part payment of the total amount. Perusal of the file shows that
Mr. K. Satyanarayana could not make the payment of the remaining amount
because of his family circumstances as the remaining amount was utilized by him
in his treatment. The Committee concluded that Mr. K. Satyanarayana never
wanted to misappropriate the decretal amount and hence, the BCI set aside the
State Bar Council’s order holding that the delinquent had not committed any
professional misconduct though there might have been some negligence on his
part, which did not involve any moral turpitude12
(8.) The Bar Council of Andhra Pradesh has filed this appeal against the aforesaid
order of the Disciplinary Committee of the Bar Council of India.

ISSUES INVOLVED

(1.) Whether or not retaining client’s money in this case amounts by an advocate
amounts to professional misconduct?

10
AIR 2003 SC 177
11
AIR 2003 SC 177
12
ibid

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 (2.) Whether or not in this case retaining client’s money is just negligence on the part
of K. Satyanarayana?
(3.) Whether or not K. Satyanarayana is guilty of professional misconduct?

ARGUMENTS BY BOTH THE PARTIES

(1.)The appellant Bar Council of Andhra Pradesh filed appeal petition against the

order of the Bar Council of India which set aside its order of removing the name of
K. Satyanarayana from the State roll as it was of view that he committed one of the
gravest professional misconduct as he retained money belonging to Shri. G.
Nagabhushanam13.
(2.)The point which was raised by the respondent that the appeal filed by the Bar
Council of Andhra Pradesh is not maintainable as it is not the person aggrieved so
this appeal is not maintainable.

DECISION BY THE SUPREME COURT

(1.)The Supreme Court said that the pleading of the point raised by the respondent
that the appeal filed by the Bar Council of Andhra Pradesh is not maintainable
need not be dilated as seven Judge Constitution Bench of this Court held in Bar
Council of Maharashtra M. V. Dabholkar and others14, that the role of Bar Council is
of dual capacity, one as the prosecutor through its Executive Committee and the other
quasi-judicial performed through its Disciplinary Committee.
(2.)The Supreme Court said that the finding of the BCI that there was no intention
on the part of the advocate to misappropriate the money of his client was not
only “unfounded and perverse” but also lacked the serious thought which was
required to be given to the disciplinary committee of the BCI in the discharge of
quasi-judicial functions while probing into such grave instances.
(3.)Further, it said that it was neither pleaded nor shown that Mr. K. Satyanarayana
was in dire financial difficulty which promoted him to utilize the decretal amount
for his treatment which was with him in trust. This is an act of breach of trust. It

13
AIR 2003 SC 177
14
1975 (2) SCC 702.

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 said that “we are firmly of the view that such types of excuses cannot be entertained
being frivolous and unsustainable”.
(4.)Bench comprising Justice V. N. Khare and Justice Ashok Bhan said “adherence to
correct professional conduct in the discharge of one’s duties as an advocate is the
backbone of legal system. Any laxity while judging the misconduct which is not bona
fide  and dishonest advocate would undermine the confidence of the litigant public
resulting in the collapse of legal system15”
(5.)The Supreme Court referred to the case of Harish Chandra Tiwari Baiju16, in which it
was held that “Amongst the various types of misconduct envisaged for a legal
practitioner the misappropriation of the client’s money must be regarded as one of the
gravest.” It was observed that, “Among the different types of misconduct envisaged
for a legal practitioner misappropriation of the client’s money must be regarded
as one of the gravest. In his professional capacity, the legal practitioner has to collect
money from the client towards expenses of the litigation or withdraw money from the
Court payable to the client or take money of the Client to be deposited in Court. In all
such cases, when the money of the client reaches his hand it is a trust. If a public
servant misappropriates money he is liable to be punished under the present
Prevention of Corruption Act, with imprisonment which shall not be less than one
year. He is certain to be dismissed from service. But if an advocate misappropriates
money of the client there is no justification in de-escalating the gravity of the
misdemeanor. Perhaps the gravity of such breach of trust would be mitigated when
the misappropriation remained only for temporary period. There may be a justification
to award a lesser punishment in a case where the delinquent advocate the money
before commencing the disciplinary proceedings.”
(6.)Setting aside the BCI’s order, the Bench said that “the conduct of the delinquent, who
is an elderly gentleman, is reprehensible and is unbecoming of an advocate. It deeply
pains us that the delinquent who claimed to have practised for three decades and has
worked as Government advocate for four years should have been guilty of such
serious misconduct.”
(7.)Hence, the Supreme Court has upheld an order of the Andhra Pradesh Bar
Council removing the name of a lawyer from its rolls after he was found guilty of
“grave professional misconduct” in the discharge of his duties and also the

15
AIR 2003 SC 178
16
2002 (2) SCC 67

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appellant shall be entitled to the costs of this appeal, which was assessed as Rs.
5000/-.

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