Case Laws On Breach Of Trust By Advocates

A final project submitted in partial fulfilment of the course of Professional

Ethics and Professional Accounting System during the academic session
2021-22, Semester IX

Submitted by
Sudarshan Kumar, 181653
B.B.A.,LL.B(Hons.)

Submitted to
Dr. Anshuman Pandey Sir
Faculty Of Professional Ethics

September ,2021

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 Chanakya National Law University

Nyaya Nagar, Mithapur

Patna-800001

DECLARATION

I hereby declare that the research project entitled “Case Laws on

Breach of Trust by an Advocate” submitted at Chanakya
National Law University, Patna, for fulfilment of Professional
Ethics and Professional Accounting System syllabus is my own
work carried under supervision of Dr. Anshuman Pandey Sir.
This project has not been submitted elsewhere for any other
degree/certificate/ course in any institute/University.

Sudarshan Kumar

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 ACKNOWLEDGEMENT
I would like to thank my faculty Dr. Anshuman Pandey Sir, whose
guidance helped me a lot with structuring my project.

I owe the present accomplishment of my project to my friends, who helped

me immensely with materials throughout the project and without whom I
couldn’t have completed it in the present way.

I would also like to extend my gratitude to my parents and all those unseen
hands that helped me out at every stage of my project.

I would also like to extend my gratitude to the library staffs of

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA.

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 Table Of Contents

1. Declaration
2. Acknowledgement
3. INTRODUCTION
4. FIDUCIARY RELATIONSHIP BETWEEN A LAWYER AND
HIS CLIENT
5. Section 126 Indian Evidence Act 1872
6. CASE LAWS ON BREACH OF TRUST BY ADVOCATES
7. Conclusion
8. Bibliography

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 INTRODUCTION

Advocacy is a noble profession and an Advocate is the most accountable, privileged and
erudite person of the society. An Advocate’s role in the society is to ensure competence
and discipline in the legal process and contribute to society by serving the public interest
to their utmost good faith. His acts are role model for the society and thus are necessary to
be regulated. Professional misconduct is the behavior outside the bounds of what is
considered acceptable or worthy of its membership by the governing body of a profession.
Professional misconduct refers to disgraceful or dishonorable conduct not appropriate for
an Advocate.

An act of professional misconduct or breach of trust is said to be committed by a lawyer

when he does something which is ‘dishonorable’ to him as a man or dishonorable in his
profession.
Certain basic standards of professional behavior do exist. These had been regarded as
sacrosanct for so long that they may be as relevant in the 21st century as they were when
they were first identified in medieval times. When the legal profession first emerged
during the reign of Edward I in the late 13th century it may perhaps have been clear
enough to say merely that a lawyer must behave with ‘honor’. Acting for the ‘benefit of a
friend in need’ for free is considered, then, as an act of honor. However, those were times
when honorable conduct was, easier to identify than is the case when dealing with the
complexities of the practice of law today. Such are the intricacies of the modern world
that it can no longer simply be said that, if it seems right, it probably is right, but if it feels
wrong, it is probably unethical.

Chapter V of the Advocate Act, 1961 1, deals with the conduct of Advocates. It describes
provisions relating to punishment for professional and other misconducts. Section 35(1)
of the Advocate Act, 1961, says, where on receipt of a complaint or otherwise a State
1
Act No. 25 of 1961

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Bar Council has reason to believe that any advocate on its roll has been guilty of
professional or other misconduct, it shall refer the case for disposal to it disciplinary
committee.

Generally legal profession is not a trade or business, it’s a gracious, noble, and
decontaminated profession of the society. Members belonging to this profession should
not encourage deceitfulness and corruption, but they have to strive to secure justice to
their clients. The credibility and reputation of the profession depends upon the manner in
which the members of the profession conduct themselves. It’s a symbol of healthy
relationship between Bar and Bench.

However, Advocates have of late been the subject of criticism in matters involving
client’s money. Advocates and solicitors hold money in a variety of circumstances,
including possession of settlement checks, the purchase price, deposits for transactions,
and advances for attorneys' fees and costs. The funds usually are not secured only by the
profession's reputation, and the honor of the individual advocates and solicitor’s words
provide for the security.

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AIMS AND OBJECTIVE

1. To know about professional misconduct by an Advocate.

2. To develop a proper understanding of Breach of trust by Advocates.
3. To further highlight this concept with the help of different case laws.

RESEARCH METHODOLOGY

The researcher has mainly confined the research to doctrinal method for this study.
Various books, articles, e-articles, reports and journals were used extensively in framing
the project in appropriate form, essential for this study.

The method used in writing this research is primarily analytical.

SOURCE OF DATA

The researcher has relied upon both primary and secondary sources of data. The primary
sources include cases while the secondary source include books, articles and websites

SCOPE OF THE STUDY

Though the researcher will try her level best not to leave any stone unturned in doing this
project work to highlight various aspects relating to the topic, but the topic is so dynamic
field of law, the researcher will sight with some of unavoidable limitations.

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 FIDUCIARY RELATIONSHIP BETWEEN A LAWYER
AND HIS CLIENT
Advocates owe fiduciary duties to clients and others in the course of their duties. These
fiduciary duties are similar to those owed by trustees. This fiduciary duty is best
demanded in relation to the client’s money. Advocate and his client stand in a fiduciary
relationship where the duty to act in utmost good faith and ensure that client’s interest is
well protected should be the prime consideration especially when money is handed over
to advocate for any legal task.

The courts viewed mismanagement of money as serious misconduct that could not be
tolerated. The ethical issue that arises is the duty in relation to operating and maintaining
the client’s money in a bank account operated by the advocates. There are many issues
regarding the failure of advocate in operating and maintaining bank accounts for the
purpose of their clients. One of them is the duty not to misappropriate client’s money.
Advocate must perform his duty according to the client’s instruction and to only use the
money for the client’s purposes.

The underlying principle is that an advocate should not place himself in a position where
his duty and interest may conflict. This is because the fiduciary relationship with a client
requires an advocate to act in the utmost good faith, in the interest of the client.

In the Law Society of New South Wales v Moulton ,2 court held that clients must be able
to rely upon the professional advice of their advocate and to place him in the fullest
confidence that he will protect them and handle their affairs in their interests.
Nevertheless, the advocate may continue to act for a client, notwithstanding that he or the
prescribed parties has an interest in the matters or interests adverse to the client’s,
provided that the advocate makes full and frank disclosure of such interest to the client or
“the client having been fully informed, and advised that he should seek independent legal
advice, consents to advocate acting or continuing to act on his behalf”. Furthermore, it is
2
[1981] 2 NSWLR 736.

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also the advocate’s duty to explain to his client his dual responsibilities and how the
client would or might be prejudiced by engaging him as his advocate. Only then can a
client give his informed consent. Despite having obtained the client’s informed consent,
the advocate will still be liable for a failure to discharge his duty to the client.

Advocates Duties towards his Clients

Preamble of Standards of Professional conduct and etiquette rules 3 made under section
49(1)(c) of the Advocates Act,19614 states that an Advocate shall, at all times, comport
himself in a manner befitting his status as an officer of the Court, a privileged member of
the community, and a gentleman, bearing in mind that what may be lawful and moral for
a person who is not a member of the Bar, or for a member of the Bar in his non-
professional capacity may still be improper for an Advocate. Without prejudice to the
generality of the foregoing obligation, an Advocate shall fearlessly uphold the interests of
his client, and in his conduct conform to the rules hereinafter mentioned both in letter and
in spirit. The rules hereinafter mentioned contain canons of conduct and etiquette adopted
as general guides; yet the specific mention thereof shall not be construed as a denial of the
existence of other equally imperative though not specifically mentioned.

Rule 11 to rule 33 of the Standard of Professional conduct and etiquette rules 5

made under section 49(1)(c) of the Advocates Act, 1961 states an Advocate’s duty
towards his clients:

Rule 11. An Advocate is bound to accept any brief in the Courts or Tribunals or before
any other authority in or before which he professes to practice at a fee consistent with his
standing at the Bar and the nature of the case. Special circumstances may justify his
refusal to accept a particular brief.

Rule 12. An Advocate shall not ordinarily withdraw from engagements once accepted,
without sufficient cause and unless reasonable and sufficient notice is given to the client.
Upon his withdrawal from a case, he shall refund such part of the fee as has not been

3
Bar council of India rules, 1975
4
Advocates’ Act, Act No. 25 of 1961
5
Bar council of India rules, 1975

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earned.

Rule 13. An Advocate should not accept a brief or appear in a case in which he has reason
to believe that he will be a witness and if being engaged in a case, it becomes apparent that
he is a witness on a material question of fact, he should not continue to appear as an
Advocate if he can retire without jeopardizing his client’s interests.

Rule 14. An Advocate shall at the commencement of his engagement and during the
continuance thereof make all such full and frank disclosures to his client relating to his
connection with the parties and any interest in or about the controversy as are likely to
affect his client’s judgement in either engaging him or continuing the engagement.

Rule 15. It shall be the duty of an Advocate fearlessly to uphold the interests of his client
by all fair and honorable means without regard to any unpleasant consequences to himself
or any other. He shall defend a person accused of a crime regardless of his personal
opinion as to the guilt of the accused, bearing in mind that his loyalty is to the law which
requires that no man should be convicted without adequate evidence.

Rule 16. An Advocate appearing for the prosecution in a criminal trial shall so
conduct the prosecution that it does not lead to conviction of the innocent. The
suppression of material capable of establishing the innocence of the accused shall
be scrupulously avoided.

Rule 17. An Advocate shall not directly or indirectly, commit a breach of the
obligations imposed by Sec. 126 of the Indian Evidence Act.

Rule 18. An Advocate shall not at any time, be a party to fomenting of litigation.

Rule 19. An Advocate shall not act on the instructions of any person other than his
client or his authorised agent.

Rule 20. An Advocate shall not stipulate for a fee contingent on the results of litigation
or agree to share the proceed thereof.

Rule 21. An Advocate shall not buy or traffic in or stipulate for or agree to receive any
share or interest in any actionable claim. Nothing in this Rule shall apply to stock, shares
and debentures or Government securities, or to any instruments, which are, for the time
being, by law or custom negotiable, or to any mercantile document of title to goods.

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Rule 22. An Advocate shall not, directly or indirectly, bid for or purchase, either in his
own name or in any other name, for his own benefit or for the benefit of any other person,
any property sold in the execution of a decree or order in any suit, appeal or other
proceeding in which he was in any way professionally engaged. This prohibition,
however, does not prevent an Advocate from bidding for or purchasing for his client any
property, which his client may, himself legally bid for or purchase, provided the Advocate
is expressly authorised in writing in this behalf.

Rule 23. An Advocate shall not adjust fee payable to him by his client against his own
personal liability to the client, which liability does not arise in the course of his
employment as an Advocate.

Rule 24. An Advocate shall not do anything whereby he abuses or takes advantage of the
confidence reposed in him by his client.

Rule 25. Advocate should keep accounts of the client’s money entrusted to him, and the
accounts should show the amounts received from the client or on his behalf, the expenses
incurred for him and the debits made on account of fees with respective dates and all
other necessary particulars.

Rule 26. Where moneys are received from or on account of a client, the entries in the
accounts should contain a reference as to whether the amounts have been received for
fees or expenses, and during the course of the proceedings, no Advocate shall, except
with the consent in writing of the client concerned, be at liberty to divert any portion of
the expenses towards fees.

Rule 27. Where any amount is received or given to him on behalf of his client the fact of
such receipt must be intimated to the client as early as possible.

Rule 28. After the termination of the proceeding the Advocate shall be at liberty to
appropriate towards the settled fee due to him any sum remaining unexpended out of the
amount paid or sent to him for expenses, or any amount that has come into his hands in
that proceeding.

Rule 29. Where the fee has been left unsettled, the Advocate shall be entitled to deduct,
out of any moneys of the client remaining in his hands, at the termination of the
proceeding for which he had been engaged, the fee payable under the rules of the Court,
in force for the time being, of by then settled and the balance, if any, shall be refunded to

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 the client.

Rule 30. A copy of the client’s account shall be furnished to him on demand
provided the necessary copying charge is paid.

Rule 31. An Advocate shall not enter into arrangements whereby funds in his hands are
converted into loans.

Rule 32. An Advocate shall not lend money to his client for the purpose of any action
or legal proceedings in which he is engaged by such client.

Rule 33. An Advocate who has, at any time, advised in connection with the institution
of a suit, appeal or other matter or has drawn pleadings, or acted for a party shall not
act, appear or plead for the opposite party.

While discussing the relationship between an Advocate and a client, the Supreme Court in
State of U.P. v. U.P. State Law officers’ Association 6, very categorically, sums up the
relationship as follows, “The relationship between the lawyer and his client is one of trust
and confidence. The client engages the lawyer for personal reasons and is at liberty to leave
him also, for the same reasons. He is under no obligation to give reasons for withdrawing
his brief from his lawyer.
The lawyer in turn is not an agent of his client but his dignified, responsible spokesman.
He is not bound to tell the court every fact or urge every proposition of law, which his
client wants him to, however irrelevant they may be. He is essentially an adviser to his
client and is rightly called a counsel in some jurisdictions. Once acquainted with the facts
of the case, it is the lawyer’s discretion to choose the facts and the points of law which he
would advance. Being a responsible officer of the court and an important adjunct of the
administration of justice, the lawyer also owes a duty to the court as well as to the
opposite side. He has to be fair to ensure that justice is done. He demeans himself if he
acts merely as a mouthpiece of his client. This relationship between the lawyer and the
private client is equally valid between him and the public bodies.”

Duty towards the Client's Money

There must be an attorney-client relationship first before the money received by an

6
AIR 1994 SC 1654: 1994(2) SCC 204.

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 advocate can be regarded as client’s money. An attorney-client relationship can be
established by signing of a retainer form. It is a written document prepared by an
advocate that includes the particulars of service and if agreed upon by the client will be
executed before an advocate. By executing a retainer form an attorney-client relationship
is established.

There are three components elements in this duty. First, he must distinguish the
principal’s money from his own. Second, he must keep it in a separate account in the
bank and third he must never use the money for his own purposes.

i. When advocate receives client’s money, client’s account must be

opened.
This client account is subject to a yearly audit and an accountant’s report must be issued
certifying that the account has been properly conducted before the partners of the firm will be
entitled to renew their practicing certificates. The obligation to maintain such report must
relate to previous twelve months of practice. Advocates have no right to use the client’s
money even if in a position to replace it immediately.

ii. Advocate must use the client’s money strictly for or on behalf of the
client.

The advocate must use the money for his client’s benefit and not for his own purposes. In
Singaporean case, Law Society of Singapore v VCS Vardan7, an advocate was making
unauthorized payments out of the client’s account with unauthorised withdrawals. In April
1998, the Commercial Affairs Department received information that the respondent had made
unauthorised withdrawals of client’s money. Upon investigations, it was found that the
respondent while practicing as an advocate had made various unauthorised withdrawals of
client’s funds from the client’s account of the law firm. The respondent had dishonestly
misappropriated a large sum from the client’s account by making unauthorised withdrawals.
The funds withdrawn were used to pay staff salaries and central provident funds
contributions, his income tax, office rental and other expenses, still the court held that the
advocate breached his fiduciary duty of misappropriation of client money.

7
[1999]2 SLR 229

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 Section 126 Of Indian Evidence Act, 1872

126. PROFESSIONAL COMMUNICATIONS:- No barrister, attorney, pleader

or Vakil shall at any time be permitted, unless with his client’s express consent, to disclose
any communication made to him in the course and for the purpose of his employment as such
barrister, pleader, attorney or Vakil, by or on behalf of his client, or to state the contents or
condition of any document with which he has become acquainted in the course and for the
purpose of his professional employment, or to disclose any advice given by him to his client
in the course and for the purpose of such employment:

Provided that nothing in this section shall protect from disclosure-

1. Any such communication made in furtherance of any [illegal] purpose.

2. Any fact observed by any barrister, pleader, attorney or Vakil, in the course of his
employment as such, showing that any crime or fraud has been committed since the
commencement of his employment.

It is immaterial whether the attention of such barrister, pleader, attorney or Vakil was

or was not directed to such fact by or on behalf of his client.

Explanation-
The obligation stated in this section continues after the employment has ceased.

Illustrations-

 A, a client, says to B, an attorney— “I have committed forgery, and I wish you to

defend me”.
As the defence of a man known to be guilty is not a criminal purpose, this
communication is protected from disclosure.

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  A, a client, says to B, an attorney—“I wish to obtain possession of property by the use
of a forged deed on which I request you to sue”

This communication, being made in furtherance of a criminal purpose, is not

protected from disclosure

 A, being charged with embezzlement, retains B, an attorney, to defend him. In the

course of the proceedings, B observes that an entry has been made in A’s account-
book, charging A with the sum said to have been embezzled, which entry was not in
the book at the commencement of his employment.

This being a fact observed by B in the course of his employment, showing that a fraud
has been committed since the commencement of the proceedings, it is not protected
from disclosure.

IS A BREACH OF SECTION 126 ACTIONABLE?

 
The issue of whether a breach of section 126 of the Evidence Act is actionable arose very
recently in the case of Tan Chong Kean v Yeoh Tai Chuan & Anor [2018] 2 MLJ 669. The
Federal Court was of the opinion that a breach of section 126 was tantamount to breach of a
principle of fundamental justice. This would entitle an aggrieved party to commence an
action for an order to “safeguard the confidentiality of the client-solicitor communication”.
As a note of caution, in mounting such an action, it is sufficient to merely mention the
privileged documents as any disclosure of their contents may be construed as a waiver of
privilege.

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 CASE LAWS ON BREACH OF TRUST BY ADVOCATES
In Prahlad Saran Gupta v Bar council of India,8 retention of money deposited with the
advocate for the decree holder even after execution proceeding was held to be an
instance of misconduct.

In DS Dalai v State Bank of India9 and JS Jadhav v Mustafa Haji Mohamed Yusuf,10
misappropriation of amount paid was held to be an instance of misconduct.

In Harish Chandra Tiwari v. Baiju11, court held on these fact, Appellant Harish
Chandra Tiwari was enrolled as an advocate with the Bar Council of the State of UP in
May 1982 and has been practicing since then, mainly in the courts at Lakhimpur Kheri
District in UP. Respondent Baiju engaged the delinquent advocate in a land acquisition
case in which the respondent was a claimant for compensation. The Disciplinary
Committee has described the respondent as “an old, helpless, poor illiterate person.”
Compensation of Rs. 8118/- for the acquisition of the land of the said Baiju was
deposited by the State in the court. Appellant applied for releasing the amount and as
per orders of the court he withdrew the said amount on 2.9.1987. But he did not return
it to the client to whom it was payable nor did he inform the client about the receipt of
the amount. Long thereafter, when the client came to know of it and after failing to get
the amount returned by the advocate, compliant was lodged by him with the Bar
Council of the State for initiating suitable disciplinary action against the appellant.
Court held 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 this 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

8
AIR 1997 SC 1338
9
AIR 1993 SC 1608
10
AIR 1993. SC 1535
11
AIR 2002 SC 548

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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
dimension of the gravity of such breach of trust would be mitigated when the
misappropriation remained only for a temporary period. There may be justification to
award a lesser punishment in a case where the delinquent advocate returned the money
before commencing the disciplinary proceedings.

In Bapurao Pakhiddey v Suman Dondey,12 the appellant, an advocate who was also the
treasurer of the Welfare Society for the Handicapped, Scheduled Caste and Backward
People (Regd.), New Delhi. A complaint was lodged by Smt. Suman Dondey in her
capacity as the Hony.
Secretary of the Society to the Bar Council of Delhi against the appellant alleging that in
the year 1978-79 he had received certain monies but he did not account for the same but
had used the same for his private ends. The appellant raised an objection on a notice
issued to him that the complaint against him is not maintainable under Section 35 of the
Advocates Act as there is no nexus between the profession as an Advocate and his
activities as a treasurer of a society. The objection raised by the appellant was rejected by
the Bar Council of Delhi inasmuch as if an Advocate is guilty of other misconduct also he
would be liable for action in terms of Section 35 of the Advocates Act. An appeal was
made to Supreme Court of India which set aside the order made by the Disciplinary
Committee. Court said that we are satisfied on the perusal of the order made by the
Disciplinary Committee and the relevant papers placed before us with reference to the
account extracts that the appellant is not guilty of the charge labeled against him.

12
1999 (2) SCC 442

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 CONCLUSION

The role of the lawyers in the society is of great importance. They being part of the system
of delivering justice holds great reverence and respect in the society. An advocate while
discharging his professional assignment has a duty towards his client, a duty to his
opponent, a duty to the court, a duty to the society at large and a duty to himself. It requires
high degree of probity and poise to strike a balance to arrive at the place of righteous stand,
during the times when there are conflicting claims. An advocate is also an office of the
Court who has the responsibility to render services of sound quality. Deficiency in services
in the nature of absence when the matters are scheduled, filing of incomplete and inaccurate
pleadings, lots of time even illegible and without personal check and verification, the
nonpayment of court fees and process fees amount to deficiency in work.

Usually the act of an Advocate affects only to his clients but in certain circumstances
persons who are directly injured by the acts of the advocates or omissions can also bring
an action against him. An Advocates liability to the disappointed beneficiary is
recognised in many jurisdictions. Legal profession does not allow an advocate to
withdraw his liability for deficiency in services.

According to the study there is a lot of variation in the characteristics of legal malpractice
cases. The dimensions characterizing lawyers’ malpractice are more extensive in nature
and the issues that arise differ in important ways depending on those dimensions. As one
would expect, there is a lot of variation in the characteristics of legal malpractice cases.
We would argue that the variation in this area of professional negligence is substantially
greater than in the most visible area. The dimensions characterizing lawyers’ malpractice
are more extensive and the issues that arise differ in important ways depending on those
dimensions.

The relationship which is shared between an advocate and his client is a relationship of trust
also known as fiduciary relationship. In this a lawyer is responsible and has the liability to
keep the conversation relating to case matters private and maintain secrecy. If such
measurements are not being taken by an advocate hired by a person to resolve the matter
involving and having knowledge of Law which thus requires a legal professional to deal

18
with certain matters by productively using his competence. If the advocate does not respect
the relationship and fail to maintain the secrecy about the case matter therefore, he is
deficient in rendering quality sound service which he is bound to render.

It is the duty of an advocate to uphold the dignity and decorum of the Court and must not
do anything to bring the Court itself into disrepute, and ensure that at no point of time, he
oversteps the limits of propriety. I want to conclude that it is not the number of laws or
the outdated or old laws which cause problem but it is the ineffective and incompetent
mechanism which implement them are the real problems.

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 BIBLIOGRAPHY

Statute:

 Advocates Act, 1961

 Bar council of India rules, 1975

Web sources:

 https://sci.gov.in

 www.barcounilofindia.org

 www.lawcommisionofindia.nic.in

 www.legalserviesindia.com

 https://globalfreedomofexpression.columbia.edu/cases/

 http://www.lawsindia.com/Advocate%20Library/Amendments/Bar
%20consi_rules/BAR
%20COUNCIL%20OF%20INDIA
%20RULES.htm#PART_VII_CHAPTER_1

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