2020 (12) TMI 1075 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - Petitioner borrowed the money from the advocate - only point raised by the learned counsel appearing for the petitioner is that the respondent is being an Advocate, he ought not to have do the business of money lending - Section 138 of Negotiable Instruments Act - HELD THAT - Hon'ble Supreme Court of India in V.C. RANGADURAI VERSUS D. GOPALAN AND ORS 1978 (10) TMI 155 - SUPREME COURT held that the action of Advocate is against public policy and an act of professional misconduct. The proceedings under his complaint is felt to be abuse of process of law and have to be quashed. In the case on hand, when there is a specific bar for doing money lending business that too with his own client, the act of the respondent is amount to professional misconduct. Therefore, the entire proceedings initiated as against the petitioner is nothing but clear abuse of process of law and the complaint itself is liable to be quashed. Petition allowed.

Summary

Issues:
Petition to quash proceedings under Section 138 of Negotiable Instruments Act.

Analysis:
The petitioner borrowed money from the respondent, who is an advocate, and issued a cheque that bounced due to insufficient funds. The respondent filed a complaint under Section 138 of NI Act against the petitioner. The petitioner argued that the respondent misused the cheque given as security and that there was no legally enforceable debt. The petitioner contended that the respondent, being an advocate, violated bar rules against money lending, making the proceedings an abuse of process of law. The respondent, on the other hand, claimed the petitioner borrowed money and issued a cheque for repayment, which bounced. The respondent argued that the petitioner's objections were mixed questions of fact and not applicable under Section 482 of Cr.P.C.

The court examined the case and cited a judgment highlighting the changing trends in the legal profession, emphasizing the trust between lawyers and clients. It was noted that for a cheque to trigger penal provisions under Section 138 of NI Act, it must be issued to discharge a debt or liability. The court also referred to rules prohibiting advocates from stipulating fees contingent on case outcomes or sharing litigation proceeds. The court held that the advocate's claim, based on a share in the subject matter, was against public policy and professional misconduct, leading to the quashing of the proceedings as an abuse of process of law.

Ultimately, the court allowed the petition, quashing the proceedings against the petitioner under Section 138 of NI Act. The court found the advocate's actions to be professional misconduct and against public policy, leading to the abuse of process of law. The judgment emphasized the fiduciary nature of the lawyer-client relationship and the importance of upholding ethical standards in the legal profession.