Source: Supreme Court

Why in News?

Recently, a division bench of Justices Bela M Trivedi and Pankaj Mithal said that advocates cannot be held liable for deficiency of services under Consumer Protection Act, 2019.

• The Supreme Court gave this observation in the case of Bar of Indian Lawyers v. D.K.Gandhi.

What was the Background of Bar of Indian Lawyers v. D.K.Gandhi Case?

• Initiation:
  • Mr. D K Gandhi hired the services of an advocate to file a case under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) against Mr. Kamal Sharma for dishonoring a cheque of Rs. 20,000/-.
  • During the court proceedings, Mr. Kamal Sharma agreed to pay Rs. 20,000/- for the dishonored cheque and Rs. 5,000/- as expenses to Mr. D.K. Gandhi.
  • Mr. Kamal Sharma gave the advocate a DD/pay order for Rs. 20,000/- and a crossed cheque of Rs. 5,000/- on behalf of Mr. D.K. Gandhi.
  • However, the advocate did not deliver these to Mr. D K Gandhi. Instead, the advocate demanded Rs. 5,000/- in cash from Mr. D K Gandhi as his fees.
  • Advocate filed a suit in the Small Causes Court to recover Rs. 5,000/- as fees from Mr. D K Gandhi.
  • Later, the advocate gave the DD and cheque to Mr. D K Gandhi, but Mr. Kamal Sharma stopped payment of the Rs. 5,000/- cheque at advocates' instance.
• Complaint for Deficiency in Service:
  • D K Gandhi filed a consumer complaint against the advocate before the District Consumer Disputes Redressal Forum, alleging deficiency in service and seeking compensation.
• Consumer Forum’s Decision:
  • The District Forum allowed D K Gandhi's complaint, but the State Commission allowed advocates' appeal, holding that lawyers' services did not fall under the definition of "service" in the Consumer Protection Act, 2019.
  • However, the National Consumer Disputes Redressal Commission (NCDRC) allowed D K Gandhi's revision petition, holding that complaints alleging deficiency in Advocates' services would be maintainable under the Consumer Protection Act.
• Appeal to Supreme Court:
  • Aggrieved by this, appeals were filed in the SC by the Bar of Indian Lawyers, Delhi High Court Bar Association, Bar Council of India, and that advocate.

What were the Court’s Observations?

• Legislative Intent and Purpose of Consumer Protection Act:
  • The SC held that the very purpose and object of the Consumer Protection Act, 1986 as re-enacted in 2019 was to protect consumers from unfair trade practices and unethical business practices only.

• • There is nothing on record to suggest that the Legislature ever intended to include professions or services rendered by professionals within the purview of the Act.
• Legal Profession is sui generis:
  • The court observed that the legal profession is sui generis i.e. unique in nature and cannot be compared with any other profession.
  • Considering the role, status and duties of advocates as professionals, the legal profession cannot be equated with any other traditional profession.
  • The court held that it is not commercial in nature but is essentially a service-oriented, noble profession.
• Advocates' Services Fall Under 'Contract of Personal Service':
  • The court held that a service hired or availed of an advocate would be a service under a "contract of personal service" and would therefore stand excluded from the definition of "service" under Section 2(42) of the Consumer Protection Act, 2019.
  • This is because a considerable amount of direct control is exercised by the client over how an advocate renders services during employment.
• Complaints against Advocates not Maintainable under Consumer Protection Act:
  • The court concluded that a complaint alleging "deficiency in service" against advocates practicing the legal profession would not be maintainable under the Consumer Protection Act, 2019.
  • The court set aside the impugned NCDRC judgment which had relied on the Indian Medical Association v. V.P. Shantha & Others (1996) to bring advocates within the purview of the Act.
    • The court referred the Indian Medical Association case for consideration by a larger bench as it deserves to be revisited.

What is Deficiency of Services under the Consumer Protection Act, 2019?

• Definition:
  • The Section 2 (1) (g) of Consumer Protection Act, 1986 and Section 2(11) of Consumer Protection Act, 2019 defines "deficiency" as any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance required to be maintained under any law or undertaken to be performed by a person under a contract or otherwise in relation to any service. It includes:
    • Any act of negligence or omission or commission by the service provider, which causes loss or injury to the consumer.
    • Deliberate withholding of relevant information by the service provider from the consumer.
• Concept:
  • The concept of "deficiency of services" encompasses any failure, lack, or shortfall in the expected standard of services provided to consumers.
  • It covers instances where the service rendered falls short of the legal requirements, contractual obligations, or reasonable expectations of the consumer.
  • Deficiency can arise due to negligence, intentional acts, or omissions by the service provider, leading to consumer dissatisfaction, inconvenience, or harm.
• Complaint:
  • If a consumer encounters a deficiency in the services provided, they can file a complaint with the appropriate consumer forum established under the Act.
  • The complaint should include details of the complainant, the service provider, the facts of the case, the deficiency alleged, the relief sought, and supporting documents.
• Redressal Mechanism:
  • The Consumer Protection Act, 2019 establishes a three-tier quasi-judicial mechanism for redressal of consumer grievances:
    • District Consumer Disputes Redressal Forum: For claims up to Rs. 1 crore.
    • State Consumer Disputes Redressal Commission: For claims between Rs. 1 crore and Rs. 10 crore.
    • NCDRC: For claims exceeding Rs. 10 crore.

What are the Landmark Cases Cited in this Case?

• Dharangadhra Chemical Works Ltd. v. State of Saurashtra and Others (1957):
  • The court recognized the difficulty in definitively distinguishing a 'contract of service' from a 'contract for services' and laid down the following test:
    • “The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer”.
• Byram Pestonji Gariwala v. Union Bank of India and Others (1992):
  • It discussed the unique nature of the Indian legal system rooted in common law traditions.
• State of U.P and Others v. U.P. State Law Officers Association and Others (1994):
  • It recognized the legal profession as essentially a service-oriented, noble profession.
• Indian Medical Association v. V P Shantha & Others (1996):
  • It held that the wide definition of 'service' under the CP Act would cover the services rendered by medical practitioners (This case was referred for reconsideration by a larger bench).
• Himalayan Cooperative Group Housing Society v. Balwan Singh and Others (2015):
  • It discussed the advocate-client relationship and the control exercised by the client over the advocate.