#TaxmannAnalysis | Legal Tug-of-War | Advocates' Accountability vs Consumer Rights in Legal Services

The Legal Tug-of-War

Advocates’ Accountability vs. Consumer Rights in Legal Services

The Legal Tug-of-War

Advocates’ Accountability vs. Consumer Rights in Legal Services

1. Introduction

Ever wondered if you can take legal action against your advocate for negligence under the Consumer Protection Act? Does the law protect clients of legal services like it does other consumers? The Apex Court answered this in M. Mathias v. D. K. Gandhi PS National Institute of Communicable Diseases [2024] 162 taxmann.com 461 (SC). It was ruled that complaints about “deficiency in service” against advocates are not maintainable under the Consumer Protection Act, 1986, as re-enacted in 2019. This decision follows a 2007 ruling by the National Consumer Disputes Redressal Commission (NCDRC) that allowed complaints against lawyers for providing deficient services under the Consumer Protection Act, 1986.

2. Background of the Case

The appellant, an advocate, was hired by the respondent for a complaint under Section 138 of the Negotiable Instruments Act. During this case, the accused of the case filed by the respondent agreed to pay the required amounts to settle the matter.

Allegedly, the appellant received the payment but did not deliver it to the respondent, demanding an additional amount in cash instead. Later, the appellant handed over the payment; however, the accused stopped the cheque portion at the appellant’s request.

The respondent then filed a complaint seeking compensation for the delayed payment and mental anguish. The District Forum ruled in favour of the respondent, but the appellant challenged this decision on jurisdictional grounds.

The State Commission sided with the appellant, stating that lawyer services were not covered under the Consumer Protection Act. However, the National Consumer Disputes Redressal Commission (NCDRC) overturned this decision, leading to the current appeals by various legal bodies and the appellant.

3. Challenges in Applying Consumer Protection Laws – Advocate’s Views

The Advocates Act, 1961 exclusively governs the legal profession, setting standards for professional conduct and addressing misconduct. This profession, integral to the justice system, is not merely a business but a pillar of democracy that relies on the Bar’s independence.

Advocates uniquely owe duties to the court and peers, in addition to their clients. The Act recognizes that errors or negligence may not always constitute misconduct and provides specific provisions for addressing such issues. Given its specialized focus, the Advocates Act supersedes consumer protection laws regarding advocate conduct.

The law of negligence recognizes that a professional would be held liable in a civil action for negligence. It includes professionals of varied fields who possess special skills in that profession generally. Unlike any other profession, where professionals fully control their surroundings, the legal profession is the sole profession where advocates have no control over their environment. The environment they work in is controlled by the presiding Judge.

4. Multiplicity of Proceedings and

Forum

Shopping – A Potential Risk

Applying consumer protection laws to advocates could lead to excessive litigation, multiple proceedings across different forums, and revisiting issues already settled by higher courts, potentially resulting in conflicting decisions. The swift and inexpensive nature of consumer protection proceedings, designed to address trade-related issues, might be misused by disgruntled litigants to make speculative or vexatious claims instead of addressing genuine grievances related to professional misconduct.

5.

Distinguishing Advocates under Consumer Protection Norms

As per the Amicus Curiae, distinguishment between two categories of advocates based on their engagement and work nature:

5.1 Advocates in Court Not Service Providers Under CP Act:

Advocates engaged to represent clients in court proceedings, acting as agents of the client through a vakalatnama, are not considered service providers under the Consumer

Protection Act (CP Act). Here, the advocate’s actions and statements are viewed as those of the client, and the relationship does not fit the framework of a “service provider” and “consumer” under the CP Act.

5.2 Non-Litigation Legal Services by Advocates Covered Under CP Act

Advocates engaged for legal opinions, drafting agreements, and other legal services outside of litigation (without a vakalatnama) fall under the purview of service providers. Any deficiency in services by such advocates outside the litigation process would be covered under the CP Act as they engage in a client-service provider relationship.

6. Advocates vs Medicine Professionals

The Bar Council of India Rules outline four key duties for lawyers: Duty to the Court, Duty to the Client, Duty to the Opponent, and Duty to Colleagues. These duties can sometimes conflict, but the duty to the court is considered paramount in such situations.

Unlike medicine, which relies on scientific standards to determine care, there is no universal or objective standard of care for the legal profession to assess the abandonment of duty.

Drawing a distinction from the decision in Indian Medical Association vs. V.P. Shantha & Others, it was argued that the practice of law differs significantly from medicine, including in the professional-client relationship. Given the complexity and diversity of legal issues, legal services provided by advocates fall outside the scope of the Consumer Protection Act.

7. International Legal Norms – Excluding Lawyers from Consumer Protection Laws

In the matter of the Bar of Indian Lawyers through its President Jasbir Singh Malik Vs. D.K. Gandhi PS National Institute of Communicable Diseases and anr., the Apex Court contented that while consumer protection laws aim to safeguard consumers from unfair trade practices, there is a longstanding tradition, observed internationally, of excluding regulated professions like law from such laws. This exclusion aligns with the belief that certain professions are sui generis and of paramount public interest.

Internationally, common law countries have consistently excluded lawyers from consumer protection laws, viewing legal services as sui generis due to their role in the justice delivery system. Even in countries like Malaysia, the services of professionals such as lawyers are specifically exempted from consumer protection legislation.

In India, the Advocates Act regulates the conduct of lawyers comprehensively, highlighting the need to align with international practices that exclude legal professionals from consumer protection laws. The objective of consumer protection laws is to protect consumers, specifically in transactions involving goods and services, implying the exclusion of professional services—particularly those of lawyers, whose role is considered paramount and distinct within the legal system.

Therefore, aligning with international trends and recognizing the unique nature of legal practice, legal services should be excluded from the ambit of consumer protection laws in India.

8. Key Questions Arising from the Matter as per Apex Court

(a) Legislative Intent Regarding Inclusion of Professional Services in the CP Act, 1986 (as re-enacted in 2019)

(b) The Uniqueness of the Legal Profession (Sui Generis)

(c) Nature of Service Provided by Advocates and Its Classification Under “Contract of Personal Service”

8.1 Legislative

Intent Regarding Inclusion

of Professional Services in the CP Act, 1986 (as re-enacted in 2019)

8.1-1

Legislative Purpose and Historical Context

To comprehend whether the Legislature ever intended to encompass professions or services rendered by professionals within the scope of the CP Act 1986 (as re-enacted in 2019) through various legal pronouncements, it’s essential to look into the legislative purpose and history behind this enactment. As per the UN Guidelines and Legislative Background, the CP Act 1986 stemmed from UN guidelines advocating consumer protection. India, as a signatory, embraced these objectives aimed at safeguarding consumer interests.

8.1-2 Evolution and Modernization of Consumer Protection

The CP Act aims to enhance consumer protection by establishing councils and dispute settlement mechanisms, addressing unfair trade practices, and promoting consumer education and fair market conditions. Over time, market dynamics evolved with global supply chains and e-commerce, presenting new consumer vulnerabilities. Consequently, the CP Act, 2019 was enacted to modernize consumer protection amidst these changes.

The Act targeted unfair trade practices and unethical business conduct, not professions or professionals. Professionals, such as advocates or doctors, operate in specialized domains requiring advanced education, skill, and moral principles beyond typical business or trade practices.

8.1-3 Professions vs. Business in Legal Context

The differentiation between professions and businesses is rooted in several key aspects. Professions, such as law or medicine, require specialized knowledge, extensive training, and adherence to strict ethical standards. The work of Professionals involves complex judgments and responsibilities that go beyond standard commercial transactions covered by consumer protection laws.

8.1-4 Judicial Interpretation

In conclusion, while professionals can be liable for misconduct or negligence, they aren’t subject to the CP Act’s consumer protection framework intended for business-toconsumer disputes. Interpreting professions as akin to business or services would extend the Act beyond its intended scope, leading to unintended consequences and diluting the Act’s core objectives.

As per the Apex Court, the above analysis underscores that neither the CP Act 1986 nor its re-enactment in 2019 was designed to encompass professions or the services rendered by professionals within its consumer protection framework.

8.2 Uniqueness of the Legal Profession (Sui Generis)

8.2-1 Historical and Cultural Roots of the Indian Legal System

The next question that arose before the Apex Court was whether the Legal Profession, particularly Advocates, is distinct from other professions like Medicine in the context of the Consumer Protection Act (CP Act).

The Indian legal system is deeply rooted in history, culture, and traditions. Postindependence, the legal framework remained fundamentally unchanged, rooted in common law traditions. The courts have recognized the unique nature of the legal profession. Lawyers perform noble duties impacting society and democracy. The Bar’s independence is crucial for a strong judicial system and upholding constitutional values.

8.2-2 Role of Advocates in Justice Delivery and Jurisprudence

Unlike traditional commercial professions, the legal profession is service-oriented. Advocates play a vital role in justice delivery, preserving judicial independence, and ensuring equal access to justice. Advocates contribute to evolving jurisprudence and protecting individual rights. They are expected to act with utmost integrity, fairness, and loyalty, not only to clients but also to the court and the justice system.

8.2-3 Judicial Interpretation

The legal profession influences the entire administration of justice, making it a solemn and serious profession crucial for a civilized society. Given the distinctive role, status, and duties of Advocates, as per the Apex Court, the legal profession is sui generis—unique and incomparable to other professions. Its contribution to the judicial system and democracy is unparalleled.

8.3 Nature of Service Provided by Advocates and Its Classification Under “Contract of

Personal Service”

8.3-1 Legal Service Exclusions and the Consumer Protection Act

The question of whether services provided by an advocate fall under a “contract of personal service” hinges on legal definitions and control dynamics. In India, the Advocates Act of 1961 defines “advocate” and “legal practitioner” separately. An advocate is someone listed under this act and is a subset of legal practitioners. The act establishes standards, categorizes advocates, and delegates disciplinary powers to Bar Councils.

Under the Consumer Protection Act (CP Act) of 1986/2019, a service is broadly defined but excludes services under a “contract of personal service.” This exclusion raises the question of whether legal services provided by advocates fall under this category.

8.3-2 Nature of Control in Advocate-Client Relationships

The determination of whether a relationship is a “contract of service” or “for services” relies on the nature of control exercised by the employer. Direct control by the client over an advocate’s services, as evidenced by the execution of a Vakalatnama (a document appointing the advocate), suggests a contract ‘of personal service’.

The relationship between an advocate and a client embodies fiduciary duties, where the advocate acts as an agent and must adhere to client instructions. The advocateclient relationship is defined by control dynamics, with the client maintaining significant influence over the manner in which legal services are rendered.

This level of control indicates a contract ‘of personal service,’ potentially excluding legal services from the definition of “service” under the CP Act, 2019. Therefore, complaints alleging “deficiency in service” against advocates may not be maintainable under this act.

9. Supreme Court Ruling – Advocates

Excluded from Consumer Protection Act

In summary, the Apex Court concluded that the Consumer Protection Act of 1986/2019 was not intended to cover professions or services provided by professionals like advocates, considering the unique nature of the legal profession.

Services hired from an advocate are deemed to fall under “a contract of personal service,” thus excluding them from the definition of “service” under the CP Act, making complaints alleging deficiency in service against advocates not maintainable under this law. Consequently, the impugned judgment by the NCDRC has been set aside, and the appeal is allowed.

10. Advocates and Accountability –

Beyond Consumer Protection Laws

It’s important to acknowledge that while the exclusion of legal services from consumer protection laws serves to uphold the distinct nature of the legal profession and mitigate certain risks, it should not be interpreted as granting advocates carte blanche immunity or exception from accountability.

Just as with medical services, where there are specific standards of care and avenues for redress in case of negligence or misconduct, the legal profession should adhere to similar principles of professional conduct and accountability.

While advocates may not fall under the purview of consumer protection laws in the same way as goods or traditional services, they are bound by ethical duties and standards established by the Advocates Act and professional codes. Advocates must continue to uphold the integrity of their profession and prioritize the interests of their clients, the court, and the justice system within this established regulatory framework.