Why has the Supreme Court ruled that the profession of advocates, which it described as a noble one having wide ramifications on society, does not fall under the definition of 'service' under the Consumer Protection Act?
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IN a significant ruling having wide ramifications, the Supreme Court has ruled that a complaint alleging 'deficiency in service' against an advocate is not maintainable under the Consumer Protection Act, 1986 as reenacted in 2019.
In other words, the court has ruled that 'services' hired or availed of an advocate do not fall under the definition of 'service' under the Act.
A Bench of Justice Bela M. Trivedi and Justice Pankaj Mithal handed down a ruling to this effect in their separate but concurring opinions.
The Bench based its views on "legislative intent" which it found has never been to include advocates under the purview of the Consumer Protection Act. The Bench also said the legal profession could not be treated as 'business' or 'trade', nor could the services provided by 'professionals' be treated at par with services provided by businessmen or traders.
The Bench also based its views on the fact that the legal profession is sui generis, that is, unique. The Bench also reasoned that the service hired or availed of an advocate is under "a contract of personal service" and thus not covered by the Consumer Protection Act.
“The Supreme Court has ruled that 'services' hired or availed of an advocate do not fall under the definition of 'service' under the Act.
The Bench thus set aside a judgment of the National Consumer Disputes Redressal Commission (NCDRC), holding that if there is any deficiency in service rendered by advocates or lawyers, a complaint under the Consumer Protection Act would be maintainable. The NCDRC decision dates back to 2007.
In the course of their reasoning, the Bench also doubted the correctness of a three-judge decision in Indian Medical Association versus V.P. Shantha & Others, in which it was held that the wide amplitude of the definition of 'service' in the main part of Section 2(1)(o) of the Consumer Protection Act would cover services rendered by medical practitioners.
On August 6, 2007, the NCDRC held that a complaint against an advocate could be filed under the Consumer Protection Act if there was any deficiency in service rendered by them.
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One D.K. Gandhi had hired the services of an advocate for filing a complaint in the court of the metropolitan magistrate, Tis Hazari, Delhi, against one Kamal Sharma under Section 138 of the Negotiable Instruments Act, 1881 as the cheque for ₹20,000 issued by the said Kamal Sharma in favour of Gandhi was dishonoured.
During the course of the said complaint case, the accused Sharma agreed to pay the sum of ₹20,000 for the dishonoured cheque besides ₹5,000 as the expenses incurred by Gandhi.
Gandhi alleged that though the advocate had received from the accused Sharma a demand draft/pay order for ₹20,000 and a crossed cheque of ₹5,000 on his behalf, the advocate did not deliver the same to him and instead demanded ₹5,000 in cash from him.
The advocate also filed a suit for recovery of ₹5,000 in the court of small causes, Delhi, raising a plea that the sum was due to him as his fees.
Subsequently, the advocate gave the demand draft/pay order for ₹20,000 and a cheque for ₹5,000 to Gandhi. However, the payment of the cheque for ₹5,000 was stopped by the accused Sharma at the instance of the advocate.
At this stage, Gandhi filed a complaint before the district consumer disputes redressal forum, Delhi, seeking compensation worth ₹15,000 in addition to the amount of the cheque of ₹5,000 and also ₹10,000 for the mental agony and harassment along with the cost.
The advocate resisted the said complaint by filing a reply raising a preliminary objection to the effect that the district consumer forum had no jurisdiction to adjudicate the dispute raised in the complaint as the advocates were not covered under the Consumer Protection Act.
“On August 6, 2007, the NCDRC held that a complaint against an advocate could be filed under the Consumer Protection Act if there was any deficiency in service rendered by them.
The district forum, however, rejected the preliminary objection, holding that it had the jurisdiction to adjudicate upon the dispute between the parties and further decided the complaint in favour of Gandhi.
The advocate challenged the said Order in an appeal before the state commission which allowed the same, holding that the services of lawyers and advocates do not fall within the ambit of "service" defined under Section 2(1)(o) of the Consumer Protection Act, 1986.
The NCDRC, however in the revision application preferred by Gandhi, reserved the Order of the state commission. It held that a complaint against the advocate was maintainable under the Consumer Protection Act if there was any deficiency in service rendered by them.
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On these facts, the matter travelled to the Supreme Court. The Bar of Indian Lawyers, the Delhi High Court Bar Association, the Bar Council of India and the advocate in question filed appeals against the NCDRC Order.
Before coming to the reasons given by the Bench in support of its conclusions, it is important to extract at least two provisions of the Consumer Protection Act which are central to the case.
The definition of "service" contained in Section 2(1)(o) of the Consumer Protection Act, 1986 and Section 2(42) of the Consumer Protection Act of 2019 is the same and reads as under:
"Service means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service."
Section 2(1)(g) of the Consumer Protection Act, 1986 defines "deficiency" as "any fault imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service."
“The Bar of Indian Lawyers, the Delhi High Court Bar Association, the Bar Council of India and the advocate in question filed appeals against the NCDRC Order.
Section 2(11) of the Consumer Protection Act, 2019 defines "deficiency" with slight modification to mean "any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service and includes:
(i) any act of negligence or omission or commission by such person which causes loss or injury to the consumer; and
(ii) deliberate withholding of relevant information by such person to the consumer"
The definition of 'service' is divided into three parts, the Bench notes. The first part is explanatory and defines service to mean service of any description that is made available to potential users. The second part is inclusionary, which expressly includes the provision of facilities in connection with the specific services. The third part is exclusionary, it excludes rendering of any service free of charge or under a contract of personal service.
Tracing the legislative intention behind the Consumer Protection Act, the Bench observed that it was enacted to provide better protection to the interests of the consumers against exploitation by traders and manufacturers of consumer goods and to help consumers get justice and fair treatment in matters of goods and services purchased and availed by them in a market dominated by large trading and manufacturing bodies.
The Bench also took note of the Consumer Protection Act as reenacted in 2019. The Bench noted that there is "not a whisper" in the statement of objects and reasons either of the Consumer Protection Acts (1986 or 2019) to include professions or services provided by professionals such as advocates, doctors, etc. within the purview of the Act.
The Bench asserted that it is a well-accepted proposition that professionals could not be called businessmen or traders, nor could clients or patients be called consumers.
"It is also required to be borne in mind that the terms 'business' or 'trade' having a commercial aspect involved, could not be used interchangeably with the term 'profession' which normally would involve some branch of learning or science," the Bench said.
Citing the Black's Law Dictionary, 11th Edition, the Bench quoted the meaning of "profession" as "a vocation requiring advanced education and training; especially one of the three traditional professions— law, medicine and the ministry."
“The Bench asserted that it is a well-accepted proposition that professionals could not be called businessmen or traders, nor could clients or patients be called consumers.
"Professional" means "someone who belongs to a learned profession or whose occupation requires a high level of training and proficiency."
The Bench observed that a 'profession' would require advanced education and training in some branch of learning or science. The nature of work is also a skilled and specialised one, a substantial part of which would be mental rather than manual.
The Bench then went on to the nature of the work of a professional which, according to it, requires a high level of education, training and proficiency and involves skilled and specialised kind of mental work, operating in the specialised spheres where achieving success would depend upon many other factors beyond a man's control.
The Bench thus held that a professional could not be treated equally or at par with a businessman or a trader or a service provider of products or goods as contemplated in the Consumer Protection Act.
"Similarly, the services rendered by a businessman or a trader to the consumers with regard to his goods or products cannot be equated with the services provided by a professional to his clients with regard to his specialised branch of profession," the Bench said.
The Bench also claimed that the legislative draftsmen are presumed to know the law and there is no good reason to assume that the legislature intended to include professions or professionals or services provided by professionals within the ambit of the Consumer Protection Act.
"Any interpretation of the preamble or the scheme of the Act for construing 'profession' as 'business' or 'trade'; or 'professional' as 'service provider' would be extending the scope of the Act which was not intended, rather would have a counterproductive effect," the Bench underscored.
On this point, the Bench thus ruled that the very purpose and object of the CP Act 1986 as re-enacted in 2019 was to protect the consumers from unfair trade practices and unethical business practices only and that there is nothing on record to suggest that the legislature ever intended to include professions or professionals within the purview of the Consumer Protection Act.
The Bench also cautioned that if services provided by all professionals are brought within the purview of the Consumer Protection Act, it would open the "floodgates of litigation" in the commissions or forums established under the Consumer Protection Act, particularly because the remedy provided under the Act is inexpensive and summary in nature.
That, the Bench flagged, will frustrate the very object of providing timely and effective settlement of consumers' disputes arising out of unfair trade and unethical business practices.
The Bench, however, clarified that it should not be misunderstood that professionals could not be sued or held liable for their alleged misconduct or tortious or criminal acts.
The Bench put to itself that even if it is held that the Consumer Protection Act applies to professions and professionals, whether the legal profession is sui generis or different from other professions, particularly from the medical profession because the NCDRC had, in the judgment under challenge, relied upon the decision in Indian Medical Association versus V.P Shantha for bringing advocates within the purview of the Consumer Protection Act.
To answer this question, the Bench referred to three decisions, namely Byram Pestonji Gariwala versus Union Bank of India and Others; R. Muthukrishnan versus Registrar General, High Court of Judicature at Madras & State of U.P and Others versus U.P. State Law Officers Association and Others.
“The Bench observed that a 'profession' would require advanced education and training in some branch of learning or science.
These decisions have held that the legal profession cannot be equated with any other traditional profession. It is not a commercial profession but a noble one considering the nature of the duties to be performed and their impact on society.
These decisions have also held that the Indian legal system is the product of history. It is rooted in the country's soil; nurtured and nourished by its culture, languages and traditions; fostered and sharpened by its genius and quest for social justice; and reinforced by history and heritage.
The Bench said that advocates are perceived to be intellectuals amongst the elites and social activists amongst the downtrodden. That is the reason they are expected to act according to the principles of uberrima fides, i.e., the utmost good faith, integrity, fairness and loyalty while handling legal proceedings of clients.
"Being a responsible officer of the court and an important adjunct of the administration of justice, an advocate owes his duty not only to his client but also to the court as well as to the opposite side," the Bench said.
The Bench opined that the legal profession is different from other professions also for the reason that what the advocates do affects not only an individual but the entire administration of justice, which is the foundation of civilised society.
"It must be remembered that the legal profession is a solemn and serious profession. It has always been held in very high esteem because of the stellar role played by the stalwarts in the profession to strengthen the judicial system in the country.
"Their services in making the judicial system efficient, effective and credible, and in creating a strong and impartial judiciary, which is one of the three pillars of democracy, could not be compared with the services rendered by other professionals," the Bench said.
The Bench put to itself whether the relationship between an advocate and their client should be classified as a contract 'for services' as opposed to a contract 'of service' (i.e. contract 'of personal service').
The greater the amount of direct control exercised over the person rendering the services by the person contracting for them, the stronger would be the grounds for holding it to be a "contract of service".
The Bench proceeded to decide whether in the case of an advocate–client relationship, the client exercises direct control over the advocate who is rendering his legal professional services to him.
The Bench held that upon a conjoint reading of the provisions contained in Order III Code of Civil Procedure, 1908 and Chapter IV of the Advocates Act, 1961 pertaining to right to practise, there remains "no shadow of a doubt" that an advocate whose name has been entered in the State roll is entitled as of right to practise in all courts.
However, he can act for any person in any court only when he is appointed by such a person by executing the document called 'vakalatnama'.
“The Bench thus held that a professional could not be treated equally or at par with a businessman or a trader or a service provider of products or goods as contemplated in the Consumer Protection Act.
Such advocate has certain authorities by virtue of such vakalatnama but at the same time has certain duties too, i.e., the duties to the courts, to the client, to the opponent and to the colleagues as enumerated in the Bar Council of India Rules.
The Bench also listed out "unique attributes" regarding the advocate–client relationship:
1) Advocates are generally perceived to be their client's agents and owe fiduciary duties to their clients.
2) Advocates are fastened with all the traditional duties that agents owe to their principals. For example, advocates have to respect the client's autonomy to make decisions at a minimum, as to the objectives of the representation.
“The legal profession is not a commercial profession but a noble one considering the nature of the duties to be performed and their impact on society, various decisions have held.
3) Advocates are not entitled to make concessions or give any undertaking to the court without express instructions from the client.
4) It is the solemn duty of an advocate not to transgress the authority conferred on him by his client.
5) An advocate is bound to seek appropriate instructions from the client or his authorised agent before taking any action or making any statement or concession which may, directly or remotely, affect the legal rights of the client.
6) The advocate represents the client before the court and conducts proceedings on behalf of the client. He is the only link between the court and the client. Therefore, his responsibility is onerous. He is expected to follow the instructions of his client rather than substitute his judgment.
The Bench thus held that the client exercises a considerable amount of direct control over the manner in which an advocate renders his services during the course of his employment.
The Bench accordingly held that the services hired or availed of an advocate would be that of a contract 'of personal service' and thus do not fall within the definition of "service" contained in Section 2(42) of the Consumer Protection Act, 2019.
“The Bench said that advocates are perceived to be intellectuals amongst the elites and social activists amongst the downtrodden.
As a result, the Bench declared that a complaint alleging "deficiency in service" against advocates practising legal profession would not be maintainable under the Consumer Protection Act, 2019.