Case Note: Bar Council Of Andhra Pradesh vs Kurapati Satyanarayana

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case analysis

By Harpreet Kaur, Student, University Institute of Legal Studies

BAR COUNCIL OF ANDHRA PRADESH v. K. SATYANARAYANA

BENCH: J. V.N. KHARE and J. A. BHAN

Dated: 15.11.2002

 

FACTS OF THE CASE

  1. The Bar Council of Andhra Pradesh has filed this appeal against the order of the Disciplinary Committee of the Bar Council of India dated 28th March, 1999 by which the Bar Council of India has set aside the order passed by the State Bar Council removing the name of the Kurapati Satyanarayana from the roll of the State Bar Council as he was found guilty of grave professional misconduct in discharge of his duties.
  2. Initially, O.S. No 1624 of 1991 was filed by the Shri. Gutta Nagabhushanam on the file of the Additional District Munsif Magistrate. The said suit was decreed and the Execution Petition No. 112 of 1995 was instituted for realization of the decretal amount. Mr. K. Satyanarayana was engaged as counsel by Shri. G. Nagabhushanam in the execution proceedings[1].
  3. K. Satyanarayana received a total sum of Rs. 14600/- on various dates in the execution proceedings but he did not make the payment of same to Shri. G. Nagabhushanam. Hence, on 18th October, 1996 Shri. G. Nagabhushanam filed a complaint with the Additional District Munsif, who then transferred the matter to the Bar Council of Andhra Pradesh.
  4. The complaint filed and important documents were forwarded to the state Bar Council and Mr. K. Satyanarayana chose not to file a counter. Hence the matter went to its Disciplinary Committee which after examining the witnesses produced came to the conclusion that Mr. K. Satyanarayana received the total sum of Rs. 14600/- belonging to Shri. G. Nagabhushanam and retained the same with him. Hence, the disciplinary committee of the State Bar Council concluded that the advocate had retained the money with him and was thus guilty of “professional misconduct.” He was directed to return the money to the complainant[2].
  5. K. Satyanarayana asserted that he had informed Shri. G. Nagabhushanam through a post card about the receipt of the decretal amount and that on 24th April, 1996 he paid Rs. 11000/- to Shri. G. Nagabhushanam. However, these were not accepted by the Disciplinary Committee as Mr. K. Satyanarayana failed to produce any evidence proving the payment of the sum of Rs. 11000/-[3].
  6. K. Satyanarayana then filed an appeal before the Disciplinary Committee of the Bar Council of India. The Disciplinary Committee of the BCI agreed with the finding of fact recorded by the State Bar Council that Mr. K. Satyanarayana failed to pay the amount of Rs. 14600/- received by him on the behalf of Shri. G. Nagabhushanam in the execution proceedings but came to the conclusion that Mr. K. Satyanarayana did not commit any professional misconduct though there might have been some negligence on his part[4].
  7. The Disciplinary Committee of BCI observed that the conduct of the appellant shows that Mr. K. Satyanarayana never refused to return the money the same and also he had made part payment of the total amount. Perusal of the file shows that Mr. K. Satyanarayana could not make the payment of the remaining amount because of his family circumstances as the remaining amount was utilized by him in his treatment. The Committee concluded that Mr. K. Satyanarayana never wanted to misappropriate the decretal amount and hence, the BCI set aside the State Bar Council’s order holding that the delinquent had not committed any professional misconduct though there might have been some negligence on his part, which did not involve any moral turpitude[5].
  8. The Bar Council of Andhra Pradesh has filed this appeal against the aforesaid order of the Disciplinary Committee of the Bar Council of India.

ISSUES INVOLVED

  1. Whether or not retaining client’s money in this case amounts by an advocate amounts to professional misconduct?
  2. Whether or not in this case retaining client’s money is just negligence on the part of K. Satyanarayana?
  3. Whether or not K. Satyanarayana is guilty of professional misconduct?

ARGUMENTS BY BOTH THE PARTIES

  • The appellant Bar Council of Andhra Pradesh filed appeal petition against the order of the Bar Council of India which set aside its order of removing the name of K. Satyanarayana from the State roll as it was of view that he committed one of the gravest professional misconduct as he retained money belonging to Shri. G. Nagabhushanam[6].

  • The point which was raised by the respondent that the appeal filed by the Bar Council of Andhra Pradesh is not maintainable as it is not the person aggrieved so this appeal is not maintainable.

DECISION BY THE SUPREME COURT

  • The Supreme Court said that the pleading of the point raised by the respondent that the appeal filed by the Bar Council of Andhra Pradesh is not maintainable need not be dilated as seven Judge Constitution Bench of this Court held in Bar Council of Maharashtra M. V. Dabholkar and others[7], that the role of Bar Council is of dual capacity, one as the prosecutor through its Executive Committee and the other quasi-judicial performed through its Disciplinary Committee.
  • The Supreme Court said that the finding of the BCI that there was no intention on the part of the advocate to misappropriate the money of his client was not only “unfounded and perverse” but also lacked the serious thought which was required to be given to the disciplinary committee of the BCI in the discharge of quasi-judicial functions while probing into such grave instances.
  • Further, it said that it was neither pleaded nor shown that Mr. K. Satyanarayana was in dire financial difficulty which promoted him to utilize the decretal amount for his treatment which was with him in trust. This is an act of breach of trust. It said that “we are firmly of the view that such types of excuses cannot be entertained being frivolous and unsustainable”.
  • Bench comprising Justice V. N. Khare and Justice Ashok Bhan said “adherence to correct professional conduct in the discharge of one’s duties as an advocate is the backbone of legal system. Any laxity while judging the misconduct which is not bona fide and dishonest advocate would undermine the confidence of the litigant public resulting in the collapse of legal system[8].”
  • The Supreme Court referred to the case of Harish Chandra Tiwari Baiju[9], in which it was held that “Amongst the various types of misconduct envisaged for a legal practitioner the misappropriation of the client’s money must be regarded as one of the gravest.” It was observed 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 his 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 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 gravity of such breach of trust would be mitigated when the misappropriation remained only for temporary period. There may be a justification to award a lesser punishment in a case where the delinquent advocate the money before commencing the discplnnary proceedings.”
  • Setting aside the BCI’s order, the Bench said that “the conduct of the delinquent, who is an elderly gentleman, is reprehensible and is unbecoming of an advocate. It deeply pains us that the delinquent who claimed to have practised for three decades and has worked as Government advocate for four years should have been guilty of such serious misconduct.”
  • Hence, the Supreme Court has upheld an order of the Andhra Pradesh Bar Council removing the name of a lawyer from its rolls after he was found guilty of “grave professional misconduct” in the discharge of his duties and also the appellant shall be entitled to the costs of this appeal, which was assessed as Rs. 5000/-.

STATUTORY LAW

  • An advocate is the most accountable, privileged and erudite person of the society and his acts are role model for the society, which are necessary to be regulated[10]. Professional misconduct is the behaviour outside the bounds of what is considered acceptable or worthy of its membership by the governing body of a profession[11]. Professional misconduct refers to disgraceful or dishonourable conduct not befitting an advocate[12].
  • The Advocates Act, 1961 as well Indian Bar Council are silent in providing exact definition for profession misconduct because of its scope, though under Advocate Act, 1961 to take disciplinary action punishment are prescribed when the credibility and reputation on the profession comes under a clout on account of acts of omission and commission any member of the profession.
  • Chapter V of the Advocate Act, 1961, 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, proviso says, is relevant in this context. This proviso say, where on receipt of a complain otherwise a State 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.
  • Under Section 35 of the Act, the State Bar Council is empowered to initiate proceedings against an advocate for misconduct, either on a complaint or on its own. The Bar Council of India under Section 36 can likewise initiate such proceeding and also has the power to withdraw such proceedings pending before any State Bar Council and inquire into such cases on its own. If misconduct is proved in such case before the Bar Council such action may be taken, such as suspension of practice for a period, or in grave cases striking the name of such advocates of the roll. In such cases the advocate can prefer an appeal to the Bar Council of India, and further to the Supreme Court under section 37 and 38 respectively. It is noteworthy that the Act does not provide for withdrawal of complaint. A complaint once filed cannot be withdrawn and the process of inquiry once set in motion cannot be stopped.
  • Part-VI, Chapter- II of the Bar Council of India Rules provide Standards of Professional Conduct and Etiquette for advocates. Rule 24 of the aforesaid Chapter provides that an advocate shall not do anything whereby he abuses or takes advantage of the confidence reposed in him by his client and then Rule 25 says that an advocate should keep accounts of the client’s money entrusted to him.

Further Rule 27 provides that 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[13].

POSITION OF LAW BEFORE THIS JUDGMENT

In the case of Smt. Siya Bai v. Sita Ram[14], the advocate withdrew the decretal amounts paid and did not make the payment to the client. He pleaded that the amount withdrawn was adjusted towards the fee and other expenses but it was not found true and not accepted and therefore, found guilty of professional misconduct for illegally retaining the amount. The Disciplinary Committee of the Bar Council of India ordered the advocate to refund the money to the complainant along with the 10% interest per annum and also ordered suspension of advocate for a period of one year.

Also, Kerala High Court In Re: An Advocate vs Unknown[15], it was found that the Advocate had withdrawn Rs. 270/- deposited by the judgment-debtor in the case for payment to the complainant-decree-holder as per the Debt Relief Act, but has not paid the same to the complainant in spite of repeated demands and a registered notice through counsel and it was held by the Court that “It is the imperative duty of the counsel on receipt of the client’s money, to inform the client thereof and pay him without any delay the amount under receipt. For non-fulfillment of this duty on the part of the counter-petitioner we suspend him from practice for a period of six months with effect from the date of service on him of a copy of this order by the learned Munsiff of Pathanamthitta in whose court he is reported to be practising[16].”

Hence, from the above judgments, we can see that earlier also, retaining and misappropriation of Client’s money by an advocate was held to be a professional misconduct by the Disciplinary Committee of BCI and the Hon’ble High Court and now also, Supreme Court has held it to be one of the gravest professional misconducts by an advocate. So, we can say that there is no significant change in the position of law before the judgment was passed and after it.

SIGNIFICANCE OF THE JUDGMENT

  • The Supreme Court in this case reiterated the observations made in Bar Council of Maharashtra M. V. Dabholkar and others[17] that the role of Bar Council is of dual capacity, one as the prosecutor through its Executive Committee and the other quasi-judicial performed through its Disciplinary Committee. Hence, being the prosecutor, the State Bar Council would be an ‘aggrieved person’ and therefore, the appeal under section 38 of the Advocates Act, 1961 would be maintainable.
  • The Supreme Court also reiterated the principle that Misappropriation of client’s money is an act of grave misconduct[18].
  • It was observed by the Hon’ble Supreme Court that this is an act of breach of trust. Advocate is the backbone of legal system. Any laxity while judging the misconduct which is not bona fide and dishonest advocate would undermine the confidence of the litigant public resulting in the collapse of legal system.

POSITION IN AMERICA

Disciplinary Rule [DR] 9-102 of the American Bar Association (ABA) Code[19] requires that client funds should be deposited and maintained in a separate bank account apart from funds belonging to the lawyer or law firm. The Disciplinary Rules are mandatory in character[20]. They “state the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action”.

The New Jersey Supreme Court in In re Lennan[21] reaffirmed the rule that misappropriation will trigger automatic disbarment. Moreover, the court in Lennan essentially stated that no mitigating circumstances would prevent disbarment where the attorney knowingly misappropriates funds.

Moreover, In re Addams[22], Washington D.C. Court of Appeals held that except where the misappropriation is the result of simple negligence, virtually in all cases of misappropriation, disbarment will be the appropriate action[23].

Hence, we can see that position of law in America and in India in case of misappropriation of client’s money is almost same.

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. Each individual has a well defined code of conduct which needs to be followed by the person living in the society. A lawyer in discharging his professional assignment has a duty to 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 needs a high degree of probity and poise to strike a balance and arrive at the place of righteous stand, more so, when there are conflicting claims. While discharging duty to the court, a lawyer should never knowingly be a party to any deception, design or fraud. While placing the law before the court a lawyer is at liberty to put forth a proposition and canvass the same to the best of his wits and ability so as to persuade an exposition which would serve the interest of his client and the society.

[1] AIR 2003 SC 176 Para 2.

[2] AIR 2003 SC 176 Para 3.

[3] AIR 2003 SC 177 Para 4.

[4] AIR 2003 SC 177 Para 5.

[5] Ibid.

[6] AIR 2003 SC 177 Para 7.

[7] 1975 (2) SCC 702.

[8] AIR 2003 SC 178 Para8.

[9] 2002 (2) SCC 67.

[10] http://jurisonline.in/2010/04/%E2%80%98professional-misconduct%E2%80%99/

[11] www.businessdictionary.com/…/professional-misconduct.html

[12] Vincent v. Union of India, AIR 1987 SC 990

[13] http://www.barcouncilofindia.org/wp-content/uploads/2010/05/BCIRulesPartVonwards.pdf

[14] BCI Trust, Selected Judgments on Professional Ethics, p.28

[15] AIR 1961 Ker 209

[16] http://www.indiankanoon.org/doc/872274/

[17] 1975 (2) SCC 702.

[18] Harish Chandra Tiwari v. Baiju, 2002 (2) SCC 67.

[19] http://www.ehow.co.uk/about_6668617_lawyer_s-code-conduct.html#ixzz1opNUXLho

[20] http://www.law.ua.edu/pubs/jlp/files/issues_files/vol12/vol12art04.pdf

[21] 102 N.J. 518, 509 A.2d 179 (1986)

[22] 579 A.2d 190, 191 (D.C. 1990)

[23] http://www.ibtimes.com/articles/104842/20110125/lawyer-who-misappropriated-funds-in-client-s-interest-spared-disbarment.htm

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