27 May 1954
Supreme Court







DATE OF JUDGMENT: 27/05/1954


CITATION:  1954 AIR  560            1955 SCR  501

ACT: Supreme  Court  Rules--Order  IV,  rule  30-Advocate-Supreme Court-Agreement  between  him  and his  client  for  sharing recoveries  in  the legal  proceedings-Whether  professional misconduct-Professional conduct of Advocate of Supreme Court in view of his special privileges and status.

HEADNOTE: The act of an Advocate of the Supreme Court in entering into an agreement with a client whereby the client undertakes  to pay him a part of any recoveries he might make in the  legal proceedings  in respect of which he is employed, amounts  to professional   misconduct   and   makes   him   liable   for disciplinary  action and to this extent the  ordinary  legal rights of contract do not apply to an Advocate as such. Such  agreements are not permissible to advocates under  the rigid  rules of conduct enjoined by the profession  so  that their integrity, dignity and honour may be placed above  the breath of scandal. An Advocate of the Supreme Court is governed by special  and rigid rules of professional conduct expected of and  applied to  a specially privileged class of persons who  because  of their privileged status are subject to certain  disabilities which  do  not  attach to other men and which  do  not  even attach  to  an  Advocate  while  acting  otherwise  than  as Advocate. An  Advocate  is  therefore bound to conduct  himself  in  a manner  befitting  the high and  honourable  profession  the privileges  of  which he enjoys and if he departs  from  the high standards which that profession has set for itself  and demands  of  him he renders himself liable  to  disciplinary action.

JUDGMENT: Original (Disciplinary) Jurisdiction. In the matter of summons issued to Mr. "G" under rule 30  of Order  IV, Supreme Court Rules, to show cause to this  Court



why disciplinary action should not be taken against him. The  material facts of the case are stated in  the  Judgment Order  IV  rule  30  of the  Supreme  Court  rules  runs  as follows;- "  Where  on the complaint of any person or  otherwise,  the Court  is  of opinion that an Advocate has  been  guilty  of misconduct  or of conduct unbecoming an Advocate, the  Court may  debar  him  from practising  before  the  Court  either permanently  or for such period as the Court may think  fit, and the Registrar shall thereupon report his name to his own High Court 491    "  Provided  that the Court shall in the  first  instance direct  a  summons to issue returnable before the  Court  or before  a  Special  Bench to be  constituted  by  the  Chief Justice,  requiring the Advocate to show cause  against  the matter  alleged  in the summons, and the summons  shall,  if possible,  be served personally upon him with copies of  any affidavit  or statement before the Court at the time of  the issue of the summons." G in person: Amarnath was the client.  He had admittedly a just cause and the  High  Court has held that the terms came from  him  and were  accepted  out of compassion.  I submit  that  in  such circumstances  the agreement was neither professionally  nor morally improper.  English law of Champerty and  Maintenance does  not apply to India; Please see Ram Coomar  Coondoo  v. Chunder Canto Mookerjee (1876) L.R. 4 I.A. 23; Bhagwat Dayal Singh  v. Debi Dayal Sahu (1907) L.R. 35 I.A. 48.  Prior  to 1926 there was a distinction between Pleaders, Advocates and barristers.   Barristers  could nod enter  into  contractual relationship.   They could not sue or be sued: Deo Kisen  v. Budh  Prakash  (1833) I.L.R. 25 All. 509 F.B.  This  was  in accordance with the English rules of professional  etiquette among  Barristers,  but Pleaders and Advocates  could  enter into contractual relations.  Contingent fees have been known and recognised in India at any rate since 1814.  Please  see sec.  25,  Bengal  Regulation XXVII of 1814,  and  see.  52, Bombay  Regulation  II  of 1827.   Contractual  rights  were extended in 1846.  Please see Pleaders Act I of 1846; Please see sec. 7 as to fees.  But agreements had to be  registered with the Court to be enforceable.  Wide changes in all these matters   came   about  by  legislation   in   1926   (Legal Practitioners’  Fees  Act,  1926).   Barristers,  Attorneys, Advocates, Pleaders all came within the definition of  Legal Practitioners,  who  may now sue and be sued and  may  enter into  and may settle with their clients the terms  of  their engagement and the fees to be paid.  Section 3 of the Act is sufficiently  wide  to include the impugned  agreement  with Amarnath.  Contingent fees have been known in India for more than  a  century.  In Madras in the case  of  Achamparambath Cheria  Kunhammu v. William Sydenham Gantz (1881)  I.L.R.  3 Mlad. 138 F.B. a contrary view was expressed but Madras  bad framed a special rule by Circular Order of the Sudder Adulet dated 18-8-53.  In Bombay a contrary view was also taken: In re Bhandara (1901) 3 Bom.  L.R. 102 F.B. But the contract of the  Advocate there was clearly improper and facts  of  that case  were totally different from the facts of  the  present case.   The observations of the Learned Chief  Justice  were obiter.  In Bombay, Inampatra, which was in substance a  fee payable  and contingent on success has, however,  been  held enforceable: Shivram Hari v. Arjun (1881) I.L.R. 5 Bom. 258; Parshram Vaman v. Hiraman Fatu (1884) I.L.R. 8 Bom. 413. GHULAM HASAN J.: In U.P. they were referred to as Shukriana. G: In the Punjab they were known as "back fees"



492 and were held valid and enforceable: 5 P.R. 1878 F.B. Beechy v.  Faiz Mahomed until the Full Court’s decision by majority disapproved of the practice: 61 P.R. 1907 Ganga v. Devi Das. But strong reasons in support of the practice will  be-found in  the  judgments of Lalchand & Chatterjee JJ. in  61  P.R. 1907.    Contingent  fees  in  a  just  cause   have   found approbation  in England.  Please see Wiggins V. Lavy  (1928) 44 T.L.R. 721 ; Bich v. Cook (1900) 110 L.T.J.D. 94 C.A. per Lord Russell L.J.     In America, contingent fees are expressly recognised  in the  canons  of  professional ethics  of  the  American  Bar Association  (Canon  12); See " Legal Ethics"  by  Henry  S. Drinker  (Columbia University Press page 99)  and  Hoffman’s Resolutions  (Ibid at page 343).  The Supreme Court  of  the U.S.A.  in  several  cases  has  held  such  agreements   as enforceable. 1.   Wylie v. Coxe 14 L. Ed. 753. 2.   Barnes v. Alexander 58 L. Ed. 530. 3.   McGowan v. Parish 59 L. Ed. 955. 4.   Morris v. Giddings 29 L. Ed. 403. 5.   Ball v. Halsell 40 L. Ed. 622. 6.  Ingersoll v. Coram 53 L. Ed. 208.    The  substance of the American law will be found  in  the foot note to McMicken v. Perin, 15 L. Ed. 504.    The  High  Court based its decision in the  present  case (1954)  56  Bombay L.R. 838 in re K.L. G on  a  question  of Public Policy as void under sec. 23 of the Contract Act, but Public  Policy has been held to be a treacherous ground  for legal   decision  [Lord  Davey  in  Tanson  v.   Driefontein Consolidated Mines [1901] A.C. 484 at page 500.]    GHULAM  HASAN  J. Public Policy is an  "  unruly  horse."    MUKHERJEA J. You need not press this point.      M.   C.   Setalvad, Attorney-General for India (G.   N. Joshi and P.   G. Gokhale with him) Conditions of the Bar in America   and  in  India  are  very   different.    American authorities   have  therefore  no  relevance   (Please   see observations  of  Rattigan J. in 61 P.R. 1907 Ganga  Ram  v. Devi  Das).   An  agreement  though not  void  in  law,  may nevertheless amount to professional misconduct.  Our  Courts have  held  that  agreeing  to a  share  in  the  fruits  of litigation  is  unprofessional.  Please see (1874)  21  W.R. 297:  In  the  matter of Moung Htoon Oung,  an  Advocate  at Bangoon ; (1900) 4 C.L.J. 259 -In the matter of an Advocate; (1901)  3  Bom.   L.R.  102-In re N.  F.  Bhandara  and  the majority  judgments  of the Full Court in 61 P.R.  of  1907. The  facts  in the case in 3 Bom.  Law Reporter 102  may  be different but the rules of professional conduct were clearly laid  down  in  the observations of  Sir  Lawrence  Jenkins. Rigid   notions  of  Champerty  and  Maintenance   are   not applicable  to  India but such contracts are  prohibited  by professional rules of conduct. G.   in reply: The law cannot approbate and reprobate in the same   breath.    The  Rulings  earlier   than   the   Legal Practitioners 493 Fees  Act  of 1926 and expressing a contrary  view  are  now obsolete.   A  contract  which is  not  vitiated  by  fraud, misrepresentation  or some illegality or is not  void  under any  recognised  head  of public policy,  cannot  amount  to professional  misconduct.  The misconduct must  fall  within the  definitions and limitations of misconduct laid down  by the Bombay High Court in (1934) 36 Bom.  L.R. 1136 F.B.  Sir Jamshed  Byramji Kanga v. Kaikhushru Bomanji  Bharucha;  and Anant Vishnu Chitre v. Pitamberdas Goculdas Mehta.



’ G’ in person. M.C.  Setalvad, Attorney-General for India (G.,N. Joshi  and P.  G. Gokhale, with him) for the Hon’ble Chief Justice  and other Hon’ble Judges of the Bombay High Court. 1954.  May 27.  The Judgment of the Court was delivered by BOSE J.-This matter arises out of a summons issued to Mr. G, a Senior Advocate of this Court under Order IV, rule 30,  of the  Supreme  Court Rules, to show  cause  why  disciplinary action should not be taken against him. Mr.  G  was  called  to the Bar in  England  and  was  later enrolled  as  an Advocate of the Bombay High Court.   He  is also an Advocate of this Court.  On 20th December, 1952,  he entered  into an agreement with a client whereby the  client undertook to pay him 50 per cent. of any recoveries he might make  in  the legal proceedings in respect of which  he  was engaged.   On  this  being reported to the  High  Court  the matter  was  referred  to the Bombay  Bar  Council  and  was investigated  by three of its members under section 1 1  (1) of  the Bar Councils Act.  They recorded their opinion  that this  amounted to professional misconduct.  The  High  Court agreed  and suspended Mr. G from practice as an Advocate  of the  Bombay High Court for six months.  The  learned  Judges considered that they had no power to affect his position  as an Advocate of this Court, so directed that a copy of  their judgement be submitted to this Court to enable this Court to take  such action on it as it thought fit.  ’Acting on  this report  this  Court issued notice to  the  petitioner  under Order  IV, rule 30, to show cause why discipliner  y  action should not be taken against him.  About the same time Mr.  G filed a petition for a writ 494 under  article’32  of the Constitution.   We  are  confining ourselves in this order to the matter raised in the summons.     There  is no dispute about the facts.  They are set  out in Mr. G’s petition under article 32 and\are as follows:    On  the 23rd of July, 1951, Air.  G’s client is  said  to have  entered  into an agreement with  the  Baroda  Theatres Ltd., for work on a picture which they intended to  produce. The  remuneration  agreed on was Rs. 15,000.   Of  this  Rs. 3,000  was paid at once and the balance, Rs. 12,000, was  to be  paid on the completion of the picture.  It is said  that at the date of the dispute the Barods Theatres admitted that Rs.  9,400 was due, but as they did not pay up,  the  client consulted Mr. G about the best way to recover his money  and wanted  to know what the expenses and fees would be.   After examining the matter in detail and talking it over with  his client, Mr. G advised him that two courses were open to him. First,  there  was a civil suit.  He said the cost  of  this would be about Rs. 800 for Court fees and expenses and about Rs.  1,250 for fees.  The other alternative was  winding  up proceedings.   The client was told that in these  the  Court fees would be lower but Mr. G’s fees would have to be higher as winding up proceedings are usually protracted.   The  client preferred the latter course but said  that  he could not pay more than Rs. 200 towards the expenses and  as regards the fees he said he was too poor to pay and so  made a  proposal which he reduced to writing.  It is embodied  in the following letter dated 20th December, 1952, addressed to Mr. G:    I  hereby engage you with regard to my claim against  the Baroda Theatres Ltd., for a sum of Rs. 9,400 (balance due to me).    Out  of  the recoveries you may take 50%  of  the  amount recovered.   I  will by Wednesday deposit Rs.  200  in  your account or give personally towards expenses."



  Mr.  G said that he was unwilling to work on these  terms but when he was pressed to do so and when he 495 realised  that  unless he agreed the client  would  probably lose a just claim he reluctantly agreed.    Rs. 200 was thereupon paid towards expenses and Mr. G  at once entered into correspondence with the solicitors of  the Baroda Theatres Ltd.  A winging up petition was drawn up and declared   but  was  not  filed  because  the   matter   was compromised at that stage.  The Baroda Theatres undertook to pay  Mr.  G’s client Rs. 6,400 in full satisfaction  of  his claim.     The  client then paid Mr. G a further Rs. 800.  (He  had already paid Rs. 200, part of which was spent for expenses). Mr. G claimed the balance which was roughly Rs. 2,200. We are not concerned with the proceedings in the Bombay High Court  and  before the Tribunal of the Bar  Council  in  the summons  matter with which we are dealing at the moment,  as we are acting here under Order IV, rule 30, of the Rules  of this Court.  The only question is whether, on the facts  and circumstances  set out above (all of which are  admitted  by Mr.  G), his engagement of 20th December, 1952,  amounts  to professional misconduct. Mr.  G argued the matter at length, and to his credit be  it said,  objectively  and  with  restraint,  but  it  is   not necessary to cover the wide field he did because we are  not concerned  with  ordinary  rights  of  contract,  nor   with ordinary  legal  rights,  but with  the  special  and  rigid rules  of professional conduct expected of and applied to  a specially  privileged class of persons who, because of there privileged status, are subject to certain disabilities which do  not attach to other men and which do not attach even  to them  in a non-professional character.  To use the  language of  the Army, an Advocate of this Court is expected  at  all times to comport himself in a manner befitting his status as an " officer and a gentleman." In the Army it is a  military offence  to  do otherwise (see section 45 of the  Army  Act, 1950)  though  no  notice would be  taken  of  ungentlemanly conduct under the ordinary law of the land, and none in  the case of a civilian.  So here, he is bound to conduct himself in a manner befitting the high and- 496 honourable  profession  to whose privileges he has  so  long been  admitted;  and if he departs from the  high  standards which that profession has set for itself and demands of  him in  professional  matters,  he  is  liable  to  disciplinary action. Now it can be accepted at once that a contract of this  kind would be legally unobjectionable if no lawyer was  involved. The rigid English rules of champerty and maintenance do  not apply  in India, so if this agreement had been between  what we  might  term third parties, it would  have  been  legally enforceable and good.  It may even be that it is good in law and  enforceable  as it stands though we do  not  so  decide because the question does not arise; but that was argued and for  the  sake of argument even that can  be  conceded.   It follows  that  there is nothing morally  wrong,  nothing  to shock  the  conscience, nothing against  public  policy  and public morals in such a transaction per se, that is to  say, when a legal practitioner is not concerned.  But that is not the  question  we  have to  consider.   However  much  these agreements  may be open to other men what we have to  decide is  whether  they are permissible under the rigid  rules  of conduct enjoyed by the members of a very close  professional preserve so that their integrity, dignity and honour may  be



placed  above  the breath of scandal.  That is part  of  the price  one pays for the privilege of belonging to a kind  of close  and  exclusive  "and enjoying in  it  privileges  and immunities’ denied to less fortunate persons who are outside its  fold.  There is no need to enter its portals and  there is  no need to stay, but having entered and  having  elected to.  stay and enjoy its amenities and privileges, its  rules must  be  obeyed or the disciplinary measures  which  it  is entitled  to  take  must be  suffered.   The  real  question therefore  is whether this kind of conduct is  forbidden  to the elect or whether, if it was once forbidden, the ban  has since  been removed, either directly or by  implication,  by legislative action. Now  it was not disputed that, so far as English  Barristers are concerned, this sort of agreement was once taboo both in England and in India.  Even when 497 they  worked  in the mofussil in India and did the  kind  of work that would be done by solicitors in England and in  the Presidency  Towns  in India, they could not  enter  into  an engagement of this kind, for even solicitors in England  are forbidden  from  making  such bargains  (see  Cordery’s  Law Relating to Solicitors, fourth edition, page 342).  But,  it was argued, this rule only applied to members of the English Bar, and in any event it was abrogated in India in 1926. We will first examine whether there was a difference between Barristers  and  other classes of lawyers.  This  point  was raised in the Punjab in 1907 but was rejected by a  majority of  seven  Judges to two in a Full Bench of nine  Judges  in Ganga  Ram  v. Devi Das(1).  But it is to be  observed  that even the two dissenting Judges agreed that an engagement  of the present kind was not open to a member of the Punjab Bar. Lal Chand J. (who dissented) said at page 331 : "I  am in perfect accord with the Hon’ble Chief  Judge  that stipulation  to  receive  a  share  in  the  result  of  the litigation is different from a stipulation to be, paid a fee contingent on success." The  other dissenting Judge, Chatterji J., agreed  with  him but  even  as regards the practice which these  two  learned Judges  thought permissible at the date of  their  decision, Chatterji J. said at page 299   "It must not be supposed, however, that I am in favour  of the   practice.    I  should  on  the   whole   prefer   its abolition......... "    We  agree  with Chitty J. at page 326 that there  was  no justification even at that date for seeking to apply one set of  rules  to one branch of the profession  and  another  to another.  As he said-   "What is right or wrong for the one must be right or wrong for the other," or,  as  Sir Lawrence Jenkins C. J. put it in  In  re.  N.F. Bhandara(2), "For  common honesty there must be no sliding scale even  in the mofussil.............. (1) 61 P. R. (Of 1907), P. 280.  (2) 3 Bom, L. R. 102 at  I. I. J. 64 498 Reading  "standards  of professional conduct" for  the  word "honesty",  the  quotation is apt here.  In  any  case,  the decisions to which we shall refer deal with "Advocates"  and even  where  these "Advocates" were  Barristers  the  matter touched them as "Advocates" of an Indian High Court and  not because  of their special status as Barristers.  It is  true that at one time Advocates were mainly Barristers, but  that



was  not  always the case and the rule laid  down  in  these decisions  governed all "Advocates," whether  Barristers  or otherwise. The  learned Judges in the Punjab Record case collected  all the  available authorities up to the year of their  decision and  they show that this kind of agreement was condemned  in Calcutta  in  1874 and 1900: In the matter  of  Moung  Htoon Qung(1)  and  In the matter of an Advocate of  the  Calcutta High Court(2) ; in Bombay in 1901: In re.  N. F. Bhandara(3) ;  and in Madras in 1881 and again in 1939 :  Achamparambath Cheria  Kunhammu v. William Sydenham Ganty(1) and In re.  an Advocate  of the Madras High Court(5).  As the  Bombay  High Court  is the one in which Mr. G normally practices  and  as the  engagement  was  entered into in Bombay,  we  think  it proper  to quote the following passage at page 113 from  the judgment in the Bombay case (In re.  N. F. Bhandara)    I  consider  that  for  an  Advocate  of  this  Court  to stipulate  for, or receive, a remuneration  proportioned  to the results of litigation or a claim whether in the form  of a share in the subject-matter, a, percentage, or  otherwise, is  highly reprehensible, and I think it should  be  clearly understood  that  whether his practice be, here  or  in  the mofussil  he  will  by so acting offend  the  rules  of  his profession and so render himself liable to the  disciplinary jurisdiction of this Court." Mr.  G argued that even if this was once the law, section  3 of the Legal Practitioners (Fees) Act, 1926, (Act XXI of 1926)changed it and that now. every legal  Practitioner is competent to settle the terms (1) 21 W.R. 297.              (4) I. L. R. 3 Mad. 138. (2) 4 Cal.  L. J. 259.         (5) 1, L, R. 1940 Mad. 17. (3)  Bom, L. R. 102 at 113 499 his  engagement and his fees by private agreement  with  his client.   This, Mr. G said, entitles him to enter  into  any agreement  which  the law permits in the  case  of  ordinary persons.   Legal  practitioners, according to him,  are  now governed  by the law of contract and not by  rules  imported from  other  countries with different  ideas  and  different social  customs  and imposed on the Bar ha India  mainly  by English  Judges.  We do not agree, because this Act  is  not concerned with professional misconduct.  That is dealt  with by  the Bar Councils Act which was passed in the  same  year (1926).   The Bar Councils Act makes no modification in  the disciplinary jurisdiction of the High Court or of the  sense in   which  professional  misconduct  had  been   understood throughout India up to that time.    The. only Indian decision which Mr. G, could quote in his favour was Muthoo Lail v. Budree Pershad (1).  But that  was not  a  case in which disciplinary action  was  being  taken against  a legal practitioner for  professional  misconduct. The question there was whether an, agreement which might  be objectionable on the ground of professional misconduct could be  enforced by suit.  Two Bombay decisions on which  Mr.  G relies  are  to be distinguished in the same way  :  Shivram Hari  v.  Arjun(2) and Parshram Vaman  v.  Hiraman  Fatu(3). Whether  these  cases were rightly decided or  whether  they would  also be hit on the ground of public policy as  Chitty J. thought of a similar matter in the Punjab Record case, is something  which  does not arise for decision here.   It  is enough  to say that those cases are distinguishable  on  the around that the Judges there were not considering a case  of disciplinary action.    Mr.  G  relied on the practice in some  of  the  American States where an agreement by an attorney to purchase part of



the  subject-matter of the litigation is upheld.  The  class of cases to which he refers are summarised in a footnote  to McMicken  v.  Perin(1).   He relied on  this  to  show  that contracts of this kind cannot be dismissed as  reprehensible or  morally  wrong.  We do not propose to  enter  into  this because what may be (1)  I N. W. P. H. C. R. I. (2)  1. L. R. 5 Bom. 258. (3)  I. L. R. 8 BOm. 413. (4)  15 Law.  Edn. 504 & 505. 500 harmless  in one country may not be so in another.  We  will however pause to observe that Rattigan J. collected a  large volume  of  ’American  authority at  pages  318-321  of  his opinion  in  Ganga Ram v. Devi Das(1) to show that  even  in those  States  where this is permitted it is  regretted  and frowned  upon.  For historical reasons obtaining there,  the practice may have come to stay however much it is regretted; but  in  1937  the  American  Bar  Association  adopted  the following canon of Professional Ethics:    "The  lawyer  should  not purchase any  interest  in  the subject-matter of the litigation which he is conducting."    In  India  history tells the converse tale.   We  see  no reason  why we should import what many feel if;  a  mistake, even in the country of its origin, from another country  and seek to perpetuate their error here when a sound and healthy tradition  to the contrary already exists in our  Bar.   The reasons  for exacting these high standards in this  country, where  ignorance and illiteracy are the rule, are even  more important  than they are in England where the general  level of education is so much higher.  We hold that the conduct of Mr.  G  amounts  to professional misconduct and  as  it  was committed  in the face of the Bombay view expressed  by  Sir Lawrence Jenkins in 1901 disciplinary action is called for.    Now  had  Mr. G been as restrained and objective  in  his petition  under article 32 as he was while arguing the  case before us, we might have considered a warning enough  seeing that  this  is  the  first  time  this  question  has   been considered  in  this  Court, but, in view  of  his  personal attacks  on the learned Chief Justice in his petition  where he  has questioned his good faith and attributed  malice  to him,  we  are  not able to deal with  him  as  lightly.   We therefore  direct  that he be suspended from  practising  in this  Court for a period which will expire on the same  date as his period of suspension in-the Bombay High Court.   There will be no order about costs.                             Order accordingly. (1) 61 P. R. (of 1907), P. 280. 501