Himalayan Cooperative Group Housing Society Vs. Balwan Singh (Supreme Court)

The Supreme Court had to inter alia consider the following issues:

(a) whether the counsel appearing for an appellant-Society could make concession for or on behalf of the appellant-Society without any express instructions/ authorisation in that regard by the Society?

(b) Whether such a concession would bind the appellant-Society and its members?

(c) Since the subject matter of the concession made by the counsel was not the issue before the Writ Court, whether the same would bind the appellant-Society and its members?

HELD by the Supreme Court:

(i) Lawyers are perceived to be their client’s agents. The law of agency may not strictly apply to the client – lawyer’s relationship as lawyers or agents, lawyers have certain authority and certain duties. Because lawyers are also fiduciaries, their duties will sometimes more demanding than those imposed on other agents. The authority-agency status affords the lawyers to act for the client on the subject matter of the retainer. One of the most basic principles of the lawyer-client relationships is that lawyers owe fiduciary duties to their clients. As part of those duties, lawyers assume all the traditional duties that agents owe their principals and, thus, have to respect the client’s autonomy to make decisions at a minimum, as to the objectives of the representation;

(ii) Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client’s instructions rather than substitute their judgment for that of the client. The law is now well settled that a lawyer must be specifically authorised to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise/ settlement. To put it alternatively that a lawyer by virtue of retention, has the authority to choose the means for achieving the client’s legal goal, while the client has the right to decide on what the goal will be. If the decision in question falls within those that clearly belong to the client, the lawyers conduct in failing to consult the client or in making the decision for the client, is more likely to constitute ineffective assistance of counsel.

(iii) The Bar Council of India Rules, 1975 (for short, “the BCI Rules”), in Part VI, Chapter II provide for the ‘Standards of Professional Conduct and Etiquette’ to be observed by all the advocates under the Advocates Act, 1972 (for short, “the Act, 1972”). In the preamble to Chapter II, the BCI Rules provide as follows:

“An advocate shall, at all times, comport himself in a manner befitting his status as an officer of the Court, a privileged member of the community, and a gentleman, bearing in mind that what may be lawful and moral for a person who is not a member of the Bar, or for a member of the Bar in his non-professional capacity may still be improper for an advocate. Without prejudice to the generality of the foregoing obligation, an advocate shall fearlessly uphold the interests of his client and in his conduct conform to the rules hereinafter mentioned both in letter and in spirit. The rules hereinafter mentioned contain canons of conduct and etiquette adopted as general guides; yet the specific mention thereof shall not be construed as a denial of the existence of others equally imperative though not specifically mentioned.” (emphasis supplied)

(iv)The Preamble makes it imperative that an advocate has to conduct himself and his duties in an extremely responsible manner. They must bear in mind that what may be appropriate and lawful for a person who is not a member of the Bar, or for a member of the Bar in his non-professional capacity, may be improper for an advocate in his professional capacity.

(v) Section II of the said Chapter II provides for duties of an advocate towards his client. Rules 15 and 19 of the BCI Rules, has relevance to the subject matter and therefore, they are extracted below:

“15. It shall be the duty of an advocate fearlessly to uphold the interests of his client by all fair and honourable means without regard to any unpleasant consequences to himself or any other. He shall defend a person accused of a crime regardless of his personal opinion as to the guilt of the accused, bearing in mind that his loyalty is to the law which requires that no man should be convicted without adequate evidence.
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19. An advocate shall not act on the instructions of any person other than his client or his authorised agent.”

(vi) While Rule 15 mandates that the advocate must uphold the interest of his clients by fair and honourable means without regard to any unpleasant consequences to himself or any other. Rule 19 prescribes that an advocate shall only act on the instructions of his client or his authorized agent. Further, The BCI Rules in Chapter I of the said Section II provide that the Senior advocates in the matter of their practice of the profession of law mentioned in Section 30 of the Act, 1972 would be subject to certain restrictions. One of such restrictions contained in clause (cc) reads as under:

“(cc) A Senior Advocate shall, however, be free to make concessions or give undertaking in the course of arguments on behalf of his clients on instructions from the junior advocate.”

(vii) Further, the ‘Code of Ethics’ prescribed by the Bar Council of India, in recognition of the evolution in professional and ethical standards within the legal community, provides for certain rules which contain canons of conduct and etiquette which ought to serve as general guide to the practice and profession. Chapter of the said Code provides for an ‘Advocate’s duty to the Client’. Rule 26 thereunder mandates that an “advocate shall not make any compromise or concession without the proper and specific instructions of his/her client.”

It is pertinent to notice that an advocate under the Code expressly includes a group of advocates and a law firm whose partner or associate acts for the client.

(viii) Therefore, the BCI Rules make it necessary that despite the specific legal stream of practice, seniority at the Bar or designation of an advocate as a Senior advocate, the ethical duty and the professional standards in so far as making concessions before the Court remain the same. It is expected of the lawyers to obtain necessary instructions from the clients or the authorized agent before making any concession/ statement before the Court for and on behalf of the client.

(ix) While the BCI Rules and the Act, does not draw any exception to the necessity of an advocate obtaining instructions before making any concession on behalf of the client before the Court, this Court in Periyar & Pareekanni Rubber Ltd. v. State of Kerala, (1991) 4 SCC 195 has noticed the sui generic status and the position of responsibility enjoyed by the Advocate General in regards to the statements made by him before the Courts. The said observation is as under:

“19. …Any concession made by the government pleader in the trial court cannot bind the government as it is obviously, always, unsafe to rely on the wrong or erroneous or wanton concession made by the counsel appearing for the State unless it is in writing on instructions from the responsible officer. Otherwise it would place undue and needless heavy burden on the public exchequer. But the same yardstick cannot be applied when the Advocate General has made a statement across the bar since the Advocate General makes the statement with all responsibility.” (See: Joginder Singh Wasu v. State Of Punjab, 1994 SCC (1) 184).

(x) The Privy Council in the case of Sourendra Nath Mitra v. Tarubala Dasi, AIR 1930 PC 158 has made the following two observations which hold relevance to the present discussion:

“Two observations may be added. First, the implied authority of counsel is not an appendage of office, a dignity added by the Courts to the status of barrister or advocate at law. It is implied in the interests of the client, to give the fullest beneficial effect to his employment of the advocate. Secondly, the implied authority can always be countermanded by the express directions of the client. No advocate has actual authority to settle a case against the express instructions of his client. If he considers such express instructions contrary to the interests of his client, his remedy is to return his brief.”

(See: Jamilabai Abdul Kadar v. Shankarlal Gulabchand, (1975) 2 SCC 609, Svenska Handelsbanken vs Indian Charge Chrome Ltd, 1994 SCC (2) 155)

(xi) Therefore, it is the solemn duty of an advocate not to transgress the authority conferred him by the client. It is always better to seek appropriate instructions from the client or his authorized agent before making any concession which may, directly or remotely, affect the rightful legal right of the client. 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.

(xii) Generally, admissions of fact made by a counsel is binding upon their principals as long as they are unequivocal; where, however, doubt exists as to a purported admission, the Court should be wary to accept such admissions until and unless the counsel or the advocate is authorised by his principal to make such admissions. Furthermore, a client is not bound by a statement or admission which he or his lawyer was not authorised to make.

Lawyer generally has no implied or apparent authority to make an admission or statement which would directly surrender or conclude the substantial legal rights of the client unless such an admission or statement is clearly a proper step in accomplishing the purpose for which the lawyer was employed. We hasten to add neither the client nor the Court is bound by the lawyer’s statements or admissions as to matters of law or legal conclusions. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client’s instructions rather than substitute their judgment for that of the client.

We may add that in some cases, lawyers can make decisions without consulting client. While in others, the decision is reserved for the client. It is often said that the lawyer can make decisions as to tactics without consulting the client, while the client has a right to make decisions that can affect his rights. We do not intend to prolong this discussion. We may conclude by noticing a famous statement of Lord Brougham:

“an advocate, in the discharge of his duty knows but one person in the world and that person is his client.”