Sunday, 27 September 2015

Whether lawyer must be specifically authorised to settle and compromise a claim?

 Apart from the above, in our view 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.
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.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4360-4361 OF 2015
(Arising out of S.L.P.(C) Nos. 9302-9303 of 2013)
HIMALAYAN COOPERATIVE GROUP
HOUSING SOCIETY ...APPELLANT

VERSUS
BALWAN SINGH ...RESPONDENT
WITH
CIVIL APPEAL NOS. 4363-4364 OF 2015
(Arising out of S.L.P.(C) Nos.9305-9306 of 2013)
Citation;(2015) 7 SCC 373

2. These appeals are directed against the
judgment and order passed by the High Court in Writ
Petition No.7546 of 2005 and connected matters,
dated 25.11.2010 and in Review Petition No.138 of
2010 and connected matters, dated 12.10.2012. By the
impugned judgment and order in the Writ Petition,
the High Court has affirmed the orders passed by the
Courts/authorities below and, on the basis of a
concession made by the counsel appearing on behalf
of the appellant, issued certain directions to the
appellant.
3. For convenience, we would only notice the
facts in Civil Appeals arising out of S.L.P.(C)
Nos.9302-9303 of 2013.
4. The appellant is a co-operative society
registered under the provisions of the DelhiPage 3
3
Cooperative Societies Act, 1972 (for short, “the
Act”). The appellant-Society comprised of 150
members, including the respondents, who had enrolled
themselves with the said Society for allotment of
residential quarters/ apartments. The
appellant-Society raised a demand for payment
towards allotment of residential quarters/
apartments on 28.05.1998. The respondents failed to
comply with the demand. They continued to be
defaulters in spite of continuous demand notices. In
view of the default in payment of initial deposit
amount, the appellant-Society after following the
due procedure had passed a resolution expelling the
respondents from the membership of the Society.
5. The resolution requires confirmation of
the Registrar of Co-Operative Societies (respondent
No.2-herein) under Rule 36 of the Delhi Co-Operative
Societies Rules, 1973 (for short, “the Rules”) and
therefore, was placed before the Registrar for his
consideration and approval. The Registrar, after duePage 4
4
verification of the records of the appellant-Society
and in compliance with the procedure as contemplated
under the provisions of the Act and the Rules, by an
order dated 29.01.2004, has approved the resolution
passed by the appellant-Society. However, in the
interest of justice the Registrar has provided a
last opportunity to the respondents to pay their
outstanding dues to the appellant-Society within
four weeks, failing which their expulsion from the
appellant-Society would come into effect. The
respondents not having complied with the aforesaid
order, the said resolution stood confirmed and the
respondents ceased to be members of the appellantSociety.
6. The aforesaid order of the Registrar was
carried in appeal by the respondents before the
Presiding Officer, Delhi Co-operative Tribunal under
Section 86(4) of the Delhi Co-operative Societies
Act, 2003. However, on a later date, the respondents
withdrew the said appeal and preferred RevisionPage 5
5
Petition before the Financial Commissioner,
Government of NCT of Delhi under Section 80 of the
Act. The Revisional Authority has carefully
considered the documents on record and the
submissions made by parties to the lis and concluded
that the Registrar has rightly confirmed the
expulsion of members of the Society. The Revisional
Authority, while dismissing the revision petitions,
by its order dated 24.02.2005 has noticed that
despite ample opportunity provided to the
respondents, they have failed to pay the outstanding
amount and therefore, their expulsion is proper and
justified.
7. The respondents, aggrieved by the
aforesaid orders passed by the Registrar and the
Revisional Authority, had approached the Writ Court.
In the Writ Petition filed, their main prayer was to
set aside the orders passed by the Registrar and the
revisional authority by exercising supervisory
jurisdiction of the Court.Page 6
6
8. The Writ Court, after duly considering
the contentions raised in the Writ Petition has come
to the conclusion that the Registrar and the
revisional authority have not committed any error in
arriving at their respective conclusions and have
rightly confirmed the resolution expelling the
respondents from the membership of
appellant-Society. The Writ Court has observed that
the respondents have not made out a case for
interference with the orders of the authorities
below. However, on a request made by the respondents
seeking issuance of direction to the
appellant-Society for consideration of their request
to construct and allot the additional quarters/
apartments to them, the same being agreeable to by
the learned counsel appearing for the appellantSociety,
the Court has issued certain directions to
the appellant-Society for construction of additional
quarters/ apartments and their allotment to the
respondents, by judgment and order dated 25.11.2010.Page 7
7
9. Being of the firm view, that, the
appellant-Society had not authorized the learned
counsel who had appeared for them before the Writ
Court to make any concession in favour of the
respondents had preferred Review Petitions against
the aforesaid common judgment and order of the Writ
Court. The said Review Petitions were confined to
the limited question of feasibility of
implementation of the directions issued by the Writ
Court in the impugned judgment and order. The High
Court after considering the merits of the Review
Petitions has dismissed the same by its order dated
12.10.2012.
10. Aggrieved by the aforesaid judgment and
order passed by the High Court in the Writ Petitions
as well as in the Review Petitions, the
appellant-Society is before us in these appeals.
11. We have heard learned counsel appearing
for the parties to the lis. Page 8
8
12. Shri Jayant Bhushan, learned counsel
appearing for the appellant-Society contends that in
the Writ Petitions filed under Article 226 read with
Article 227 of the Constitution of India, the Writ
Court was not justified in passing the incidental
and ancillary directions in respect of construction
and allotment of the additional flats/apartments to
the respondents. In support of his contention, Shri
Bhushan would rely upon the concurrent finding of
the Registrar, Revisional Authority and the Writ
Court and submit, that, the respondents are indeed
the defaulters and, therefore, they were not
entitled to continue as members of the appellantSociety.
Further, Shri Bhushan would submit that
appellant-Society at no point of time had authorized
the learned counsel for the appellant-Society to
make any concession before the Writ Court and such
being the case, the Writ Court ought not have issued
any further direction to the appellant-Society
solely on the basis of a concession made by thePage 9
9
lawyer appearing on its behalf without any express
consent by the appellant-Society.
13. Learned counsel, Shri N. Prabhakar,
appearing for one set of the respondents submits
that the Writ Court had only issued the impugned
directions in light of the concession made by the
learned counsel for the appellant-Society. Shri
Prabhakar would state that the appellant-Society
having made a concession before the Writ Court,
cannot now dispute the authority of the lawyer to
settle and compromise a claim before this Court and
therefore, submits that the Writ Court was justified
in issuing the said directions to the appellantSociety.
14. Shri Huzefa Ahmadi, learned counsel
appearing for some of the respondents contends that
the jurisdiction exercised by the Writ Court was not
under Article 227 of the Constitution but only under
Article 226 of the Constitution of India andPage 10
10
therefore, such directions could be issued and have
been rightly issued by the Writ Court. Shri Ahmadi,
would submit that since, the appellant-Society in
the affidavit filed before this Court has stated
that certain apartments are still lying vacant, the
same may be allotted to the respondents in the
interest of justice. Further, Shri Ahmadi would
support the directions issued by the Writ Court and
submit that the counsel who had appeared for the
appellant-Society had not only given his consent for
the same before the Writ Court but also not disputed
the same in the Review Petition preferred by the
appellant-Society and therefore, the appellantSociety
now cannot resile from the concession made
by its counsel before the Writ Court.
15. The issues that would arise for
consideration and decision are:
(a) What is the jurisdiction of the
Court while dealing with a petition filed
under Articles 226 and 227 of thePage 11
11
Constitution of India?
(b) 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?
(c) Whether such a concession would
bind the appellant-Society and its
members?
(d) 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?
16. The first issue need not detain us for
long. It is the stand of the learned counsel for the
respondents, that, since the Writ Petition that was
filed was both under Articles 226 and 227 of the
Constitution of India, the Court apart from
examining the merits of the Writ Petition could also
issue incidental and ancillary directions to doPage 12
12
complete justice between parties litigating before
it. We do not agree. The issue in our view is no
more debatable in view of the decision of this Court
in the case of Jaisingh and Ors. vs. Municipal
Corporation of Delhi and Anr. (2010) 9 SCC 385. The
Court has stated:
“15. …we may notice certain well
recognised principles governing the
exercise of jurisdiction by the High
Court under Article 227 of the
Constitution of India. Undoubtedly the
High Court, under this article, has the
jurisdiction to ensure that all
subordinate courts as well as statutory
or quasi-judicial tribunals, exercise the
powers vested in them, within the bounds
of their authority. The High Court has
the power and the jurisdiction to ensure
that they act in accordance with the
well-established principles of law. The
High Court is vested with the powers of
superintendence and/or judicial revision,
even in matters where no revision or
appeal lies to the High Court. ThePage 13
13
jurisdiction under this article is, in
some ways, wider than the power and
jurisdiction under Article 226 of the
Constitution of India. It is, however,
well to remember the well-known adage
that greater the power, greater the care
and caution in exercise thereof. The High
Court is, therefore, expected to exercise
such wide powers with great care, caution
and circumspection. The exercise of
jurisdiction must be within the wellrecognised
constraints…”
(emphasis supplied)
17. The scope and extent of power of the Writ
Court in a petition filed under Article 226 and 227
of the Constitution came up for consideration before
three Judge Bench of this Court in the recent case
of Radhey Shyam and Anr v. Chhabi Nath & Ors., Civil
Appeal No.2548 of 2009. This Court observed that the
Writ of Certiorari under Article 226 though directed
against the orders of a inferior court would be
distinct and separate from the challenge to an orderPage 14
14
of an inferior court under Article 227 of the
Constitution. The supervisory jurisdiction comes
into play in the latter case and it is only when the
scope and ambit of the remedy sought for does not
fall in purview of the scope of supervisory
jurisdiction under Article 227, the jurisdiction of
the Court under Article 226 could be invoked.
18. In the present case, what was challenged
by the members of the Society was an order passed by
the Registrar and the Revisional Authority under the
provisions of the Act and the Rules framed
thereunder. The prayer was to set aside the orders
passed by the authorities below. Even if the said
petitions(s) were styled as a petition under Article
226, the content and the prayers thereunder being
ones requiring exercise of supervisory jurisdiction
only, could be treated as petitions filed under
Article 227 of the Constitution only.
19. Having said so, we will now consider thePage 15
15
issues that falls for our consideration and decision
in the present appeals.
20. In the present case, the subject matter
of the petitions was the orders passed by the
Registrar and the Revisional Authority under the
provisions of the Act and the Rules framed
thereunder. The Registrar and the Revisional
Authority in their order have considered the
validity of the expulsion of the respondents from
the membership of the appellant-Society for having
defaulted in paying the principal amount to the
appellant-Society. The Registrar and the Revisional
Authority have recorded a concurrent finding that
despite notice and repeated opportunities to deposit
the required amounts to the appellant-Society, the
respondents have continued to be in default and
hence, the said authorities have confirmed the
resolution passed by the appellant-Society expelling
the respondents from the membership of the
appellant-Society. The Writ Court, in the impugnedPage 16
16
judgment and order, has also reached the conclusion
that since the respondents had defaulted in paying
the principal amount to the appellant-Society, the
appellant-Society was justified in expelling them
from the membership of the appellant-Society and
hence, confirmed the orders passed by the
authorities below.
21. The Writ Court after considering the
merits of the case has come to the conclusion that
the expulsion of respondents from the appellantSociety
was justified. Having said so, in our view,
the Court ought not to have issued the impugned
directions merely because a request was made by the
learned counsel appearing for the
respondents-herein. The same would hold true even if
a concession was made by the counsel for the
appellant-Society. The Court, while, exercising its
powers under Article 227 of the Constitution of
India, ought to have confined itself to the subject
matter and the issues raised by parties in the WritPage 17
17
Petition. The digression of or expansion of the
supervisory jurisdiction under Article 227 of the
Constitution of India, would open precarious
floodgates of litigation should the limitation on
the supervisory jurisdiction not be observed
mindfully.
22. If for any reason, the Writ Court
perceived the oral request made by the respondents
to have justified the ends of justice and desired to
accept the concession so made by the counsel for
appellant-Society, the said request not being the
subject matter of the Writ Petition required the
Court to query whether the counsel for the
appellant-Society has been authorized to make such a
statement by the appellant-Society or whether any
such resolution has been passed by the
appellant-Society giving concession in matters of
this nature. Since the required caution was not
exercised by the learned Judges of the Writ Court,
the directions issued by the Writ Court suffer fromPage 18
18
infirmity and hence require to be set aside.
23. Apart from the above, in our view 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.
Thus, according to generally accepted notions of
professional responsibility, lawyers should follow
the client’s instructions rather than substitutePage 19

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.
24. 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 advocatesPage 20
20
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 notPage 21
21
specifically mentioned.”
(emphasis supplied)
25. 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.
26. 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 crimePage 22
22
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.
***
***
***
19. An advocate shall not act on the
instructions of any person other than his
client or his authorised agent.”
27. 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 bePage 23
23
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.”
28. 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 thePage 24
24
Code expressly includes a group of advocates and a
law firm whose partner or associate acts for the
client.
29. 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.
30. 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 generisPage 25
25
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).
31. The Privy Council in the case of
Sourendra Nath Mitra v. Tarubala Dasi, AIR 1930 PCPage 26
26
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)
32. Therefore, it is the solemn duty of an
advocate not to transgress the authority conferredPage 27
27
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.
33. 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 admissionPage 28
28
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 affectPage 29
29
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.”
34. In view of the above, while allowing
these appeals, we set aside the directions issued by
the Writ Court to the appellant-Society as also the
judgment and order passed by the High Court in
Review Petition.
Ordered accordingly.
 ............CJI.
 [H.L. DATTU]
 ..............J.
 [S.A. BOBDE]
 ..............J.
 [ARUN MISHRA]
 Page 30
30
NEW DELHI,
APRIL 29, 2015.
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