Madras High Court Reiterates Illegality Of Contingent Fees By Advocate While Quashing A Cheque Bounce Case U/s. 138 NI Act
The Madras High Court quashed a cheque bounce complaint ruling that since the complaint was not based on a contractual obligation, and the claimed fee appeared to be illegal under the Legal Practitioner's Fees Rules, 1973, the petitioner could not be held liable under section 138 of the Negotiable Instruments Act. The petitioner sought the quashment of complaint against him in the Fast Track Court.
A Bench of Justice G. Ilangovan held that, “Since the complaint was not filed on the basis of the contractual obligation, then automatically, the respondent cannot maintain the petition under section 138 of the Negotiable Instruments Act. Because, as mentioned above, the Rules does' not prescribe the fee, which is not legal in nature under the Legal Practitioner's Fees Rules, 1973.”
The complainant, an advocate, provided legal assistance to the petitioner for various legal issues, and an agreement was made, including a fee of Rs.10,00,000. The petitioner issued a cheque for the agreed fee, which bounced, leading to a legal dispute under section 138 of the Negotiable Instruments Act.
Advocate S. Mahalakshmi appeared for the Petitioner and Advocate S. Muniyandi appeared for the Respondent.
Petitioner argued the fee was illegal and against Legal Practitioner's Fees Rules, 1973. Respondent claimed the cheque covered various expenses incurred during the legal engagement. No contract document supporting the fee claim was provided by the respondent.
The key issue before the Court was whether the cheque represented a legal fee or was intended to cover other expenses.
The Court noted that no contract document supported the fee claim and that contingent fees were criticized by the Supreme Court in B.Sunitha Vs. State of Telangana and another [2018(1)SCC 638].
The Court said as the complaint wasn't based on a contractual obligation and no legal fee contract was provided, the petitioner couldn't be held liable under section 138. The claimed fee appeared illegal per Legal Practitioner's Fees Rules 1973. The court added, “it has been stated that this petitioner agreed to pay Rs.10,00,000/- as whole sum fee for all litigations that were defended by the complainant. So, it is seen that it is not a contractual in nature.”
The Court deemed this a case of legal practitioner abusing the legal process and quashed the proceedings. The Court said, “This is a classical case of legal practitioner's abuse of the process of the court. So the continuation of proceedings amounts to illegal.”
The Court allowed the petition adding that, “Legal process can be undertaken to advance or vindicate the grievance, but it should not be permitted to be taken as an act of aberration, abuse and that too by any legal practitioner. So, the entire process is liable to be quashed.”
Cause Title: Davidraj v. V. Pavel
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